Document:

SECURITIES PURCHASE AGREEMENT

      SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of September
12, 2006, by and among Advanced Biophotonics Inc., a Delaware corporation, with
headquarters located at 125 Wilbur Place, Suite 120, Bohemia, NY 11716 (the
"Company"), and each of the purchasers set forth on the signature pages hereto
(the "Buyers").

      WHEREAS:

      A. The Company and the Buyers are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by the
rules and regulations as promulgated by the United States Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act");

      B. Buyers desire to purchase and the Company desires to issue and sell,
upon the terms and conditions set forth in this Agreement (i) 8% secured
convertible notes of the Company, in the form attached hereto as Exhibit "A", in
the aggregate principal amount of Seven Hundred and Seventy-Five Thousand
Dollars ($775,000) (together with any note(s) issued in replacement thereof or
as a dividend thereon or otherwise with respect thereto in accordance with the
terms thereof, the "Notes"), convertible into shares of common stock, par value
$.001 per share, of the Company (the "Common Stock"), upon the terms and subject
to the limitations and conditions set forth in such Notes and (ii) warrants, in
the form attached hereto as Exhibit "B", to purchase 20,000,000 shares of Common
Stock (the "Warrants").

      C. Each Buyer wishes to purchase, upon the terms and conditions stated in
this Agreement, such principal amount of Notes and number of Warrants as is set
forth immediately below its name on the signature pages hereto; and

      D. Contemporaneous with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement, in
the form attached hereto as Exhibit "C" (the "Registration Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration rights
under the 1933 Act and the rules and regulations promulgated thereunder, and
applicable state securities laws.

      NOW THEREFORE, the Company and each of the Buyers severally (and not
jointly) hereby agree as follows:

      1. PURCHASE AND SALE OF NOTES AND WARRANTS.

                  a. Purchase of Notes and Warrants. On the Closing Date (as
defined below), the Company shall issue and sell to each Buyer and each Buyer
severally agrees to purchase from the Company such principal amount of Notes and
number of Warrants as is set forth immediately below such Buyer's name on the
signature pages hereto.

<PAGE>

                  b. Form of Payment. On the Closing Date (as defined below),
(i) each Buyer shall pay the purchase price for the Notes and the Warrants to be
issued and sold to it at the Closing (as defined below) (the "Purchase Price")
by wire transfer of immediately available funds to the Company, in accordance
with the Company's written wiring instructions, against delivery of the Notes in
the principal amount equal to the Purchase Price and the number of Warrants as
is set forth immediately below such Buyer's name on the signature pages hereto,
and (ii) the Company shall deliver such Notes and Warrants duly executed on
behalf of the Company, to such Buyer, against delivery of such Purchase Price.

                  c. Closing Date. Subject to the satisfaction (or written
waiver) of the conditions thereto set forth in Section 6 and Section 7 below,
the date and time of the issuance and sale of the Notes and the Warrants
pursuant to this Agreement (the "Closing Date") shall be 12:00 noon, Eastern
Standard Time on September 12, 2006, or such other mutually agreed upon time.
The closing of the transactions contemplated by this Agreement (the "Closing")
shall occur on the Closing Date at such location as may be agreed to by the
parties.

      2. BUYERS' REPRESENTATIONS AND WARRANTIES. Each Buyer severally (and not
jointly) represents and warrants to the Company solely as to such Buyer that:

                  a. Investment Purpose. As of the date hereof, the Buyer is
purchasing the Notes and the shares of Common Stock issuable upon conversion of
or otherwise pursuant to the Notes (including, without limitation, such
additional shares of Common Stock, if any, as are issuable (i) on account of
interest on the Notes, (ii) as a result of the events described in Sections 1.3
and 1.4(g) of the Notes and Section 2(c) of the Registration Rights Agreement or
(iii) in payment of the Standard Liquidated Damages Amount (as defined in
Section 2(f) below) pursuant to this Agreement, such shares of Common Stock
being collectively referred to herein as the "Conversion Shares") and the
Warrants and the shares of Common Stock issuable upon exercise thereof (the
"Warrant Shares" and, collectively with the Notes, Warrants and Conversion
Shares, the "Securities") for its own account and not with a present view
towards the public sale or distribution thereof, except pursuant to sales
registered or exempted from registration under the 1933 Act; provided, however,
that by making the representations herein, the Buyer does not agree to hold any
of the Securities for any minimum or other specific term and reserves the right
to dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act.

                  b. Accredited Investor Status. The Buyer is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D (an "Accredited
Investor").

                  c. Reliance on Exemptions. The Buyer understands that the
Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of, and the
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire the Securities.

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<PAGE>

                  d. Information. The Buyer and its advisors, if any, have been,
and for so long as the Notes and Warrants remain outstanding will continue to
be, furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Securities which have been requested by the Buyer or its advisors. The Buyer and
its advisors, if any, have been, and for so long as the Notes and Warrants
remain outstanding will continue to be, afforded the opportunity to ask
questions of the Company. Notwithstanding the foregoing, the Company has not
disclosed to the Buyer any material nonpublic information and will not disclose
such information unless such information is disclosed to the public prior to or
promptly following such disclosure to the Buyer. Neither such inquiries nor any
other due diligence investigation conducted by Buyer or any of its advisors or
representatives shall modify, amend or affect Buyer's right to rely on the
Company's representations and warranties contained in Section 3 below. The Buyer
understands that its investment in the Securities involves a significant degree
of risk. The Buyers are not aware of any facts that may constitute a breach of
any of the Company's representations and warranties made herein.

                  e. Governmental Review. The Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities.

                  f. Transfer or Re-sale. The Buyer understands that (i) except
as provided in the Registration Rights Agreement, the sale or re-sale of the
Securities has not been and is not being registered under the 1933 Act or any
applicable state securities laws, and the Securities may not be transferred
unless (a) the Securities are sold pursuant to an effective registration
statement under the 1933 Act, (b) the Buyer shall have delivered to the Company
an opinion of counsel reasonably acceptable to the Company and its counsel that
shall be in form, substance and scope customary for opinions of counsel in
comparable transactions to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration, which opinion shall be accepted by the Company, (c) the Securities
are sold or transferred to an "affiliate" (as defined in Rule 144 promulgated
under the 1933 Act (or a successor rule) ("Rule 144")) of the Buyer who agrees
to sell or otherwise transfer the Securities only in accordance with this
Section 2(f) and who is an Accredited Investor, (d) the Securities are sold
pursuant to Rule 144, or (e) the Securities are sold pursuant to Regulation S
under the 1933 Act (or a successor rule) ("Regulation S"), and the Buyer shall
have delivered to the Company an opinion of counsel reasonably acceptable to the
Company and its counsel that shall be in form, substance and scope customary for
opinions of counsel in corporate transactions, which opinion shall be accepted
by the Company; (ii) any sale of such Securities made in reliance on Rule 144
may be made only in accordance with the terms of said Rule and further, if said
Rule is not applicable, any re-sale of such Securities under circumstances in
which the seller (or the person through whom the sale is made) may be deemed to
be an underwriter (as that term is defined in the 1933 Act) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register such Securities under the 1933 Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder (in each case, other than pursuant to the Registration
Rights Agreement). Notwithstanding the foregoing or anything else contained
herein to the contrary, the Securities may be pledged as collateral in
connection with a bona fide margin account or other lending arrangement. In the
event that the Company does not accept the opinion of counsel provided by the
Buyer with respect to the transfer of Securities pursuant to an exemption from
registration, such as Rule 144 or Regulation S, within three (3) business days
of delivery of the opinion to the Company, the Company shall pay to the Buyer
liquidated damages of two percent (2%) of the outstanding amount of the Notes
per month plus accrued and unpaid interest on the Notes, prorated for partial
months, in cash or shares at the option of the Company ("Standard Liquidated
Damages Amount"). If the Company elects to be pay the Standard Liquidated
Damages Amount in shares of Common Stock, such shares shall be issued at the
Conversion Price at the time of payment. Notwithstanding anything herein to the
contrary, in the event the Company has to pay the Standards Liquidated Damages
Amount pursuant to any provision of this Agreement, the Buyers shall first have
to give the Company advance written notice of such breach and in such event, the
Company shall have 30 days from the receipt of such notice to cure such breach
before the Standard Liquidated Damages Amount shall be due and payable to the
Buyers.

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<PAGE>

                  g. Legends. The Buyer understands that the Notes and the
Warrants and, until such time as the Conversion Shares and Warrant Shares have
been registered under the 1933 Act as contemplated by the Registration Rights
Agreement or otherwise may be sold pursuant to Rule 144 or Regulation S without
any restriction as to the number of securities as of a particular date that can
then be immediately sold, the Conversion Shares and Warrant Shares may bear a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for such Securities):

            "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 or unless sold pursuant
            to Rule 144 or Regulation S under said Act."

