Document:

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EXHIBIT 10.4

THIS NOTE AND THE SECURITIES  INTO WHICH THIS NOTE IS CONVERTIBLE  HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,  OR THE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR IN ANY OTHER  JURISDICTION.  THE SECURITIES
REPRESENTED HEREBY MAY NOT BE OFFERED,  SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE  REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES
LAWS UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THOSE LAWS.

                       CONVERTIBLE SECURED PROMISSORY NOTE
                       -----------------------------------

Date: March __, 2003                                                  $_________

         FOR VALUE RECEIVED, P-COM, INC., a corporation organized under the laws
of  the  State  of  Delaware   (hereinafter   called  the   "Borrower"   or  the
"Corporation"),  hereby promises to pay to the order of ____________________,  a
____________________, or its registered assigns (individually, the "Holder", and
collectively  with the  holders of all other  notes of same like and tenor,  the
"Holders"),  the sum of  _______________________($_________)  on March __,  2004
[First  Anniversary of Issue Date] (the "Scheduled  Maturity Date"),  and to pay
interest on the unpaid principal balance hereof at a rate determined as follows:
(a) during the period from the date hereof (the "Issue  Date")  until  September
__, 2003,  interest shall accrue at the rate of ten percent (10%) per annum, and
(b) thereafter,  interest shall accrue at the rate of thirteen percent (13%) per
annum (in each case, except as otherwise provided herein). Interest shall accrue
on the unpaid  principal  balance  hereof  from the Issue Date until the same is
paid, whether at maturity, or upon prepayment, repayment, or otherwise. Interest
shall  be  calculated  based on a 365 day year  and  shall  be  payable  in cash
quarterly in arrears on June __, 2003, September __, 2003, December __, 2003 and
the Scheduled  Maturity  Date. The principal  amount  hereof,  together with all
accrued and unpaid interest  thereon,  shall be due and payable on the Scheduled
Maturity  Date.  All  payments  of  principal  and  interest  (to the extent not
converted  in  accordance  with the  terms  hereof)  shall  be made in,  and all
references herein to monetary  denominations shall refer to, lawful money of the
United  States of America.  All  payments  shall be made at such  address as the
Holder  shall  have given or shall  hereafter  give to the  Borrower  by written
notice made in accordance with the provisions of this Note.

         The term "Note" and all references  thereto,  as used  throughout  this
instrument,  shall mean this  instrument  as  originally  executed,  or if later
amended or supplemented,  then as so amended or supplemented. This Note is being
issued by the  Borrower  along with  similar  convertible  notes  designated  as
Convertible  Secured Promissory Notes (the "Other Notes" and, together with this
Note, the "Notes") pursuant to that certain Securities Purchase Agreement, dated
as of the date hereof,  between the Borrower  and the  signatories  thereto (the
"Securities Purchase Agreement"). The obligations under the Notes are secured as
provided in a Security  Agreement,  dated as of the date hereof, by the Borrower

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in favor of the Holders of the Notes (the "Security Agreement").  The Notes, the
Securities  Purchase  Agreement,  the Security  Agreement,  the Warrants  issued
pursuant  to  the  Securities   Purchase  Agreement  (the  "Warrants")  and  the
Registration Rights Agreement, dated as of the date hereof, between the Borrower
and the parties thereto (the  "Registration  Rights Agreement") are collectively
referred to herein as the "Transaction Documents."

                                   ARTICLE I

                                   PREPAYMENT

         A. Mandatory Prepayment. Upon the occurrence of an Event of Default (as
defined  below),  this Note shall be prepaid by the Borrower in accordance  with
the provisions of Article V hereof.

         B. No Prepayment  Without Consent.  This Note may not be prepaid at the
option of Borrower without the prior written consent of the Holder.

                                   ARTICLE II

                               CERTAIN DEFINITIONS

         The following terms shall have the following meanings:

         A. "Authorized  Stock Approval" means the approval of the Corporation's
stockholders  of  the  increase  in  the  number  of  authorized  shares  of the
Corporation's  Common Stock to a number sufficient to provide for the conversion
of all of the Notes.

         B.  "Closing Bid Price"  means,  for any  security as of any date,  the
closing bid price of such  security on the principal  United  States  securities
exchange or trading  market where such  security is listed or traded as reported
by Bloomberg  Financial  Markets (or a comparable  reporting service of national
reputation selected by the Corporation and reasonably acceptable to holders of a
majority of the aggregate  principal amount and accrued interest  represented by
the then outstanding Notes ("Majority  Holders") if Bloomberg  Financial Markets
is not then  reporting  closing  bid  prices  of such  security)  (in any  case,
"Bloomberg"), or if the foregoing does not apply, the last reported bid price of
such security in the OTC Bulletin Board (the "Bulletin Board") for such security
as reported by  Bloomberg,  or, if no bid price is reported for such security by
Bloomberg,  the average of the bid prices of any market makers for such security
as reported  in the "pink  sheets" by the Pink Sheets LLC, in each case for such
date or,  if such  date was not a trading  date for such  security,  on the next
preceding  date which was a trading  date.  If the Closing  Bid Price  cannot be
calculated  for such security as of either of such dates on any of the foregoing
bases,  the  Closing  Bid Price of such  security on such date shall be the fair
market value as reasonably  determined by an investment banking firm selected by
the  Corporation  and reasonably  acceptable to the Majority  Holders,  with the
costs of such appraisal to be borne by the Corporation.

                                      -2-
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         C. "Common Stock" means the common stock of the Corporation,  par value
$0.0001 per share.

         D. "Common Stock Equivalent" means (A) any security  convertible,  with
or without  consideration,  into any Common Stock (including any option, warrant
or other right to subscribe for or purchase  such a security),  (B) any security
carrying  any option,  warrant or other right to  subscribe  for or purchase any
Common Stock, or (C) any such option, warrant or other right.

         E. "Conversion  Amount" means the portion of the outstanding  principal
amount of this Note,  together with all accrued and unpaid interest thereon,  on
the Conversion Date, multiplied by:

                  (i)  in  the  event  that,  as  of  the  Conversion  Date  the
         Corporation has not entered into definitive documentation relating to a
         Qualified Transaction, 1.2; or

                  (ii)  in  the  event  that,  as of  the  Conversion  Date  the
         Corporation  has entered into  definitive  documentation  relating to a
         Qualified Transaction, 1.1.

         F. "Conversion  Date" means (i) in the case of an automatic  conversion
pursuant  to  Section  III.A,  the  date on which  the  Qualified  Financing  is
consummated,  and (ii) in the case of an optional conversion pursuant to Section
III.B, the date specified in the Notice of Conversion so long as the copy of the
Notice of Conversion is faxed (or delivered by other means  resulting in notice)
to the  Corporation  at or  before  11:59  p.m.,  New  York  City  time,  on the
Conversion Date indicated in the Notice of Conversion;  provided,  however, that
if the Notice of Conversion is not so faxed or otherwise  delivered  before such
time,  then the Conversion  Date shall be the date the Holder faxes or otherwise
delivers the Notice of Conversion to the Corporation.

         G.  "Conversion  Securities"  means  (i) in the  case  of an  automatic
conversion  pursuant to Section III.A, shares of Common Stock and/or the type of
Common  Stock  Equivalents  that are sold and issued by the  Corporation  in the
Qualified Financing,  and (ii) in the case of an optional conversion pursuant to
Section III.B, shares of Common Stock.

         H.  "Conversion  Price"  means the  lesser  of (i)  $0.10,  subject  to
adjustment as set forth herein, or (ii) subject to the Corporation obtaining the
Price Adjustment  Approval,  the  consideration per share of Common Stock or Net
Consideration  Per Share of the Common  Stock  Equivalents  sold and issued in a
Qualified Financing.

         I. "Daily  Market Price" means,  as of any date of  determination,  the
volume  weighted  average  price  for the  Common  Stock,  for the  trading  day
immediately   preceding  such  date  of  determination   (subject  to  equitable
adjustment for any stock splits,  stock dividends,  reclassifications or similar
events  during such trading day and further  shall be subject to  adjustment  as
provided herein) on the principal United States  securities  exchange or trading
market where the Common Stock is listed or traded as reported by  Bloomberg,  or
if the  foregoing  does not apply,  the volume  weighted  average  price for the
Common Stock in the Bulletin  Board for such  security as reported by Bloomberg,
or, if no sale price is  reported  for such  security by  Bloomberg,  the volume
weighted  average of the bid prices of any market  makers for such  security  as
reported in the "pink sheets" by the Pink Sheets LLC, in each case for such date
or, if such date was not a trading date for such security, on the next preceding
date which was a trading  date.  For the  avoidance  of doubt,  the  trading day
immediately  preceding  any  Conversion  Date is the last calendar day that is a
                                      -3-
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trading day and which is immediately preceding the Conversion Date. If the Daily
Market Price cannot be  calculated  for such security as of either of such dates
on any of the foregoing  bases,  the Daily Market Price of such security on such
date shall be the fair market value as  reasonably  determined  by an investment
banking  firm  selected by the  Corporation  and  reasonably  acceptable  to the
Majority  Holders,  with  the  costs  of  such  appraisal  to be  borne  by  the
Corporation.

         J.   "Measurement   Date"  means  for  purposes  of  any  issuances  of
securities, the date of such issuance.

         K. "Net  Consideration Per Share" shall mean with respect to any Common
Stock Equivalents issued in a Qualified  Financing,  the amount equal to (i) the
total  amount of  consideration,  if any,  received by the  Corporation  for the
issuance  of such  Common  Stock  Equivalents  plus (ii) the  minimum  amount of
consideration,  if any, payable to the Corporation upon conversion,  exercise or
exchange thereof, divided by the aggregate number of shares of Common Stock that
would be issued if all such Common Stock  Equivalents were converted,  exercised
or exchanged.  The Net  Consideration  Per Share  receivable by the  Corporation
shall be  determined in each instance as of the date of issuance of Common Stock
Equivalents   without  giving  effect  to  any  possible   future  upward  price
adjustments  or rate  adjustments  that may be  applicable  with respect to such
Common Stock Equivalents.

         L. "Notice of  Conversion"  shall mean a notice of  conversion,  in the
form attached hereto as Exhibit A, delivered by the Holder to the Corporation.

         M. "Price Adjustment  Approval" means the approval of the Corporation's
stockholders  of  the   anti-dilution   and  other   conversion/exercise   price
adjustments contained in the Notes and the Warrants, as required by Article VII,
Section 8 of the Corporation's Bylaws.

         N. "Qualified Financing" means the sale and issuance by the Corporation
of any  Common  Stock  and/or  Common  Stock  Equivalents,  on terms  reasonably
acceptable to the Majority Holders, resulting in aggregate gross proceeds to the
Corporation  (without  giving  effect to the  conversion  of the Notes  pursuant
hereto) of at least Three Million Dollars ($3,000,000).

         O. "Qualified  Transaction"  means the acquisition by the  Corporation,
either by merger,  consolidation or asset acquisitions of a third party mutually
agreed  upon by the  Corporation  and the  Majority  Holders  to be a  desirable
strategic acquisition target for the Corporation.

                                  ARTICLE III

                                   CONVERSION
                                      -4-
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         A. Automatic Conversion.  If, prior to the Scheduled Maturity Date, the
Corporation consummates a Qualified Financing,  then the unpaid principal amount
hereof and any accrued  interest thereon shall  automatically  convert into such
number of fully paid and non-assessable  Conversion  Securities as determined in
accordance with Section III.C below.

         B. Optional Conversion. At any time from and after the later of (i) the
date on which the Corporation obtains the Authorized Stock Approval and (ii) the
90th day  following  the  Closing  Date,  and  prior to the  earlier  of (x) the
Scheduled  Maturity  Date  and  (y) the  consummation  by the  Corporation  of a
Qualified  Financing,  the Holder  shall  have the right to  convert  all or any
portion of the unpaid  principal  amount hereof and any accrued interest thereon
into such  number of fully  paid and  non-assessable  shares of Common  Stock as
determined in accordance with Section III.C below.

         C. Conversion Formula.

                  (i) In the case of (A) an automatic  conversion as a result of
         a  Qualified   Financing   involving  the  sale  and  issuance  by  the
         Corporation of Common Stock or (B) an optional  conversion,  the number
         of Conversion Securities issuable upon conversion of this Note shall be
         that  number  of shares  of  Common  Stock as is equal to the  quotient
         obtained by dividing (x) the  Conversion  Amount by (y) the  Conversion
         Price then in effect.

                  (ii) In the case of an automatic  conversion  as a result of a
         Qualified  Financing involving the sale and issuance by the Corporation
         of  Common  Stock  Equivalents,  the  number of  Conversion  Securities
         issuable  upon  conversion  of this Note shall be that number of Common
         Stock   Equivalents  as  is  convertible  or   exchangeable   into,  or
         exercisable  for,  that number of shares of Common Stock as is equal to
         the quotient  obtained by dividing (x) the Conversion Amount by (y) the
         greater  of the  Conversion  Price  then in effect  less the  amount of
         consideration  per  share  of  Common  Stock,  if any,  payable  to the
         Corporation upon conversion,  exercise or exchange of such Common Stock
         Equivalents into Common Stock, and $0.0001 .

                  (iii) In the case of an automatic  conversion as a result of a
         Qualified  Financing involving the sale and issuance by the Corporation
         of a combination of Common Stock,  Common Stock Equivalents  and/or any
         other  debt or  equity  security  of the  Corporation,  the  number  of
         Conversion  Securities  issuable upon  conversion of this Note shall be
         determined as set forth above (in subsection III.C.(i) for Common Stock
         and in subsection  III.C.(ii)  for Common Stock  Equivalents)  and such
         additional number of shares of equity or value of debt such that, taken
         as a whole,  the Holder  receives the  Conversion  Amount of securities
         offered in the Qualified Financing.

