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                                                                    EXHIBIT 10.2

                      SUBORDINATED SECURED CONVERTIBLE NOTE

            NEITHER THESE SECURITIES NOR THE SECURITIES  ISSUABLE UPON
            CONVERSION  HEREOF  HAVE BEEN  REGISTERED  WITH THE UNITED
            STATES   SECURITIES   AND  EXCHANGE   COMMISSION   OR  THE
            SECURITIES COMMISSION OF ANY STATE OR UNDER THE SECURITIES
            ACT OF 1933, AS AMENDED (THE "ACT").  THE  SECURITIES  ARE
            RESTRICTED  AND MAY NOT BE  OFFERED,  RESOLD,  PLEDGED  OR
            TRANSFERRED  EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO
            AN EFFECTIVE  REGISTRATION  STATEMENT OR AN EXEMPTION FROM
            SUCH REGISTRATION REQUIREMENTS.

No. [    ]                                                         US $[       ]

                              DATATEC SYSTEMS, INC.

                      SUBORDINATED SECURED CONVERTIBLE NOTE
                               DUE OCTOBER 3, 2004

            THIS NOTE is issued by Datatec Systems, Inc., a Delaware corporation
(the "COMPANY"),  pursuant to a Note Purchase  Agreement dated July 3, 2003 (the
"PURCHASE AGREEMENT"), and is designated as its Subordinated Secured Convertible
Note Due October 3, 2004 (the "NOTE" and  together  with the other notes  issued
pursuant to the Purchase  Agreement,  the "NOTES").  This Note has been executed
and delivered pursuant to the Purchase Agreement and is subject to the terms and
conditions of the Purchase Agreement, which are, by this reference, incorporated
herein and made a part hereof. In the event of any conflict between the terms of
this Note and the Purchase  Agreement,  the Purchase  Agreement  shall  control.
Capitalized  terms used and not otherwise defined herein shall have the meanings
set forth for such terms in the Purchase Agreement.

            The obligations of the Company under this Note are secured  pursuant
to the terms of (i) a Pledge Agreement, dated as of the date hereof (the "PLEDGE
AGREEMENT"), made by the Company in favor of the Holder (as such term is defined
below),  (ii) a Security  Agreement,  dated as of the date hereof,  to which the
Holder and the  Company  are  parties  (the  "SECURITY  AGREEMENT")  and (iii) a
Security Agreement, dated as of the date hereof, to which the Holder and certain
of the Company's subsidiaries are parties (the "SUBSIDIARY SECURITY AGREEMENT").

            FOR  VALUE  RECEIVED,  the  Company  promises  to pay to [ ], or its
permitted  successors  or assigns (the "HOLDER" and together with the holders of
the other Notes,  the  "HOLDERS"),  on or before  October 3, 2004 (the "MATURITY
DATE"),  the  principal sum of [ ] Dollars (US $[ ]) (the  "PRINCIPAL  AMOUNT"),
PLUS all interest and other amounts accrued hereunder.

            The following provisions will apply to this Note:

            1.  Interest.  Interest  will  accrue on the  outstanding  Principal
Amount at an annual rate of 2%,  accruing  daily and  computed on the basis of a
365-day year for the actual number of days actually  elapsed from the Issue Date
until the  outstanding  Principal  Amount has been paid in full. All accrued and
unpaid interest,  and other amounts accrued hereon, shall be payable as provided
in Section 2 below.

            2.  Repayment  of this Note.  The  Company  shall repay this Note by
making  monthly  payments  in the amount of [                     ]  Dollars (US
$[    ]) PLUS all unpaid  interest and other  amounts  accrued  hereon (each,  a
"MONTHLY  PAYMENT"  and  collectively,  the  "MONTHLY  PAYMENTS"),  beginning on
January 1, 2004 (the "INITIAL  PAYMENT DATE") and thereafter on the first day of
each  succeeding  calendar  month  through and  including the Maturity Date (the
Initial  Payment Date, each such subsequent day and the Maturity Date each being
referred  to herein as a  "PAYMENT  DATE"  and,  collectively,  as the  "PAYMENT
DATES"); PROVIDED, HOWEVER, that on the Maturity Date, the Monthly Payment shall
be equal to the entire  Principal  Amount  outstanding on the Maturity Date PLUS
all unpaid interest and other amounts accrued hereon. If any Payment Date is not
a Business  Day,  then the  related  Monthly  Payment  shall be made on the next
succeeding Business Day (and the interest otherwise payable on such Payment Date
shall accrue through such Business Day).

            3. PAYMENT OPTIONS.

            (a) PAYMENT IN CASH OR STOCK. Each Monthly Payment shall be made, at
the Company's  option,  either (i) in cash (in which case payment of such amount
shall be made on the relevant Payment Date) or (ii) in shares of Common Stock of
the Company (the "STOCK PAYMENT OPTION"). The Company may not exercise the Stock
Payment  Option with  respect to a Payment  Date  unless  each of the  following
conditions  is  satisfied  (or  waived by the  Holder  in its sole and  absolute
discretion):  (i) the Common Stock  (including all shares of Common Stock issued
or issuable under the Notes and the Warrants,  respectively) is, on such Payment
Date and, except with respect to the Initial Payment Date, on each of the twenty
(20)  Trading  Days  immediately  preceding  such  Payment  Date,  listed on the
Principal   Market,   (ii)  the  Registration   Statement  (as  defined  in  the
Registration Rights Agreement) is, on such Payment Date and, except with respect
to the Initial Payment Date, on each of the twenty (20) Trading Days immediately
preceding  such Payment  Date,  effective  and  available to the Holders for the
resale of all of the shares of Common Stock  issued or issuable  under the Notes
and the Warrants,  respectively,  (iii) the Company has delivered written notice
to the Holder at least two (2) Business  Days prior to such Payment Date that it
intends to  exercise  the Stock  Payment  Option,  (iv) an Event of Default  (as
defined  below),  or an event or occurrence  that,  with the giving of notice or
lapse of time, or both, would  constitute an Event of Default,  is not in effect
as of such Payment Date and (v) such payment in shares of Common Stock would not
violate any applicable listing requirement of the Principal Market. For purposes
of this  subsection  3(a), the number of Conversion  Shares issuable on any date
upon  Conversion of the Notes shall be determined as though such Conversion were
effected at the Mandatory Conversion Price, as defined below, then in effect.

                                       2

            (b)  MANDATORY  CONVERSION.  In the event that the  Company  validly
exercises the Stock Payment Option with respect to a Monthly Payment, the Holder
shall be  required  to use its  reasonable  best  efforts to convert  the entire
dollar amount of such Monthly Payment (a "MANDATORY  CONVERSION") into shares of
Common Stock (the "MANDATORY  CONVERSION  SHARES") at any time (and/or from time
to time)  during  the  period  of  twenty  (20)  Trading  Days  (the  "Mandatory
Conversion Period") following such Payment Date; PROVIDED,  HOWEVER,  that if on
any  Trading  Day  occurring  during  the  Mandatory   Conversion   Period,  the
Registration  Statement is not  effective  and  available to the Holders for the
resale of all of the shares of Common Stock  issued or issuable  under the Notes
and the  Warrants,  respectively  (assuming  the  Notes are  convertible  at the
Mandatory  Conversion  Price in effect at such  time and  without  regard to any
limitation on such issuance),  the Mandatory Conversion Period shall be extended
by one Trading Day in each such instance. Upon the valid exercise by the Company
of the Stock Payment Option with respect to a Monthly Payment,  the Company will
be deemed to have paid the full  amount of such  Monthly  Payment to the Holder;
PROVIDED,  HOWEVER, that if an Event of Default (as defined below) occurs during
the related  Mandatory  Conversion  Period,  and the Holder  exercises its right
under this Note to declare  all amounts  hereunder  to be due and  payable,  any
unconverted  amount of such Monthly  Payment  shall be added to the  outstanding
Principal  Amount of this Note.  The Holder's  obligation to use its  reasonable
best efforts to effect a Mandatory  Conversion  within the Mandatory  Conversion
Period  shall not be  waivable  except upon the  written  agreement  of both the
Company and the Holder. If the Holder wishes to effect a Mandatory Conversion on
a particular  date (a "MANDATORY  CONVERSION  DATE"),  the Holder must deliver a
Notice of  Conversion  (as  defined  below) to the  Company in  accordance  with
Section 10 below.  Upon  delivery of a Notice of Conversion  (as defined  below)
with respect to all or any part of a Monthly Payment,  the Company shall deliver
to the Holder a number of  Mandatory  Conversion  Shares  equal to the amount of
such Monthly Payment or part thereof DIVIDED BY the Mandatory  Conversion  Price
in effect on the  relevant  Mandatory  Conversion  Date,  and shall  effect such
delivery in accordance with paragraph 10 below. For purposes hereof,  "MANDATORY
CONVERSION PRICE" means, on any date, the lesser of (i) the Optional  Conversion
Price (as defined below) and (ii) 90% of the Volume  Weighted  Average Price for
the Common Stock on such date.  Notwithstanding anything herein to the contrary,
in the event that the Holder does not convert all of a Monthly Payment  pursuant
to a Mandatory Conversion during the Mandatory Conversion Period, the Holder may
at any time thereafter,  but prior to the Maturity Date, convert all or any part
of such unconverted  amount in accordance with the provisions of Section 6 below
at the  conversion  price  equal to the greater of (i) the  Optional  Conversion
Price (as defined below) and (ii) 90% of the Volume  Weighted  Average Price for
the Common Stock on the last day of the Mandatory  Conversion Period (subject to
adjustment upon stock splits, stock dividends and similar events).

            4. TAX  WITHHOLDING.  The Company shall be entitled to withhold from
all payments of principal of, and interest on, this Note any amounts required to
be withheld under the applicable provisions of the United States income tax laws
or other applicable laws at the time of such payments,  and Holder shall execute
and deliver all required documentation in connection therewith.