      The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by applicable state securities laws, (a)
such Security is registered for sale under an effective registration statement
filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or
Regulation S without any restriction as to the number of securities as of a
particular date that can then be immediately sold, or (b) such holder provides
the Company with an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, which opinion shall be
reasonably acceptable to the Company's counsel, to the effect that a public sale
or transfer of such Security may be made without registration under the 1933
Act, which opinion shall be accepted by the Company so that the sale or transfer
is effected or (c) such holder provides the Company with reasonable assurances
that such Security can be sold pursuant to Rule 144 or Regulation S. The Buyer
agrees to sell all Securities, including those represented by a certificate(s)
from which the legend has been removed, in compliance with applicable prospectus
delivery requirements, if any.

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<PAGE>

                  h. Authorization; Enforcement. This Agreement and the
Registration Rights Agreement have been duly and validly authorized. This
Agreement has been duly executed and delivered on behalf of the Buyer, and this
Agreement constitutes, and upon execution and delivery by the Buyer of the
Registration Rights Agreement, such agreement will constitute, valid and binding
agreements of the Buyer enforceable in accordance with their terms.

                  i. Residency. The Buyer is a resident of the jurisdiction set
forth immediately below such Buyer's name on the signature pages hereto.

      3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to each Buyer that:

                  a. Organization and Qualification. The Company and each of its
Subsidiaries (as defined below), if any, is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated, with full power and authority (corporate and other) to
own, lease, use and operate its properties and to carry on its business as and
where now owned, leased, used, operated and conducted. Schedule 3(a) sets forth
a list of all of the Subsidiaries of the Company and the jurisdiction in which
each is incorporated. The Company and each of its Subsidiaries is duly qualified
as a foreign corporation to do business and is in good standing in every
jurisdiction in which its ownership or use of property or the nature of the
business conducted by it makes such qualification necessary except where the
failure to be so qualified or in good standing would not have a Material Adverse
Effect. "Material Adverse Effect" means any of (i) a material and adverse effect
on the legality, validity or enforceability of any document executed in
connection with this financing, (ii) a material and adverse effect on the
results of operations, assets, prospects, business or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) an
adverse impairment to the Company's ability to perform under any of the
documents executed in connection with this financing. "Subsidiaries" means any
corporation or other organization, whether incorporated or unincorporated, in
which the Company owns, directly or indirectly, any equity or other ownership
interest.

                  b. Authorization; Enforcement. (i) Subject to Stockholder
Approval (as such term is defined in Section 4(n)), the Company has all
requisite corporate power and authority to enter into and perform this
Agreement, the Registration Rights Agreement, the Notes and the Warrants and to
consummate the transactions contemplated hereby and thereby and to issue the
Securities, in accordance with the terms hereof and thereof, (ii) the execution
and delivery of this Agreement, the Registration Rights Agreement, the Notes and
the Warrants by the Company and the consummation by it of the transactions
contemplated hereby and thereby (including without limitation, the issuance of
the Notes and the Warrants and the issuance and reservation for issuance of the
Conversion Shares and Warrant Shares issuable upon conversion or exercise
thereof) have been duly authorized by the Company's Board of Directors and no
further consent or authorization of the Company, its Board of Directors, or its
shareholders is required, (iii) this Agreement has been duly executed and
delivered by the Company by its authorized representative, and such authorized
representative is the true and official representative with authority to sign
this Agreement and the other documents executed in connection herewith and bind
the Company accordingly, and (iv) this Agreement constitutes, and upon execution
and delivery by the Company of the Registration Rights Agreement, the Notes and
the Warrants, each of such instruments will constitute, a legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms.

                                       5
<PAGE>

                  c. Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (i) 200,000,000 shares of Common Stock,
of which 33,783,141 shares are issued and outstanding, 13,502,805 shares are
reserved for issuance pursuant to the Company's stock option plans, 16,253,770
shares are reserved for issuance pursuant to securities (other than the Notes
and the Warrants) exercisable for, or convertible into or exchangeable for
shares of Common Stock and 4,166,667 shares are reserved for issuance upon
conversion of the Notes and exercise of the Warrants (subject to adjustment
pursuant to the Company's covenant set forth in Section 4(h) below); and (ii)
3,000,000 shares of Series A convertible preferred stock and 7,000,000 shares of
Series B convertible preferred stock, of which 1,851,423 and 1,333,432 shares
are issued and outstanding, respectively. All of such outstanding shares of
capital stock are, or upon issuance will be, duly authorized, validly issued,
fully paid and nonassessable. No shares of capital stock of the Company are
subject to preemptive rights or any other similar rights of the shareholders of
the Company or any liens or encumbrances imposed through the actions or failure
to act of the Company. Except as disclosed in Schedule 3(c), as of the effective
date of this Agreement, (i) there are no outstanding options, warrants, scrip,
rights to subscribe for, puts, calls, rights of first refusal, agreements,
understandings, claims or other commitments or rights of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for any shares of capital stock of the Company or any of its Subsidiaries, or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
Subsidiaries, (ii) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of
its or their securities under the 1933 Act (except the Registration Rights
Agreement) and (iii) there are no anti-dilution or price adjustment provisions
contained in any security issued by the Company (or in any agreement providing
rights to security holders) that will be triggered by the issuance of the Notes,
the Warrants, the Conversion Shares or Warrant Shares. The Company has furnished
to the Buyer true and correct copies of the Company's Certificate of
Incorporation as in effect on the date hereof ("Certificate of Incorporation"),
the Company's By-laws, as in effect on the date hereof (the "By-laws"), and the
terms of all securities convertible into or exercisable for Common Stock of the
Company and the material rights of the holders thereof in respect thereto. The
Company shall provide the Buyer with a written update of this representation
signed by the Company's Chief Executive or Chief Financial Officer on behalf of
the Company as of the Closing Date.

                  d. Issuance of Shares. The Conversion Shares and Warrant
Shares are duly authorized and reserved for issuance and, upon conversion of the
Notes and exercise of the Warrants in accordance with their respective terms,
will be validly issued, fully paid and non-assessable, and 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
Company and will not impose personal liability upon the holder thereof.

                  e. Acknowledgment of Dilution. The Company understands and
acknowledges the potentially dilutive effect to the Common Stock upon the
issuance of the Conversion Shares and Warrant Shares upon conversion of the Note
or exercise of the Warrants. The Company further acknowledges that its
obligation to issue Conversion Shares and Warrant Shares upon conversion of the
Notes or exercise of the Warrants in accordance with this Agreement, the Notes
and the Warrants is absolute and unconditional regardless of the dilutive effect
that such issuance may have on the ownership interests of other shareholders of
the Company.

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<PAGE>

                  f. No Conflicts. The execution, delivery and performance of
this Agreement, the Registration Rights Agreement, the Notes and the Warrants by
the Company and the consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the issuance and reservation
for issuance of the Conversion Shares and Warrant Shares) will not (i) conflict
with or result in a violation of any provision of the Certificate of
Incorporation or By-laws or (ii) violate or conflict with, or result in a breach
of any provision of, or constitute a default (or an event which with notice or
lapse of time or both could become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture, patent, patent license or instrument to which the Company
or any of its Subsidiaries is a party, or (iii) to the Company's knowledge,
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and regulations of
any self-regulatory organizations to which the Company or its securities are
subject) applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries is bound or affected
(except for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect). Neither the Company nor any of its Subsidiaries
is in violation of its Certificate of Incorporation, By-laws or other
organizational documents and neither the Company nor any of its Subsidiaries is
in default (and no event has occurred which with notice or lapse of time or both
could put the Company or any of its Subsidiaries in default) under, and neither
the Company nor any of its Subsidiaries has taken any action or failed to take
any action that would give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its Subsidiaries is a party or by which any property or
assets of the Company or any of its Subsidiaries is bound or affected, except
for possible defaults as would not, individually or in the aggregate, have a
Material Adverse Effect. The businesses of the Company and its Subsidiaries, if
any, are not being conducted, and shall not be conducted so long as a Buyer owns
any of the Securities, in violation of any law, ordinance or regulation of any
governmental entity. Except as specifically contemplated by this Agreement and
as required under the 1933 Act and any applicable state securities laws, the
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court, governmental agency, regulatory
agency, self regulatory organization or stock market or any third party in order
for it to execute, deliver or perform any of its obligations under this
Agreement, the Registration Rights Agreement, the Notes or the Warrants in
accordance with the terms hereof or thereof or to issue and sell the Notes and
Warrants in accordance with the terms hereof and to issue the Conversion Shares
upon conversion of the Notes and the Warrant Shares upon exercise of the
Warrants. Except as disclosed in Schedule 3(f), all consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the date hereof. The Company is not in violation of the quotation requirements
of the Over-the-Counter Bulletin Board (the "OTCBB") and does not reasonably
anticipate that the Common Stock will be removed by the OTCBB in the foreseeable
future. The Company and its Subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.