                  (iv) In the case of an automatic  conversion  as a result of a
         Qualified  Financing involving the sale and issuance by the Corporation
         of Common  Stock  Equivalents  that  require a payment of cash or other
         consideration to the Corporation upon conversion,  exercise or exchange
         thereof, such securities,  when issued to the Holder upon conversion of
         this Note, shall contain a "cashless exercise" provision.

         D. Mechanics of Conversion.

                                      -5-
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                  (i) In the event that the Corporation proposes to consummate a
         Qualified  Financing,  the Corporation  shall provide written notice to
         each Holder of such  Qualified  Financing at least 15 days prior to its
         consummation  thereof,  which notice should set forth the date on which
         such  Qualified  Financing  will be  consummated  (which  shall  be the
         Conversion Date). On the Conversion Date, the Holder shall surrender or
         cause to be surrendered  this Note, duly endorsed to the Corporation or
         the transfer agent.

                  (ii) In the event that the  Holder  desires  to  exercise  its
         right to effect an optional  conversion,  the Holder shall: (a) fax (or
         otherwise deliver) a copy of the fully executed Notice of Conversion to
         the  Corporation  or the  transfer  agent for the Common  Stock and (b)
         surrender or cause to be surrendered  this Note,  duly endorsed,  along
         with  a copy  of the  Notice  of  Conversion  as  soon  as  practicable
         thereafter to the Corporation or the transfer agent.

                  (iii) Upon receipt by the Corporation of a facsimile copy of a
         Notice of Conversion from a Holder,  the Corporation  shall immediately
         send,  via facsimile,  a  confirmation  to such Holder stating that the
         Notice  of  Conversion  has been  received,  the date  upon  which  the
         Corporation  expects to deliver  the Common  Stock  issuable  upon such
         conversion and the name and telephone number of a contact person at the
         Corporation  regarding the  conversion.  The  Corporation  shall not be
         obligated  to issue  shares of Common  Stock upon a  conversion  unless
         either this Note is delivered to the  Corporation or the transfer agent
         as  provided  above,  or the Holder  notifies  the  Corporation  or the
         transfer  agent  that  such  certificates  have  been  lost,  stolen or
         destroyed and delivers the documentation to the Corporation required by
         Section X.H hereof.

                  (iv) Upon the  surrender of this Note pursuant to clause (iii)
         above, the Corporation shall, no later than the later of (a) the second
         business day  following  the  Conversion  Date and (b) the business day
         following the date of such surrender  (or, in the case of lost,  stolen
         or destroyed  certificates,  after  provision of indemnity  pursuant to
         Section X.H), issue and deliver to the Holder or its nominee the number
         of Conversion  Securities  issuable upon  conversion of this Note.  The
         Corporation   shall  deliver  to  the  Holder   physical   certificates
         representing the Conversion Securities issuable upon conversion.

                  (v) The  Corporation  shall pay any and all taxes which may be
         imposed  upon it with  respect  to the  issuance  and  delivery  of the
         Conversion Securities upon the conversion of this Note.

                  (vi) No  fractional  shares of  Common  Stock are to be issued
         upon the conversion of this Note, but the Corporation  shall pay a cash
         adjustment in respect of any fractional  share which would otherwise be
         issuable in an amount  equal to the same  fraction of the Daily  Market
         Price of a share of Common Stock on the date of such conversion.

         E. No Five Percent Holders.  In no event shall a Holder of the Notes be
entitled to receive Conversion Securities upon conversion to the extent that the
sum of (a) the number of shares of capital stock of the Corporation beneficially
owned by the Holder and its  affiliates  (exclusive  of shares of capital  stock
issuable  upon  conversion  of  the  unconverted  portion  of the  Notes  or the
unexercised or unconverted  portion of any other  securities of the  Corporation
(including,  without  limitation,  the  Warrants)  subject  to a  limitation  on
conversion or exercise  analogous to the limitations  contained  herein) and (b)
the number of Conversion  Securities  issuable upon the  conversion of the Notes
                                      -6-
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with  respect to which the  determination  of this  subparagraph  is being made,
would result in  beneficial  ownership by the Holder and its  affiliates of more
than 4.99% of the outstanding  shares of capital stock of the  Corporation.  For
purposes of this  subparagraph,  beneficial  ownership  shall be  determined  in
accordance  with  Section  13(d) of the  Securities  Exchange  Act of  1934,  as
amended,  and  Regulation  13 D-G  thereunder,  except as otherwise  provided in
clause (a) above. Except as provided in the immediately succeeding sentence, the
restriction  contained  in this  Section  III.E shall not be  altered,  amended,
deleted or changed in any manner  whatsoever unless the holders of a majority of
the  outstanding  shares of capital  stock of the  Corporation  and the Majority
Holders  shall  approve  such  alteration,  amendment,  deletion  or change.  In
applying the foregoing,  such limitation  should be applied in conjunction  with
the  application  of  limitations  on  conversion  or exercise  analogous to the
foregoing limitation.

                                   ARTICLE IV

                              RESERVATION OF SHARES

         A. Reserved Amount.  Immediately upon the receipt by the Corporation of
the Authorized Stock Approval,  the Corporation shall reserve  18,600,000 shares
of the  authorized  but  unissued  shares of  Common  Stock  for  issuance  upon
conversion of each of the Notes  pursuant to Section III.B hereof and thereafter
the number of authorized  but unissued  shares of Common Stock so reserved shall
not be  decreased  and  shall at all  times be  sufficient  to  provide  for the
conversion  of each of the Notes  pursuant to Section  III.B  hereof at the then
current  Conversion  Price  thereof  (the  number of  shares of Common  Stock so
reserved pursuant to this Section IV.A being referred to herein as the "Reserved
Amount").

         B. Increases to Reserved  Amount.  If the Reserved Amount for any three
consecutive  trading  days  (the  last of such  three  trading  days  being  the
"Authorization  Trigger Date") shall be less than the number of shares of Common
Stock issuable upon conversion of the Notes, the Corporation  shall  immediately
notify the  Holders  of the Notes of such  occurrence  and shall take  immediate
action (including,  if necessary,  seeking shareholder approval to authorize the
issuance of additional  shares of Common Stock) to increase the Reserved  Amount
to 135% of the number of shares of Common Stock then issuable upon conversion of
the Notes. In the event the Corporation fails to so increase the Reserved Amount
within, in the event shareholder approval is required,  ninety (90) days, or, in
the event only approval of the Corporation's Board of Directors is required, ten
(10) days after an  Authorization  Trigger Date,  each Holder of the Notes shall
thereafter have the option, exercisable in whole or in part at any time and from
time to time by delivery of a Default  Notice (as defined in Section V.C) to the
Corporation,  to require  the  Corporation  to prepay for cash,  at the  Default
Amount (as defined in Section V.B), a portion of the Holder's  principal  amount
outstanding of the Notes (plus accrued interest thereon) such that, after giving
effect to such prepayment, the Holder's allocated portion of the Reserved Amount
equals the total number of shares of Common  Stock  issuable to such Holder upon
conversion  of its Note.  If the  Corporation  fails to pay the  Default  Amount
within five (5)  business  days after its receipt of such Default  Notice,  then
such  Holder  shall  be  entitled  to the  remedies  provided  in  Section  V.C.
Notwithstanding  anything  else  contained  herein,  if  the  Corporation  has a
                                      -7-
<PAGE>

sufficient  number of authorized  shares of Common Stock, the Corporation  shall
immediately  issue  additional  shares of  Common  Stock to any  Holder  who has
exceeded its allocated  portion of the Reserved Amount upon  conversions by such
Holder of its Notes.

         C. Adjustment to Conversion Price. If the Corporation is prohibited, at
any time,  from issuing  shares of Common Stock upon  conversion of the Notes to
any Holder  because the  Corporation  does not then have  available a sufficient
number of authorized  and reserved  shares of Common Stock,  then the Conversion
Price in respect of any Notes held by any Holder  (including  Notes submitted to
the Corporation  for  conversion,  but for which shares of Common Stock have not
been issued to any such Holder) shall be adjusted as provided in Section VI.A.

                                   ARTICLE V

                                EVENTS OF DEFAULT

         A. Events of Default.  In the event  (each of the events  described  in
clauses (i)-(viii) below after expiration of the applicable cure period (if any)
being an "Event of Default"):

                  (i) the Corporation  fails to pay in full an interest  payment
         on a  scheduled  payment  date,  or fails to pay in full the  principal
         hereof,  and/or the  accrued  and unpaid  interest  thereon,  when due,
         whether at maturity, upon acceleration or otherwise;

                  (ii) the Common Stock  (including  any of the shares of Common
         Stock  issuable  upon  conversion  of the  Notes) is not  eligible  for
         trading on the OTC  Bulletin  Board for an aggregate of 10 trading days
         in any nine month period;

                  (iii) the  Corporation  provides  notice to any  Holder of the
         Notes,  including by way of public  announcement,  at any time,  of its
         intention not to issue, or otherwise refuses to issue, shares of Common
         Stock to any Holder of the Notes upon conversion in accordance with the
         terms of the Notes (other than due to the circumstances contemplated by
         Articles IV or VI for which the  Holders  shall have the  remedies  set
         forth in such Articles);

                  (iv) except with  respect to matters  covered by  subparagraph
         (i) above, as to which such  subparagraph  shall apply, the Corporation
         otherwise  shall breach any material term  hereunder or under the other
         Transaction    Documents,    including,    without   limitation,    the
         representations and warranties contained therein (i.e., in the event of
         a material breach as of the date such  representation  and warranty was
         made) and if such  breach is  curable,  shall fail to cure such  breach
         within 10 business days after the Corporation has been notified thereof
         in writing by the Holder;

                  (v) the Corporation shall:

                           (a) sell,  convey or dispose of all or  substantially
                  all of its assets (the  presentation  of any such  transaction
                  for stockholder  approval being conclusive  evidence that such
                  transaction  involves the sale of all or substantially  all of
                  the assets of the Corporation);

                           (b)  merge,   consolidate  or  engage  in  any  other
                  business   combination  with  any  other  entity  (other  than
                  pursuant to a migratory merger effected solely for the purpose
                                      -8-
<PAGE>

                  of  changing  the   jurisdiction  of   incorporation   of  the
                  Corporation), other than (i) a Qualified Transaction, (ii) any
                  strategic merger,  consolidation or business combination being
                  pursued by the Corporation as of the Issue Date which has been
                  publicly disclosed prior to the Issue Date, or (iii) any other
                  strategic merger,  consolidation or business combination which
                  the  Majority  Holders  approve,   such  approval  not  to  be
                  unreasonably withheld;

                           (c) except for non-exclusive licenses of intellectual
                  property on arms' length bases, sell or otherwise transfer any
                  independently-significant  asset or  intellectual  property to
                  any  other  person(s)  or  entity(ies)   (including,   without
                  limitation, to any subsidiary(ies) of the Corporation);

                           (d) either (i) fail to pay,  when due,  or within any
                  applicable  grace  period,  any  payment  with  respect to any
                  indebtedness  of the  Corporation  in excess of $50,000 due to
                  any  third  party,   other  than  payments  contested  by  the
                  Corporation in good faith, or otherwise  breach or violate any
                  agreement  for monies  owed or owing in an amount in excess of
                  $50,000  which  breach or  violation  permits  the other party
                  thereto to declare a default or otherwise  accelerate  amounts
                  due  thereunder,  or (ii) suffer to exist any other default or
                  event of default under any agreement  binding the  Corporation
                  which default or event of default would or is likely to have a
                  material   adverse   effect  on  the   business,   operations,
                  properties,   prospects   or   financial   condition   of  the
                  Corporation; or

                           (e) sell or otherwise issue any securities other than
                  (i) in a Qualified Financing, (ii) in an issuance for which no
                  adjustment to the  Conversion  Price shall be made pursuant to
                  Section  VII.G.(vii),  or  (iii)  commencing  on the  30th day
                  following  the Issue  Date,  in an  issuance  of an  aggregate
                  amount  of  securities  not  exceeding   $500,000  in  any  30
                  consecutive  day period  provided  that (A) such issuance does
                  not constitute a Dilutive Issuance (as such term is defined in
                  Section  VII.E(i)  below)  and (B) the  Corporation  gives the
                  Holder the right,  exercisable within 15 days after the Holder
                  receives  written notice of the proposed  issuance  (including
                  all  material   terms  and   conditions   thereof)   from  the
                  Corporation, to participate in such issuance on the same terms
                  and conditions as all other participants  therein in an amount
                  up to such  Holder's Pro Rata Amount,  where the Holder's "Pro
                  Rata  Amount"  shall  equal  that  portion  of the  securities
                  proposed to be so issued which equals the proportion  that the
                  outstanding  principal  amount  of  this  Note  bears  to  the
                  aggregate outstanding principal amount of all Notes;

                  (vi) the  Corporation  or any  subsidiary  of the  Corporation
         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;

                  (vii)  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
         Corporation  or any  subsidiary of the  Corporation,  and if instituted
         against the Corporation or any subsidiary of the Corporation by a third
         party, shall not be dismissed within 60 days of their initiation; or
                                      -9-
<PAGE>

                  (viii) the  Corporation  shall  fail to obtain the  Authorized
         Stock  Approval  and the  Price  Adjustment  Approval  within  120 days
         following the Issue Date;

                  then, upon the occurrence of any such Event of Default, at the
         option of each Holder,  exercisable in whole or in part at any time and
         from  time to time by  delivery  of a Default  Notice  (as  defined  in
         Paragraph  C below) to the  Corporation  while  such  Event of  Default
         continues,  the  Corporation  shall  pay  the  Holders  (and  upon  the
         occurrence of an Event of Default  specified in subparagraphs  (vi) and
         (vii) of this Section V.A, the Corporation shall be required to pay the
         Holders),  in  satisfaction  of its  obligation to pay the  outstanding
         principal amount of the Notes and accrued and unpaid interest  thereon,
         an amount equal to the Default Amount (as defined in Section V.B below)
         and such Default  Amount,  together  with all other  ancillary  amounts
         payable  hereunder,  shall  immediately  become  due and  payable,  all
         without  demand,  presentment  or  notice,  all  of  which  are  hereby
         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.  For the avoidance of doubt,  the occurrence of any event
         described in clauses (i), (ii), (iii), (v), (vi) and (viii) above shall
         immediately  constitute  an Event of Default and there shall be no cure
         period. Upon the Corporation's receipt of any Default Notice hereunder,
         the Corporation shall immediately (and in any event within one business
         day  following  such  receipt)  deliver  a written  notice (a  "Default
         Announcement")  to all Holders of the Notes stating the date upon which
         the  Corporation  received  such  Default  Notice and the amount of the
         Notes covered thereby. Following the delivery of a Default Announcement
         hereunder,  at any time and from time to time, each Holder of the Notes
         may  request  (either  orally  or  in  writing)  information  from  the
         Corporation  with respect to the instant  default  (including,  but not
         limited to, the aggregate principal amount outstanding of Notes covered
         by Default  Notices  received by the  Corporation)  and the Corporation
         shall furnish (either orally or in writing) as soon as practicable such
         requested information to such requesting Holder.