            5.  TRANSFER  RESTRICTIONS.  This Note may not be sold or  otherwise
transferred  by the initial  Holder to a third party who is not an  affiliate of
the initial Holder without the consent of the Company,  unless this Note is then

                                       3

subject to an Event of Default  which has not been cured  within the  applicable
cure  period,   if  any.  This  Note  has  been  issued  subject  to  investment
representations  of the  original  purchaser  hereof and may be  transferred  or
exchanged only in compliance with the Securities Act, and other applicable state
and foreign  securities  laws.  The Holder shall deliver  written  notice to the
Company of any  proposed  transfer  of this Note.  In the event of any  proposed
transfer of this Note, the Company may require,  prior to issuance of a new Note
in  the  name  of  such  other  person,  that  it  receive  reasonable  transfer
documentation  including  legal  opinions that the issuance of this Note in such
other name does not and will not cause a violation of the Act or any  applicable
state or foreign  securities laws. Prior to due presentment for transfer of this
Note,  the  Company  and any agent of the  Company may treat the person in whose
name this Note is duly  registered on the Company's  records as the owner hereof
for the  purpose  of  receiving  payment  as herein  provided  and for all other
purposes,  whether or not this Note be overdue,  and neither the Company nor any
such agent shall be affected by notice to the contrary.

            6. OPTIONAL CONVERSION.  The Holder of this Note is entitled, at its
option,  to  convert  at any time and from time to time  beginning  on the Issue
Date, the Principal  Amount of this Note or any portion  thereof  (together with
all unpaid interest and other amounts accrued hereon) (the "OPTIONAL  CONVERSION
AMOUNT") into a number of shares of Common Stock of the Company  (together  with
the Mandatory Conversion Shares, the "CONVERSION SHARES") equal to such Optional
Conversion  Amount  DIVIDED  BY the  Optional  Conversion  Price  (an  "OPTIONAL
CONVERSION"), and the Company shall effect delivery of such shares in accordance
with the  provisions  of  Section  10  below.  For  purposes  hereof,  "OPTIONAL
CONVERSION PRICE" means $1.40, subject to adjustment as provided herein.

            7. ANTI-DILUTION PROVISIONS.

            (a) Subject to the  exclusions  contained in Section 7(e) below,  if
during the period  beginning  on the Issue Date and ending on the later to occur
of (i) the last day of the period of fifteen (15) full calendar months following
the Issue Date or (ii) the date on which this Note has been paid or converted in
full (the "MFN PERIOD"), the Company sells any shares of its Common Stock or any
Convertible  Securities  (as  defined  below) at a Per Share  Selling  Price (as
defined  below)  lower than the  Optional  Conversion  Price,  then the Optional
Conversion  Price  applicable to any  subsequent  conversions  shall be adjusted
downward to equal such lower Per Share Selling Price.

            (b) For the purposes of this Section 7, the term "PER SHARE  SELLING
PRICE" shall include the amount actually paid by third parties for each share of
Common  Stock.  In the  event a fee in excess  of 6% is paid by the  Company  in
connection with such transaction,  any such excess amount shall be deducted from
the selling  price pro rata to all shares sold in the  transaction  to arrive at
the Per Share Selling  Price.  "CONVERTIBLE  SECURITIES"  shall include  rights,
options,  warrants or convertible  securities  under which the Company is or may
become  obligated  to issue  shares of Common  Stock,  and upon the  issuance of
Convertible  Securities,  the term "PER  SHARE  SELLING  PRICE"  shall  mean the
exercise or conversion price thereof (in addition to the consideration  received
by the Company  upon such sale less the excess fee  amount,  if any, as provided
above).  In case of any  Convertible  Security issued within the MFN Period in a

                                       4

Variable Rate Transaction (as defined below), the term "PER SHARE SELLING PRICE"
shall mean the lowest  conversion or exercise price at which such securities are
convertible  or  exercisable.  In the case of  Common  Stock or any  Convertible
Security  issued in an MFN  Transaction  where any  adjustment  in the number of
shares of Common  Stock  issued or  issuable  pursuant  to such  transaction  or
securities  occurs  during the MFN Period,  the term "PER SHARE  SELLING  PRICE"
shall mean the  effective  price at which all of the shares of Common  Stock are
issued or issuable.  If shares are issued for a  consideration  other than cash,
the Per Share Selling Price shall be the fair market value of such consideration
as determined in good faith by independent certified public accountants mutually
acceptable to the Company and the Investors. "VARIABLE RATE TRANSACTION" means a
transaction  in  which  the  Company  issues  or sells  (a) any  debt or  equity
securities  that are  convertible  into,  exchangeable  or  exercisable  for, or
include the right to receive  additional  shares of Common Stock either (x) at a
conversion,  exercise or exchange  rate or other price that is based upon and/or
varies with the trading prices of or quotations for the Common Stock at any time
after the  initial  issuance  of such debt or equity  securities,  or (y) with a
fixed  conversion,  exercise or exchange price that is subject to being reset at
some  future  date  after the  initial  issuance  of such  security  or upon the
occurrence  of specified or  contingent  events,  or (b) any  securities  of the
Company issued or issuable pursuant to an "equity line" structure which provides
for the  sale,  from  time to time,  of  securities  of the  Company  which  are
registered for resale pursuant to the Securities Act. "MFN TRANSACTION"  means a
transaction  in which the  Company  issues or sells any equity  securities  in a
capital  raising  transaction  or  series  of  related  transactions  (the  "NEW
OFFERING") which grants to an investor (the "NEW INVESTOR") the right to receive
additional shares or, in the case of Convertible  Securities,  a decrease in the
applicable  conversion  or  exercise  price,  based upon future  equity  raising
transactions  of the Company on terms more  favorable  than those granted to the
New Investor in the New Offering.

            (c) If an  adjustment of the Optional  Conversion  Price is required
pursuant to paragraph (a) above,  the Company shall deliver to the Holder within
three (3)  business  days of the closing of the  transaction  giving rise to the
adjustment (the "DELIVERY  DATE") written  confirmation  reflecting the adjusted
Optional Conversion Price.

            (d) In case  of any  stock  split  or  reverse  stock  split,  stock
dividend,  reclassification  of the Common  Stock,  recapitalization,  merger or
consolidation,  or similar adjustment affecting the Common Stock of the Company,
the  Optional  Conversion  Price  shall be  adjusted  in a fair,  equitable  and
reasonable  manner  so as to  preserve  the  economic  benefits  of an  Optional
Conversion.

            (e) This  Section 7 shall not apply to (i) sales of shares of Common
Stock by the Company upon conversion or exercise of any  Convertible  Securities
outstanding  prior to the Issue Date  pursuant to the terms of such  Convertible
Securities  in effect on the Issue Date; or (ii) sales of shares of Common Stock
by the Company  pursuant to the provisions of any stock option plan in existence
on the Issue Date or a subsequently  adopted and  stockholder-approved  employee
option or similar plan.

                                       5

            8. COMPANY REDEMPTION RIGHTS.

            (a) The Company may redeem the outstanding principal of this Note at
any time as a whole or in part from time to time (a  "COMPANY  REDEMPTION"),  on
such date or dates (each, a "REDEMPTION DATE") as the Company shall designate in
writing to the Holder in the manner provided below (a "REDEMPTION  NOTICE"),  as
long as, with respect to each Company Redemption,  each Redemption Condition (as
defined  below) is  satisfied  (or waived by the Holder in its sole and absolute
discretion).  The date on which the Company delivers a Redemption  Notice to the
Holder is referred to herein as the "REDEMPTION NOTICE DATE".

            (b) Each of the following shall constitute a "REDEMPTION CONDITION":
(i) the Volume  Weighted  Average  Price for the Common  Stock shall  exceed two
hundred  percent  (200%) of the  Optional  Conversion  Price on each of at least
twenty (20) Trading Days occurring  during the period of thirty (30) consecutive
Trading Days immediately  preceding the Redemption  Notice Date, (ii) the Common
Stock  (including  all shares of Common Stock issued or issuable under the Notes
and the Warrants,  respectively)  shall be listed on the  Principal  Market (and
trading in the Common  Stock shall not have been  suspended or curtailed on such
market) at all times during the period beginning on the twentieth (20th) Trading
Day  immediately  preceding  the  Redemption  Notice  Date  and  ending  on  the
Redemption Date (such period being referred to herein as the "REDEMPTION  NOTICE
PERIOD"),  (iii) the  Registration  Statement  (as  defined in the  Registration
Rights Agreement) shall be effective and available to the Holders for the resale
of all of the shares of Common Stock issued or issuable  under the Notes and the
Warrants,  respectively  (assuming  the Notes are  convertible  at the Mandatory
Conversion  Price in effect at such time and without regard to any limitation on
such issuance),  at all times during the Redemption Notice Period, (iv) an Event
of Default (as defined below),  or an event or occurrence  that, with the giving
of notice or lapse of time, or both, would constitute an Event of Default, shall
not  have  occurred  and be in  effect  on the  Redemption  Notice  Date  or the
Redemption Date, (v) there shall not apply, on the Redemption Notice Date or the
Redemption Date, any limitation on the issuance of Conversion  Shares or Warrant
Shares  under the Notes or the  Warrants,  as the case may be,  pursuant  to the
applicable listing  requirements of the Principal Market and (vi) there shall be
authorized  and reserved for issuance upon  Conversion of the Notes and exercise
of the  Warrants a number of shares of Common Stock at least equal to the number
of  shares of  Common  Stock  then  issuable  under the Notes and the  Warrants,
respectively  (assuming the Notes are  convertible  at the Mandatory  Conversion
Price in effect  at such  time and  without  regard  to any  limitation  on such
issuance).  For purposes hereof, the number of Conversion Shares issuable on any
date upon  Conversion of the Notes shall be determined as though the outstanding
Principal Amount thereof,  together with all accrued interest, were converted at
the Mandatory Conversion Price then in effect.