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<PAGE>

                  g. SEC Documents; Financial Statements. Except as disclosed in
Schedule 3(g), since December 31, 2005 the Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "1934 Act") (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements and schedules
thereto and documents (other than exhibits to such documents) incorporated by
reference therein, being hereinafter referred to herein as the "SEC Documents").
As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and regulations of
the SEC promulgated thereunder applicable to the SEC Documents, and none of the
SEC Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. None of the
statements made in any such SEC Documents is, or has been, required to be
amended or updated under applicable law (except for such statements as have been
amended or updated in subsequent filings prior the date hereof). As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
United States generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed or summary statements) and fairly present in all material respects the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth in the
financial statements of the Company included in the SEC Documents, the Company
has no liabilities, contingent or otherwise, other than (i) liabilities incurred
in the ordinary course of business subsequent to December 31, 2005 and (ii)
obligations under contracts and commitments incurred in the ordinary course of
business and not required under generally accepted accounting principles to be
reflected in such financial statements, which, individually or in the aggregate,
are not material to the financial condition or operating results of the Company.

                  h. Absence of Certain Changes. Except as set forth in Schedule
3(h), since December 31, 2005, there has been no material adverse change and no
material adverse development in the assets, liabilities, business, properties,
operations, financial condition, results of operations or prospects of the
Company or any of its Subsidiaries.

                  i. Absence of Litigation. There is no action, suit, claim,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened against or
affecting the Company or any of its Subsidiaries, or their officers or directors
in their capacity as such, that could have a Material Adverse Effect. Schedule
3(i) contains a complete list and summary description of any pending or, to the
knowledge of the Company, threatened proceeding against or affecting the Company
or any of its Subsidiaries, without regard to whether it would have a Material
Adverse Effect. The Company and its Subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.

                                       8
<PAGE>

                  j. Patents, Copyrights, etc. The Company and each of its
Subsidiaries owns or possesses the requisite licenses or rights to use all
patents, patent applications, patent rights, inventions, know-how, trade
secrets, trademarks, trademark applications, service marks, service names, trade
names and copyrights ("Intellectual Property") necessary to enable it to conduct
its business as now operated (and, except as set forth in Schedule 3(j) hereof,
to the best of the Company's knowledge, as presently contemplated to be operated
in the future); there is no claim or action by any person pertaining to, or
proceeding pending, or to the Company's knowledge threatened, which challenges
the right of the Company or of a Subsidiary with respect to any Intellectual
Property necessary to enable it to conduct its business as now operated (and,
except as set forth in Schedule 3(j) hereof, to the best of the Company's
knowledge, as presently contemplated to be operated in the future); to the best
of the Company's knowledge, the Company's or its Subsidiaries' current and
intended products, services and processes do not infringe on any Intellectual
Property or other rights held by any person; and the Company is unaware of any
facts or circumstances which might give rise to any of the foregoing. The
Company and each of its Subsidiaries have taken reasonable security measures to
protect the secrecy, confidentiality and value of their Intellectual Property.

                  k. No Materially Adverse Contracts, Etc. Neither the Company
nor any of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company's officers has or is expected in the future to have a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a
party to any contract or agreement which in the judgment of the Company's
officers has or is expected to have a Material Adverse Effect.

                  l. Tax Status. Except as set forth on Schedule 3(l), the
Company and each of its Subsidiaries has made or filed all federal, state and
foreign income and all other tax returns, reports and declarations required by
any jurisdiction to which it is subject (unless and only to the extent that the
Company and each of its Subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside on
its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the officers of the Company know of no
basis for any such claim. The Company has not executed a waiver with respect to
the statute of limitations relating to the assessment or collection of any
foreign, federal, state or local tax. Except as set forth on Schedule 3(l), none
of the Company's tax returns is presently being audited by any taxing authority.

                  m. Certain Transactions. Except as set forth on Schedule 3(m)
and except for arm's length transactions pursuant to which the Company or any of
its Subsidiaries makes payments in the ordinary course of business upon terms no
less favorable than the Company or any of its Subsidiaries could obtain from
third parties and other than the grant of stock options disclosed on Schedule
3(c), none of the officers, directors, or employees of the Company is presently
a party to any transaction with the Company or any of its Subsidiaries (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.

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                  n. Disclosure. All information relating to or concerning the
Company or any of its Subsidiaries set forth in this Agreement and provided to
the Buyers pursuant to Section 2(d) hereof and otherwise in connection with the
transactions contemplated hereby is true and correct in all material respects
and the Company has not omitted to state any material fact necessary in order to
make the statements made herein or therein, in light of the circumstances under
which they were made, not misleading. No event or circumstance has occurred or
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, prospects, operations or financial conditions, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed (assuming for this purpose that the Company's reports filed under the
1934 Act are being incorporated into an effective registration statement filed
by the Company under the 1933 Act).

                  o. Acknowledgment Regarding Buyers' Purchase of Securities.
The Company acknowledges and agrees that the Buyers are acting solely in the
capacity of arm's length purchasers with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that no Buyer
is acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any statement made by any Buyer or any of their respective
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is not advice or a recommendation and is merely incidental
to the Buyers' purchase of the Securities. The Company further represents to
each Buyer that the Company's decision to enter into this Agreement has been
based solely on the independent evaluation of the Company and its
representatives.

                  p. No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales in any security or solicited any offers to
buy any security under circumstances that would require registration under the
1933 Act of the issuance of the Securities to the Buyers. The issuance of the
Securities to the Buyers will not be integrated with any other issuance of the
Company's securities (past, current or future) for purposes of any shareholder
approval provisions applicable to the Company or its securities.

                  q. No Brokers. Except as set forth in Schedule 3(q), the
Company has taken no action which would give rise to any claim by any person for
brokerage commissions, transaction fees or similar payments relating to this
Agreement or the transactions contemplated hereby.

                                       10
<PAGE>

                  r. Permits; Compliance. The Company and each of its
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates,
approvals and orders necessary to own, lease and operate its properties and to
carry on its business as it is now being conducted (collectively, the "Company
Permits"), and there is no action pending or, to the knowledge of the Company,
threatened regarding suspension or cancellation of any of the Company Permits.
Neither the Company nor any of its Subsidiaries is in conflict with, or in
default or violation of, any of the Company Permits, except for any such
conflicts, defaults or violations which, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect. Since December 31,
2005, neither the Company nor any of its Subsidiaries has received any
notification with respect to possible conflicts, defaults or violations of
applicable laws, except for notices relating to possible conflicts, defaults or
violations, which conflicts, defaults or violations would not have a Material
Adverse Effect.

                  s. Environmental Matters.

                        (i) Except as set forth in Schedule 3(s), there
are, to the best of the Company's knowledge, with respect to the Company or any
of its Subsidiaries or any predecessor of the Company, no past or present
violations of Environmental Laws (as defined below), releases of any material
into the environment, actions, activities, circumstances, conditions, events,
incidents, or contractual obligations which may give rise to any common law
environmental liability or any liability under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 or similar federal, state,
local or foreign laws and neither the Company nor any of its Subsidiaries has
received any notice with respect to any of the foregoing, nor is any action
pending or, to the Company's knowledge, threatened in connection with any of the
foregoing. The term "Environmental Laws" means all federal, state, local or
foreign laws relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants contaminants, or toxic or hazardous substances or wastes
(collectively, "Hazardous Materials") into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.

                        (ii) Other than those that are or were stored, used
or disposed of in compliance with applicable law, no Hazardous Materials are
contained on or about any real property currently owned, leased or used by the
Company or any of its Subsidiaries, and no Hazardous Materials were released on
or about any real property previously owned, leased or used by the Company or
any of its Subsidiaries during the period the property was owned, leased or used
by the Company or any of its Subsidiaries, except in the normal course of the
Company's or any of its Subsidiaries' business.

                        (iii) Except as set forth in Schedule 3(s), to the
best of the Company's knowledge there are no underground storage tanks on or
under any real property owned, leased or used by the Company or any of its
Subsidiaries that are not in compliance with applicable law.

                                       11
<PAGE>

                  t. Title to Property. The Company and its Subsidiaries have
good and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is material to the
business of the Company and its Subsidiaries, in each case free and clear of all
liens, encumbrances and defects except such as are described in Schedule 3(t) or
such as would not have a Material Adverse Effect. Any real property and
facilities held under lease by the Company and its Subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as would not
have a Material Adverse Effect.

                  u. Insurance. The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.

                  v. Internal Accounting Controls. The Company and each of its
Subsidiaries maintain a system of internal accounting controls sufficient, in
the judgment of the Company's board of directors, to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.

                  w. Foreign Corrupt Practices. Neither the Company, nor any of
its Subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any Subsidiary has, in the course of his
actions for, or on behalf of, the Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.

                  x. Solvency. The Company (after giving effect to the
transactions contemplated by this Agreement) is solvent (i.e., its assets have a
fair market value in excess of the amount required to pay its probable
liabilities on its existing debts as they become absolute and matured) and
currently the Company has no information that would lead it to reasonably
conclude that the Company would not, after giving effect to the transaction
contemplated by this Agreement, have the ability to, nor does it intend to take
any action that would impair its ability to, pay its debts from time to time
incurred in connection therewith as such debts mature.