         B. Definition of Default Amount. The "Default Amount" with respect to a
Note means an amount equal to the greater of:

                  (i)               V                x        M
                                   ----
                                   C P

         and      (ii)     V   x   115%
where:

         "V" means the aggregate principal amount outstanding of the Notes being
paid plus all accrued and unpaid interest thereon through the payment date;

         "CP"  means  the  Conversion  Price in  effect on the date on which the
Corporation receives the Default Notice; and

         "M" means  the  greater  of (i) the  highest  Closing  Bid Price of the
Corporation's  Common Stock during the period beginning on the date on which the
Corporation  receives  the  Default  Notice and  ending on the date  immediately
preceding  the date of payment  of the  Default  Amount or (ii) the fair  market
value, as of the date on which the Corporation  receives the Default Notice,  of
the  consideration  payable to the holder of a share of Common Stock pursuant to
the transaction  which triggers the repayment  obligation.  For purposes of this
definition,  "fair market value" shall be determined by the mutual  agreement of
the Corporation and the Majority Holders, or if such agreement cannot be reached
within  five  business  days prior to the date of  repayment,  by an  investment
banking  firm  selected by the  Corporation  and  reasonably  acceptable  to the
Majority  Holders,  with  the  costs  of  such  appraisal  to be  borne  by  the
Corporation.

                                      -10-
<PAGE>

         C. Failure to Pay Default Amounts.  If the Corporation fails to pay any
Holder the Default  Amount with  respect to any Note within five  business  days
after its receipt of a notice  requiring  such  repayment (a "Default  Notice"),
then the Holder of any Note  delivering such Default Notice shall be entitled to
interest  on the  Default  Amount  at a per  annum  rate  equal to the  lower of
twenty-four  percent (24%) and the highest interest rate permitted by applicable
law from the date on which the Corporation receives the Default Notice until the
date of payment of the Default Amount hereunder. In the event the Corporation is
not able to repay  all of the  outstanding  Notes  subject  to  Default  Notices
delivered  prior to the date upon which such  repayment is to be  effected,  the
Corporation  shall repay the outstanding  Notes from each Holder pro rata, based
on the total amounts due on the Notes at the time of repayment  included by such
Holder  in all  Default  Notices  delivered  prior to the date upon  which  such
repayment is to be effected relative to the total amounts due under the Notes at
the time of repayment  included in all of the Default Notices delivered prior to
the date upon which such repayment is to be effected.

                                   ARTICLE VI

                         FAILURE TO SATISFY CONVERSIONS

         A. Conversion Defaults;  Adjustments to Conversion Price. The following
shall  constitute a "Conversion  Default":  (i)  following  the  submission by a
Holder of a Notice of Conversion,  the  Corporation  fails for any reason (other
than because of an event  described  in clause  (iii)  below) to deliver,  on or
prior to the fourth business day following the expiration of the Delivery Period
for such conversion,  such number of Conversion  Securities to which such Holder
is entitled upon such  conversion,  (ii) the Corporation  provides notice to any
Holder at any time of its  intention  not to issue  Conversion  Securities  upon
exercise by any Holder of its conversion  rights in accordance with the terms of
the Notes (other than because of an event  described in clause (iii) below),  or
(iii) the  Corporation  is  prohibited,  at any time,  from  issuing  Conversion
Securities  upon  conversion of the Notes to any Holder because the  Corporation
does not have available a sufficient number of authorized and reserved shares of
Common  Stock.  In the case of a Conversion  Default,  the  Conversion  Price in
respect of any Notes  held by such  Holder  (including  Notes  submitted  to the
Corporation for conversion,  but for which  Conversion  Securities have not been
issued to such Holder)  shall  thereafter  be the lesser of (x) the Daily Market
Price on the date of the  Conversion  Default  and (y) the lowest  Daily  Market
Price in effect during the period beginning on, and including, such date through
and including (A) in the case of a Conversion  Default referred to in clause (i)
above, the day such Conversion  Securities are delivered to the Holder,  and (B)
in the case of a Conversion  Default referred to in clause (iii) above, the date
on which the prohibition on issuances of Conversion  Securities  terminates.  In
the case of a Conversion  Default described in clause (ii) above, the Conversion
Price with respect to any conversion thereafter shall be the lowest Daily Market
                                      -11-
<PAGE>

Price in effect at any time during the period  beginning on, and including,  the
date of the  occurrence  of such  Conversion  Default  through and including the
Default Cure Date (as hereinafter defined). Upon the occurrence of each reset of
the  Conversion  Price  pursuant to this  Paragraph A, the  Corporation,  at its
expense, shall promptly compute the new Conversion Price and prepare and furnish
to each  Holder of the Notes a  certificate  setting  forth such new  Conversion
Price  showing  in detail  each  Conversion  Price in effect  during  such reset
period.

         "Default  Cure Date"  means (A) with  respect to a  Conversion  Default
described in clause (i) of its definition,  the date the Corporation effects the
conversion of all of the outstanding Notes, and (B) with respect to a Conversion
Default  described  in  clause  (ii) or  (iii) of its  definition,  the date the
Corporation  issues Conversion  Securities in satisfaction of all conversions of
the Notes.

         B. Buy-In Cure.  Unless the  Corporation  has  notified the  applicable
Holder in writing prior to the delivery by such Holder of a Notice of Conversion
that the  Corporation  is unable to honor  conversions,  if (i) the  Corporation
fails for any reason to deliver during the Delivery Period Conversion Securities
to a Holder upon a conversion  of the Notes,  and (ii)  thereafter,  such Holder
purchases (in an open market transaction or otherwise)  Conversion Securities to
make  delivery  in  satisfaction  of a sale by  such  Holder  of the  Conversion
Securities (the "Sold Shares") which such Holder anticipated receiving upon such
conversion (a "Buy-In"),  the Corporation  shall pay such Holder (in addition to
any  other  remedies  available  to the  Holder)  the  amount  by which (x) such
Holder's total purchase price (including brokerage commissions,  if any) for the
Conversion Securities so purchased exceeds (y) the net proceeds received by such
Holder from the sale of the Sold  Shares.  For  example,  if a Holder  purchases
Conversion Securities having a total purchase price of $11,000 to cover a Buy-In
with respect to Conversion  Securities it sold for $10,000, the Corporation will
be required to pay the Holder  $1,000.  A Holder shall  provide the  Corporation
written notification and supporting documentation indicating any amounts payable
to such Holder  pursuant to this  Paragraph  B. The  Corporation  shall make any
payments required pursuant to this Paragraph B in accordance with and subject to
the provisions of Section X.I.

         C. Right to Require  Prepayment.  If the  Corporation  fails,  and such
failure  continues  uncured for five (5) business days after the Corporation has
been  notified  thereof  in  writing  by the  Holder,  for any  reason  to issue
Conversion  Securities  within 10  business  days  after the  expiration  of the
Delivery Period with respect to any conversion of the Notes, then the Holder may
elect at any time and from time to time prior to the Default  Cure Date for such
Conversion Default, by delivery of a Default Notice to the Corporation,  to have
all or any portion of such Holder's outstanding Notes prepaid by the Corporation
for cash, at the Default Amount.  If the  Corporation  fails to pay such Default
Amount  within five business  days after its receipt of a Default  Notice,  then
such Holder shall be entitled to the remedies provided for herein.

                                  ARTICLE VII

                       ADJUSTMENTS TO THE CONVERSION PRICE

                                      -12-
<PAGE>

         The Conversion  Price shall be subject to adjustment  from time to time
as follows:

         A. Stock Splits, Stock Dividends,  Etc. If, at any time on or after the
Issue Date, the number of outstanding shares of the Corporation's  capital stock
is increased by a stock split, stock dividend, combination,  reclassification or
other similar event, the Conversion Price shall be proportionately  reduced,  or
if the  number of  outstanding  shares  of the  Corporation's  capital  stock is
decreased by a reverse stock split,  combination or  reclassification of shares,
or other similar event, the Conversion Price shall be proportionately increased.
In such event, the Corporation shall notify the Corporation's  transfer agent of
such change on or before the effective date thereof.

         B. Adjustment Due to Merger, Consolidation,  Etc. If, at any time after
the  Issue  Date,  there  shall be (i) any  reclassification  or  change  of the
outstanding  shares of the  Corporation's  capital stock (other than a change in
par value, or from par value to no par value, or from no par value to par value,
or as a result of a  subdivision  or  combination),  (ii) any  consolidation  or
merger of the  Corporation  with any other entity  (other than a merger in which
the  Corporation is the surviving or continuing  entity and its capital stock is
unchanged), (iii) any sale or transfer of all or substantially all of the assets
of the  Corporation  or (iv) any  share  exchange  pursuant  to which all of the
outstanding shares of any class or series of the Corporation's capital stock are
converted  into other  securities or property  (each of (i) - (iv) above being a
"Corporate  Change"),   then  appropriate  provisions  (in  form  and  substance
reasonably  satisfactory to the Holders of a majority of the principal amount of
the  Notes  then  outstanding)  shall be made with  respect  to the  rights  and
interests of the Holders of the Notes to the end that the economic  value of the
Notes are in no way diminished by such Corporate  Change and that the provisions
hereof (including,  without  limitation,  in the case of any such consolidation,
merger or sale in which the  successor  entity or  purchasing  entity is not the
Corporation,  an  immediate  adjustment  of the  Conversion  Price  so that  the
Conversion  Price  immediately  after the  Corporate  Change  reflects  the same
relative value as compared to the value of the surviving  entity's  common stock
that existed  between the  Conversion  Price and the value of the  Corporation's
common stock  immediately  prior to such Corporate  Change) shall  thereafter be
applicable,  as nearly as may be  practicable in relation to any shares of stock
or  securities   thereafter   deliverable  upon  the  conversion  thereof.   The
Corporation  shall not effect any Corporate Change unless (i) each Holder of the
Notes has received  written  notice of such  transaction  at least 45 days prior
thereto,  but in no event  later than 15 days  prior to the record  date for the
determination of shareholders  entitled to vote with respect  thereto,  (ii) the
resulting  successor or  acquiring  entity (if not the  Corporation)  assumes by
written instrument (in form and substance reasonably satisfactory to the Holders
of a  majority  of the  principal  amount of the  Notes  then  outstanding)  the
obligations of the Notes and (iii) the Corporation shall have received the prior
written  consent of the  Majority  Holders.  The above  provisions  shall  apply
regardless of whether or not there would have been a sufficient number of shares
of capital stock  authorized  and available for issuance upon  conversion of the
Notes outstanding as of the date of such transaction,  and shall similarly apply
to successive  reclassifications,  consolidations,  mergers, sales, transfers or
share exchanges.

         C.  Adjustment  Due to  Distribution.  If, at any time  after the Issue
Date, the Corporation  shall declare or make any  distribution of its assets (or
rights to acquire its assets) to holders of the Corporation's capital stock as a
partial  liquidating  dividend,  by  way  of  return  of  capital  or  otherwise
                                      -13-
<PAGE>

(including any dividend or  distribution  to the  Corporation'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 Holders of the Notes shall be
entitled,  upon  any  conversion  of the  Notes  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 the Corporation's capital stock issuable upon such conversion had such
Holder  been the holder of such  shares of such stock on the record date for the
determination of shareholders entitled to such Distribution.

         D.  Purchase  Rights.  If,  at any  time  after  the  Issue  Date,  the
Corporation issues any warrants,  rights or options,  whether or not immediately
exercisable,  to subscribe for or to purchase the Corporation's capital stock or
securities  exercisable,  convertible into or exchangeable for the Corporation's
capital  stock or  rights  to  purchase  stock,  warrants,  securities  or other
property (the "Purchase  Rights") pro rata to the record holders of any class or
series of the Corporation's capital stock, then the Holders of the Notes 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 the Corporation's capital stock acquirable upon
complete  conversion of the Notes 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 the  Corporation's
capital stock are to be determined for the grant, issue or sale of such Purchase
Rights.

         E. Adjustment of Conversion Price.

                  (i) Except as otherwise  provided in  Paragraphs A, B, C and D
         of this  Article  VII, if during any period  after the later of (A) the
         date  that  is six  (6)  months  after  the  Issue  Date,  and  (B) the
         Corporation  obtaining the Price Adjustment  Approval,  the Corporation
         issues or sells,  or in  accordance  with Section  VII.E(ii)  hereof is
         deemed to have  issued  or sold,  any  shares  of  Common  Stock for no
         consideration or for a consideration per share less than the Conversion
         Price in effect at the time of such  issuance (a "Dilutive  Issuance"),
         then effective  immediately upon the Dilutive Issuance,  the Conversion
         Price  will be  adjusted  to equal  the per share  price at which  such
         shares were issued,  sold or deemed to have been issued or sold in such
         Dilutive Issuance.  Notwithstanding the foregoing,  no adjustment shall
         be made pursuant to this Paragraph E if such adjustment would result in
         an increase in the Conversion Price.