            (c) If the  Company  wishes  to  effect  a  Company  Redemption,  in
addition to the satisfaction (or waiver) of the Redemption  Conditions,  it must
provide a Redemption  Notice to the Holder,  which  notice shall be  irrevocable
upon delivery.  Each Redemption  Notice must specify the Redemption  Date, which
must be not less  than  fifteen  (15)  Trading  Days nor more than  twenty  (20)
Trading Days  following the  Redemption  Notice Date, and (B) the portion of the
Principal  Amount to be redeemed,  plus all unpaid  interest  and other  amounts
accrued on this Note (the "REDEMPTION AMOUNT").  The Holder shall be entitled to
convert  all or any part of the  Principal  Amount  outstanding  under this Note
prior to the Company Redemption Date.

                                       6

            (d) Within three (3) Trading Days after the Company  Redemption Date
(the  "REDEMPTION  CLOSING  DATE"),  the  Company  shall pay to the  Holder  the
Redemption  Amount in cash by wire transfer of  immediately  available  funds in
accordance with the Holder's written wire transfer instructions.

            9. SUFFICIENT  SHARES  RESERVED.  Without limiting the effect of any
provision  hereof or of the Purchase  Agreement,  the Company shall at all times
prior to the  conversion  in full or  payment  in full of this  Note  reserve  a
sufficient  number of shares of Common Stock to permit the Holder to convert the
entire Principal  Amount of this Note at the Mandatory  Conversion Price then in
effect.  The  Company  shall take all  actions  necessary  to give effect to the
preceding sentence,  including, without limitation,  amending its Certificate of
Incorporation to authorize additional shares of Common Stock, if necessary.

            10. CONVERSION PROCEDURES.

            (a) The  Holder  may  effect  a  Mandatory  Conversion  or  Optional
Conversion (each, a "CONVERSION") by submitting an executed conversion notice in
the form  attached  hereto as Exhibit A (a "NOTICE OF  CONVERSION").  The Holder
shall not be required to physically  surrender this Note to the Company in order
to effect a Conversion.  The Company  shall  maintain a record  showing,  at any
given  time,  the  unpaid  Principal  Amount  of this  Note and the date of each
Conversion or other payment of principal hereof. No fraction of a share or scrip
representing a fraction of a share will be issued on Conversion,  but the number
of shares  issuable  shall be rounded up to the nearest whole share. A Notice of
Conversion  shall be deemed  to be given on the  Business  Day (the  "CONVERSION
DATE") on which the Holder faxes an executed Notice of Conversion to the Company
prior to  11:59  p.m.,  eastern  time,  on such  Business  Day (if a  Notice  of
Conversion  is  delivered  on a day that is not a Business  Day,  or after 11:59
p.m.,  eastern time,  such delivery shall be deemed to have occurred on the next
succeeding Business Day. Facsimile delivery of the Notice of Conversion shall be
accepted by the Company at facsimile number (973) 890-2888,  Attn.: President or
Chief Executive Officer.  Certificates representing Common Stock upon conversion
will be delivered to the Holder within five  (5)Trading Days from the Conversion
Date.  Delivery of shares upon Conversion shall be made to the address specified
by the Holder in the Notice of Conversion or, if so requested by the Holder, and
provided the Company's  transfer agent is then  participating  in The Depository
Trust Company ("DTC") Fast Automated  Securities  Transfer Program, by crediting
such  aggregate  number of Conversion  Shares to the Holder's or its  designee's
account with DTC through its Deposit Withdrawal Agent Commission system.

            (b) The Company acknowledges and agrees that a delay in the issuance
of Conversion Shares beyond the five (5) Trading Day period described in Section
10(a) will result in economic loss to the Holder.  As compensation to the Holder
for such loss, the Company  agrees to pay  liquidated  damages to the Holder for
late issuance of Conversion  Shares in  accordance  with the following  schedule
(where  "NUMBER OF TRADING  DAYS LATE" is defined as the number of Trading  Days
occurring  between  the  fifth  (5th)  Trading  Day  immediately  following  the
applicable  Conversion Date and the date on which all of such Conversion  Shares
are delivered to the Holder).

                                       7

                                           Liquidated Damages for Each $5,000 of
Number of Trading Days Late                  Principal Amount Being Converted

             1                                             $100
             2                                             $200
             3                                             $300
             4                                             $400
             5                                             $500
             6                                             $600
             7                                             $700
             8                                             $800
             9                                             $900
            10                                           $1,000
       More than 10                         $1,000 + $200 for each Trading Day
                                              Late beyond 10 Trading Days

            The Company shall pay any payments incurred under this Section 10(b)
in immediately available funds upon demand.  Nothing herein shall limit Holder's
right to pursue  injunctive  relief  and/or  actual  damages  for the  Company's
failure to issue and deliver Conversion Shares to the Holder, including, without
limitation,  the Holder's  actual losses incurred as a result of any "buy-in" of
Common Stock necessitated by such late delivery. Furthermore, in addition to any
other  remedies  which may be  available  to the  Holder,  in the event that the
Company fails for any reason to effect delivery of Conversion Shares within five
(5)  Trading  Days from the  applicable  Conversion  Date,  the  Holder  will be
entitled to revoke the relevant  Notice of  Conversion by delivering a notice to
such effect to the Company,  whereupon  the Company and the Holder shall each be
restored to their  respective  positions  immediately  prior to delivery of such
Notice  of  Conversion,  and in such  event  no late  payments  shall  be due in
connection with such withdrawn conversion.

            (c) If at any time (i) the  Company  challenges,  disputes or denies
the right of the  Holder  to effect  the  Conversion  of this Note or  otherwise
dishonors or rejects any Notice of Conversion  duly delivered in accordance with
this Section 10 or (ii) any holder of any of the Company's securities who is not
and has never been an Affiliate (as defined in Rule 405 under the Securities Act
of 1933, as amended) of the Holder obtains a judgment or any  injunctive  relief
from any court or public or governmental authority that denies, enjoins, limits,
modifies, delays or disputes the right of the Holder to effect the Conversion of
this Note, then the Holder shall have the right,  by written notice,  to require
the Company to redeem this Note  promptly  (but in no event later than the fifth
(5th)  Business Day following  delivery of such Notice) for cash at a redemption
price  equal  to one  hundred  thirty  percent  (130%)  of (x)  the  outstanding
Principal  Amount hereof PLUS (y) all unpaid  interest and other amounts accrued
hereon (the "HOLDER  REDEMPTION  AMOUNT").  Under any of the  circumstances  set
forth above,  the Company shall be responsible  for the payment of all costs and
expenses of the Holder,  including  reasonable  legal fees and expenses,  as and
when incurred in disputing any such action or pursuing its rights  hereunder (in
addition to any other rights of the Holder),  subject in the case of clause (ii)
above to the  Company's  right to control  and  assume  the  defense of any such

                                       8

action.  In the absence of an injunction  precluding the same, the Company shall
issue Conversion Shares upon a properly noticed Conversion.

            (d)  The  Holder  shall  be  entitled  to  exercise  its  Conversion
privileges  hereunder  notwithstanding  the  commencement  of any case under the
Bankruptcy Code. In the event the Company is a debtor under the Bankruptcy Code,
the Company hereby waives to the fullest  extent  permitted any rights to relief
it may  have  under 11  U.S.C.ss.  362 in  respect  of the  Holder's  Conversion
privilege.

            11. NOTE IS AN UNCONDITIONAL  OBLIGATION.  No provision of this Note
shall alter or impair the  obligation  of the  Company,  which is  absolute  and
unconditional,  to pay the principal of, and interest on, this Note at the time,
place,  and rate, and in the coin or currency or shares of Common Stock,  herein
prescribed. This Note is a direct obligation of the Company.

            12. MERGER; CONSOLIDATION;  SALE OF ASSETS. If the Company merges or
consolidates  with or into  another  corporation  or sells or  transfers  all or
substantially  all of its assets to another person,  then as a condition of such
merger, consolidation, sale or transfer, at the option of the Holder in its sole
and absolute discretion,  upon written notice thereof to the Company, either (i)
the Company and any such successor, purchaser or transferee must agree that this
Note may  thereafter be converted on the terms and subject to the conditions set
forth in this Note into common stock of the  successor  or surviving  entity (in
which  case  appropriate  adjustment  shall be made to the  Optional  Conversion
Price) or, if  applicable,  the Holder shall be entitled to receive the kind and
amount  of  stock,   securities  or  property   receivable   upon  such  merger,
consolidation,  sale or  transfer  by a holder of the number of shares of Common
Stock into which this Note was  convertible  at the Mandatory  Conversion  Price
then in  effect  (without  regard to any  limitations  on  Conversion  set forth
herein) immediately before such merger, consolidation, sale or transfer, subject
to such  adjustments  as may be  necessary  to preserve  the  economic  benefits
conferred  by this Note on the Holder or (ii) the Company  must redeem this Note
promptly  (but in no event later than the fifth  (5th)  Business  Day  following
delivery of such  notice) for cash in an amount  equal to the Holder  Redemption
Amount.

            In the  event  of any  proposed  merger,  consolidation  or  sale or
transfer  of all or  substantially  all of the assets of the  Company or similar
transaction,  the Company must give the Holder  written  notice thereof at least
ten (10) Trading Days prior to the  consummation  of such  transaction,  and the
Holder  shall have the right to convert  any or all of this Note  pursuant to an
Optional  Conversion by delivering a Notice of Conversion to the Company  within
ten (10) days of receipt of such notice;  PROVIDED,  HOWEVER, that if the Holder
is obligated to effect a Mandatory  Conversion during such period of ten Trading
Days, it shall have the right to do so.