                                       12
<PAGE>

                  y. No Investment Company. The Company is not, and upon the
issuance and sale of the Securities as contemplated by this Agreement will not
be an "investment company" required to be registered under the Investment
Company Act of 1940 (an "Investment Company"). The Company is not controlled by
an Investment Company.

                  z. Certain Registration Matters. Assuming the accuracy of the
Buyers' representations and warranties set forth in Section 3, no registration
under the Securities Act is required for the offer and sale of the Conversion
Shares and Warrant Shares by the Company to the Buyers under the transaction
documents. Except as specified in Schedule 3(z), the Company has not granted or
agreed to grant to any Person any rights (including "piggy-back" registration
rights) to have any securities of the Company registered with the Commission or
any other governmental authority that have not been satisfied.

                  aa. Breach of Representations and Warranties by the Company.
If the Company materially breaches any of the representations or warranties set
forth in this Section 3, and in addition to any other remedies available to the
Buyers pursuant to this Agreement, the Company shall pay to the Buyer the
Standard Liquidated Damages Amount in cash or in shares of Common Stock at the
option of the Company, until such breach is cured. If the Company elects to pay
the Standard Liquidated Damages Amounts in shares of Common Stock, such shares
shall be issued at the Conversion Price at the time of payment.

      4. COVENANTS.

                  a. Best Efforts. The parties shall use their best efforts to
satisfy timely each of the conditions described in Section 6 and 7 of this
Agreement.

                  b. Form D; Blue Sky Laws. The Company agrees to file a Form D
with respect to the Securities as required under Regulation D and to provide a
copy thereof to each Buyer promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for sale to the Buyers at the
applicable closing pursuant to this Agreement under applicable securities or
"blue sky" laws of the states of the United States (or to obtain an exemption
from such qualification), and shall provide evidence of any such action so taken
to each Buyer on or prior to the Closing Date; provided, however, that the
Company shall not be required in connection therewith or as a condition thereto
to (a) qualify to do business in any jurisdiction where it would not otherwise
be required to qualify but for this Section 4(b), (b) subject itself to general
taxation in any such jurisdiction, (c) file a general consent to service of
process in any such jurisdiction, (d) provide any undertakings that cause the
Company undue expense or burden, or (e) make any change in its charter or
bylaws, which in each case the Board of Directors of the Company determines to
be contrary to the best interests of the Company and its shareholders.

                  c. Reporting Status; Eligibility to Use Form S-3, SB-2 or Form
S-1. The Company's Common Stock is registered under Section 12(g) of the 1934
Act. The Company represents and warrants that it meets the requirements for the
use of Form SB-2 (or if the Company is not eligible for the use of Form SB-2 as
of the Filing Date (as defined in the Registration Rights Agreement), the
Company may use the form of registration for which it is eligible at that time)
for registration of the sale by the Buyer of the Registrable Securities (as
defined in the Registration Rights Agreement). So long as the Buyer beneficially
owns any of the Securities, the Company shall timely file all reports required
to be filed with the SEC pursuant to the 1934 Act, and the Company shall not
terminate its status as an issuer required to file reports under the 1934 Act
even if the 1934 Act or the rules and regulations thereunder would permit such
termination. The Company further agrees to file all reports required to be filed
by the Company with the SEC in a timely manner so as to become eligible, and
thereafter to maintain its eligibility, for the use of Form SB-2. The Company
shall issue a press release describing the material terms of the transaction
contemplated hereby as soon as practicable following the Closing Date but in no
event more than two (2) business days of the Closing Date, which press release
shall be subject to prior review by the Buyers. The Company agrees that such
press release shall not disclose the name of the Buyers unless expressly
consented to in writing by the Buyers or unless required by applicable law or
regulation, and then only to the extent of such requirement.

                                       13
<PAGE>

                  d. Use of Proceeds. The Company shall use the net proceeds
from the sale of the Notes and the Warrants in the manner set forth in Schedule
4(d) attached hereto and made a part hereof and shall not, directly or
indirectly, use such proceeds for (i) any loan to or investment in any other
corporation, partnership, enterprise or other person (except in connection with
its currently existing direct or indirect Subsidiaries); (ii) the satisfaction
of any portion of the Company's debt (other than payment of trade payables and
accrued expenses in the ordinary course of the Company's business and consistent
with prior past practices), or (iii) the redemption of any Common Stock.

                  e. Future Offerings. Subject to the exceptions described
below, the Company will not, without the prior written consent of a
majority-in-interest of the Buyers, which consent shall not be unreasonably
withheld, negotiate or contract with any party to obtain additional equity
financing (including debt financing with an equity component) that involves (A)
the issuance of Common Stock for cash at a discount to the market price of the
Common Stock on the date of issuance (taking into account the value of any
warrants or options to acquire Common Stock issued in connection therewith) or
(B) the issuance of convertible securities that are convertible into an
indeterminate number of shares of Common Stock or (C) the issuance of warrants
during the period (the "Lock-up Period") beginning on the Closing Date and
ending on the later of (i) two hundred seventy (270) days from the Closing Date
and (ii) one hundred eighty (180) days from the date the Registration Statement
(as defined in the Registration Rights Agreement) is declared effective (plus
any days in which sales cannot be made thereunder). In addition, subject to the
exceptions described below, the Company will not conduct any equity financing
(including debt with an equity component) ("Future Offerings") during the period
beginning on the Closing Date and ending two (2) years after the end of the
Lock-up Period unless it shall have first delivered to each Buyer, at least
twenty (20) business days prior to the closing of such Future Offering, written
notice describing the proposed Future Offering, including the terms and
conditions thereof and proposed definitive documentation to be entered into in
connection therewith, and providing each Buyer an option during the fifteen (15)
day period following delivery of such notice to purchase its pro rata share
(based on the ratio that the aggregate principal amount of Notes purchased by it
hereunder bears to the aggregate principal amount of Notes purchased hereunder)
of the securities being offered in the Future Offering on the same terms as
contemplated by such Future Offering (the limitations referred to in this
sentence and the preceding sentence are collectively referred to as the "Capital
Raising Limitations"). In the event the terms and conditions of a proposed
Future Offering are amended in any respect after delivery of the notice to the
Buyers concerning the proposed Future Offering, the Company shall deliver a new
notice to each Buyer describing the amended terms and conditions of the proposed
Future Offering and each Buyer thereafter shall have an option during the
fifteen (15) day period following delivery of such new notice to purchase its
pro rata share of the securities being offered on the same terms as contemplated
by such proposed Future Offering, as amended. The foregoing sentence shall apply
to successive amendments to the terms and conditions of any proposed Future
Offering. The Capital Raising Limitations shall not apply to any transaction
involving (i) issuances of securities in a firm commitment underwritten public
offering (excluding a continuous offering pursuant to Rule 415 under the 1933
Act, an equity line of credit or similar financing arrangement) resulting in net
proceeds to the Company of in excess of $1,500,000, or (ii) issuances of
securities as consideration for a merger, consolidation or purchase of assets,
or in connection with any strategic partnership or joint venture (the primary
purpose of which is not to raise equity capital), or in connection with the
disposition or acquisition of a business, product or license by the Company. The
Capital Raising Limitations also shall not apply to the issuance of securities
upon exercise or conversion of the Company's options, warrants or other
convertible securities outstanding as of the date hereof or to the grant of
additional options or warrants, or the issuance of additional securities, under
any Company stock option or restricted stock plan approved by the shareholders
of the Company.

                                       14
<PAGE>

                  f. Expenses. At the Closing, the Company shall reimburse
Buyers for expenses incurred by them in connection with the negotiation,
preparation, execution, delivery and performance of this Agreement and the other
agreements to be executed in connection herewith ("Documents"), including,
without limitation, attorneys' and consultants' fees and expenses, transfer
agent fees, fees for stock quotation services, fees relating to any amendments
or modifications of the Documents or any consents or waivers of provisions in
the Documents, fees for the preparation of opinions of counsel, escrow fees, and
costs of restructuring the transactions contemplated by the Documents. When
possible, the Company must pay these fees directly, otherwise the Company must
make immediate payment for reimbursement to the Buyers for all fees and expenses
immediately upon written notice by the Buyer or the submission of an invoice by
the Buyer. Notwithstanding anything herein to the contrary, the Company's
obligation to reimburse Buyers' expenses shall not exceed $50,000 in the
aggregate.

                  g. Financial Information. The Company agrees to send the
following reports to each Buyer until such Buyer transfers, assigns, or sells
all of the Securities: (i) within ten (10) days after the filing with the SEC, a
copy of its Annual Report on Form 10-KSB its Quarterly Reports on Form 10-QSB
and any Current Reports on Form 8-K; (ii) within one (1) day after release,
copies of all press releases issued by the Company or any of its Subsidiaries;
and (iii) contemporaneously with the making available or giving to the
shareholders of the Company, copies of any notices or other information the
Company makes available or gives to such shareholders.