                  (ii)  Effect  on  Conversion  Price  of  Certain  Events.  For
         purposes of determining the adjusted  Conversion Price under Subsection
         (i), the following will be applicable:

                           (a) Issuance of Rights or Options. If the Corporation
                  in any  manner  issues  or  grants  any  warrants,  rights  or
                  options, whether or not immediately exercisable,  to subscribe
                  for  or  to  purchase   Common   Stock  or  other   securities
                  exercisable, 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  (and  the  price  of any  conversion  of  Convertible
                  Securities,  if applicable) is less than the Conversion  Price
                  in effect on the Measurement  Date of such securities  ("Below
                  Conversion Price  Options"),  then the maximum total number of
                  shares of Common Stock  issuable upon the exercise of all such
                  Below  Conversion  Price  Options   (assuming  full  exercise,

                                      -14-
<PAGE>

                  conversion   or  exchange  of   Convertible   Securities,   if
                  applicable)  will,  as of the date of the issuance or grant of
                  such  Below  Conversion   Price  Options,   be  deemed  to  be
                  outstanding   and  to  have  been   issued  and  sold  by  the
                  Corporation  for 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 Below  Conversion
                  Price Options" is determined by dividing (i) the total amount,
                  if  any,   received  or  receivable  by  the   Corporation  as
                  consideration  for the  issuance or granting of all such Below
                  Conversion Price Options, plus the minimum aggregate amount of
                  additional  consideration,  if any, payable to the Corporation
                  upon the exercise of all such Below  Conversion Price Options,
                  plus, in the case of Convertible  Securities issuable upon the
                  exercise of such Below Conversion  Price Options,  the minimum
                  aggregate amount of additional  consideration payable upon the
                  exercise,   conversion  or  exchange  thereof  (determined  in
                  accordance  with the  calculation  method set forth in Section
                  VII.E(ii)(b)(2) below) at the time such Convertible Securities
                  first become exercisable, convertible or exchangeable, by (ii)
                  the maximum  total number of shares of Common  Stock  issuable
                  upon the exercise of all such Below  Conversion  Price 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 Below  Conversion  Price  Options or
                  upon the  exercise,  conversion  or  exchange  of  Convertible
                  Securities  issuable  upon  exercise of such Below  Conversion
                  Price Options.

                           (b) Issuance of Convertible Securities.

                  (1) If the  Corporation  in any  manner  issues  or sells  any
         Convertible  Securities,  which  Convertible  Securities  do not have a
         fluctuating  conversion or exercise price or exchange ratio, 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  exercise,  conversion  or  exchange  (as
         determined  pursuant to Section  VII.E(ii)(b)(2) if applicable) is less
         than the Conversion  Price in effect on the Measurement  Date, then the
         maximum  total  number  of shares of  Common  Stock  issuable  upon the
         exercise,  conversion  or exchange of all such  Convertible  Securities
         will, as of the date of the issuance of such Convertible Securities, be
         deemed  to be  outstanding  and to have  been  issued  and  sold by the
         Corporation for such price per share. For the purposes of the preceding
         sentence,  the "price per share for which Common Stock is issuable upon
         such  exercise,  conversion  or exchange" is determined by dividing (i)
         the total amount,  if any, received or receivable by the Corporation 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 Corporation  upon the exercise,
         conversion or exchange thereof at the time such Convertible  Securities
         first become  exercisable,  convertible  or  exchangeable,  by (ii) the
         maximum  total  number  of shares of  Common  Stock  issuable  upon the
         exercise, conversion or exchange of all such Convertible Securities. No
         further adjustment to the Conversion Price will be made upon the actual
         issuance of such Common Stock upon exercise,  conversion or exchange of
         such Convertible Securities.

                  (2) If the  Corporation  in any  manner  issues  or sells  any
         Convertible  Securities with a fluctuating conversion or exercise price
         or exchange ratio (a "Variable Rate  Convertible  Security"),  then the
         "price per share for which Common Stock is issuable upon such exercise,
         conversion or exchange" for purposes of the calculation contemplated by
         Section  VII.E(ii)(b)(1)  shall be  deemed to be the  lowest  price per
                                      -15-
<PAGE>

         share which would be applicable  (assuming all holding period and other
         conditions to any discounts contained in such Variable Rate Convertible
         Security  have  been   satisfied)  if  the  Conversion   Price  on  the
         Measurement Date of such Variable Rate Convertible  Security was 75% of
         the  Conversion  Price  on such  date  (the  "Assumed  Variable  Market
         Price").  Further,  if the  Conversion  Price  at  any  time  or  times
         thereafter is less than or equal to the Assumed  Variable  Market Price
         last used for  making any  adjustment  under  this  Section  VII.F with
         respect to any Variable Rate Convertible Security, the Conversion Price
         in effect  at such time  shall be  readjusted  to equal the  Conversion
         Price which would have resulted if the Assumed Variable Market Price at
         the time of issuance of the Variable Rate Convertible Security had been
         75% of the Daily  Market Price  existing at the time of the  adjustment
         required by this sentence.

                  (3) Change in Option Price or  Conversion  Rate. If there is a
         change  at any  time  in (a) the  amount  of  additional  consideration
         payable to the  Corporation  upon the exercise of any Options;  (b) the
         amount of additional consideration,  if any, payable to the Corporation
         upon  the  exercise,   conversion   or  exchange  of  any   Convertible
         Securities;  or (c) the rate at which any  Convertible  Securities  are
         convertible  into or exchangeable  for Common Stock (in each such case,
         other than under or by reason of provisions designed to protect against
         dilution  and except  when an  adjustment  is made  pursuant to Section
         VII.F(ii)(b)(2)  above),  the Conversion Price in effect at the time of
         such change will be readjusted to the Conversion Price which would have
         been in effect at such time had such Options or Convertible  Securities
         still outstanding provided for such changed additional consideration or
         changed  conversion  rate,  as the case may be,  at the time  initially
         granted, issued or sold.

         F. Calculation of Consideration  Received. If any Common Stock, Options
or  Convertible   Securities   are  issued,   granted  or  sold  for  cash,  the
consideration  received  therefor will be the amount received by the Corporation
therefor,  after  deduction  of all  underwriting  discounts  or  allowances  in
connection with such issuance,  grant or sale. In case any Common Stock, Options
or Convertible  Securities are issued or sold for a consideration part or all of
which shall be other than cash,  including in the case of a strategic or similar
arrangement in which the other entity will provide  services to the Corporation,
purchase  services  from  the  Corporation  or  otherwise   provide   intangible
consideration to the  Corporation,  the amount of the  consideration  other than
cash  received  by the  Corporation  (including  the net  present  value  of the
consideration  expected  by  the  Corporation  for  the  provided  or  purchased
services) will be the fair market value of such consideration, except where such
consideration consists of securities,  in which case the amount of consideration
received by the Corporation  will be the Daily Market Price with respect to such
securities thereof as of the date of receipt. In case any Common Stock,  Options
or  Convertible   Securities  are  issued  in  connection  with  any  merger  or
consolidation in which the Corporation is the surviving corporation,  the amount
of  consideration  therefor  will be deemed to be the fair market  value of such
portion of the net assets and business of the  non-surviving  corporation  as is
attributable  to such Common Stock,  Options or Convertible  Securities,  as the
case may be.  Notwithstanding  anything else herein to the  contrary,  if Common
Stock,  Options  or  Convertible  Securities  are  issued,  granted  or  sold in
conjunction  with each other as part of a single  transaction  or in a series of
related transactions,  any Holder of the Notes may elect to determine the amount
of consideration  deemed to be received by the Corporation therefor by deducting
the fair value of any type of securities (the "Disregarded  Securities") issued,
granted or sold in such  transaction  or series of  transactions.  If the Holder
makes an election pursuant to the immediately  preceding sentence, no adjustment
                                      -16-
<PAGE>

to the  Conversion  Price shall be made  pursuant to this Section  VII.F for the
issuance  of the  Disregarded  Securities  or upon any  conversion  or  exercise
thereof.  For example, if the Corporation were to issue convertible notes having
a face value of $1,000,000 and warrants to purchase shares of Common Stock at an
exercise  price  equal to the market  price of the  Common  Stock on the date of
issuance of such warrants in exchange for $1,000,000 of consideration,  the fair
value of the warrants would be subtracted  from the $1,000,000 of  consideration
received by the Corporation  for the purposes of determining  whether the shares
of Common Stock  issuable  upon  conversion  of the  convertible  notes shall be
deemed to be issued at a price per share  below  market  price  and,  if so, for
purposes of determining  any adjustment to the Conversion  Price  hereunder as a
result of the issuance of the  Convertible  Securities.  The  Corporation  shall
calculate,  using standard commercial  valuation methods appropriate for valuing
such  assets,  the fair  market  value of any  consideration  other than cash or
securities;  provided, however, that if the Holder hereof does not agree to such
fair market value  calculation  within three business days after receipt thereof
from the  Corporation,  then such fair market value will be  determined  in good
faith by an investment banker or other appropriate expert of national reputation
selected by the Corporation and reasonably  acceptable to the Majority  Holders,
with the costs of such appraisal to be borne by the Corporation.

         G. Additional Adjustment Provisions.  The following provisions shall be
applicable to the making of adjustments in the Conversion Price pursuant to this
Article VII:

                  (i) Any  obligation,  agreement or undertaking to issue shares
         of Common Stock or Common Stock  Equivalents  at any time in the future
         shall  be  deemed  to be an  issuance  at  the  time  such  obligation,
         agreement or undertaking is made or arises.

                  (ii) No  adjustment  of the  Conversion  Price  shall  be made
         pursuant to this  Article VII upon the issuance of any shares of Common
         Stock that are issued upon the exercise,  conversion or exchange of any
         Common Stock  Equivalents for which an adjustment has already been made
         pursuant to this Article VII. Should the Net Consideration Per Share of
         any Common  Stock  Equivalents  for which an  adjustment  has been made
         pursuant to this Article VII (or would have been made  pursuant to this
         Article VII had the Net  Consideration  Per Share of such Common  Stock
         Equivalents been less than the Conversion  Price in effect  immediately
         prior to the issuance or sale  thereof) be decreased  from time to time
         other than as a result of the application of  anti-dilution  provisions
         substantially similar to the provisions of this Article VII, then, upon
         the  effectiveness  of each such change,  the Conversion Price shall be
         readjusted  to  that  which  would  have  been  obtained  (A)  had  the
         adjustments made pursuant to this Article VII upon the issuance of such
         Common  Stock  Equivalents  been  made  upon  the  basis of the new Net
         Consideration Per Share of such Common Stock  Equivalents,  and (B) had
         the adjustments made to the Conversion Price since the date of issuance
         of such Common Stock  Equivalents been made to such Conversion Price as
         adjusted pursuant to clause (A) above.

                  (iii) In the event any shares of Common  Stock or Common Stock
         Equivalents  are issued or sold without  consideration,  such shares of
         Common Stock or Common Stock  Equivalents  shall be deemed to have been
         issued or sold for a consideration of $0.0001 per share.

                  (iv) In the  event  that all or any part of the  consideration
         received  or paid by the  Corporation  in  connection  with  any of the
                                      -17-
<PAGE>

         transactions  described in this Article VII consists of property  other
         than cash,  such  consideration  shall be deemed to have a fair  market
         value  as is  reasonably  determined  in good  faith  by the  Board  of
         Directors of the Corporation in a manner  reasonably  acceptable to the
         Holder of this Note.

                  (v) All  calculations  under this Article VII shall be made to
         the nearest 1/100th of a cent or 1/10,000th of a share of Common Stock,
         as the case may be. No  adjustment  to the  Conversion  Price  shall be
         required  unless such  adjustment  (plus any adjustments not previously
         made by reason of this Section  VII.G(v)  would  require an increase or
         decrease of at least 1% in such Conversion  Price;  provided,  however,
         that any adjustment(s)  that by reason of this Section VII.G(v) are not
         required  to be made shall be carried  forward  and taken into  account
         upon the earlier of (A) any subsequent adjustment or (B) any conversion
         of this Note.

                  (vi)  Notwithstanding  any other  provision  of this Note,  no
         adjustment  to the  Conversion  Price  shall be made to the extent such
         adjustment would reduce the Conversion Price below the par value of the
         Common Stock.

                  (vii) No adjustment to the Conversion  Price shall be made (A)
         upon the exercise of any warrants,  options or  convertible  securities
         issued and  outstanding on the Issue Date that are set forth in Section
         3(c) of the Disclosure Schedule to the Securities Purchase Agreement in
         accordance  with the terms of such securities as of the Issue Date; (B)
         upon the grant or exercise of any stock or options  which may hereafter
         be granted to or  exercised  by any  employee,  director or  consultant
         under any employee  benefit plan of the  Corporation now existing or to
         be implemented in the future,  so long as the issuance of such stock or
         options is  approved  by a majority  of the Board of  Directors  of the
         Corporation or a majority of the members of a committee of non-employee
         directors  established  for such purpose;  (C) upon conversion of these
         Notes or exercise of the Warrants; or (D) the issuance of securities in
         connection with a Qualified Transaction.

         H.  Notice  of  Adjustments.  Upon the  occurrence  of any  event  that
requires any  adjustment of the Conversion  Price,  then, and in each such case,
the  Corporation,  at its expense,  shall promptly  compute such  adjustment and
prepare and furnish to each Holder a certificate  setting forth such  adjustment
and  showing  in detail  the facts upon  which  such  adjustment  is based.  The
Corporation  shall,  upon the  written  request at any time of any Holder of the
Notes,  furnish  to such  Holder  a like  certificate  setting  forth  (i)  such
adjustment and (ii) the Conversion Price at the time in effect.