            13. GOVERNING LAW; JURISDICTION.  This Note shall be governed by and
construed in  accordance  with the laws of the State of New York  applicable  to
contracts  made and to be  performed  entirely  within such  state.  Each of the
parties  consents  to the  non-exclusive  jurisdiction  of the state and federal
courts located in the City of New York,  borough of Manhattan in connection with
any dispute  arising under this Note and hereby  waives,  to the maximum  extent
permitted by law, any  objection,  including  any  objection  based on forum non
conveniens, to the bringing of any such proceeding in such jurisdictions.

                                       9

            14. DEFAULT.  Any one of the following shall constitute an "EVENT OF
DEFAULT":

            (a) The Company  shall fail to make any payment  required to be made
in cash under this Note or any other Note held by an Investor (as defined in the
Purchase Agreement), whether upon redemption, with respect to a Payment Date, or
otherwise,  and such default  shall  continue for a period of five (5) days from
the due date therefore; or

            (b) Any of the  representations  or  warranties  made by the Company
herein or in any other Transaction Document, or in any agreement, certificate or
financial or other written statements  heretofore or hereafter  furnished by the
Company in connection with the execution and delivery of this Note, the Purchase
Agreement or any other Transaction  Document shall be false or misleading at the
time made and which deficiency has had or could reasonably be expected to have a
material adverse effect on the Holder or its investment in the Company; or

            (c) The Company fails to issue and deliver or cause to be issued and
delivered  to the  Holder,  on or  before  the date on which  such  delivery  is
required to be made  hereunder,  Conversion  Shares  issuable  upon a Conversion
effected  in  accordance  with the terms of this Note,  free of any  restrictive
legend  if  required  or  permitted  by the  terms of this  Note,  the  Purchase
Agreement  or the  Registration  Rights  Agreement  and such  legend  removal is
otherwise  lawful,  and any such failure  shall  continue  uncured for three (3)
days; or

            (d) The Company  shall fail to perform or observe,  in any  material
respect, any other covenant, term, provision, condition, agreement or obligation
of the Company under this Note, any other Transaction Document or any other Note
held by an Investor and such failure shall continue  uncured for a period of ten
(10) days after  written  notice of such failure is delivered to the Company (it
being   understood   that  if  the  Company   cannot  achieve  or  maintain  the
effectiveness  of the  Registration  Statement  but  continues  to use its  best
efforts to achieve such  effectiveness and otherwise  complies with the terms of
the  Registration   Rights  Agreement,   its  failure  to  achieve  or  maintain
effectiveness  of the  Registration  Statement  shall not be deemed a breach for
purposes of this  subsection (d), so long as the Company makes timely payment of
the liquidated damages provided for in the Registration Rights Agreement); or

            (e) The Company  shall (1) admit in writing its inability to pay its
debts  generally  as they  mature;  (2) make an  assignment  for the  benefit of
creditors  or  commence  proceedings  for its  dissolution;  or (3) apply for or
consent to the appointment of a trustee, liquidator or receiver for its or for a
substantial part of its property or business; or

            (f) A trustee,  liquidator  or receiver  shall be appointed  for the
Company or for a  substantial  part of its  property  or  business  without  its
consent  and  shall  not  be  discharged  within  sixty  (60)  days  after  such
appointment; or

            (g) Any governmental  agency or any court of competent  jurisdiction
at the instance of any  governmental  agency shall assume  custody or control of
the whole or any substantial  portion of the properties or assets of the Company
and shall not be dismissed within sixty (60) days thereafter; or

                                       10

            (h) Any money  judgment,  writ or warrant of attachment,  or similar
process in excess of Two Hundred and Fifty  Thousand  ($250,000)  Dollars in the
aggregate shall be entered or filed against the Company or any of its properties
or other assets and shall remain unpaid,  unvacated,  unbonded or unstayed for a
period of sixty (60) days or in any event  later than five (5) days prior to the
date of any proposed sale thereunder; or

            (i)   Bankruptcy,   reorganization,    insolvency   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 Company and, if
instituted  against the Company,  shall not be dismissed  within sixty (60) days
after such  institution or the Company shall by any action or answer approve of,
consent  to,  or  acquiesce  in any  such  proceedings  or  admit  the  material
allegations of, or default in answering a petition filed in any such proceeding;
or

            (j)  The  IBM  Lender,  or its  assigns,  or  any  holder  of  other
indebtedness  of the  Company  for  borrowed  money  (including  IBM Debt) shall
declare  an  event  of  default  pursuant  to  the  documents   evidencing  such
indebtedness, or such other lender takes any other action to collect any part of
such debt other than  regularly  scheduled  payments of principal or interest or
noncompliance  by the Company with any of its loan  covenants that continues for
more  than 90 days  following  the end of each  year and for  more  than 45 days
following each quarter,  in each case with respect to noncompliance  revealed by
the financials disclosed at such period ends; or

            (k) The  Company's  Common Stock shall be suspended or delisted from
trading on The Nasdaq  SmallCap Market for a period in excess of two (2) Trading
Days;

then, or at any time  thereafter,  and in each and every such case,  unless such
Event of Default  shall have been waived in writing by the Holder  (which waiver
shall not be deemed to be a waiver of any  subsequent  default) at the option of
the Holder and in the  Holder's  sole and  absolute  discretion,  the Holder may
consider this Note  immediately due and payable,  without  presentment,  demand,
protest  or notice  of any  kind,  all of which  are  hereby  expressly  waived,
anything  herein or in any note or other  instruments  contained to the contrary
notwithstanding,  and the  Holder  may  immediately  enforce  any and all of the
Holder's  rights and  remedies  provided  herein or any other rights or remedies
afforded by law;  provided,  that any payment of this Note in connection with an
Event of Default shall, at the option of the Holder, be made at the Market Price
of the Common  Stock on the date this Note  becomes due and payable  pursuant to
this provision multiplied by the number of shares of Common Stock which would be
issued at the Mandatory Conversion Price in effect on the date this Note becomes
due and payable pursuant to this provision (without regard to any limitations on
such  Conversion).  Such payment  shall be made within three (3) Trading Days of
such  demand,  and if not paid within  such  period,  the Company  shall pay the
Holder liquidated  damages of 3% per month of such amount until paid,  pro-rated
for any partial months.

            15. NO RIGHTS AS STOCKHOLDER.  Nothing  contained in this Note shall
be  construed  as  conferring  upon the  Holder  the right to vote or to receive
dividends  or to consent or receive  notice as a  stockholder  in respect of any
meeting  of  stockholders  or any  rights  whatsoever  as a  stockholder  of the
Company, unless and to the extent converted in accordance with the terms hereof.

                                       11

            16.  ADDITIONAL  RESTRICTIONS.  In no  event  shall  any  holder  be
entitled to receive  shares of Common Stock upon a Conversion  of this Note,  in
excess of that number of shares of Common Stock that, upon giving effect to such
Conversion,  would  cause  the  aggregate  number  of  shares  of  Common  Stock
beneficially  owned by the holder and its  "affiliates"  (as defined in Rule 405
under the  Securities  Act) to  exceed  4.99% of the  outstanding  shares of the
Common Stock of the Company immediately following such Conversion.  For purposes
of this Section 16, the aggregate number of shares of Common Stock  beneficially
owned by the Holder and its  affiliates  shall  include  the number of shares of
Common Stock issuable upon conversion of this Note and the Warrant  purchased or
held by the Holder,  but shall exclude the number of shares of Common Stock that
would be issuable upon (i) Conversion of any remaining,  unconverted  portion of
this Note and (ii)  exercise or  conversion of the  unexercised  or  unconverted
portion of any other Securities (including,  without limitation, any warrants or
convertible  preferred  stock) subject to a limitation on conversion or exercise
analogous to the limitation  contained herein  beneficially  owned by the Holder
and its affiliates.  Except as set forth in the preceding sentence, for purposes
of this Section 16, beneficial  ownership shall be calculated in accordance with
Section 13(d) of the Securities  Exchange Act of 1934, as amended.  For purposes
of this Section 16, in determining  the number of  outstanding  shares of Common
Stock a Holder may rely on the number of  outstanding  shares of Common Stock as
reflected in (1) the  Company's  most recent Form 10-Q or Form 10-K, as the case
may be, (2) a more recent  public  announcement  by the Company or (3) any other
notice by the Company or its transfer  agent  setting forth the number of shares
of Common  Stock  outstanding.  For any reason at any time,  upon the written or
oral request of any Holder, the Company shall immediately  confirm orally and in
writing to the Holder the number of shares of Common Stock then outstanding.  In
any case, the number of  outstanding  shares of Common Stock shall be determined
after giving effect to  Conversions of portions of this Note by the Holder since
the date as of which  such  number of  outstanding  shares  of Common  Stock was
reported.  To the  extent  that the  limitation  contained  in this  Section  16
applies,  the  submission  of a Notice of  Conversion  shall be deemed to be the
Holder's  representation  that the Note is convertible,  in each case subject to
such aggregate percentage  limitation,  and the Company shall have no obligation
to verify or confirm  the  accuracy  of such  determination.  Nothing  contained
herein shall be deemed to restrict (i) the right of a Holder to convert the Note
at such time as such  conversion will not violate the provisions of this Section
16 or (ii) the right of the Company to require a Company Redemption  pursuant to
Section 8 above.  The Holder may waive the  provisions  of this Section 16 as to
itself (and solely as to itself) by  delivering  written  notice  thereof to the
Company upon or following a change of control of the Company, and the provisions
of this  Section 16 shall  continue to apply until such date as may be specified
in such notice of waiver.

                                       12

            IN WITNESS WHEREOF, the Company has caused this Subordinated Secured
Convertible Note to be executed by its officer thereunto duly authorized.

Dated:   July 3, 2003

                                     DATATEC SYSTEMS, INC.