                                       15
<PAGE>

                  h. Authorization and Reservation of Shares. Subject to
Stockholder Approval, the Company shall at all times have authorized, and
reserved for the purpose of issuance, a sufficient number of shares of Common
Stock to provide for the full conversion or exercise of the outstanding Notes
and Warrants and issuance of the Conversion Shares and Warrant Shares in
connection therewith (based on the Conversion Price of the Notes or Exercise
Price of the Warrants in effect from time to time) and as otherwise required by
the Notes. The Company shall not reduce the number of shares of Common Stock
reserved for issuance upon conversion of Notes and exercise of the Warrants
without the consent of each Buyer. The Company shall at all times maintain the
number of shares of Common Stock so reserved for issuance at an amount
("Reserved Amount") equal to no less than two (2) times the number that is then
actually issuable upon full conversion of the Notes and Additional Notes and
upon exercise of the Warrants and the Additional Warrants (based on the
Conversion Price of the Notes or the Exercise Price of the Warrants in effect
from time to time). If at any time the number of shares of Common Stock
authorized and reserved for issuance ("Authorized and Reserved Shares") is below
the Reserved Amount, the Company will promptly take all corporate action
necessary to authorize and reserve a sufficient number of shares, including,
without limitation, calling a special meeting of shareholders to authorize
additional shares to meet the Company's obligations under this Section 4(h), in
the case of an insufficient number of authorized shares, obtain shareholder
approval of an increase in such authorized number of shares, and voting the
management shares of the Company in favor of an increase in the authorized
shares of the Company to ensure that the number of authorized shares is
sufficient to meet the Reserved Amount. If the Company fails to obtain such
shareholder approval within thirty (30) days following the date on which the
number of Reserved Amount exceeds the Authorized and Reserved Shares, the
Company shall pay to the Borrower the Standard Liquidated Damages Amount, in
cash or in shares of Common Stock at the option of the Company. If the Company
elects to pay the Standard Liquidated Damages Amount in shares of Common Stock,
such shares shall be issued at the Conversion Price at the time of payment. In
order to ensure that the Company has authorized a sufficient amount of shares to
meet the Reserved Amount at all times, the Company must deliver to the Buyer at
the end of every month a list detailing (1) the current amount of shares
authorized by the Company and reserved for the Buyer; and (2) amount of shares
issuable upon conversion of the Notes and upon exercise of the Warrants and as
payment of interest accrued on the Notes for one year. If the Company fails to
provide such list within ten (10) business days of the end of each month, the
Company shall pay the Standard Liquidated Damages Amount, in cash or in shares
of Common Stock at the option of the Company, until the list is delivered. If
the Company elects to pay the Standard Liquidated Damages Amount in shares of
Common Stock, such shares shall be issued at the Conversion Price at the time of
payment.

                  i. Listing. The Company shall promptly secure the listing of
the Conversion Shares and Warrant Shares upon each national securities exchange
or automated quotation system, if any, upon which shares of Common Stock are
then listed (subject to official notice of issuance) and, so long as any Buyer
owns any of the Securities, shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all Conversion Shares and
Warrant Shares from time to time issuable upon conversion of the Notes or
exercise of the Warrants. The Company will obtain and, so long as any Buyer owns
any of the Securities, maintain the listing and trading of its Common Stock on
the OTCBB or any equivalent replacement exchange, the Nasdaq National Market
("Nasdaq"), the Nasdaq SmallCap Market ("Nasdaq SmallCap"), the New York Stock
Exchange ("NYSE"), or the American Stock Exchange ("AMEX") and will comply in
all respects with the Company's reporting, filing and other obligations under
the bylaws or rules of the National Association of Securities Dealers ("NASD")
and such exchanges, as applicable. The Company shall promptly provide to each
Buyer copies of any notices it receives from the OTCBB and any other exchanges
or quotation systems on which the Common Stock is then listed regarding the
continued eligibility of the Common Stock for listing on such exchanges and
quotation systems.

                                       16
<PAGE>

                  j. Corporate Existence. So long as a Buyer beneficially owns
any Notes or Warrants, the Company shall maintain its corporate existence and
shall not sell all or substantially all of the Company's assets, except in the
event of a merger or consolidation or sale of all or substantially all of the
Company's assets, where the surviving or successor entity in such transaction
(i) assumes the Company's obligations hereunder and under the agreements and
instruments entered into in connection herewith and (ii) is a publicly traded
corporation whose Common Stock is listed for trading on the OTCBB, Nasdaq,
Nasdaq SmallCap, NYSE or AMEX.

                  k. No Integration. The Company shall not make any offers or
sales of any security (other than the Securities) under circumstances that would
require registration of the Securities being offered or sold hereunder under the
1933 Act or cause the offering of the Securities to be integrated with any other
offering of securities by the Company for the purpose of any stockholder
approval provision applicable to the Company or its securities.

                  l. Restriction on Short Sales. The Buyers agree that, so long
as any of the Notes remain outstanding, but in no event less than two (2) years
from the date hereof, the Buyers will not enter into or effect any "short sales"
(as such term is defined in Rule 3b-3 of the 1934 Act) of the Common Stock or
hedging transaction which establishes a net short position with respect to the
Common Stock.

                  m. Breach of Covenants. If the Company breaches any of the
covenants set forth in this Section 4, and in addition to any other remedies
available to the Buyers pursuant to this Agreement, the Company shall pay to the
Buyers the Standard Liquidated Damages Amount, in cash or in shares of Common
Stock at the option of the Company, until such breach is cured. If the Company
elects to pay the Standard Liquidated Damages Amount in shares, such shares
shall be issued at the Conversion Price at the time of payment.

                                       17
<PAGE>

      5. TRANSFER AGENT INSTRUCTIONS. The Company shall issue irrevocable
instructions to its transfer agent to issue certificates, registered in the name
of each Buyer or its nominee, for the Conversion Shares and Warrant Shares in
such amounts as specified from time to time by each Buyer to the Company upon
conversion of the Notes or exercise of the Warrants in accordance with the terms
thereof (the "Irrevocable Transfer Agent Instructions"). Prior to registration
of the Conversion Shares and Warrant Shares under the 1933 Act or the date on
which the Conversion Shares and Warrant Shares 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, all such certificates shall bear the
restrictive legend specified in Section 2(g) of this Agreement. The Company
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5, and stop transfer instructions to
give effect to Section 2(f) hereof (in the case of the Conversion Shares and
Warrant Shares, prior to registration of the Conversion Shares and Warrant
Shares under the 1933 Act or the date on which the Conversion Shares and Warrant
Shares 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), will
be given by the Company to its transfer agent and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement and the Registration Rights Agreement.
Nothing in this Section shall affect in any way the Buyer's obligations and
agreement set forth in Section 2(g) hereof to comply with all applicable
prospectus delivery requirements, if any, upon re-sale of the Securities. If a
Buyer provides the Company with (i) an opinion of counsel reasonably acceptable
to the Company and its counsel in form, substance and scope customary for
opinions in comparable transactions, to the effect that a public sale or
transfer of such Securities may be made without registration under the 1933 Act
and such sale or transfer is effected or (ii) the Buyer provides reasonable
assurances that the Securities can be sold pursuant to Rule 144, the Company
shall permit the transfer, and, in the case of the Conversion Shares and Warrant
Shares, promptly instruct its transfer agent to issue one or more certificates,
free from restrictive legend, in such name and in such denominations as
specified by such Buyer. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Buyers, by vitiating
the intent and purpose of the transactions contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Section 5 may be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Section, that the
Buyers shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach and requiring immediate transfer, without the
necessity of showing economic loss and without any bond or other security being
required.

            6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of
the Company hereunder to issue and sell the Notes and Warrants to a Buyer at the
Closing is subject to the satisfaction, at or before the Closing Date of each of
the following conditions thereto, provided that these conditions are for the
Company's sole benefit and may be waived by the Company at any time in its sole
discretion:

                  a. The applicable Buyer shall have executed this Agreement and
the Registration Rights Agreement, and delivered the same to the Company.

                  b. The applicable Buyer shall have delivered the Purchase
Price in accordance with Section 1(b) above.

                  c. The representations and warranties of the applicable Buyer
shall be true and correct in all material respects as of the date when made and
as of the Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date), and the applicable Buyer shall
have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the applicable Buyer at or prior to the Closing
Date.

                                       18
<PAGE>

                  d. No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.

            7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE. The obligation
of each Buyer hereunder to purchase the Notes and Warrants at the Closing is
subject to the satisfaction, at or before the Closing Date of each of the
following conditions, provided that these conditions are for such Buyer's sole
benefit and may be waived by such Buyer at any time in its sole discretion:

                  a. The Company shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to the Buyer.

                  b. The Company shall have delivered to such Buyer duly
executed Notes (in such denominations as the Buyer shall request) and Warrants
in accordance with Section 1(b) above.

                  c. The Irrevocable Transfer Agent Instructions, in form and
substance satisfactory to a majority-in-interest of the Buyers, shall have been
delivered to and acknowledged in writing by the Company's Transfer Agent.

                  d. The representations and warranties of the Company shall be
true and correct in all material respects as of the date when made and as of the
Closing Date as though made at such time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing Date. The Buyer shall
have received a certificate or certificates, executed by the chief executive
officer of the Company, dated as of the Closing Date, to the foregoing effect
and as to such other matters as may be reasonably requested by such Buyer
including, but not limited to certificates with respect to the Company's
Certificate of Incorporation, By-laws and Board of Directors' resolutions
relating to the transactions contemplated hereby.

                  e. No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.

                  f. No event shall have occurred which could reasonably be
expected to have a Material Adverse Effect on the Company.

                  g. The Conversion Shares and Warrant Shares shall have been
authorized for quotation on the OTCBB and trading in the Common Stock on the
OTCBB shall not have been suspended by the SEC or the OTCBB.

