Document:

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

                        CALLABLE SECURED CONVERTIBLE NOTE

New York, New York
September 12, 2006                                                     $232,500

      FOR VALUE RECEIVED,  ADVANCED  BIOPHOTONICS  INC., a Delaware  corporation
(hereinafter called the "Borrower"),  hereby promises to pay to the order of AJW
QUALIFIED  PARTNERS,  LLC  or  registered  assigns  (the  "Holder")  the  sum of
$232,500,  on September 12, 2009 (the "Maturity  Date"),  and to pay interest on
the  unpaid  principal  balance  hereof at the rate of eight  percent  (8%) (the
"Interest  Rate") per annum from September 12, 2006 (the "Issue Date") until the
same becomes due and  payable,  whether at maturity or upon  acceleration  or by
prepayment or otherwise.  Any amount of principal or interest on this Note which
is not paid when due shall bear  interest at the rate of fifteen  percent  (15%)
per annum from the due date thereof until the same is paid ("Default Interest").
Interest  shall  commence  accruing on the Issue Date,  shall be computed on the
basis of a  365-day  year and the  actual  number of days  elapsed  and shall be
payable  quarterly  provided  that no interest  shall be due and payable for any
month in which the Trading Price (as such term is defined below) is greater than
$.3125 for each  Trading Day (as such term is defined  below) of the month.  All
payments due hereunder (to the extent not converted into common stock, $.001 par
value per share (the "Common  Stock") in accordance with the terms hereof) shall
be made in lawful money of the United States of America.  All payments  shall be
made at such  address as the Holder  shall  hereafter  give to the  Borrower  by
written notice made in accordance with the provisions of this Note. Whenever any
amount  expressed to be due by the terms of this Note is due on any day which is
not a business  day, the same shall  instead be due on the next  succeeding  day
which is a business day and, in the case of any  interest  payment date which is
not the date on which this Note is paid in full,  the  extension of the due date
thereof shall not be taken into account for purposes of  determining  the amount
of interest  due on such date.  As used in this Note,  the term  "business  day"
shall mean any day other than a  Saturday,  Sunday or a day on which  commercial
banks in the city of New York,  New York are  authorized  or  required by law or
executive order to remain closed.  Each  capitalized  term used herein,  and not
otherwise  defined,  shall have the  meaning  ascribed  thereto in that  certain
Securities Purchase Agreement,  dated September 12, 2006, pursuant to which this
Note was originally issued (the "Purchase Agreement").

<PAGE>

      This Note is free from all  taxes,  liens,  claims and  encumbrances  with
respect to the issue  thereof and shall not be subject to  preemptive  rights or
other  similar  rights  of  shareholders  of the  Borrower  and will not  impose
personal  liability  upon the holder  thereof.  The  obligations of the Borrower
under  this  Note  shall be  secured  by that  certain  Security  Agreement  and
Intellectual  Property Security Agreement,  each dated September 12, 2006 by and
between the Borrower and the Holder.

      The following terms shall apply to this Note:

                          ARTICLE I. CONVERSION RIGHTS

      1.1 Conversion  Right.  The Holder shall have the right from time to time,
and at any time on or prior to the earlier of (i) the Maturity Date and (ii) the
date of payment of the Default  Amount (as defined in Article  III)  pursuant to
Section  1.6(a) or Article III, the  Optional  Prepayment  Amount (as defined in
Section  5.1 or any  payments  pursuant to Section  1.7,  each in respect of the
remaining  outstanding  principal amount of this Note to convert all or any part
of the outstanding and unpaid  principal amount of this Note into fully paid and
non-assessable  shares of Common Stock, as such Common Stock exists on the Issue
Date,  or any shares of capital  stock or other  securities of the Borrower into
which such  Common  Stock  shall  hereafter  be changed or  reclassified  at the
conversion  price (the  "Conversion  Price")  determined  as provided  herein (a
"Conversion");  provided, however, that in no event shall the Holder be entitled
to convert any portion of this Note in excess of that  portion of this Note upon
conversion  of  which  the sum of (1) the  number  of  shares  of  Common  Stock
beneficially owned by the Holder and its affiliates (other than shares of Common
Stock  which may be deemed  beneficially  owned  through  the  ownership  of the
unconverted  portion of the Notes or the  unexercised or unconverted  portion of
any other security of the Borrower (including,  without limitation, the warrants
issued  by  the  Borrower  pursuant  to the  Purchase  Agreement)  subject  to a
limitation  on  conversion or exercise  analogous to the  limitations  contained
herein)  and (2) the  number  of  shares  of  Common  Stock  issuable  upon  the
conversion  of the portion of this Note with respect to which the  determination
of this  proviso is being made,  would  result in  beneficial  ownership  by the
Holder and its affiliates of more than 4.99% of the outstanding shares of Common
Stock and provided  further that the Holder shall not be entitled to convert any
portion of this Note during any month  immediately  succeeding  a  Determination
Date on which the Borrower  exercises its prepayment  option pursuant to Section
5.2 of this Note.  For  purposes  of the  proviso to the  immediately  preceding
sentence,  beneficial  ownership  shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended,  and Regulations 13D-G
thereunder,  except as  otherwise  provided in clause (1) of such  proviso.  The
number of shares of Common Stock to be issued upon each  conversion of this Note
shall be determined by dividing the Conversion  Amount (as defined below) by the
applicable  Conversion  Price then in effect on the date specified in the notice
of  conversion,  in the form  attached  hereto  as  Exhibit  A (the  "Notice  of
Conversion"), delivered to the Borrower by the Holder in accordance with Section
1.4 below;  provided that the Notice of Conversion is submitted by facsimile (or
by other means resulting in, or reasonably expected to result in, notice) to the
Borrower  before 6:00 p.m., New York, New York time on such conversion date (the
"Conversion  Date").  The term  "Conversion  Amount" means,  with respect to any
conversion of this Note, the sum of (1) the principal  amount of this Note to be
converted in such  conversion plus (2) accrued and unpaid  interest,  if any, on
such  principal  amount  at the  interest  rates  provided  in this  Note to the
Conversion Date, provided, however, that the Company shall have the right to pay
any or all  interest in cash plus (3) Default  Interest,  if any, on the amounts
referred to in the immediately  preceding clauses (1) and/or (2) plus (4) at the
Holder's  option,  any amounts  owed to the Holder  pursuant to Sections 1.3 and
1.4(g)  hereof or pursuant to Section 2(c) of that certain  Registration  Rights
Agreement,  dated as of September  12,  2006,  executed in  connection  with the
initial  issuance of this Note and the other Notes issued on the Issue Date (the
"Registration  Rights Agreement").  The term "Determination Date" means the last
business day of each month after the Issue Date.

                                       2
<PAGE>

      1.2 Conversion Price.

            (a) Calculation of Conversion  Price.  The Conversion Price shall be
      the Variable Conversion Price (as defined herein) (subject,  in each case,
      to  equitable  adjustments  for stock  splits,  stock  dividends or rights
      offerings by the Borrower  relating to the  Borrower's  securities  or the
      securities   of   any   subsidiary   of   the   Borrower,    combinations,
      recapitalization,   reclassifications,   extraordinary  distributions  and
      similar events). The "Variable Conversion Price" shall mean the Applicable
      Percentage (as defined herein)  multiplied by the Market Price (as defined
      herein).  "Market Price" means the average of the lowest three (3) Trading
      Prices (as  defined  below) for the Common  Stock  during the twenty  (20)
      Trading Day period ending one Trading Day prior to the date the Conversion
      Notice  is  sent  by  the  Holder  to  the  Borrower  via  facsimile  (the
      "Conversion  Date").  "Trading  Price"  means,  for any security as of any
      date, the intraday  trading price on the  Over-the-Counter  Bulletin Board
      (the  "OTCBB")  as reported by a reliable  reporting  service  ("Reporting
      Service")  mutually  acceptable  to  Borrower  and  Holder  and  hereafter
      designated  by  Holders  of a majority  in  interest  of the Notes and the
      Borrower  or, if the OTCBB is not the  principal  trading  market for such
      security,  the intraday  trading  price of such  security on the principal
      securities  exchange or trading  market  where such  security is listed or
      traded or, if no intraday  trading  price of such security is available in
      any of the foregoing  manners,  the average of the intraday trading prices
      of any  market  makers  for such  security  that are  listed  in the "pink
      sheets" by the National Quotation Bureau, Inc. If the Trading Price cannot
      be calculated for such security on such date in the manner provided above,
      the Trading Price shall be the fair market value as mutually determined by
      the  Borrower and the holders of a majority in interest of the Notes being
      converted  for which the  calculation  of the Trading Price is required in
      order to determine the Conversion Price of such Notes. "Trading Day" shall
      mean any day on which the  Common  Stock is traded  for any  period on the
      OTCBB, or on the principal  securities exchange or other securities market
      on which the Common Stock is then being  traded.  "Applicable  Percentage"
      shall mean 60.0%.