                                     By:____________________________________
                                     Name:__________________________________
                                     Title:___________________________________

                                       13

                                    EXHIBIT A

                      SUBORDINATED SECURED CONVERTIBLE NOTE

                              NOTICE OF CONVERSION

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

            The undersigned hereby irrevocably elects to convert $ __________ of
the  principal  amount of the above Note into Shares of Common  Stock of DATATEC
SYSTEMS,  INC.  according  to the terms  hereof and of the Note,  as of the date
written below.

Date of Conversion ____________________________________________________________

Specify (check one)  Mandatory Conversion ___         Optional Conversion ___

Applicable Conversion Price  ___________________________________________________

Accrued Interest (and other accrued amounts) ___________________________________

Number of Shares to be Issued  _________________________________________________

Name of Holder _________________________________________________________________

Authorized Signatory ___________________________________________________________

Address for Delivery of Shares or DTC
Account Number for Electronic Delivery of Shares: ______________________________

________________________________________________________________________________

________________________________________________________________________________

                                       14sec document

                                                                    EXHIBIT 10.3

NEITHER  THIS WARRANT NOR THE SHARES  ISSUABLE  UPON  EXERCISE  HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES  ACT"),
OR ANY OTHER  APPLICABLE  SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION  REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS.
NEITHER THIS WARRANT NOR THE SHARES  ISSUABLE UPON EXERCISE  HEREOF MAY BE SOLD,
PLEDGED,  TRANSFERRED,  ENCUMBERED OR OTHERWISE  DISPOSED OF EXCEPT  PURSUANT TO
REGULATION S OF THE SECURITIES  ACT, AN EFFECTIVE  REGISTRATION  STATEMENT UNDER
THE SECURITIES ACT OR IN A TRANSACTION WHICH IS EXEMPT FROM  REGISTRATION  UNDER
THE PROVISIONS OF THE SECURITIES ACT.

                             STOCK PURCHASE WARRANT

                 To Purchase up to [ ] Shares of Common Stock of

                              DATATEC SYSTEMS, INC.

            THIS CERTIFIES that, for value  received,  [ ] or its successors and
permitted assigns (the "HOLDER"), is entitled, upon the terms and subject to the
conditions  hereinafter  set  forth,  at any time on or after  July 3, 2003 (the
"ISSUE  DATE")  and on or prior to the  close of  business  on July 3, 2007 (the
"TERMINATION  DATE"),  but not  thereafter,  to subscribe  for and purchase from
Datatec Systems, Inc., a Delaware corporation (the "COMPANY"),  up to [ ] shares
of Common  Stock,  $0.001 par value (the  "COMMON  STOCK"),  of the Company (the
"WARRANT  SHARES").  The  purchase  price of one  share  of  Common  Stock  (the
"EXERCISE  PRICE") under this Warrant shall be $1.3224.  Capitalized  terms used
and not  otherwise  defined  herein  shall have the  meanings set forth for such
terms in the Note Purchase Agreement dated July 3, 2003, between the Company and
the Investors  named therein (the  "PURCHASE  AGREEMENT")  or in the Notes.  The
Exercise  Price and the  number of shares for which the  Warrant is  exercisable
shall be subject to adjustment as provided herein.  In the event of any conflict
between  the terms of this  Warrant and the  Purchase  Agreement,  the  Purchase
Agreement shall control.

            1. TITLE TO WARRANT.  Prior to the  Termination  Date and subject to
compliance  with  applicable  laws,  this Warrant and all rights  hereunder  are
transferable, in whole or in part, at the office or agency of the Company by the
Holder hereof in person or by duly authorized  attorney,  upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.

            2. AUTHORIZATION OF SHARES. The Company covenants that all shares of
Common Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon exercise of the rights  represented by this Warrant,  be duly
authorized,  validly  issued,  fully  paid and  nonassessable  and free from all
taxes,  liens and charges in respect of the issue  thereof  (other than taxes in
respect of any transfer occurring contemporaneously with such issue).

            3. EXERCISE OF WARRANT.

            (a) Except as provided in Section 4 herein, exercise of the purchase
rights  represented by this Warrant may be made at any time or times on or after
the Issue Date, and before the close of business on the Termination  Date by the
surrender  of this Warrant and the Notice of Exercise  Form annexed  hereto duly
executed,  at the office of the Company  (or such other  office or agency of the
Company as it may designate by notice in writing to the registered Holder hereof
at the address of such Holder appearing on the books of the Company) and (except
in the case of a "Cashless  Exercise",  as described  below) upon payment of the
Exercise  Price for the shares  thereby  purchased by wire transfer or cashier's
check  drawn on a United  States  bank,  the  Holder  of this  Warrant  shall be
entitled to receive a  certificate  for the number of shares of Common  Stock so
purchased.  During any such time  beginning on the two-year  anniversary  of the
Issue  Date,  if a  registration  statement  with  respect  to the resale of the
Warrant Shares is not in effect or is not available to the Holder for the resale
of Warrant  Shares,  this  Warrant may also be  exercised in whole or in part by
means of a "CASHLESS  EXERCISE"  by  tendering  this  Warrant to the Company and
noting on the  Exercise  Notice  that the  Holder  wishes  to effect a  Cashless
Exercise,  in which  event the  Company  shall  issue to the  Holder a number of
shares of Common Stock determined in accordance with the following formula:

                   X = Y x (A-B)/A

where:             X = the number of Warrant Shares to be issued to the Holder;
                   Y = the number of Warrant Shares with respect to which this
                       Warrant is being exercised;
                   A = the Market Price on the Exercise Date;
                   B = the Exercise Price.

            For purposes of Rule 144, it is intended and  acknowledged  that the
Warrant Shares issued in a Cashless Exercise transaction shall be deemed to have
been  acquired by the  Holder,  and the  holding  period for the Warrant  Shares
required by Rule 144 shall be deemed to have been commenced,  on the Issue Date.
Certificates  for Warrant Shares  issuable  hereunder  shall be delivered to the
Holder  hereof within five (5) Trading Days after the date on which this Warrant
shall have been exercised as aforesaid (the "DELIVERY  DATE"). To the extent the
Holder has not received  certificates  representing the number of Warrant Shares
specified in the  applicable  Notice of Exercise  Form on or before the Delivery
Date  therefor (an "EXERCISE  DEFAULT"),  the Holder shall have (i) the right to
receive from the Company an amount equal to (A) the aggregate  amount paid by or
for the account of the Holder for shares of Common Stock purchased by the Holder
in order to make  delivery  on a sale  effected  in  anticipation  of  receiving
Warrant  Shares upon such exercise,  minus (B) the aggregate  Exercise Price for
such Warrant  Shares,  or (ii) the right to require the Company to reinstate the
Warrant and deem the exercise resulting in such Exercise Default rescinded, null
and void.  This Warrant  shall be deemed to have been  exercised and the Warrant
Shares issuable  thereunder shall be deemed to have been issued,  and the Holder
or any other person so  designated  to be named  therein shall be deemed to have
become the holder of record of such shares for all purposes,  as of the date the
Notice of Exercise Form has been  delivered to the Company,  the Holder has paid
the Exercise Price to the Company (except in the case of a "cashless  exercise",
as  described  above) and all taxes  required to be paid by the Holder,  if any,

                                       2

pursuant to Section 5 prior to the issuance of such shares,  have been paid.  If
this Warrant shall have been exercised in part,  the Company shall,  at the time
of delivery of the  certificate or  certificates  representing  Warrant  Shares,
deliver  to the  Holder a new  Warrant  evidencing  the  rights of the Holder to
purchase the  unpurchased  shares of Common  Stock  called for by this  Warrant,
which new Warrant shall in all other respects be identical with this Warrant.

            4. NO  FRACTIONAL  SHARES OR SCRIP.  No  fractional  shares or scrip
representing  fractional  shares  shall  be  issued  upon the  exercise  of this
Warrant.  As to any  fraction  of a share that the  Holder  would  otherwise  be
entitled to purchase upon such exercise, the Company shall pay a cash adjustment
in respect of such final fraction in an amount equal to the Exercise Price.

            5. CHARGES, TAXES AND EXPENSES.  Issuance of certificates for shares
of Common Stock upon the exercise of this Warrant  shall be made without  charge
to the Holder hereof for any issue or transfer tax or other  incidental  expense
in respect of the issuance of such certificate,  all of which taxes and expenses
shall be paid by the Company,  and such certificates shall be issued in the name
of the Holder of this Warrant or in such name or names as may be directed by the
Holder of this Warrant;  provided,  however,  that in the event certificates for
shares of Common  Stock  are to be issued in a name  other  than the name of the
Holder of this  Warrant,  this Warrant when  surrendered  for exercise  shall be
accompanied by the Assignment  Form attached  hereto duly executed by the Holder
hereof; and the Company may require,  as a condition  thereto,  the payment of a
sum sufficient to reimburse it for any transfer tax incidental thereto.

            6. FURTHER ASSURANCES.  The Company will take all action that may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable  shares of Common Stock, free from all taxes, liens
and charges  with  respect to the issue  thereof,  on the exercise of all or any
portion of this Warrant from time to time outstanding.

            7. TRANSFER, DIVISION AND COMBINATION.

               (a) Subject to compliance  with any applicable  securities  laws,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the Company to be maintained  for such purpose,  upon
surrender of this Warrant at the principal office of the Company,  together with
a written  assignment of this Warrant  substantially in the form attached hereto
duly executed by the Holder or its agent or attorney and funds sufficient to pay
any transfer taxes payable upon the making of such transfer;  provided, however,
that, without the consent of the Company, the initial Holder of this Warrant may
not sell or  otherwise  transfer  this  Warrant  to a third  party who is not an
affiliate of such  holder,  unless there exists at such time an Event of Default
under the Notes or a default under this  Warrant.  Upon such  surrender  and, if
required,  such payment,  the Company shall execute and deliver a new Warrant or
Warrants in the name of the assignee or  assignees  and in the  denomination  or
denominations specified in such instrument of assignment, and shall issue to the
assignor a new Warrant  evidencing  the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled.  A Warrant,  if properly assigned,
may be  exercised  by a new Holder for the  purchase  of shares of Common  Stock
without having a new Warrant issued.