                                       19
<PAGE>

                  h. The Buyer shall have received an opinion of the Company's
counsel, dated as of the Closing Date, in form, scope and substance reasonably
satisfactory to the Buyer and in substantially the same form as Exhibit "D"
attached hereto.

                  i. The Buyer shall have received an officer's certificate
described in Section 3(c) above, dated as of the Closing Date.

      8. GOVERNING LAW; MISCELLANEOUS.

                  a. Governing Law. THIS AGREEMENT 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 PARTIES HERETO HEREBY SUBMIT
TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN NEW
YORK, NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT, 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 REGISTERED 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 AGREEMENT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING
REASONABLE ATTORNEYS' FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH
SUCH DISPUTE.

                  b. Counterparts; Signatures by Facsimile. This Agreement may
be executed in one or more counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same agreement and shall
become effective when counterparts have been signed by each party and delivered
to the other party. This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

                  c. Headings. The headings of this Agreement are for
convenience of reference only and shall not form part of, or affect the
interpretation of, this Agreement.

                  d. Severability. In the event that any provision of this
Agreement is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any provision hereof which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
hereof.

                                       20
<PAGE>

                  e. Entire Agreement; Amendments. This Agreement and the
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Buyer
makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by
an instrument in writing signed by the party to be charged with enforcement.

                  f. Notices. Any notices required or permitted to be given
under the terms of this Agreement shall be sent by certified or registered mail
(return receipt requested) or delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile and shall be effective
five days after being placed in the mail, if mailed by regular United States
mail, or upon receipt, if delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile, in each case addressed
to a party. The addresses for such communications shall be:

                  If to the Company:

                  Advanced Biophotonics Inc.
                  125 Wilbur Place, Suite 120
                  Bohemia, NY 11716
                  Attention: Chief Executive Officer
                  Telephone:  (631) 543-3655
                  Facsimile: (631) 244-7960

                  With a copy to:

                  Sichenzia Ross Friedman Ference LLP
                  1065 Avenue of the Americas
                  New York, NY  10018
                       Attention: Gregory Sichenzia, Esq.
                  Telephone:  (212) 930-9700
                  Facsimile:   (212) 930-9725

      If to a Buyer: To the address set forth immediately below such Buyer's
name on the signature pages hereto.

                                       21
<PAGE>

                  With copy to:

                        Ballard Spahr Andrews & Ingersoll, LLP
                        1735 Market Street
                        51st Floor
                        Philadelphia, Pennsylvania  19103
                        Attention:  Gerald J. Guarcini, Esq.
                        Telephone:  215-864-8625
                        Facsimile:  215-864-8999

      Each party shall provide notice to the other party of any change in
address.

                  g. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and assigns.
Neither the Company nor any Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other.
Notwithstanding the foregoing, subject to Section 2(f), any Buyer may assign its
rights hereunder to any person that purchases Securities in a private
transaction from a Buyer or to any of its "affiliates," as that term is defined
under the 1934 Act, without the consent of the Company.

                  h. Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

                  i. Survival. The representations and warranties of the Company
and the agreements and covenants set forth in Sections 3, 4, 5 and 8 shall
survive the closing hereunder notwithstanding any due diligence investigation
conducted by or on behalf of the Buyers. The Company agrees to indemnify and
hold harmless each of the Buyers and all their officers, directors, employees
and agents for loss or damage arising as a result of or related to any breach or
alleged breach by the Company of any of its representations, warranties and
covenants set forth in Sections 3 and 4 hereof or any of its covenants and
obligations under this Agreement or the Registration Rights Agreement, including
advancement of expenses as they are incurred.

                  j. Publicity. The Company and each of the Buyers shall have
the right to review a reasonable period of time before issuance of any press
releases, SEC, OTCBB or NASD filings, or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of each of the Buyers, to
make any press release or SEC, OTCBB (or other applicable trading market) or
NASD filings with respect to such transactions as is required by applicable law
and regulations (although each of the Buyers shall be consulted by the Company
in connection with any such press release prior to its release and shall be
provided with a copy thereof and be given an opportunity to comment thereon).

                  k. Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

                                       22
<PAGE>

                  l. No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.

                  m. Remedies. The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the Buyers by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Agreement will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Agreement, that the
Buyers 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 Agreement
and to enforce specifically the terms and provisions hereof, without the
necessity of showing economic loss and without any bond or other security being
required.

                                       23
<PAGE>

                                  SCHEDULE 3(c)

Anti Dilution as of September 1, 2006 - without the NIR transaction

Extracted from the 10QSB - 6/30/06

On December 14, 2004, we completed a private placement of 1,550,000 shares of
its Series A convertible preferred stock and issued, for no additional
consideration, to the investors in the private placement, five year warrants to
purchase 465,000 shares of our common stock at an exercise price of $1.10 per
share which expire December 14, 2009. We received gross proceeds of $1,550,000
in the private placement. As a result of anti-dilution provisions relating to
the series A convertible preferred stock and the warrants that were triggered by
the subscription rights offering the warrant exercise price was reduced to $0.50
per share. At July 25, 2006 every 1 share of series A preferred stock held can
be converted into 2.94 shares of common stock for a total of 5,443,184 shares of
common stock. On October 28, 2005, as anti-dilution protection to each investor
in the December 2004 Private Placement, we issued additional five year warrants
to purchase 1,550,000 shares of our common stock with an exercise price of $0.75
per share which will expire on August 9, 2010. We could receive an additional
$1,395,000 if all of the warrants issued to the Series A stockholders are
exercised though there is no assurance these warrants will be exercised. Holders
of the Series A convertible preferred stock are entitled to receive a cumulative
dividend of 4% per annum, payable either in cash or, at our option, additional
shares of series A convertible preferred stock. On January 3, 2006, we issued
301,423 shares of series A convertible preferred stocks as in-kind dividends to
the holders of series A preferred stock on the dividend record date of December
15, 2005. We inadvertently issued an additional 183,628 series A preferred
dividend shares in lieu of cash dividends than the holders were required to
receive. We intend to send a notice letter to the holders requesting the
shareholders return the certificates and thereafter we will issue an aggregate
of 117,795 series A preferred dividend shares.

                                       24
<PAGE>

On August 10, 2005, we consummated a subscription rights offering to our
existing stockholders. We distributed to holders of our common stock
transferable subscription rights to purchase shares of our newly-created series
B convertible preferred stock. We issued the subscription rights at the current
rate of one right for approximately 4.33 shares of our common stock held on the
record date of July 1, 2005, which represents the ratio of subscription rights
to total common shares outstanding of 30,281,107 on the record date. Each
subscription right represented the right to purchase one share of newly-created
series B preferred stock. Stockholders that purchased shares of our series B
preferred stock in the rights offering were issued, for no additional
consideration, five-year warrants to purchase that number of shares of our
common stock equal to 50% of the number of shares of series B preferred stock
acquired by the stockholder in the offering. The warrants have an exercise price
of $0.75 per share. At the closing of the subscription rights offering on August
10, 2005,we received gross proceeds of $703,933, issued 1,407,867 shares of
series B convertible preferred stock and 703,934 five-year warrants to purchase
703,934 shares of common stock. The warrants have an exercise price of $0.75 per
share. And will expire August 10, 2010. Holders of the series B convertible
preferred stock are entitled to receive a cumulative dividend of 7% per annum,
payable either in cash or, at our option, additional shares of series B
convertible preferred stock. As of July 25, 2006, every 1 share of series B
preferred stock converts into 1.47 shares of common stock for a total of
1,960,145 shares of common stock. As of June 30, 2006, 150,902 shares of series
B convertible stock were converted into 165,034 shares of our common stock. On
January 3, 2006, we issued 76,467 shares of series B convertible preferred stock
as in-kind dividends in to the holders of series B preferred stock on the
dividend record date of December 15, 2005. We inadvertently issued an additional
16,701 series B preferred dividend shares in lieu of cash dividends than the
holders were required to receive. We intend to send a notice letter to the
holders requesting the shareholders return the certificates and thereafter we
will issue an aggregate of 59,766 series B preferred dividend shares. We could
receive an additional $527,950 if all of the warrants issued in the subscription
rights offering are exercised. There can be no assurance as to how many warrants
will be exercised. We incurred legal and accounting fees in connection with the
rights offering totaling approximately $212,000.

                                       25
<PAGE>

                                  SCHEDULE 3(f)

Authorizations or Consents Necessary

None.

                                       26
<PAGE>

                                  SCHEDULE 3(g)

SEC Filings that Haven't Been Filed in a Timely Manner

None.

                                       27
<PAGE>

                                  SCHEDULE 3(h)

Material Adverse Changes to Assets, Liabilities or Operations

None.

                                       28
<PAGE>

                                  SCHEDULE 3(i)

Litigations

None.

                                       29
<PAGE>

                                  SCHEDULE 3(j)

Infringement Claim against the Company's Technology needed to Operate the
Business

None.