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

                                       3
<PAGE>

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

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

                                       4
<PAGE>

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

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

      The Holder's election shall be made in writing to the Borrower at any time
prior to 6:00  p.m.,  New  York,  New York  time,  on the third day of the month
following the month in which  Conversion  Default  payments have accrued.  If no
election is made,  the Holder shall be deemed to have  elected to receive  cash.
Nothing  herein shall limit the Holder's  right to pursue actual damages (to the
extent in excess of the Conversion  Default Payments) for the Borrower's failure
to maintain a sufficient  number of authorized  shares of Common Stock, and each
holder shall have the right to pursue all remedies available at law or in equity
(including degree of specific performance and/or injunctive relief).

                                       5
<PAGE>

      1.4 Method of Conversion.

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

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

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

            (d)  Delivery of Common Stock Upon  Conversion.  Upon receipt by the
      Borrower from the Holder of a facsimile  transmission (or other reasonable
      means of communication) of a Notice of Conversion meeting the requirements
      for  conversion as provided in this Section 1.4, the Borrower  shall issue
      and  deliver or cause to be issued and  delivered  to or upon the order of
      the Holder certificates for the Common Stock issuable upon such conversion
      within three (3) business days after such receipt (and, solely in the case
      of conversion of the entire unpaid principal  amount hereof,  surrender of
      this Note) (such third business day being  hereinafter  referred to as the
      "Deadline") in accordance with the terms hereof and the Purchase Agreement
      (including,  without  limitation,  in accordance with the  requirements of
      Section 2(g) of the Purchase  Agreement  that  certificates  for shares of
      Common Stock  issued on or after the  effective  date of the  Registration
      Statement  upon  conversion  of this Note  shall not bear any  restrictive
      legend).

                                       6
<PAGE>

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

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

            (g) Failure to Deliver  Common Stock Prior to  Deadline.  Without in
      any way limiting the Holder's  right to pursue other  remedies,  including
      actual damages and/or equitable relief, the parties agree that if delivery
      of the Common Stock issuable upon conversion of this Note is more than two
      (2)  business  days after the  Deadline  (other  than a failure due to the
      circumstances  described  in Section  1.3 above,  which  failure  shall be
      governed by such Section) the Borrower  shall pay to the Holder $2,000 per
      day in cash,  for each day beyond the Deadline that the Borrower  fails to
      deliver such Common Stock. Such cash amount shall be paid to Holder by the
      fifth day of the month  following the month in which it has accrued or, at
      the option of the Holder (by written  notice to the  Borrower by the first
      day of the month  following the month in which it has  accrued),  shall be
      added to the principal  amount of this Note, in which event interest shall
      accrue  thereon  in  accordance  with  the  terms  of this  Note  and such
      additional  principal  amount  shall be  convertible  into Common Stock in
      accordance with the terms of this Note.

                                       7
<PAGE>

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

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

      The legend set forth above shall be removed and the  Borrower  shall issue
to the Holder a new certificate  therefor free of any transfer legend if (i) the
Borrower or its  transfer  agent shall have  received an opinion of counsel,  in
form,  substance  and scope  customary  for  opinions  of counsel in  comparable
transactions,  to the effect that a public sale or transfer of such Common Stock
may be made  without  registration  under the Act and the  shares are so sold or
transferred,  (ii) such Holder  provides the Borrower or its transfer agent with
reasonable  assurances  that the Common Stock  issuable upon  conversion of this
Note (to the extent such securities are deemed to have been acquired on the same
date) can be sold  pursuant to Rule 144 or (iii) in the case of the Common Stock
issuable upon  conversion of this Note,  such security is registered for sale by
the Holder  under an  effective  registration  statement  filed under the Act or
otherwise  may be sold  pursuant to Rule 144 without any  restriction  as to the
number of securities as of a particular date that can then be immediately  sold.
Nothing  in this  Note  shall  (i) limit  the  Borrower's  obligation  under the
Registration Rights Agreement or (ii) affect in any way the Holder's obligations
to comply with applicable  prospectus  delivery  requirements upon the resale of
the securities referred to herein.