                                       3

               (b) This Warrant may be divided or combined  with other  Warrants
upon presentation hereof at the aforesaid office of the Company, together with a
written notice  specifying the names and denominations in which new Warrants are
to be  issued,  signed  by the  Holder  or its  agent or  attorney.  Subject  to
compliance  with Section 7(a), as to any transfer  which may be involved in such
division or combination,  the Company shall execute and deliver a new Warrant or
Warrants  in  exchange  for the Warrant or Warrants to be divided or combined in
accordance with such notice.

               (c) The  Company  shall  prepare,  issue and  deliver  at its own
expense  (other than  transfer  taxes) the new  Warrant or  Warrants  under this
Section 7.

               (d) The Company  agrees to  maintain,  at its  aforesaid  office,
books for the registration and the registration of transfer of the Warrants.

            8. NO RIGHTS AS STOCKHOLDER  UNTIL  EXERCISE.  This Warrant does not
entitle the Holder  hereof to any voting rights or other rights as a stockholder
of the Company prior to the exercise hereof.

            9. LOSS,  THEFT,  DESTRUCTION OR MUTILATION OF WARRANT.  The Company
covenants that upon receipt by the Company of evidence  reasonably  satisfactory
to it of the loss, theft,  destruction or mutilation of this Warrant certificate
or any stock  certificate  relating to the Warrant Shares,  and in case of loss,
theft or  destruction,  of indemnity or security  reasonably  satisfactory to it
(which  shall  include the  posting of a bond only if required by the  Company's
transfer  agent and if the Holder is not the purchaser of this Warrant under the
Purchase  Agreement or an affiliate of such  purchaser),  and upon surrender and
cancellation  of such Warrant or stock  certificate,  if mutilated,  the Company
will make and deliver a new Warrant or stock certificate of like tenor and dated
as of such cancellation, in lieu of such Warrant or stock certificate.

            10. BUSINESS DAY. If the last or appointed day for the taking of any
action  or the  expiration  of any right  required  or  granted  herein is not a
Business  Day,  then such action may be taken or such right may be  exercised on
the next succeeding Business Day.

            11. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.

               (a)  STOCK  SPLITS,  ETC.  The  number  and  kind  of  securities
purchasable  upon the exercise of this  Warrant and the Exercise  Price shall be
subject  to  adjustment  from  time to time  upon  the  happening  of any of the
following.  In case the  Company  shall (i) pay a  dividend  in shares of Common
Stock or make a  distribution  in shares of Common  Stock to the  Holders of its
outstanding  Common Stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares of Common Stock,  (iii) combine its  outstanding
shares of Common  Stock into a smaller  number of shares of Common Stock or (iv)
issue any shares of its capital stock in a reclassification of the Common Stock,
then the number of Warrant  Shares  purchasable  upon  exercise of this  Warrant
immediately  prior  thereto shall be adjusted so that the Holder of this Warrant
shall be  entitled  to receive  the kind and  number of Warrant  Shares or other
securities  of the  Company  which he would have owned or have been  entitled to
receive had such  Warrant  been  exercised  in advance  thereof.  Upon each such

                                       4

adjustment of the kind and number of Warrant  Shares or other  securities of the
Company  which are  purchasable  hereunder,  the  Holder of this  Warrant  shall
thereafter  be  entitled  to  purchase  the  number of  Warrant  Shares or other
securities resulting from such adjustment at an Exercise Price per Warrant Share
or  other  security  obtained  by  multiplying  the  Exercise  Price  in  effect
immediately prior to such adjustment by the number of Warrant Shares purchasable
pursuant hereto  immediately prior to such adjustment and dividing by the number
of  Warrant  Shares  or other  securities  of the  Company  resulting  from such
adjustment. An adjustment made pursuant to this paragraph shall become effective
immediately  after the effective  date of such event  retroactive  to the record
date,  if any, for such event.

               (b) REORGANIZATION,  RECLASSIFICATION,  MERGER,  CONSOLIDATION OR
DISPOSITION  OF  ASSETS.  In case the  Company  shall  reorganize  its  capital,
reclassify  its  capital  stock,  consolidate  or  merge  with or  into  another
corporation  (where the Company is not the surviving  corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business  to another  corporation  and,  pursuant to the terms of such
reorganization,   reclassification,  merger,  consolidation  or  disposition  of
assets, shares of common stock of the successor or acquiring corporation, or any
cash,  shares of stock or other securities or property of any nature  whatsoever
(including  warrants or other subscription or purchase rights) in addition to or
in lieu of  common  stock of the  successor  or  acquiring  corporation  ("OTHER
PROPERTY"),  are to be received by or distributed to the holders of Common Stock
of the Company, then the Holder shall have the right thereafter to receive, upon
exercise of this Warrant,  the number of shares of common stock of the successor
or acquiring corporation or of the Company, if it is the surviving  corporation,
and  Other  Property  receivable  upon or as a  result  of such  reorganization,
reclassification,  merger, consolidation or disposition of assets by a holder of
the  number of shares of Common  Stock for which  this  Warrant  is  exercisable
immediately   prior  to  such  event.  In  case  of  any  such   reorganization,
reclassification,  merger, consolidation or disposition of assets, the successor
or acquiring  corporation (if other than the Company) shall expressly  assume in
writing or by operation of law the due and punctual  observance and  performance
of each and every  covenant and  condition  of this Warrant to be performed  and
observed by the  Company  and all the  obligations  and  liabilities  hereunder,
subject to such  modifications  as may be deemed  appropriate  (as determined in
good faith by  resolution  of the Board of Directors of the Company) in order to
provide  for  adjustments  of shares of Common  Stock for which this  Warrant is
exercisable   which  shall  be  as  nearly  equivalent  as  practicable  to  the
adjustments  provided  for in this  Section 11. For purposes of this Section 11,
"common stock of the successor or acquiring  corporation" shall include stock of
such  corporation  of any class which is not preferred as to dividends or assets
over any other  class of stock of such  corporation  and which is not subject to
redemption and shall also include any evidences of indebtedness, shares of stock
or other  securities  which are convertible  into or  exchangeable  for any such
stock,  either  immediately  or upon  the  arrival  of a  specified  date or the
happening of a specified event and any warrants or other rights to subscribe for
or purchase any such stock.  The  foregoing  provisions of this Section 11 shall
similarly  apply  to  successive  reorganizations,  reclassifications,  mergers,
consolidations  or  disposition  of assets.

                                       5

               (c) Rights of Holders Upon Dilutive Issuances.

               (i) REQUIRED ADJUSTMENTS.  Subject to the exclusions contained in
Section  11(c)(iv)  below,  if the Company issues or sells any Common Stock in a
capital  raising  transaction  for a Per Share Selling Price (as defined  below)
less than the applicable  Exercise Price in effect immediately prior to the time
of such issue or sale (a "DILUTIVE ISSUANCE"), then forthwith upon such Dilutive
Issuance,  the Exercise Price shall be reduced to the Weighted  Average Exercise
Price (as  defined  below).  The  "WEIGHTED  AVERAGE  EXERCISE  PRICE"  shall be
determined by the following formula:

                                               N + C
                                   EP1 = EP *  -----
                                               N + AS

       where:

                   EP1 =   the Weighted Average Exercise Price;

                   EP  =   the former Exercise Price;

                   N   =   the  number of shares  of  Common  Stock  outstanding
                           immediately   prior  to  such   issuance  (or  deemed
                           issuance)  assuming  exercise  or  conversion  of all
                           outstanding securities exercisable for or convertible
                           into Common Stock;

                   C   =   the  number  of  shares  of  Common  Stock  that  the
                           aggregate  consideration  received  or  deemed  to be
                           received  by the  Company  for the  total  number  of
                           additional  securities  so  issued  or  deemed  to be
                           issued in the Dilutive Issuance would purchase if the
                           Per Share  Selling  Price were equal to the  Exercise
                           Price;

                   AS  =   the  number of  shares  of Common  Stock so issued or
                           deemed to be issued in the Dilutive Issuance.

Notwithstanding the foregoing, the exercise of Stock Purchase Rights (as defined
below) or conversion of  Convertible  Securities (as defined below) shall not be
deemed a Dilutive  Issuance.  The Company  shall give to the  Investors  written
notice of any such  Dilutive  Issuance  within  twenty  four  (24)  hours of the
closing thereof.