                                       30
<PAGE>

                                  SCHEDULE 3(l)

Delinquent Tax Filings or Returns Currently being Audited

None.

                                       31
<PAGE>

                                  SCHEDULE 3(m)

Related Party Transactions

(Extracted from current SB2 filing)

Among the purchasers of the Company's series A convertible preferred stock were
Jed Schutz and Joseph T. Casey, each of whom is a director of the Company. Mr.
Schutz purchased 250,000 shares of series A convertible preferred stock for a
purchase price of $250,000, and was issued warrants to purchase 75,000 shares of
common stock. Mr. Casey purchased 250,000 shares of series A convertible
preferred stock for a purchase price of $250,000, and was issued warrants to
purchase 75,000 shares of common stock. A former director, George Benedict
invested $100,000 and received 100,000 shares of series A convertible preferred
stock and warrants to purchase 30,000 shares of common stock at an exercise
price of $0.50. Mr. Benedict resigned from our board effective December 31,
2005. The purchase price of the shares was determined with reference to the then
current market price of the Company's common stock. In October 2005, each
investor in the December 2004 private placement, as anti dilution protection,
received additional five year warrants to purchase the Company's common stock at
an exercise price of $0.75 per share which if unexercised will expire on August
9, 2010. Mr. Schutz and Mr. Casey each received 250,000 additional warrants. Mr.
Benedict received 100,000 additional warrants.

Among the purchasers of the Company's series B convertible preferred stock were
Jed Schutz, Joseph T. Casey,Dr. Michael Davis, each of whom is a director of the
Company and former director George Benedict. Mr. Schutz and Mr. Benedict each
purchased 100,000 shares of series B convertible preferred stock for a purchase
price of $50,000, and issued warrants to purchase 50,000 shares of common stock.
Mr. Casey purchased 150,000 shares of series B convertible preferred stock for a
purchase price of $75,000, and was issued warrants to purchase 75,000 shares of
common stock. Dr. Davis purchased 10,000 shares of series B convertible
preferred stock for a purchase price of $5,000, and was issued warrants to
purchase 5,000 shares of common stock.

On January 3, 2006, we issued shares of our series A and series B convertible
preferred stock as dividends in-kind to the holders of our series A and B
convertible preferred stock. Dividends were payable to holders of record as they
appear in the stockholder records of our company at the close of business on the
applicable record date, which was December 15, 2005. Joseph Casey, as co-trustee
for the Casey Living Trust, and Jed Schutz each received 48,616 shares of series
A convertible preferred stock as dividends. Our former director, George Benedict
received 19,447 shares of series A convertible preferred stock as dividends.
Joseph Casey, as co-trustee for the Casey Living Trust was issued 8,869 shares
of series B preferred stock as dividends. Jed Schutz and George Benedict each
received 5,913 shares and Michael Davis received 591 shares of series B
preferred stock as dividends.

On March 9, 2005, in settlement of an arbitration proceeding arising from the
December 13, 2004 termination of his employment agreement as President and Chief
Executive Officer, the Company entered into a consulting agreement with Mark A.
Fauci, a member of our board of directors. The agreement, which terminates Mr.
Fauci's previous employment with the Company, provides that Mr. Fauci will
perform consulting services for the Company for a retroactive two-year period in
exchange for consulting fees of $200,000 per year during the term of the
agreement which expires December 2006. Mr. Fauci will be nominated at the next
two annual meetings of stockholders to continue as a board member. The agreement
also provides for a three-year payout schedule of the obligation to pay Mr.
Fauci's deferred accrued salary under his previous employment agreement, in the
amount of $625,000. Those payments commenced on October 1, 2005. This amount is
payable at the rate of $10,000 per month for the initial 12 months and $20,000
per month thereafter.

                                       32
<PAGE>

Under a Guaranty and Pledge Agreement entered into on November 14, 2005, the
Company's President and Chief Executive Officer, agreed (i) to unconditionally
guarantee the timely and full satisfaction of all obligations, whether matured
or unmatured, now or hereafter existing or created and becoming due and payable
to the Purchasers , their successors, endorsees, transferees or assigns under
the Securities Purchase Agreement and other transaction documents to the extent
of 2,677,000 shares of the Company's common stock issued in the Company's name,
and (ii) to grant to ,their successors, endorsees, transferees or assigns a
security interest in the 2,677,000 shares, as collateral security for such
obligations.

During 2005, Dr. Michael Davis, the Chairperson of the Executive Committee of
the Board of Directors was compensated $95,000 for his service in this role to
the Company. By unanimous consent of the Board of Directors on December 13,
2005, the Executive Committee was disbanded effective December 31, 2005 in
keeping with the long term strategic plan to reorganize and restructure our
Board. The Company offered Dr. Davis a new consulting contract in January 2006,
whereby he will provide medical and scientific expertise for the Company. Dr,
Davis will be compensated $5,000 per month for his consulting services. This
agreement was amended in May 2006. Dr. Davis' compensation will be reduced to
$2,500 per month during June, July and August 2006.

                                       33
<PAGE>

                                  SCHEDULE 3(q)

Finders' Fees and Commissions related to this Transaction

The Company entered into an Agreement with Axiom Capital Management, Inc.
("Axiom") on September 23, 2005, which was amended on November 8, 2005, whereby
the Company shall pay to Axiom: (i) an amount in cash equal to 6.5% of the
dollar value of any securities issued by the Company which are purchased by NIR;
and (ii) warrants to purchase a number of shares of common stock of the Company
as shall equal 8% of the number of shares sold in that Transaction. The number
of shares sold in that Transaction shall be computed by dividing the total
dollar investment by the Initial Market Price as defined by NIR (100% of the
volume weighed average price of the Company's common stock for the five days
immediately prior to closing). Warrants shall have a five year term from date of
issuance, exercise price equal to $0.65 per share, cashless exercise will be
permitted in the event there is not an effective registration statement.

                                       34
<PAGE>

                                  SCHEDULE 3(s)

Violations of Environmental Laws

None.

Hazardous Materials Used in Products

None.

Underground Storage Tanks on Owned or Leased Property

None.

                                       35
<PAGE>

                                  SCHEDULE 3(t)

Good and Marketable Title to Real and Personal Property

1.         Real Property No Real Property Owned.

2.   Personal Property

                                         9/30/2006       9/30/2006
                                           Balance     Accumulated     9/30/2006
                                            Assets    Depreciation     Net Asset
                                         ---------      ---------      ---------

Office Computers                            73,907         45,831         28,075

Capital Equipment                          886,540        743,703        142,837

Leasehold Improvements                      21,075          7,844         13,231

Furniture and Fixtures                      26,805         11,416         15,389
                                         ---------      ---------      ---------

                                         1,008,326        808,794        199,532
                                         =========      =========      =========

                                       36
<PAGE>

                                  SCHEDULE 3(z)

Rights Granted by Company to have Securities Registered which have not been
Registered

The Company entered into an Agreement (the "Agreement") with Axiom Capital
Management, Inc. ("Axiom") on September 23, 2005, whereby the Company was
required to pay Axiom: (i) an amount in cash equal to 8% of the dollar value of
any securities issued by the Company which are purchased by NIR; and (ii)
warrants to purchase a number of shares of common stock of the Company as shall
equal 8% of the number of shares sold in that Transaction. As a result of the
transaction between the Company and The NIR Group contemplated herein, this
Agreement was amended on November 8, 2005, whereby the Company shall pay to
Axiom and Axiom has agreed to accept: (i) an amount in cash equal to 6.5% of the
dollar value of any securities issued by the Company which are purchased by NIR;
and (ii) warrants to purchase a number of shares of common stock of the Company
as shall equal 8% of the number of shares sold in that Transaction. The number
of shares sold in that Transaction shall be computed by dividing the total
dollar investment by the Initial Market Price as defined by NIR (100% of the
volume weighed average price of the Company's common stock for the five days
immediately prior to closing). Warrants shall have a five year term from date of
issuance, exercise price equal to $0.65 per share, cashless exercise will be
permitted in the event there is not an effective registration statement. The fee
due to Axiom shall be payable to Axiom by the Company at closing of the
Transaction and dispersed from the closing escrow. As a result of this
Agreement, an aggregate of 1,081,112 shares of common stock issuable upon
exercise of a warrant held by Axiom Capital Management, Inc.

                                       37
<PAGE>

                                  SCHEDULE 4(d)

Use of Proceeds

The Company intends to use the proceeds from this transaction for
commercialization of the Company's product and to continue operations.

                                       38
<PAGE>

      IN WITNESS WHEREOF, the undersigned Buyers and the Company have caused
this Agreement to be duly executed as of the date first above written.

ADVANCED BIOPHOTONICS INC.