         I. Other Action Affecting  Conversion  Price. If the Corporation  takes
any action  affecting the  Conversion  Stock after the date hereof that would be
covered by Section  VII.A  through F, but for the manner in which such action is
taken or  structured,  which would in any way  diminish  the value of the Notes,
then the  Conversion  Price  shall be  adjusted  in such  manner as the Board of
Directors of the Corporation shall in good faith determine to be equitable under
the circumstances.
                                      -18-
<PAGE>

                                  ARTICLE VIII

                                      RANK

         The Notes  shall  rank  senior  to any  indebtedness  (including  those
certain 7% Convertible  Subordinated Notes due 2005 issued by the Corporation on
November 1, 2002) outstanding as of the Issue Date as to repayment,  except that
the Notes shall rank junior to any secured  indebtedness  of the Corporation for
which a security interest has been perfected as of the Issue Date.

                                   ARTICLE IX

                                 CONSENT RIGHTS

         A. So long as any Notes are outstanding,  except as otherwise expressly
provided in the Securities  Purchase  Agreement,  the Corporation  shall not, in
each case without first obtaining the written  consent of the Majority  Holders:
(i)(a) redeem,  or declare or pay any dividends  (whether in cash or stock),  or
otherwise make any distributions  with respect to any class or series of capital
stock of the Corporation,  except for dividends and distributions payable solely
in  the  capital  stock  of  the  Corporation,  or (b)  prepay  any  outstanding
indebtedness of the Corporation, or (ii) create or sell any securities that rank
senior to or pari passu with the Notes.

                                   ARTICLE X

                                  MISCELLANEOUS

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

         B.  Notices.  Any notices  required or  permitted to be given under the
terms of this Note shall be sent by certified or registered mail (return receipt
requested) or delivered  personally or by courier or by confirmed telecopy,  and
shall be effective five days after being placed in the mail, if mailed,  or upon
receipt  or  refusal  of  receipt,  if  delivered  personally  or by  courier or
confirmed  telecopy,  in each case addressed to a party.  The addresses for such
communications shall be:

                           If to the Corporation:

                           P-Com, Inc.
                           3175 South Winchester Blvd.
                           Campbell, CA 95008
                           Telephone: (408) 866-3666
                           Facsimile:  (408) 874-4461
                           Attention:  Chief Executive Officer

                                      -19-
<PAGE>

         If to the Holder,  to the address set forth under such Holder's name on
the signature page to the Securities Purchase Agreement executed by such Holder.
Each party shall provide notice to the other parties of any change in address or
the address of any transferee of the Note.

         C.  Amendment  Provision.  This Note and any  provision  hereof  may be
amended  only by an  instrument  in writing  signed by the  Corporation  and the
Majority Holders.

         D.  Assignability.  This Note shall be binding upon the Corporation and
its  successors and assigns and shall inure to the benefit of the Holder and its
successors and assigns.  Notwithstanding  anything to the contrary  contained in
this Note or the Transaction Documents,  this Note may be pledged and all rights
of the Holder  under this Note may be assigned to any  affiliate or to any other
person or entity without the consent of the Corporation.

         E. Cost of  Collection.  If an Event of Default occurs  hereunder,  the
Corporation  shall  pay  the  Holder  hereof  costs  of  collection,   including
reasonable attorneys' fees.

         F.  Governing  Law;  Jurisdiction.  This Note shall be  governed by and
construed in  accordance  with the laws of the State of Delaware  applicable  to
contracts  made and to be performed in the State of  Delaware.  The  Corporation
irrevocably consents to the jurisdiction of the United States federal courts and
the state  courts  located in the State of  Delaware  in any suit or  proceeding
based on or arising  under this Note and  irrevocably  agrees that all claims in
respect  of such  suit or  proceeding  may be  determined  in such  courts.  The
Corporation  irrevocably  waives  the  defense of an  inconvenient  forum to the
maintenance  of such suit or  proceeding.  The  Corporation  further agrees that
service  of process  upon the  Corporation  mailed by first  class mail shall be
deemed in every respect effective service of process upon the Corporation in any
such suit or proceeding.  Nothing herein shall affect the right of any Holder to
serve process in any other manner permitted by law. The Corporation  agrees 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.

         G. Denominations.  At the request of the Holder, upon surrender of this
Note,  the  Corporation   shall  promptly  issue  new  Notes  in  the  aggregate
outstanding  principal amount hereof, in the form hereof, in such  denominations
of at least $25,000 as the Holder shall request.

         H.  Lost or  Stolen  Notes.  Upon  receipt  by the  Corporation  of (i)
evidence of the loss, theft,  destruction or mutilation of any Note and (ii) (y)
in the case of loss,  theft or  destruction,  of indemnity  (without any bond or
other security) reasonably  satisfactory to the Corporation,  or (z) in the case
of mutilation,  upon  surrender and  cancellation  of any Note, the  Corporation
shall execute and deliver a new Note of like tenor and date.

         I. Payment of Cash;  Defaults.  Whenever the Corporation is required to
make any cash payment to a Holder under the Notes  (whether a Default  Amount or
upon  prepayment,  repayment or  otherwise),  such cash payment shall be made in
U.S.  dollars to the Holder  within five  business  days after  delivery by such
Holder of a notice  specifying that the Holder elects to receive such payment in
cash and the method (e.g., by check, wire transfer) in which such payment should
be made. If such payment is not delivered  within such five business day period,
                                      -20-
<PAGE>

such Holder shall  thereafter  be entitled to interest on the unpaid amount at a
per annum rate equal to the lower of  twenty-four  percent (24%) and the highest
interest rate  permitted by applicable  law until such amount is paid in full to
the Holder.

         J. Status as Note  Holder.  Upon an  automatic  conversion  or optional
conversion pursuant to Article III hereof, (i) the principal amount of the Notes
(but none of the accrued and unpaid interest  thereon) shall be deemed converted
into  Conversion  Securities  as of the  Conversion  Date and (ii) the  Holder's
rights as a Holder of such Notes shall cease and  terminate,  excepting only the
right (A) to receive  certificates  for such  Conversion  Securities  and (B) to
exercise any remedies provided herein or otherwise available at law or in equity
to such Holder because of a failure by the  Corporation to comply with the terms
of the Notes.

         K.  Remedies  Cumulative.  The remedies  provided in this Note shall be
cumulative and in addition to all other remedies  available  under this Note, at
law or in  equity  (including  a decree of  specific  performance  and/or  other
injunctive  relief),  and nothing  herein shall limit a Holder's right to pursue
actual  damages for any failure by the  Corporation  to comply with the terms of
this Note. The Corporation  acknowledges  that a breach by it of its obligations
hereunder will cause  irreparable  harm to the Holders of the Notes and that the
remedy at law for any such breach may be inadequate.  The Corporation  therefore
agrees, in the event of any such breach or threatened  breach,  that the Holders
of the Notes shall be entitled,  in addition to all other available remedies, to
an injunction  restraining any breach, without the necessity of showing economic
loss and without any bond or other security being required.

         L. Business  Day. For purposes of this Note,  the term  "business  day"
means  any day,  other  than a  Saturday  or  Sunday  or a day on which  banking
institutions  in the  State of New  York are  authorized  or  obligated  by law,
regulation  or  executive  order to close.  If any payment to be made  hereunder
shall be stated to be or become due on a day which is not a business  day,  such
payment shall be made on the next  following  business day and such extension of
time shall be included in computing interest in connection with such payment.

         M.  Certain   Waivers.   Borrower  and  each   endorser   hereby  waive
presentment,  notice of nonpayment or dishonor,  protest,  notice of protest and
all other notices in  connection  with the  delivery,  acceptance,  performance,
default or  enforcement  of payment of this Note, and hereby waive all notice or
right of approval of any  extensions,  renewals,  modifications  or forbearances
which may be allowed.

         N.  JURY  TRIAL  WAIVER.  BORROWER  HEREBY  WAIVES,  AND  HOLDER BY ITS
ACCEPTANCE  HEREOF  THEREBY  WAIVES,  TRIAL  BY  JURY  IN ANY  LEGAL  PROCEEDING
INVOLVING,  DIRECTLY  OR  INDIRECTLY,  ANY  MATTER  (WHETHER  SOUNDING  IN TORT,
CONTRACT OR  OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATED TO THIS NOTE OR THE
RELATIONSHIP  EVIDENCED  HEREBY.  THIS  PROVISION IS A MATERIAL  INDUCEMENT  FOR
HOLDER TO ACCEPT AND RELY UPON THIS NOTE.

         O.  Severability.  If any provision of this Note shall be prohibited or
invalid,  under  applicable  law, it shall be  ineffective  only to such extent,
without invalidating the remainder of this Note.
                                      -21-
<PAGE>

         P. Maximum  Interest Rate. If the effective  interest rate on this Note
would otherwise  violate any applicable  usury law, then the interest rate shall
be reduced to the  maximum  permissible  rate and any  payment  received  by the
Holder  in  excess  of the  maximum  permissible  rate  shall  be  treated  as a
prepayment of the principal of this Note.

               [Remainder of this page intentionally left blank.]

                                      -22-
<PAGE>

         IN WITNESS WHEREOF, Borrower has caused this Note to be executed by its
duly authorized officer as of the date first written above.

                                  P-COM, INC.

                                  By: __________________________
                                      Name:
                                      Title:

            [Signature page to Convertible Secured Promissory Note.]

<PAGE>
                                                             Exhibit A
                                                             ----------

                          NOTICE OF OPTIONAL CONVERSION

To:      P-COM, INC.
         3175 South Winchester Blvd.
         Campbell, CA 95008
         Facsimile:  (408) 874-4461
         Attention:  Chief Executive Officer

The undersigned  hereby irrevocably  elects to convert  $____________  principal
amount of the Note (the  "Conversion"),  into  shares of common  stock  ("Common
Stock") of P-COM,  INC. (the  "Corporation")  according to the conditions of the
Convertible  Secured Promissory Note dated March ____, 2003 (the "Note"),  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.  No fee will be charged to the holder for any conversion,
except for  transfer  taxes,  if any. A copy of the Note is attached  hereto (or
evidence of loss, theft or destruction thereof).

The Corporation shall electronically transmit the Common Stock issuable pursuant
to this Notice of  Conversion to the account of the  undersigned  or its nominee
(which is  ________________)  with DTC  through  its  Deposit  Withdrawal  Agent
Commission System ("DTC Transfer").

In the event of partial exercise,  please reissue an appropriate Note(s) for the
principal balance which shall not have been converted.

Check Box if Applicable:

|_|      In lieu of receiving  the shares of Common Stock  issuable  pursuant to
         this  Notice of  Conversion  by way of DTC  Transfer,  the  undersigned
         hereby  requests  that  the  Corporation   issue  and  deliver  to  the
         undersigned  or  its  nominee  (if  applicable)  physical  certificates
         representing such shares of Common Stock.

                                    Date of Conversion: _______________________

                                    Applicable Conversion Price: ______________

                                    Amount of Accrued and Unpaid Interest
                                    on the Principal Amount to be converted,
                                    if any: ___________________________________

                                    Default Amount to be converted, if any: ___

                                    Number of Shares of
                                    Common Stock to be Issued: ________________

                                    Signature: ________________________________

                                    Name: _____________________________________

                                    Address: __________________________________

<PAGE><PAGE>
EXHIBIT 10.5

         VOID AFTER 5:00 P.M., NEW YORK CITY TIME, ON MARCH __, 2006
         (UNLESS EXTENDED PURSUANT TO SECTION 2 HEREOF)

         THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
         NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
         "SECURITIES  ACT"),  OR THE SECURITIES  LAWS OF ANY STATE OF THE UNITED
         STATES OR ANY OTHER JURISDICTION. THE SECURITIES REPRESENTED HEREBY MAY
         NOT BE OFFERED,  SOLD OR  TRANSFERRED  IN THE  ABSENCE OF AN  EFFECTIVE
         REGISTRATION  STATEMENT FOR THE SECURITIES UNDER APPLICABLE  SECURITIES
         LAWS UNLESS  OFFERED,  SOLD OR  TRANSFERRED  PURSUANT  TO AN  AVAILABLE
         EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.

                             Right to Purchase ___________ Shares of
                             Common Stock, par value $0.0001 per share

Date: March __, 2003

                                   P-COM, INC.
                         SERIES A STOCK PURCHASE WARRANT

         THIS CERTIFIES  THAT, for value received,  _______________________,  or
its registered  assigns, is entitled to purchase from P-Com, Inc., a corporation
organized under the laws of the State of Delaware (the  "Company"),  at any time
or  from  time to  time  during  the  period  specified  in  Section  2  hereof,
__________________  fully paid and nonassessable  shares of the Company's common
stock,  par value $0.0001 per share (the "Common  Stock"),  at an exercise price
per share (the "Exercise  Price") equal to $0.12. The number of shares of Common
Stock  purchasable  hereunder (the "Warrant  Shares") and the Exercise Price are
subject to adjustment as provided in Section 4 hereof. The term "Warrants" shall
mean this Warrant and the other warrants of the Company issued  pursuant to that
certain Securities Purchase Agreement,  dated as of March __, 2003, by and among
the  Company  and  the  other  signatories  thereto  (the  "Securities  Purchase
Agreement").