               (ii)  DEFINITIONS.  For the purposes of this Section  11(c),  the
term "PER SHARE SELLING  PRICE" shall include the amount  actually paid by third
parties  for each share of Common  Stock.  In the event a fee in excess of 6% is
paid by the Company in connection with such transaction,  any such excess amount
shall be  deducted  from the  selling  price pro rata to all shares  sold in the
transaction  to  arrive  at the Per  Share  Selling  Price.  A sale in a capital
raising transaction of shares of Common Stock shall include the sale or issuance
of Stock Purchase Rights,  Convertible Securities or any other rights,  options,
warrants  or  convertible  securities  under  which the Company is or may become
obligated to issue shares of Common  Stock,  and in such  circumstances  the Per
Share Selling  Price of the Common Stock covered  thereby shall also include the

                                       6

exercise or conversion price thereof (in addition to the consideration  received
by the Company upon such sale or issuance less the excess fee amount, if any, as
provided  above).  In case of any  such  security  issued  in a  "VARIABLE  RATE
TRANSACTION" or "MFN TRANSACTION" (each as defined below), the Per Share Selling
Price shall be deemed to be the lowest  conversion  or  exercise  price at which
such  securities  are  converted or  exercised  or might have been  converted or
exercised in the case of a Variable Rate  Transaction,  or the lowest adjustment
price in the case of an MFN Transaction,  each over the life of such securities.
If shares are issued for a consideration  other than cash, the Per Share Selling
Price shall be the fair market value of such consideration as determined in good
faith by independent  certified public  accountants  mutually  acceptable to the
Company and the Investors.  "VARIABLE RATE  TRANSACTION"  means a transaction in
which the  Company  issues or sells (A) any debt or equity  securities  that are
convertible  into,  exchangeable  or  exercisable  for,  or include the right to
receive  additional shares of Common Stock either (1) at a conversion,  exercise
or  exchange  rate or other  price that is based  upon  and/or  varies  with the
trading  prices of or  quotations  for the  Common  Stock at any time  after the
initial  issuance  of  such  debt  or  equity  securities,  or (2)  with a fixed
conversion,  exercise or  exchange  price that is subject to being reset at some
future date after the initial  issuance of such security or upon the  occurrence
of specified or contingent events directly or indirectly related to the business
of the Company or the market for the Common Stock,  or (B) any securities of the
Company issued or issuable pursuant to an "equity line" structure which provides
for the  sale,  from  time to time,  of  securities  of the  Company  which  are
registered for resale pursuant to the Securities Act. "MFN TRANSACTION"  means a
transaction  in which the  Company  issues or sells any equity  securities  in a
capital  raising  transaction  or  series  of  related  transactions  (the  "NEW
OFFERING") which grants to an investor (the "NEW INVESTOR") the right to receive
additional  shares based upon future equity raising  transactions of the Company
on terms more  favorable  than  those  granted  to the New  Investor  in the New
Offering. "CONVERTIBLE SECURITIES" shall mean evidences of indebtedness,  shares
of stock or other securities that are convertible into or exchangeable for, with
or without payment of additional  consideration,  shares of Common Stock. "STOCK
PURCHASE  RIGHTS" shall mean any warrants,  options or other rights to subscribe
for, purchase or otherwise acquire any shares of Common Stock or any Convertible
Securities.  Convertible  Securities and Stock  Purchase  Rights shall be deemed
outstanding and issued or sold at the time of such issue or sale.

               (iii)  ADJUSTMENT  MECHANISM.  If an  adjustment  of the Exercise
Price is required pursuant to Section 11(c)(i), the Company shall deliver to the
Investors  within  three (3)  business  days of the  closing of the  transaction
giving  rise  to the  adjustment  (the  "DELIVERY  DATE")  written  confirmation
reflecting the adjusted Exercise Price.

               (iv)  EXCLUSIONS.  Section  11(c) shall not apply to (i) sales of
shares of  Common  Stock by the  Company  upon  conversion  or  exercise  of any
convertible securities, options or warrants outstanding prior to the date hereof
pursuant  to the  terms of such  securities,  options  or  warrants  on the date
hereof;  (ii) sales of shares of Common  Stock by the  Company  pursuant  to the
provisions of any option plan in existence on the date hereof or a  subsequently
adopted and stockholder-approved employee option or similar plan, or (iii) sales
of Common  Stock of the Company or  securities  convertible  into  Common  Stock

                                       7

pursuant to the Confidential  Private Placement Memorandum dated June 6, 2003 of
the Company, or any amendments or supplements thereto.

                 (v)  READJUSTMENT OF EXERCISE PRICE. In the event of any change
in (i) the  consideration,  if any,  payable upon exercise of any Stock Purchase
Rights or upon the conversion or exchange of any Convertible  Securities or (ii)
the  rate  at  which  any  Convertible   Securities  are  convertible   into  or
exchangeable  for  shares of Common  Stock,  the  applicable  Exercise  Price as
computed upon the original  issue  thereof shall  forthwith be readjusted to the
Exercise  Price  that  would  have been in  effect  at such time had such  Stock
Purchase  Rights or Convertible  Securities  provided for such changed  purchase
price,  consideration  or  conversion  rate,  as the  case  may be,  at the time
initially  granted,  issued or sold.  On the  expiration  of any Stock  Purchase
Rights  not  exercised  or of  any  right  to  convert  or  exchange  under  any
Convertible  Securities  not exercised,  the  applicable  Exercise Price then in
effect shall  forthwith be increased to the Exercise  Price that would have been
in effect  at the time of such  expiration  had such  Stock  Purchase  Rights or
Convertible  Securities never been issued. No readjustment of the Exercise Price
pursuant to this  Subsection  shall require any adjustment to the amount paid or
number of shares of Common  Stock  received by the Holder  upon any  exercise of
this  Warrant  prior to the date upon which such  readjustment  to the  Exercise
Price shall occur.

               (d) NOMINAL ADJUSTMENT. The Company shall not be required to make
an adjustment in the Exercise Price under this Section 11 if such  adjustment is
less than  $0.01  per  share of Common  Stock.  However,  the  Company  shall be
required to carry forward on its books all adjustments that would have been made
but for this  Section  11(d) and shall take such  adjustment  into  account when
making subsequent adjustments under this Section 11. All calculations under this
Section 11 shall be made to the nearest cent.

            12.  VOLUNTARY  ADJUSTMENT  BY THE COMPANY.  The Company may, at any
time during the term of this Warrant,  reduce the then current Exercise Price to
any  amount  and for any  period  of time  deemed  appropriate  by the  Board of
Directors of the Company.

            13. NOTICE OF  ADJUSTMENT.  Whenever the number of Warrant Shares or
number or kind of securities or other property  purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided,  the Company
shall promptly mail by registered or certified mail,  return receipt  requested,
to the Holder of this Warrant notice of such  adjustment or adjustments  setting
forth the number of Warrant  Shares (and Other  Property)  purchasable  upon the
exercise of this  Warrant and the  Exercise  Price of such  Warrant  Shares (and
Other  Property) after such  adjustment,  setting forth a brief statement of the
facts  requiring such adjustment and setting forth the computation by which such
adjustment was made.  Such notice,  in the absence of manifest  error,  shall be
conclusive evidence of the correctness of such adjustment.

            14. NOTICE OF CORPORATE ACTION. If at any time:

               (a) the Company  shall take a record of the holders of its Common
Stock  for the  purpose  of  entitling  them to  receive  a  dividend  or  other
distribution,  or any right to subscribe  for or purchase  any  evidences of its
indebtedness,  any  shares  of stock of any  class or any  other  securities  or
property, or to receive any other right; or

                                       8

               (b) there shall be any capital reorganization of the Company, any
reclassification  or recapitalization of the capital stock of the Company or any
consolidation  or merger of the  Company  with,  or any sale,  transfer or other
disposition of all or substantially all the property,  assets or business of the
Company to, another corporation; or

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

then, in any one or more of such cases, the Company shall give to the Holder (i)
at least 30 days' prior written  notice of the date on which a record date shall
be selected for such dividend,  distribution or right or for determining  rights
to  vote  in  respect  of any  such  reorganization,  reclassification,  merger,
consolidation, sale, transfer, disposition,  liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least 30
days'  prior  written  notice of the date when the same shall take  place.  Such
notice in accordance  with the foregoing  clause also shall specify (x) the date
on which  any such  record  is to be taken  for the  purpose  of such  dividend,
distribution  or right,  (y) the date on which the holders of Common Stock shall
be  entitled to any such  dividend,  distribution  or right,  and the amount and
character  thereof,   and  (z)  the  date  on  which  any  such  reorganization,
reclassification,    merger,   consolidation,   sale,   transfer,   disposition,
dissolution,  liquidation  or winding  up is to take place and the time,  if any
such  time is to be fixed,  as of which the  holders  of Common  Stock  shall be
entitled  to  exchange  their  shares of Common  Stock for  securities  or Other
Property deliverable upon such disposition,  dissolution, liquidation or winding
up. Each such  written  notice shall be  sufficiently  given if addressed to the
Holder at the last  address of the Holder  appearing on the books of the Company
and delivered in accordance with Section 16(d).

            15. AUTHORIZED SHARES.

               (a) The Company  covenants  that during the period the Warrant is
outstanding,  it will reserve from its  authorized  and unissued  Common Stock a
sufficient  number of shares to provide for the  issuance of the Warrant  Shares
upon the exercise in full of any purchase rights under this Warrant. The Company
further  covenants  that its  issuance of this  Warrant  shall  constitute  full
authority  to its  officers  who are charged  with the duty of  executing  stock
certificates  to execute and issue the  necessary  certificates  for the Warrant
Shares upon the exercise of the purchase rights under this Warrant.  The Company
will take all such  reasonable  action as may be  necessary  to assure that such
Warrant  Shares  may be issued  as  provided  herein  without  violation  of any
applicable law or regulation,  or of any  requirements  of the Principal  Market
upon which the Common Stock may be listed.

               (b) The  Company  shall  not by any  action,  including,  without
limitation,   amending  its   certificate  of   incorporation   or  through  any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities  or any other  voluntary  action,  avoid or seek to avoid the
observance or performance  of any of the terms of this Warrant,  but will at all
times in good  faith  assist in the  carrying  out of all such  terms and in the
taking of all such  actions as may be necessary  or  appropriate  to protect the
rights of the Holder against impairment.  Without limiting the generality of the

                                       9

foregoing,  the  Company  will (i) take all such action 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, and
(ii) use its best  efforts  to obtain  all such  authorizations,  exemptions  or
consents from any public regulatory body having  jurisdiction  thereof as may be
necessary to enable the Company to perform its obligations under this Warrant.

               (c) Before  taking any action  which  would  cause an  adjustment
reducing  the current  Exercise  Price below the then par value,  if any, of the
shares of Common Stock issuable upon exercise of the Warrants, the Company shall
take any  corporate  action which may be necessary in order that the Company may
validly and legally  issue fully paid and  non-assessable  shares of such Common
Stock at such adjusted Exercise Price.