 /s/ Denis A. O'Connor
----------------------
Denis A. O'Connor
Chief Executive Officer

AJW PARTNERS, LLC
By:  SMS Group, LLC

 /s/ Corey S. Ribotsky
----------------------
Corey S. Ribotsky
Manager

RESIDENCE:  Delaware

ADDRESS:    1044 Northern Boulevard
            Suite 302
            Roslyn, New York  11576
            Facsimile:  (516) 739-7115
            Telephone:  (516) 739-7110

AGGREGATE SUBSCRIPTION AMOUNT:

      Aggregate Principal Amount of Notes:                        $________
      Number of Warrants:                                          ________
      Aggregate Purchase Price:                                   $________

                                       39
<PAGE>

AJW OFFSHORE, LTD.
By:  First Street Manager II, LLC

 /s/ Corey S. Ribotsky
----------------------
Corey S. Ribotsky
Manager

RESIDENCE: Cayman Islands

ADDRESS:    AJW Offshore, Ltd.
            P.O. Box 32021 SMB
            Grand Cayman, Cayman Island, B.W.I.

AGGREGATE SUBSCRIPTION AMOUNT:

      Aggregate Principal Amount of Notes:                        $________
      Number of Warrants:                                          ________
      Aggregate Purchase Price:                                   $________

                                       40
<PAGE>

AJW QUALIFIED PARTNERS, LLC
By:  AJW Manager, LLC

  /s/  Corey S. Ribotsky
  ----------------------
Corey S. Ribotsky
Manager

RESIDENCE:      New York

ADDRESS:    1044 Northern Boulevard
            Suite 302
            Roslyn, New York  11576
            Facsimile:  (516) 739-7115
            Telephone:  (516) 739-7110

AGGREGATE SUBSCRIPTION AMOUNT:

      Aggregate Principal Amount of Notes:                        $________
      Number of Warrants:                                          ________
      Aggregate Purchase Price:                                   $________

                                       41
<PAGE>

NEW MILLENNIUM CAPITAL PARTNERS II, LLC
By: First Street Manager II, LLP

 /s/ Corey S. Ribotsky
----------------------
Corey S. Ribotsky
Manager

RESIDENCE:  New York

ADDRESS:    1044 Northern Boulevard
            Suite 302
            Roslyn, New York  11576
            Facsimile:  (516) 739-7115
            Telephone:  (516) 739-7110

AGGREGATE SUBSCRIPTION AMOUNT:

      Aggregate Principal Amount of Notes:                        $________
      Number of Warrants:                                          ________
      Aggregate Purchase Price:                                   $________

                                       42THE  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

New York, New York
September 12, 2006                                                     $465,000

      FOR VALUE RECEIVED,  ADVANCED  BIOPHOTONICS  INC., a Delaware  corporation
(hereinafter called the "Borrower"),  hereby promises to pay to the order of AJW
OFFSHORE,  LTD. or registered  assigns (the  "Holder")  the sum of $465,000,  on
September  12, 2009 (the  "Maturity  Date"),  and to pay  interest on the unpaid
principal balance hereof at the rate of eight percent (8%) (the "Interest Rate")
per annum from  September 12, 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 $.3125 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  capitalized  term used herein,  and not otherwise
defined,  shall have the meaning  ascribed  thereto in that  certain  Securities
Purchase  Agreement,  dated September 12, 2006,  pursuant to which this Note was
originally issued (the "Purchase Agreement").

<PAGE>

      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 September 12, 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 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 September  12,  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.

                                       2
<PAGE>

      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 60.0%.

            (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.

                                       3
<PAGE>

      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.

      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:

                                       4
<PAGE>

            (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 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).

                                       5
<PAGE>

      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 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).

                                       6
<PAGE>

            (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 two
      (2)  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 $2,000 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
      additional  principal  amount  shall be  convertible  into Common Stock in
      accordance with the terms of this Note.

                                       7
<PAGE>

      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  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.

                                       8
<PAGE>

      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 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.

                                       9
<PAGE>

            (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 "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.

                                       10
<PAGE>

            (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 Trading Market  Limitations.  Unless permitted by the applicable rules
and regulations of the principal  securities market on which the Common Stock is
then listed or traded,  in no event shall the Borrower issue upon  conversion of
or otherwise  pursuant to this Note and the other Notes  issued  pursuant to the
Purchase  Agreement  more than the maximum number of shares of Common Stock that
the  Borrower  can issue  pursuant to any rule of the  principal  United  States
securities  market on which the Common Stock is then traded (the "Maximum  Share
Amount"),  which shall be 19.99% of the total shares  outstanding on the Closing
Date (as defined in the Purchase  Agreement),  subject to  equitable  adjustment
from time to time for  stock  splits,  stock  dividends,  combinations,  capital
reorganizations  and similar events relating to the Common Stock occurring after
the date  hereof.  Once the  Maximum  Share  Amount has been issued (the date of
which is  hereinafter  referred to as the  "Maximum  Conversion  Date"),  if the
Borrower fails to eliminate any  prohibitions  under applicable law or the rules
or  regulations of any stock  exchange,  interdealer  quotation  system or other
self-regulatory  organization  with jurisdiction over the Borrower or any of its
securities on the  Borrower's  ability to issue shares of Common Stock in excess
of the Maximum Share Amount (a "Trading Market  Prepayment  Event"),  in lieu of
any  further  right  to  convert  this  Note,  and in full  satisfaction  of the
Borrower's  obligations  under this Note,  the Borrower shall pay to the Holder,
within fifteen (15) business days of the Maximum  Conversion  Date (the "Trading
Market Prepayment  Date"), an amount equal to 130% times the sum of (a) the then
outstanding  principal  amount of this Note  immediately  following  the Maximum
Conversion  Date, plus (b) accrued and unpaid  interest on the unpaid  principal
amount of this Note to the  Trading  Market  Prepayment  Date,  plus (c) Default
Interest,  if any,  on the  amounts  referred to in clause (a) and/or (b) above,
plus  (d)  any  optional  amounts  that  may be  added  thereto  at the  Maximum
Conversion  Date by the Holder in  accordance  with the terms  hereof  (the then
outstanding  principal  amount of this Note  immediately  following  the Maximum
Conversion  Date, plus the amounts referred to in clauses (b), (c) and (d) above
shall collectively be referred to as the "Remaining  Convertible Amount").  With
respect to each Holder of Notes,  the Maximum  Share  Amount shall refer to such
Holder's pro rata share thereof determined in accordance with Section 4.8 below.
In the event that the sum of (x) the aggregate  number of shares of Common Stock
issued upon  conversion of this Note and the other Notes issued  pursuant to the
Purchase  Agreement plus (y) the aggregate number of shares of Common Stock that
remain issuable upon conversion of this Note and the other Notes issued pursuant
to the Purchase Agreement, represents at least one hundred percent (100%) of the
Maximum Share Amount (the  "Triggering  Event"),  the Borrower will use its best
efforts to seek and obtain Shareholder  Approval (or obtain such other relief as
will allow conversions  hereunder in excess of the Maximum Share Amount) as soon
as practicable  following the Triggering Event and before the Maximum Conversion
Date. As used herein,  "Shareholder Approval" means approval by the shareholders
of the Borrower to authorize the issuance of the full number of shares of Common
Stock which would be issuable upon full conversion of the then outstanding Notes
but for the Maximum Share Amount.

                                       11
<PAGE>

      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 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.

                                       12
<PAGE>

      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 $50,000.

      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;

                                       13
<PAGE>

      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 (for a period of at least sixty
(60) days, if such failure is solely as a result of the  circumstances  governed
by  Section  1.3 and the  Borrower  is using its best  efforts  to  authorize  a
sufficient  number of shares of Common Stock as soon as  practicable),  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 ten (10) days  after the  Borrower  shall have been
notified thereof in writing 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  thirty-five  (135) 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 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;

                                       14
<PAGE>

      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  $50,000,  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  Delisting 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; 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  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.

                                       15
<PAGE>

                           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 125 Wilbur
Place, Suite 120, Bohemia, NY 11716, facsimile number: (631) 244-7960.  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.

      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.

                                       16
<PAGE>

      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.

      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.

                                       17
<PAGE>

      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 (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.

                                       18
<PAGE>

                             ARTICLE V. CALL OPTION

      5.1 Call Option.  Notwithstanding  anything to the  contrary  contained in
this Article V, so long as (i) no Event of Default or Trading Market  Prepayment
Event shall have occurred and be continuing,  (ii) 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 (iii) the
Common Stock is trading at or below $.30 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) 125%
(for prepayments occurring within thirty (30) days of the Issue Date), (ii) 135%
for  prepayments  occurring  between  thirty-one (31) and sixty (60) days of the
Issue Date, or (iii) 145% (for  prepayments  occurring after the sixtieth (60th)
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  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 104% of the principal  amount hereof  divided by thirty-six  (36)
plus one month's  interest.  The term  "Initial  Market  Price" means shall mean
$.30.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       19
<PAGE>

            IN WITNESS WHEREOF, Borrower has caused this Note to be signed in
its name by its duly authorized officer this 12th day of September, 2006.

                                          ADVANCED BIOPHOTONICS INC.

                                          By: /s/ Denis A. O'Connor
                                              -----------------------
                                              Denis A. O'Connor
                                              Chief Executive Officer

                                       20
<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  Advanced   Biophotonics  Inc.,  a  Delaware
corporation  (the  "Borrower")  according to the  conditions of the  convertible
Notes of the Borrower  dated as of September 12, 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:____________________________________

                                       21
<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.

                                       22

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