<PAGE>

         This  Warrant  is  subject  to  the  following  terms,  provisions  and
conditions:

         1. Manner of Exercise;  Issuance of  Certificates;  Payment for Shares.
Subject to the provisions hereof, including, without limitation, the limitations
contained  in Section 7 hereof,  this  Warrant  may be  exercised  by the holder
hereof,  in whole or in part, by the surrender of this Warrant,  together with a
completed  exercise  agreement  in  the  form  attached  hereto  (the  "Exercise
Agreement"),  to the Company during normal business hours on any business day at
the Company's principal executive offices (or such other office or agency of the
Company as it may designate by notice to the holder hereof),  and (a) payment to
the Company in cash, by certified or official bank check or by wire transfer for
the  account  of the  Company,  of the  Exercise  Price for the  Warrant  Shares
specified  in the  Exercise  Agreement  or (b) if the holder is  effectuating  a
Cashless  Exercise  (as  defined in Section  10 hereof)  pursuant  to Section 10
hereof,  delivery to the Company of a written  notice of an election to effect a
Cashless  Exercise for the Warrant Shares  specified in the Exercise  Agreement.
The  Warrant  Shares so  purchased  shall be  deemed to be issued to the  holder
hereof or such holder's designee,  as the record owner of such shares, as of the
close of business on the date on which this Warrant shall have been surrendered,
the completed  Exercise  Agreement shall have been delivered,  and payment shall
have  been made for such  shares  as set  forth  above or, if such date is not a
business  day,  on the next  succeeding  business  day.  The  Warrant  Shares so
purchased, representing the aggregate number of shares specified in the Exercise
Agreement,  shall (by the Company or through its  transfer  agent) be  delivered
(i.e., deposited with a nationally-recognized  overnight courier service postage
prepaid) to the holder  hereof  within a  reasonable  time,  not  exceeding  two
business  days,  after this Warrant shall have been so exercised  (the "Delivery
Period").  If the Company's  transfer agent is  participating  in the Depository
Trust Company ("DTC") Fast Automated Securities Transfer program, and so long as
the  certificates  therefor do not bear a legend and the holder is not obligated
to return such  certificate for the placement of a legend  thereon,  the Company
shall cause its transfer agent to electronically  transmit the Warrant Shares so
purchased  to the holder by  crediting  the account of the holder or its nominee
with  DTC  through  its  Deposit   Withdrawal  Agent  Commission   system  ("DTC
Transfer").  If  the  aforementioned  conditions  to  a  DTC  Transfer  are  not
satisfied,  the Company shall deliver as provided  herein to the holder physical
certificates  representing the Warrant Shares so purchased.  Further, the holder
may  instruct  the  Company  to  deliver  to the  holder  physical  certificates
representing  the Warrant Shares so purchased in lieu of delivering  such shares
by  way of  DTC  Transfer.  Any  certificates  so  delivered  shall  be in  such
denominations  as may be  reasonably  requested by the holder  hereof,  shall be
registered  in the name of such holder or such other name as shall be designated
by such holder and, following the date on which the resale of the Warrant Shares
has been registered under the Securities Act or the Warrant Shares otherwise may
be sold by the holder pursuant to Rule 144 promulgated  under the Securities Act
(or a successor rule),  shall not bear any restrictive  legend.  If this Warrant
shall have been exercised only in part,  then the Company shall, at its expense,
at the  time of  delivery  of such  certificates,  deliver  to the  holder a new
Warrant  representing  the number of shares with  respect to which this  Warrant
shall not then have been exercised.

         If, at any time, a holder of this  Warrant  submits  this  Warrant,  an
Exercise  Agreement and payment to the Company of the Exercise Price for each of
the Warrant Shares specified in the Exercise Agreement  (including pursuant to a
Cashless Exercise), and the Company fails for any reason to deliver, on or prior
                                      -2-
<PAGE>

to the fourth  business day following the expiration of the Delivery  Period for
such  exercise,  the  number of shares  of Common  Stock to which the  holder is
entitled upon such exercise (an "Exercise Default"),  then the Company shall pay
to the holder payments  ("Exercise Default Payments") for an Exercise Default in
the  amount of (a)  (N/365),  multiplied  by (b) the  amount by which the Market
Price  (as  defined  in  Section  4(j)(iii)  hereof)  on the date  the  Exercise
Agreement  giving rise to the Exercise Default is transmitted in accordance with
this Section 1 (the  "Exercise  Default  Date")  exceeds the  Exercise  Price in
respect of such Warrant Shares, multiplied by (c) the number of shares of Common
Stock the Company failed to so deliver in such Exercise  Default,  multiplied by
(d) .24, where N = the number of days from the Exercise Default Date to the date
that the Company  effects the full  exercise of this Warrant  which gave rise to
the Exercise  Default.  The accrued  Exercise  Default Payment for each calendar
month  shall be paid in cash and shall be made to the holder by the fifth day of
the month  following  the month in which it has  accrued.  Nothing  herein shall
limit the holder's right to pursue actual  damages for the Company's  failure to
maintain a sufficient  number of  authorized  shares of Common Stock as required
pursuant to the terms of Section  3(b) hereof or to  otherwise  issue  shares of
Common Stock upon exercise of this Warrant in accordance  with the terms hereof,
and the holder shall have the right to pursue all  remedies  available at law or
in equity (including a decree of specific performance and/or injunctive relief).

         2. Period of Exercise.  This Warrant shall be  exercisable  at any time
and from  time to time  during  the  period  beginning  on the  date of  initial
issuance of this  Warrant (the "Issue  Date") and ending at 5:00 p.m.,  New York
City time, on the third  anniversary of the Issue Date (the "Exercise  Period").
The Exercise Period shall  automatically be extended by one (1) day for each day
on which the Company does not have a number of shares of Common  Stock  reserved
for  issuance  upon  exercise  hereof at least  equal to the number of shares of
Common Stock issuable upon exercise hereof.  Notwithstanding  the foregoing,  in
the event that the Company  does not obtain the Price  Adjustment  Approval  (as
such term is  defined  in the  Securities  Purchase  Agreement)  within 120 days
following  the Issue Date,  this Warrant  shall  terminate  and be of no further
force or effect.

         3. Certain Agreements of the Company.  The Company hereby covenants and
agrees as follows:

                  (a) Shares to be Fully Paid.  All Warrant  Shares shall,  upon
         issuance  in  accordance  with the terms of this  Warrant,  be  validly
         issued,  fully paid, and nonassessable and free from all taxes,  liens,
         claims and encumbrances.

                  (b)  Reservation of Shares.  During the Exercise  Period,  the
         Company  shall at all  times  have  authorized,  and  reserved  for the
         purpose of issuance upon exercise of this Warrant,  a sufficient number
         of shares of Common  Stock to provide for the  exercise in full of this
         Warrant (without giving effect to the limitations on exercise set forth
         in Section 7(g) hereof).

                  (c) Listing.  The Company shall promptly secure the listing of
         the shares of Common Stock  issuable upon exercise of this Warrant upon
         each national  securities  exchange or automated  quotation  system, if
         any, upon which shares of Common Stock become listed or quoted (subject
         to official notice of issuance upon exercise of this Warrant) and shall
         maintain,  so long as any  other  shares of  Common  Stock  shall be so
         listed or quoted,  such listing of all shares of Common Stock from time
                                      -3-
<PAGE>

         to time  issuable  upon the exercise of this  Warrant;  and the Company
         shall  so  list on  each  national  securities  exchange  or  automated
         quotation  system,  as the case may be, and shall maintain such listing
         of, any other shares of capital stock of the Company  issuable upon the
         exercise of this Warrant if and so long as any shares of the same class
         shall be  listed  or quoted on such  national  securities  exchange  or
         automated quotation system.

                  (d) Certain  Actions  Prohibited.  The  Company  shall not, by
         amendment  of its  charter or through any  reorganization,  transfer of
         assets,   consolidation,   merger,   dissolution,   issue  or  sale  of
         securities,  or any other voluntary action,  avoid or seek to avoid the
         observance  or  performance  of any  of the  terms  to be  observed  or
         performed by it hereunder,  but shall at all times in good faith assist
         in the  carrying out of all the  provisions  of this Warrant and in the
         taking of all such action as may  reasonably be requested by the holder
         of this Warrant in order to protect the economic benefit inuring to the
         holder hereof and the exercise  privilege of the holder of this Warrant
         against  dilution or other  impairment,  consistent  with the tenor and
         purpose  of  this  Warrant.  Without  limiting  the  generality  of the
         foregoing,  the  Company  (i) shall not  increase  the par value of any
         shares of Common  Stock  receivable  upon the  exercise of this Warrant
         above the Exercise  Price then in effect,  and (ii) shall take all such
         actions as may be  necessary or  appropriate  in order that the Company
         may validly and legally  issue fully paid and  nonassessable  shares of
         Common Stock upon the exercise of this Warrant.

                  (e) Successors and Assigns. This Warrant shall be binding upon
         any entity  succeeding  to the  Company by  merger,  consolidation,  or
         acquisition of all or substantially all of the Company's assets.

                  (f) Blue Sky Laws. The Company shall, on or before the date of
         issuance of any Warrant Shares,  take such actions as the Company shall
         reasonably  determine are necessary to qualify the Warrant  Shares for,
         or obtain  exemption for the Warrant  Shares for, sale to the holder of
         this Warrant upon the exercise  hereof under  applicable  securities or
         "blue sky" laws of the states of the United  States,  and shall provide
         evidence  of any such  action so taken to the  holder  of this  Warrant
         prior to such date;  provided,  however,  that the Company shall not be
         required  in  connection  therewith  or as a  condition  thereto to (i)
         qualify to do business in any jurisdiction where it would not otherwise
         be required to qualify but for this Section 3(f),  (ii) subject  itself
         to general  taxation in any such  jurisdiction  or (iii) file a general
         consent to service of process in any such jurisdiction.

         4. Antidilution  Provisions.  During the Exercise Period,  the Exercise
Price and the number of Warrant Shares  issuable  hereunder  shall be subject to
adjustment from time to time as provided in this Section 4.

                  (a) Issuance of Common Stock or Common Stock  Equivalents.  In
         the  event  that,  at any time or from  time to time from and after the
         later of (i) the 180th day following the Issue Date or (ii) the date on
         which the Company obtains the Price  Adjustment  Approval,  the Company
         shall issue or sell shares of Common Stock or Common Stock  Equivalents
         (as defined  herein) without  consideration  or at a price per share or
                                      -4-
<PAGE>

         Net  Consideration Per Share (as defined herein) less than the Exercise
         Price in effect  immediately  prior to such  issuance or sale,  then in
         each such  case the  Exercise  Price  shall,  simultaneously  with such
         issuance  or sale,  be  lowered  to equal  the  price  per share or Net
         Consideration  Per Share  received  or  receivable  by the  Company  in
         connection with such issuance or sale.

                  (b)  Subdivision  or  Combination  of  Common  Stock.  If  the
         Company,  at any time during the Exercise  Period,  subdivides  (by any
         stock  split,   stock   dividend,   recapitalization,   reorganization,
         reclassification  or  otherwise)  its  shares  of Common  Stock  into a
         greater number of shares,  then, after the date of record for effecting
         such  subdivision,  the Exercise Price in effect  immediately  prior to
         such subdivision shall be proportionately  reduced.  If the Company, at
         any time during the Exercise Period,  combines (by reverse stock split,
         recapitalization,  reorganization,  reclassification  or otherwise) its
         shares of Common Stock into a smaller number of shares, then, after the
         date of record for effecting  such  combination,  the Exercise Price in
         effect  immediately prior to such combination shall be  proportionately
         increased.

                  (c)   Consolidation,   Merger   or   Sale.   In  case  of  any
         consolidation  of the Company with, or merger of the Company into,  any
         other corporation or other entity, or in case of any sale or conveyance
         of all or substantially  all of the assets of the Company other than in
         connection  with a plan of complete  liquidation  of the Company at any
         time  during  the  Exercise  Period,   then  as  a  condition  of  such
         consolidation,  merger or sale or conveyance,  adequate provision shall
         be made  whereby the holder  hereof shall have the right to acquire and
         receive  upon  exercise of this Warrant in lieu of the shares of Common
         Stock  immediately  theretofore  acquirable  upon the  exercise of this
         Warrant,  such  shares of stock,  securities,  cash or assets as may be
         issued or  payable  with  respect to or in  exchange  for the number of
         shares  of  Common  Stock   immediately   theretofore   acquirable  and
         receivable  upon  exercise  of  this  Warrant  had  this  Warrant  been
         exercised  immediately prior to such  consolidation,  merger or sale or
         conveyance.  In any such  case,  the  Company  shall  make  appropriate
         provision to insure that the  provisions  of this Section 4 hereof will
         thereafter  be applicable as nearly as may be in relation to any shares
         of stock or securities thereafter deliverable upon the exercise of this
         Warrant. The Company shall not effect any consolidation, merger or sale
         or conveyance unless prior to the consummation  thereof,  the successor
         corporation  or other  entity  (if other than the  Company)  assumes by
         written   instrument  the  obligations   under  this  Warrant  and  the
         obligations  to  deliver  to the holder  hereof  such  shares of stock,
         securities,  cash or  assets  as,  in  accordance  with  the  foregoing
         provisions, the holder may be entitled to acquire.  Notwithstanding the
         foregoing,  in the event of any  consolidation  of the Company with, or
         merger of the Company into, any other  corporation or other entity,  or
         the sale or conveyance of all or substantially all of the assets of the
         Company,  at any time during the  Exercise  Period,  the holder  hereof
         shall,  at its option,  have the right to receive,  in connection  with
         such transaction,  cash consideration equal to the fair market value of
         this Warrant as  determined  in  accordance  with  customary  valuation
         methodology used in the investment banking industry.

                  (d) Distribution of Assets.  In case the Company shall declare
         or make any  distribution  of its  assets  (or  rights to  acquire  its
         assets) to holders of Common Stock as a partial  liquidating  dividend,
         stock  repurchase  by way of return of capital or otherwise  (including
         any dividend or distribution  to the Company's  stockholders of cash or
         shares (or rights to acquire  shares) of capital stock of a subsidiary)
         (a  "Distribution"),  at any time during the Exercise Period,  then the
         holder  hereof shall be entitled  upon exercise of this Warrant for the
         purchase of any or all of the shares of Common Stock subject hereto, to
         receive  the amount of such  assets (or  rights)  which would have been
                                      -5-
<PAGE>

         payable to the holder had such holder been the holder of such shares of
         Common Stock on the record date for the  determination  of stockholders
         entitled  to such  Distribution.  If the  Company  distributes  rights,
         warrants,  options or any other form of convertible  securities and the
         right to exercise or convert such securities would expire in accordance
         with their terms prior to the expiration of the Exercise  Period,  then
         the  terms of such  securities  shall  provide  that such  exercise  or
         convertibility  right  shall  remain in effect  until 30 days after the
         date  the  holder  hereof  receives  such  securities  pursuant  to the
         exercise hereof.