               (d) Before  taking any action which would result in an adjustment
in the number of shares of Common Stock for which this Warrant is exercisable or
in the  Exercise  Price,  the Company  shall obtain all such  authorizations  or
exemptions  thereof,  or consents  thereto,  as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.

               16.  ADDITIONAL  EXERCISE  RESTRICTIONS.  In no event  shall  any
holder be entitled to exercise this Warrant for shares of Common Stock in excess
of that  number of  shares of Common  Stock  that,  upon  giving  effect to such
exercise,   would  cause  the  aggregate   number  of  shares  of  Common  Stock
beneficially  owned by the holder and its  "affiliates"  (as defined in Rule 405
under the  Securities  Act) to  exceed  4.99% of the  outstanding  shares of the
Common  Stock of the  Company  following  such  exercise.  For  purposes of this
Section 16, the aggregate number of shares of Common Stock beneficially owned by
the Holder and its affiliates shall include the number of shares of Common Stock
issuable upon exercise of the Warrant with respect to which the determination is
being made, but shall exclude the number of shares of Common Stock that would be
issuable upon (i) exercise of any remaining, unexercised portion of this Warrant
and (ii) exercise or conversion of the unexercised or unconverted portion of any
other Securities  (including,  without  limitation,  any warrants or convertible
preferred  stock or convertible  Notes) subject to a limitation on conversion or
exercise analogous to the limitation  contained herein beneficially owned by the
Holder and its affiliates.  Except as set forth in the preceding  sentence,  for
purposes  of this  Section  16,  beneficial  ownership  shall be  calculated  in
accordance  with  Section  13(d) of the  Securities  Exchange  Act of  1934,  as
amended.  For  purposes  of this  Section  16,  in  determining  the  number  of
outstanding  shares  of  Common  Stock  a  Holder  may  rely  on the  number  of
outstanding shares of Common Stock as reflected in (1) the Company's most recent
Form  10-Q  or  Form  10-K,  as  the  case  may  be,  (2) a more  recent  public
announcement  by the  Company  or (3) any  other  notice by the  Company  or its
transfer  agent setting forth the number of shares of Common Stock  outstanding.
For any reason at any time, upon the written or oral request of the Holder,  the
Company shall immediately confirm orally and in writing to the Holder the number
of  shares  of  Common  Stock  then  outstanding.  In any  case,  the  number of
outstanding  shares of Common Stock shall be  determined  after giving effect to
exercises  of portions of the Warrant by such Holder  since the date as of which
such number of  outstanding  shares of Common Stock was reported.  To the extent

                                       10

that the limitation  contained in this Section 16 applies,  the determination of
whether the Warrant is exercisable (in relation to other  securities  owned by a
Holder) and of which portion of this Warrant is exercisable shall be in the sole
discretion of the Holder,  and the  submission of a Notice of Exercise  shall be
deemed to be the Holder's determination that the Warrant is exercisable, in each
case subject to such aggregate percentage limitation, and the Company shall have
no obligation or right to verify or confirm the accuracy of such  determination.
Nothing  contained  herein  shall be deemed to restrict the right of a Holder to
exercise  the  Warrant  at such  time as such  exercise  will  not  violate  the
provisions  of this  Section  16. The Holder  may waive the  provisions  of this
Section 16 as to itself  (and  solely as to itself)  upon a change of control of
the Company, and the provisions of this Section 16 shall continue to apply until
such change of control of the Company (or such later date as may be specified in
such  notice of  waiver).  No  exercise  in  violation  of this  Section 16, but
otherwise in accordance with this Warrant, shall affect the status of the Common
Stock issued upon such exercise as validly issued, fully paid and nonassessable.

            17. MISCELLANEOUS.

               (a)  JURISDICTION.   This  Warrant  shall  be  binding  upon  any
successors or assigns of the Company.  This Warrant shall  constitute a contract
and be governed under the laws of New York without regard to its conflict of law
principles or rules,  and be subject to venue pursuant to the terms set forth in
the Purchase Agreement.

               (b) RESTRICTIONS. The Holder hereof acknowledges that the Warrant
Shares acquired upon the exercise of this Warrant, if not registered,  will have
restrictions upon resale imposed by state and federal securities laws.

               (c) NONWAIVER AND EXPENSES.  No course of dealing or any delay or
failure to exercise any right  hereunder on the part of the Holder shall operate
as a waiver of such right or otherwise prejudice the Holder's rights,  powers or
remedies,  notwithstanding  all rights  hereunder  terminate on the  Termination
Date. If the Company  fails to comply with any  provision of this  Warrant,  the
Company shall pay to the Holder such amounts as shall be sufficient to cover any
costs and expenses  including,  but not limited to, reasonable  attorneys' fees,
including those of appellate  proceedings,  incurred by the Holder in collecting
any amounts due  pursuant  hereto or in otherwise  enforcing  any of its rights,
powers or  remedies  hereunder,  (but only to the extent the Holder  prevails in
enforcing such rights).

               (d) NOTICES.  Any notice,  request or other document  required or
permitted to be given or delivered to the Holder  hereof by the Company shall be
delivered in accordance with the notice provisions of the Purchase Agreement.

               (e) LIMITATION OF LIABILITY.  No provision hereof, in the absence
of affirmative  action by the Holder to purchase shares of Common Stock,  and no
enumeration herein of the rights or privileges of the Holder hereof,  shall give
rise to any  liability of the Holder for the purchase  price of any Common Stock
or as a stockholder  of the Company,  whether such  liability is asserted by the
Company or by creditors of the Company.

                                       11

               (f)  REMEDIES.  The  Holder,  in  addition  to being  entitled to
exercise  all rights  granted by law,  including  recovery of  damages,  will be
entitled to specific  performance of its rights under this Warrant.  The Company
agrees that  monetary  damages would not be adequate  compensation  for any loss
incurred  by reason  of a breach by it of the  provisions  of this  Warrant  and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.

               (g)  SUCCESSORS  AND ASSIGNS.  Subject to  applicable  securities
laws, this Warrant and the rights and obligations  evidenced  hereby shall inure
to the  benefit of and be binding  upon the  successors  of the  Company and the
successors and permitted  assigns of the Holder.  The provisions of this Warrant
are  intended  to be for the  benefit of all  holders  from time to time of this
Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

               (h)  INDEMNIFICATION.  The Company  agrees to indemnify  and hold
harmless  the Holder  from and  against any  liabilities,  obligations,  losses,
damages,  penalties,  actions, judgments, suits, claims, costs, attorneys' fees,
expenses and disbursements of any kind which may be imposed upon, incurred by or
asserted  against  the Holder in any manner  relating  to or arising  out of any
failure by the Company to perform or observe in any material  respect any of its
covenants,  agreements,  undertakings  or obligations set forth in this Warrant;
PROVIDED,  HOWEVER,  that the Company will not be liable hereunder to the extent
that  any  liabilities,   obligations,   losses,  damages,  penalties,  actions,
judgments,  suits, claims, costs, attorneys' fees, expenses or disbursements are
found in a final  non-appealable  judgment by a court to have  resulted from the
Holder's bad faith or willful  misconduct  in its capacity as a  stockholder  or
warrantholder of the Company.

               (i)  AMENDMENT.  This  Warrant  may be modified or amended or the
provisions hereof waived with the written consent of the Company and the Holder.

               (j)  SEVERABILITY.  Wherever  possible,  each  provision  of this
Warrant shall be  interpreted  in such manner as to be effective and valid under
applicable  law, but if any  provision of this Warrant shall be prohibited by or
invalid under  applicable law, such provision shall be ineffective to the extent
of such  prohibition or invalidity,  without  invalidating the remainder of such
provisions or the remaining provisions of this Warrant.

               (k)  HEADINGS.  The  headings  used in this  Warrant  are for the
convenience of reference  only and shall not, for any purpose,  be deemed a part
of this Warrant.

                     [THE NEXT PAGE IS THE SIGNATURE PAGE.]

                                       12

            IN WITNESS  WHEREOF,  the  Company  has caused  this Stock  Purchase
Warrant to be executed by its officer thereunto duly authorized.

Dated:  July 3, 2003

                                          DATATEC SYSTEMS, INC.

                                          By:
                                             -----------------------------------
                                          Name:
                                                --------------------------------
                                          Title:
                                                --------------------------------

                                       13

                               NOTICE OF EXERCISE

To:    [Transfer Agent]

            (1) The  undersigned  hereby elects to purchase  ________  shares of
Common Stock (the "Common Stock") of Datatec Systems, Inc. pursuant to the terms
of the attached Warrant,  and (except in the case of a Cashless Exercise,  if so
designated  below)  tenders  herewith  payment  of the  Exercise  Price in full,
together with all applicable transfer taxes, if any.

            (2) Please issue a certificate  or  certificates  representing  said
shares of Common Stock in the name of the  undersigned  or in such other name as
is specified below:

                                                -------------------------------
                                                (Name)

                                                -------------------------------
                                                (Address)

                                                -------------------------------

Dated: ________________, _________

                                                     ___________________________
                                                     Signature

____ Check here if the Warrant is being exercised pursuant to a Cashless Exercise

                                 ASSIGNMENT FORM

                    (To assign the foregoing Warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the Warrant.)

            FOR VALUE RECEIVED,  the foregoing  Warrant and all rights evidenced
thereby are hereby assigned to

_______________________________________________ whose address is

_________________________________________________________________

__________________________________________________________________

                                                Dated:  ______________, _______

                             Holder's Signature:   _____________________________

                             Holder's Address:     _____________________________

                                                   _____________________________

Signature Guaranteed:  ___________________________________________

NOTE: The signature to this  Assignment Form must correspond with the name as it
appears on the face of the Warrant,  without  alteration or  enlargement  or any
change whatsoever,  and must be guaranteed by a bank or trust company.  Officers
of  corporations  and  those  acting  in an  fiduciary  or other  representative
capacity  should  file  proper  evidence of  authority  to assign the  foregoing
Warrant.

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