      1.6 Effect of Certain Events.

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

                                       8
<PAGE>

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

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

                                       9
<PAGE>

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

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

      Additionally,  the Borrower  shall be deemed to have issued or sold shares
of Common  Stock if the Borrower in any manner  issues or sells any  Convertible
Securities,  whether or not immediately  convertible  (other than where the same
are issuable  upon the  exercise of Options),  and the price per share for which
Common  Stock is  issuable  upon such  conversion  or  exchange is less than the
Variable  Conversion  Price then in effect,  then the Variable  Conversion Price
shall be equal to such  price  per  share.  For the  purposes  of the  preceding
sentence,  the "price per share for which  Common  Stock is  issuable  upon such
conversion or exchange" is determined by dividing (i) the total amount,  if any,
received or receivable by the Borrower as consideration for the issuance or sale
of all  such  Convertible  Securities,  plus the  minimum  aggregate  amount  of
additional consideration, if any, payable to the Borrower upon the conversion or
exchange  thereof  at  the  time  such   Convertible   Securities  first  become
convertible  or  exchangeable,  by (ii) the  maximum  total  number of shares of
Common Stock  issuable upon the  conversion or exchange of all such  Convertible
Securities.  No further adjustment to the Variable Conversion Price will be made
upon the actual  issuance of such Common  Stock upon  conversion  or exchange of
such Convertible Securities.

                                       10
<PAGE>

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

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

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

                                       11
<PAGE>

      1.8 Status as Shareholder.  Upon submission of a Notice of Conversion by a
Holder,  (i) the shares covered  thereby  (other than the shares,  if any, which
cannot be issued  because their  issuance  would exceed such Holder's  allocated
portion  of the  Reserved  Amount  or  Maximum  Share  Amount)  shall be  deemed
converted  into shares of Common Stock and (ii) the Holder's  rights as a Holder
of such converted portion of this Note shall cease and terminate, excepting only
the right to receive  certificates  for such  shares of Common  Stock and to any
remedies  provided  herein or  otherwise  available  at law or in equity to such
Holder  because of a failure by the  Borrower  to comply  with the terms of this
Note.  Notwithstanding the foregoing,  if a Holder has not received certificates
for all shares of Common Stock prior to the tenth (10th)  business day after the
expiration  of the Deadline  with respect to a conversion of any portion of this
Note for any  reason,  then  (unless the Holder  otherwise  elects to retain its
status as a holder of Common  Stock by so  notifying  the  Borrower)  the Holder
shall  regain  the  rights  of a  Holder  of  this  Note  with  respect  to such
unconverted   portions  of  this  Note  and  the  Borrower  shall,  as  soon  as
practicable,  return such unconverted Note to the Holder or, if the Note has not
been  surrendered,  adjust its records to reflect that such portion of this Note
has not been converted.  In all cases, the Holder shall retain all of its rights
and remedies (including, without limitation, (i) the right to receive Conversion
Default Payments pursuant to Section 1.3 to the extent required thereby for such
Conversion  Default and any subsequent  Conversion Default and (ii) the right to
have the Conversion Price with respect to subsequent  conversions  determined in
accordance with Section 1.3) for the Borrower's failure to convert this Note.

                         ARTICLE II. CERTAIN COVENANTS

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

                                       12
<PAGE>

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

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

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

      2.5 Advances and Loans.  So long as the Borrower shall have any obligation
under this Note, the Borrower shall not,  without the Holder's  written consent,
lend money,  give credit or make advances to any person,  firm, joint venture or
corporation,  including,  without limitation,  officers,  directors,  employees,
subsidiaries and affiliates of the Borrower,  except loans,  credits or advances
(a) in  existence  or  committed  on the date hereof and which the  Borrower has
informed  Holder in writing  prior to the date hereof,  (b) made in the ordinary
course of business or (c) not in excess of $50,000.