                  (e)  Adjustment in Number of Shares.  Upon each  adjustment of
         the Exercise  Price  pursuant to the  provisions of this Section 4, the
         number of shares of Common Stock issuable upon exercise of this Warrant
         at each such Exercise  Price shall be adjusted by  multiplying a number
         equal  to the  Exercise  Price  in  effect  immediately  prior  to such
         adjustment  by the  number  of shares of  Common  Stock  issuable  upon
         exercise of this Warrant at such Exercise  Price  immediately  prior to
         such  adjustment  and  dividing the product so obtained by the adjusted
         Exercise Price.

                  (f) Additional Adjustment Provisions. The following provisions
         shall be applicable to the making of  adjustments in the Exercise Price
         and the number of Warrant Shares pursuant to this Section 4:

                           (i) Any obligation, agreement or undertaking to issue
                  shares of Common Stock or Common Stock Equivalents at any time
                  in the future  shall be deemed to be an  issuance  at the time
                  such obligation, agreement or undertaking is made or arises.

                           (ii)  No  adjustment  of the  Exercise  Price  or the
                  number  of  Warrant  Shares  shall  be made  pursuant  to this
                  Section 4 upon the issuance of any shares of Common Stock that
                  are issued upon the  exercise,  conversion  or exchange of any
                  Common Stock  Equivalents  for which an adjustment has already
                  been  made   pursuant  to  this  Section  4.  Should  the  Net
                  Consideration  Per Share of any Common Stock  Equivalents  for
                  which an  adjustment  has been made pursuant to this Section 4
                  (or would have been made  pursuant  to this  Section 4 had the
                  Net  Consideration  Per Share of such Common Stock Equivalents
                  been less than the Exercise Price in effect  immediately prior
                  to the  issuance or sale  thereof) be  decreased  from time to
                  time   other   than  as  a  result  of  the   application   of
                  anti-dilution   provisions   substantially   similar   to  the
                  provisions of this Section 4, then, upon the  effectiveness of
                  each such change, the Exercise Price and the number of Warrant
                  Shares  shall be  readjusted  to that  which  would  have been
                  obtained (A) had the adjustments made pursuant to this Section
                  4 upon the issuance of such Common Stock Equivalents been made
                  upon the basis of the new Net  Consideration Per Share of such
                  Common Stock Equivalents,  and (B) had the adjustments made to
                  the Exercise  Price and the number of Warrant Shares since the
                  date of issuance of such Common Stock Equivalents been made to
                  such  Exercise  Price  and the  number  of  Warrant  Shares as
                  adjusted pursuant to clause (A) above.

                           (iii) In the  event any  shares  of  Common  Stock or
                  Common   Stock   Equivalents   are  issued  or  sold   without
                  consideration,  such  shares of Common  Stock or Common  Stock
                  Equivalents  shall be deemed to have been issued or sold for a
                  consideration of $0.0001 per share.
                                      -6-
<PAGE>

                           (iv)  In  the  event  that  all or  any  part  of the
                  consideration  received or paid by the  Company in  connection
                  with  any of the  transactions  described  in this  Section  4
                  consists of property other than cash, such consideration shall
                  be  deemed  to  have  a fair  market  value  as is  reasonably
                  determined  in good  faith by the  Board of  Directors  of the
                  Company  in a manner  reasonably  acceptable  to the holder of
                  this Warrant.

                           (v) All  calculations  under this  Section 4 shall be
                  made to the nearest 1/100th of a cent or 1/10,000th of a share
                  of  Common  Stock,  as the case may be. No  adjustment  to the
                  Exercise Price (and, correspondingly, to the number of Warrant
                  Shares)  shall be required  unless such  adjustment  (plus any
                  adjustments  not  previously  made by reason  of this  Section
                  4(f)(v))  would require an increase or decrease of at least 1%
                  in  such  Exercise   Price;   provided,   however,   that  any
                  adjustment(s)  that by reason of this Section  4(f)(v) are not
                  required  to be made shall be carried  forward  and taken into
                  account upon the earlier of (A) any  subsequent  adjustment or
                  (B) any exercise of this Warrant.

                           (vi)  Notwithstanding  any  other  provision  of this
                  Warrant,  no adjustment to the Exercise Price shall be made to
                  the extent such  adjustment  would reduce the  Exercise  Price
                  below the par value of the Common Stock.

                           (vii) No  adjustment  to the Exercise  Price shall be
                  made  (A)  upon  the  exercise  of any  warrants,  options  or
                  convertible  securities  issued and  outstanding  on the Issue
                  Date  that are set  forth in  Section  3(c) of the  Disclosure
                  Schedule to the  Securities  Purchase  Agreement in accordance
                  with the terms of such  securities  as of the Issue Date;  (B)
                  upon the grant or exercise  of any stock or options  which may
                  hereafter be granted to or exercised by any employee, director
                  or consultant  under any employee  benefit plan of the Company
                  now existing or to be  implemented  in the future,  so long as
                  the  issuance  of such  stock  or  options  is  approved  by a
                  majority  of  the  Board  of  Directors  of the  Company  or a
                  majority  of  the  members  of  a  committee  of  non-employee
                  directors established for such purpose; (C) upon conversion of
                  the Notes (as defined herein) or exercise of the Warrants; (D)
                  the  issuance  of  securities  in  connection  with  strategic
                  business  partnerships or joint ventures,  the primary purpose
                  of  which,  in  the  reasonable   judgment  of  the  Board  of
                  Directors,  is not to  raise  additional  capital;  or (E) the
                  issuance of  securities  pursuant to any  equipment  financing
                  from  a bank  or  similar  financial  or  lending  institution
                  approved by the Board of Directors.

         (g)  Notice of  Adjustment.  Upon the  occurrence  of any  event  which
requires any adjustment of the Exercise Price,  then, and in each such case, the
Company shall give notice thereof to the holder hereof, which notice shall state
the Exercise Price  resulting from such  adjustment and the increase or decrease
in the number of Warrant Shares purchasable at such price upon exercise, setting
forth in reasonable  detail the method of  calculation  and the facts upon which
such  calculation  is based.  Such  calculation  shall be certified by the chief
financial officer of the Company.

         (h) Other Notices. In case at any time:

                  (i) the Company  shall  declare any  dividend  upon the Common
         Stock  payable  in  shares  of  stock of any  class  or make any  other
         distribution (other than dividends or distributions payable in cash out
         of retained earnings  consistent with the Company's past practices with
                                      -7-
<PAGE>

         respect to declaring dividends and making distributions) to the holders
         of the Common Stock;

                  (ii) the Company shall offer for  subscription pro rata to the
         holders of the Common Stock any additional shares of stock of any class
         or other rights;

                  (iii)  there  shall  be  any  capital  reorganization  of  the
         Company,  or  reclassification of the Common Stock, or consolidation or
         merger of the Company with or into, or sale of all or substantially all
         of its assets to, another corporation or entity; or

                  (iv) there shall be a voluntary  or  involuntary  dissolution,
         liquidation or winding-up of the Company;

                  then, in each such case,  the Company shall give to the holder
         of this Warrant (A) notice of the date or  estimated  date on which the
         books  of the  Company  shall  close or a  record  shall  be taken  for
         determining  the holders of Common  Stock  entitled to receive any such
         dividend,  distribution,  or subscription rights or for determining the
         holders  of  Common  Stock  entitled  to vote in  respect  of any  such
         reorganization,   reclassification,    consolidation,   merger,   sale,
         dissolution,  liquidation or winding-up and (B) in the case of any such
         reorganization,   reclassification,    consolidation,   merger,   sale,
         dissolution,  liquidation or winding-up, notice of the date (or, if not
         then known, a reasonable estimate thereof by the Company) when the same
         shall take place.  Such notice shall also specify the date on which the
         holders of Common  Stock shall be entitled  to receive  such  dividend,
         distribution,  or subscription rights or to exchange their Common Stock
         for  stock  or other  securities  or  property  deliverable  upon  such
         reorganization,   reclassification,    consolidation,   merger,   sale,
         dissolution,  liquidation,  or  winding-up,  as the case  may be.  Such
         notice  shall be given at least  fifteen  (15) days prior to the record
         date or the date on which the  Company's  books are  closed in  respect
         thereto.  Failure to give any such notice or any defect  therein  shall
         not affect the validity of the proceedings  referred to in clauses (i),
         (ii), (iii) and (iv) above.  Notwithstanding the foregoing, the Company
         shall publicly disclose the substance of any notice delivered hereunder
         prior to delivery of such notice to the holder hereof.

         (i) Certain  Events.  If, at any time during the Exercise  Period,  any
event  occurs of the type  contemplated  by the  adjustment  provisions  of this
Section 4 but not expressly  provided for by such provisions,  the Company shall
give notice of such event as provided in Section 4(g) hereof, and an appropriate
adjustment in the Exercise  Price and the number of Warrant Shares shall be made
so that the rights of the holder  shall be neither  enhanced nor  diminished  by
such event.

         (j) Certain Definitions.

                  (i) "Common Stock" shall include, for purposes of this Section
         4, the Common  Stock and any  additional  class of stock of the Company
         having no preference as to dividends or  distributions  on liquidation,
         provided  that the shares  purchasable  pursuant to this Warrant  shall
         include  only  Common  Stock  in  respect  of  which  this  Warrant  is
         exercisable, or shares resulting from any subdivision or combination of
         such   Common   Stock,   or  in  the   case   of  any   reorganization,
         reclassification,  consolidation,  merger,  or  sale  of the  character
         referred to in Section 4(c) hereof,  the stock or other  securities  or
         property provided for in such Section.
                                      -8-
<PAGE>

                  (ii)  "Common  Stock  Equivalent"  shall mean (A) any security
         convertible,  with or  without  consideration,  into any  Common  Stock
         (including  any  option,  warrant or other  right to  subscribe  for or
         purchase  such a  security),  (B) any  security  carrying  any  option,
         warrant or other right to subscribe  for or purchase any Common  Stock,
         or (C) any such option, warrant or other right.

                  (iii)  "Market  Price"  shall  mean,  as of any date,  (A) the
         average of the closing  sales  prices for the shares of Common Stock on
         the Nasdaq  National Market or other trading market where such security
         is listed or traded as reported by  Bloomberg  Financial  Markets (or a
         comparable  reporting  service of national  reputation  selected by the
         Company and reasonably acceptable to the holders if Bloomberg Financial
         Markets  is  not  then   reporting   sales  prices  of  such  security)
         (collectively,  "Bloomberg") for the ten (10) consecutive  trading days
         immediately  preceding such date, or (B) if the Nasdaq  National Market
         is not the principal trading market for the shares of Common Stock, the
         average of the  reported  sales  prices  reported by  Bloomberg  on the
         principal  trading  market for the Common Stock during the same period,
         or, if there is no sales  price for such  period,  the last sales price
         reported by Bloomberg  for such period,  or (C) if the foregoing do not
         apply,  the last sales price of such  security in the  over-the-counter
         market  on the pink  sheets or  bulletin  board  for such  security  as
         reported by  Bloomberg,  or if no sales  price is so reported  for such
         security, the last bid price of such security as reported by Bloomberg,
         or (D) if market value cannot be  calculated  as of such date on any of
         the foregoing  bases, the Market Price shall be the average fair market
         value as reasonably  determined by an investment  banking firm selected
         by the Company and reasonably  acceptable to the holder, with the costs
         of the appraisal to be borne by the Company.  The manner of determining
         the  Market  Price of the  Common  Stock  set  forth  in the  foregoing
         definition shall apply with respect to any other security in respect of
         which a determination as to market value must be made hereunder.

                  (iv) "Net  Consideration Per Share" shall mean, in determining
         the amount of consideration  received and/or  receivable by the Company
         for any Common Stock issued upon the  conversion,  exercise or exchange
         of any Common  Stock  Equivalents,  the  amount  equal to (A) the total
         amount  of  consideration,  if any,  received  by the  Company  for the
         issuance of such Common Stock  Equivalents  plus (B) the minimum amount
         of  consideration,  if any,  payable to the  Company  upon  conversion,
         exercise or exchange thereof, divided by the aggregate number of shares
         of  Common  Stock  that  would  be  issued  if all  such  Common  Stock
         Equivalents   were   converted,   exercised  or   exchanged.   The  Net
         Consideration  Per Share  receivable by the Company shall be determined
         in each instance as of the date of issuance of Common Stock Equivalents
         without giving effect to any possible  future upward price  adjustments
         or rate  adjustments that may be applicable with respect to such Common
         Stock Equivalents.

                  (v) "Notes" shall mean the convertible promissory notes issued
         and sold by the Company pursuant to the Securities Purchase Agreement.

                  (vi) The term  "trading  day"  shall mean any day on which the
         principal United States securities exchange or trading market where the
         Common Stock is then listed is open for trading.

                                      -9-
<PAGE>

         5. Issue Tax. The issuance of certificates  for Warrant Shares upon the
exercise  of this  Warrant  shall be made  without  charge to the holder of this
Warrant or such shares for any issuance  tax or other costs in respect  thereof,
provided  that the  Company  shall not be  required  to pay any tax which may be
payable in respect of any transfer  involved in the issuance and delivery of any
certificate in a name other than the holder of this Warrant.

         6. No Rights or Liabilities  as a  Stockholder.  This Warrant shall not
entitle the holder  hereof to any voting rights or other rights as a stockholder
of the  Company.  No provision of this  Warrant,  in the absence of  affirmative
action by the holder hereof to purchase Warrant Shares,  and no mere enumeration
herein of the rights or privileges of the holder hereof,  shall give rise to any
liability  of such  holder for the  Exercise  Price or as a  stockholder  of the
Company,  whether  such  liability is asserted by the Company or by creditors of
the Company.

         7. Transfer, Exchange and Replacement of Warrant.

                  (a)  Restriction  on  Transfer.  This  Warrant  and the rights
         granted to the holder  hereof  are  transferable,  in whole or in part,
         upon  surrender  of this  Warrant,  together  with a properly  executed
         assignment in the form attached hereto,  at the office or agency of the
         Company referred to in Section 7(e) below, provided,  however, that any
         transfer or assignment  shall be subject to the conditions set forth in
         Sections 7(f) and (g) hereof. Until due presentment for registration of
         transfer  on the  books of the  Company,  the  Company  may  treat  the
         registered  holder  hereof  as the  owner  and  holder  hereof  for all
         purposes,  and the  Company  shall not be affected by any notice to the
         contrary.

                  (b) Warrant  Exchangeable  for Different  Denominations.  This
         Warrant is exchangeable, upon the surrender hereof by the holder at the
         office or agency of the Company  referred to in Section 7(e) below, for
         new warrants of like tenor of different  denominations  representing in
         the  aggregate  the right to  purchase  the  number of shares of Common
         Stock which may be  purchased  hereunder,  each of such new warrants to
         represent  the right to purchase such number of shares (at the Exercise
         Price therefor) as shall be designated by the holder hereof at the time
         of such surrender,  and all such warrants  thereafter  constituting the
         Warrant referenced herein.

                  (c)   Replacement   of  Warrant.   Upon  receipt  of  evidence
         reasonably satisfactory to the Company of the loss, theft, destruction,
         or mutilation of this Warrant and, in the case of any such loss, theft,
         or  destruction,  upon  delivery of an indemnity  agreement  reasonably
         satisfactory in form and amount to the Company,  or, in the case of any
         such mutilation,  upon surrender and cancellation of this Warrant,  the
         Company, at its expense,  shall execute and deliver, in lieu thereof, a
         new Warrant of like tenor.

                  (d) Cancellation;  Payment of Expenses.  Upon the surrender of
         this Warrant in connection with any transfer,  exchange, or replacement
         as provided in this Section 7, this Warrant shall be promptly  canceled
         by the Company.  The Company shall pay all taxes (other than securities
         transfer taxes) and all other expenses  (other than legal expenses,  if
         any,  incurred by the Holder or  transferees)  and  charges  payable in
         connection with the preparation, execution, and delivery of any Warrant
         pursuant to this Section 7.

                                      -10-
<PAGE>

                  (e) Warrant  Register.  The  Company  shall  maintain,  at its
         principal  executive  offices  (or such  other  office or agency of the
         Company as it may designate by notice to the holder hereof), a register
         for this  Warrant,  in which  the  Company  shall  record  the name and
         address of the person in whose name this  Warrant has been  issued,  as
         well as the name and address of each transferee and each prior owner of
         this Warrant.

                  (f) Exercise or Transfer Without Registration. If, at the time
         of the  surrender  of this  Warrant in  connection  with any  exercise,
         transfer, or exchange of this Warrant, this Warrant (or, in the case of
         any exercise,  the Warrant  Shares  issuable  hereunder),  shall not be
         registered   under  the  Securities  Act  and  under  applicable  state
         securities or blue sky laws, the Company may require, as a condition of
         allowing such exercise,  transfer, or exchange,  (i) that the holder or
         transferee of this Warrant,  as the case may be, furnish to the Company
         a written opinion of counsel (which opinion shall be in form, substance
         and scope customary for opinions of counsel in comparable transactions)
         to the effect that such  exercise,  transfer,  or exchange  may be made
         without  registration  under the  Securities  Act and under  applicable
         state  securities or blue sky laws (the cost of which shall be borne by
         the Company if the Company's  counsel renders such an opinion and up to
         $500 of such cost shall be borne by the Company if the holder's counsel
         is  requested  to  render  such  opinion),  (ii)  that  the  holder  or
         transferee  execute and deliver to the Company an investment  letter in
         form  and  substance  acceptable  to the  Company  and  (iii)  that the
         transferee  be an  "accredited  investor"  as  defined  in Rule  501(a)
         promulgated under the Securities Act; provided,  however,  that no such
         opinion,  letter,  or  status  as an  "accredited  investor"  shall  be
         required in connection  with a transfer  pursuant to Rule 144 under the
         Securities Act.

                  (g)  Additional  Restrictions  on Exercise or Transfer.  In no
         event shall the holder hereof have the right to exercise any portion of
         this Warrant for shares of Common Stock or to dispose of any portion of
         this  Warrant to the extent that such right to effect such  exercise or
         disposition  would  result  in the  holder  or  any  of its  affiliates
         together  beneficially owning more than 4.99% of the outstanding shares
         of  Common  Stock.  For  purposes  of  this  Section  7(g),  beneficial
         ownership  shall be determined in accordance  with Section 13(d) of the
         Securities  Exchange  Act of 1934,  as amended,  and  Regulation  13D-G
         thereunder.  The restriction  contained in this Section 7(g) may not be
         altered,  amended,  deleted or changed in any manner  whatsoever unless
         the holders of a majority of the outstanding shares of Common Stock and
         the  holder  hereof  shall  approve,   in  writing,   such  alteration,
         amendment, deletion or change.

         8. No Fractional Shares. No fractional shares of Common Stock are to be
issued upon the  exercise  of this  Warrant,  but the  Company  shall pay a cash
adjustment in respect of any fractional  share which would otherwise be issuable
in an amount equal to the same fraction of the Market Price of a share of Common
Stock on the date of such exercise.

         9.  Notices.  Any notices  required or  permitted to be given under the
terms of this  Warrant  shall be sent by certified  or  registered  mail (return
receipt  requested)  or  delivered  personally  or by  courier  or by  confirmed
telecopy,  and shall be effective  five days after being placed in the mail,  if
mailed,  or upon receipt or refusal of receipt,  if delivered  personally  or by
courier,  or by  confirmed  telecopy,  in each case  addressed  to a party.  The
addresses for such communications shall be:
                                      -11-
<PAGE>

                  (a) If to the Company:

                           P-Com, Inc.
                           3175 South Winchester Blvd.
                           Campbell, CA 95008
                           Telephone: (408) 866-3666
                           Facsimile:  (408) 874-4461
                           Attention:  Chief Executive Officer

                  (b) If to the holder,  at such  address as such  holder  shall
         have  provided in writing to the Company,  or at such other  address as
         such holder  furnishes by notice given in accordance  with this Section
         9.

         10. Cashless Exercise. This Warrant may be exercised at any time during
the Exercise Period by presentation and surrender of this Warrant to the Company
at its  principal  executive  offices  with a  written  notice  of the  holder's
intention to effect a cashless  exercise,  including a calculation of the number
of shares of Common Stock to be issued upon such exercise in accordance with the
terms hereof (a "Cashless  Exercise").  In the event of a Cashless Exercise,  in
lieu of paying the  Exercise  Price in cash,  the holder  shall  surrender  this
Warrant for that number of shares of Common Stock  determined by multiplying the
number of Warrant Shares to which it would  otherwise be entitled by a fraction,
the numerator of which shall be the  difference  between the then current Market
Price of a share of the Common  Stock on the date of exercise  and the  Exercise
Price,  and the  denominator of which shall be the then current Market Price per
share of Common Stock.

         11.  Indemnification  by Company.  The Company  shall hold harmless and
indemnify the holder of this Warrant from and against,  and shall compensate and
reimburse such holder for, any damages which are directly or indirectly suffered
or incurred by such holder or to which such holder may otherwise  become subject
(regardless of whether or not such damages relate to any third-party  claim) and
which arise from or as a result of, or are directly or indirectly connected with
any breach of any of the Company's  covenants set forth herein.  In the event of
the  assertion or  commencement  by any person of any claim or legal  proceeding
with  respect to which the holder may have  indemnification  rights  pursuant to
this  Section  11, the holder  shall  promptly  notify  the  Company  thereof in
writing,  but the failure to so notify the Company  shall not limit the holder's
rights  to  indemnification   hereunder,   except  to  the  extent  the  Company
demonstrates  that the defense of such action is prejudiced by the failure to so
give such notice.

         12. Miscellaneous.

                  (a)  Governing  Law;  Jurisdiction.   This  Warrant  shall  be
         governed by and construed in  accordance  with the laws of the State of
         Delaware.  The Company irrevocably  consents to the jurisdiction of the
         United States  federal  courts and state courts located in the State of
         Delaware  in any suit or  proceeding  based on or  arising  under  this
         Warrant and irrevocably  agrees that all claims in respect of such suit
         or proceeding may be determined in such courts. The Company irrevocably
         waives  any  objection  to the  laying of venue and the  defense  of an
         inconvenient  forum to the maintenance of such suit or proceeding.  The
         Company  further agrees that service of process upon the Company mailed
                                      -12-
<PAGE>

         by  certified  or  registered  mail  shall be deemed  in every  respect
         effective  service  of  process  upon the  Company  in any such suit or
         proceeding.  Nothing  herein shall  affect the holder's  right to serve
         process in any other manner permitted by law. The Company agrees 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.

                  (b) Amendment  and Waiver.  Except as provided in Section 7(g)
         hereof, this Warrant and any provision hereof may only be amended by an
         instrument in writing signed by the Company and the holder hereof.  The
         failure of any party to enforce any of the  provisions  of this Warrant
         shall in no way be construed as a waiver of such  provisions  and shall
         not affect the right of such party thereafter to enforce each and every
         provision of this Warrant in accordance with its terms.

                  (c)  Prevailing  Party's  Costs and Expenses.  The  prevailing
         party in any  mediation,  arbitration  or legal  action to  enforce  or
         interpret   this  Warrant   shall  be  entitled  to  recover  from  the
         non-prevailing  party  all  costs and  expenses,  including  reasonable
         attorneys' fees, incurred in such action or proceeding.

                  (d) Construction. Whenever the context requires, the gender of
         any word used in this  Warrant  includes  the  masculine,  feminine  or
         neuter,  and the number of any word  includes  the  singular or plural.
         Unless the context otherwise  requires,  all references to articles and
         sections  refer to  articles  and  sections  of this  Warrant,  and all
         references to schedules are to schedules attached hereto, each of which
         is made a part hereof for all purposes. The descriptive headings of the
         several Sections of this Warrant are inserted for purposes of reference
         only,  and shall not affect the meaning or  construction  of any of the
         provisions hereof.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -13-
<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.

                               P-COM, INC.

                               By: ______________________-
                               Name:
                               Title:

<PAGE>

                           FORM OF EXERCISE AGREEMENT

         (To be Executed by the Holder in order to Exercise the Warrant)

To:      P-Com, Inc.
         3175 South Winchester Blvd.
         Campbell, CA 95008
         Attention:  Chief Executive Officer

         The  undersigned  hereby  irrevocably  exercises  the right to purchase
_____________ shares of the Common Stock of P-Com, Inc., a corporation organized
under  the laws of the  State of  Delaware  (the  "Company"),  evidenced  by the
attached Warrant, and herewith [makes payment of the Exercise Price with respect
to such  shares in  full][elects  to effect a Cashless  Exercise  (as defined in
Section  10 of  such  Warrant)],  all in  accordance  with  the  conditions  and
provisions of said Warrant.

         The  undersigned  agrees  not to offer,  sell,  transfer  or  otherwise
dispose of any Common Stock  obtained on exercise of the  Warrant,  except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or any state securities laws. The undersigned  represents that it is
an "accredited  investor" as that term is defined in Rule 501(a) of Regulation D
under the Securities Act of 1933, as amended.

|_|      The  undersigned  requests that the Company cause its transfer agent to
         electronically  transmit  the Common  Stock  issuable  pursuant to this
         Exercise  Agreement  to the account of the  undersigned  or its nominee
         (which is  _________________)  with DTC through its Deposit  Withdrawal
         Agent Commission System ("DTC  Transfer"),  provided that such transfer
         agent  participates  in the  DTC  Fast  Automated  Securities  Transfer
         program.

|_|      In lieu of receiving  the shares of Common Stock  issuable  pursuant to
         this Exercise Agreement by way of DTC Transfer,  the undersigned hereby
         requests that the Company cause its transfer agent to issue and deliver
         to the undersigned  physical  certificates  representing such shares of
         Common Stock.

         The undersigned  requests that a Warrant  representing  any unexercised
portion hereof be issued, pursuant to the Warrant, in the name of the Holder and
delivered to the undersigned at the address set forth below:

Dated: _______________                _____________________________
                                         Signature of Holder

                                      _____________________________
                                         Name of Holder (Print)

                                Address:  _________________________
                                          _________________________
                                          _________________________

<PAGE>
                                FORM OF ASSIGNMENT

         FOR  VALUE  RECEIVED,   the  undersigned  hereby  sells,  assigns,  and
transfers  all the  rights of the  undersigned  under the within  Warrant,  with
respect  to the  number  of shares of Common  Stock  covered  thereby  set forth
hereinbelow, to:

Name of Assignee                    Address                        No. of Shares
----------------                    --------                       -------------

and       hereby        irrevocably        constitutes        and       appoints
_____________________________________  as agent and attorney-in-fact to transfer
said Warrant on the books of the  within-named  corporation,  with full power of
substitution in the premises.

Dated: _____________________, ____

In the presence of

__________________

                       Name: ___________________________________

                       Signature:   ____________________________
                       Title of Signing Officer or Agent (if any):

                       Address: ________________________________
                                ________________________________
                                ________________________________

                       Note:    The  above   signature   should   correspond
                                exactly  with  the  name on the  face of the
                                within Warrant.

<PAGE>

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