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

                         ARTICLE III. EVENTS OF DEFAULT

      If any of the following  events of default  (each,  an "Event of Default")
shall occur:

      3.1 Failure to Pay  Principal or Interest.  The Borrower  fails to pay the
principal hereof or interest thereon when due on this Note, whether at maturity,
upon  a  Trading  Market   Prepayment   Event  pursuant  to  Section  1.7,  upon
acceleration or otherwise;

                                       13
<PAGE>

      3.2  Conversion  and the Shares.  The  Borrower  fails to issue  shares of
Common Stock to the Holder (or announces or threatens that it will not honor its
obligation to do so) upon exercise by the Holder of the conversion rights of the
Holder in accordance with the terms of this Note (for a period of at least sixty
(60) days, if such failure is solely as a result of the  circumstances  governed
by  Section  1.3 and the  Borrower  is using its best  efforts  to  authorize  a
sufficient  number of shares of Common Stock as soon as  practicable),  fails to
transfer  or  cause  its  transfer  agent  to  transfer  (electronically  or  in
certificated  form) any  certificate  for shares of Common  Stock  issued to the
Holder  upon  conversion  of or  otherwise  pursuant  to this  Note as and  when
required by this Note or the Registration  Rights Agreement,  or fails to remove
any restrictive legend (or to withdraw any stop transfer instructions in respect
thereof) on any  certificate for any shares of Common Stock issued to the Holder
upon  conversion  of or otherwise  pursuant to this Note as and when required by
this Note or the  Registration  Rights  Agreement  (or  makes any  announcement,
statement or threat that it does not intend to honor the  obligations  described
in  this  paragraph)  and  any  such  failure  shall  continue  uncured  (or any
announcement,  statement  or threat  not to honor its  obligations  shall not be
rescinded  in  writing)  for ten (10) days  after the  Borrower  shall have been
notified thereof in writing by the Holder;

      3.3  Failure  to Timely  File  Registration  or Effect  Registration.  The
Borrower  fails  to file the  Registration  Statement  within  sixty  (60)  days
following  the Closing  Date (as defined in the  Purchase  Agreement)  or obtain
effectiveness  with the Securities and Exchange  Commission of the  Registration
Statement within one hundred  thirty-five  (135) days following the Closing Date
(as defined in the Purchase Agreement) or such Registration  Statement lapses in
effect (or sales  cannot  otherwise  be made  thereunder  effective,  whether by
reason of the Borrower's failure to amend or supplement the prospectus  included
therein in accordance with the  Registration  Rights Agreement or otherwise) for
more than ten (10)  consecutive  days or twenty  (20) days in any  twelve  month
period after the Registration Statement becomes effective;

      3.4 Breach of Covenants.  The Borrower  breaches any material  covenant or
other  material term or condition  contained in Sections 1.3, 1.6 or 1.7 of this
Note, or Sections 4(c), 4(e),  4(h),  4(i), 4(j) or 5 of the Purchase  Agreement
and such breach  continues  for a period of ten (10) days after  written  notice
thereof to the Borrower from the Holder;

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

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

                                       14
<PAGE>

      3.7  Judgments.  Any money  judgment,  writ or  similar  process  shall be
entered or filed  against the Borrower or any  subsidiary of the Borrower or any
of its  property  or other  assets  for more  than  $50,000,  and  shall  remain
unvacated,  unbonded  or  unstayed  for a period  of  twenty  (20)  days  unless
otherwise  consented to by the Holder,  which  consent will not be  unreasonably
withheld;

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

      3.9  Delisting of Common  Stock.  The Borrower  shall fail to maintain the
listing  of the  Common  Stock on at  least  one of the  OTCBB or an  equivalent
replacement  exchange,  the Nasdaq National Market,  the Nasdaq SmallCap Market,
the New York Stock  Exchange,  or the American Stock  Exchange;  or

      3.10 Default  Under Other  Notes.  An Event of Default has occurred and is
continuing  under  any  of the  other  Notes  issued  pursuant  to the  Purchase
Agreement,

then,  upon the occurrence and during the  continuation  of any Event of Default
specified in Section 3.1,  3.2,  3.3, 3.4, 3.5, 3.7, 3.9, or 3.10, at the option
of  the  Holders  of a  majority  of  the  aggregate  principal  amount  of  the
outstanding Notes issued pursuant to the Purchase Agreement  exercisable through
the delivery of written  notice to the  Borrower by such  Holders (the  "Default
Notice"),  and upon the  occurrence of an Event of Default  specified in Section
3.6 or 3.8 (unless, under Section 3.8, such proceeding shall be stayed within 30
days), the Notes shall become immediately due and payable and the Borrower shall
pay to the Holder, in full satisfaction of its obligations hereunder,  an amount
equal to the  greater  of (i)  130%  times  the sum of (w) the then  outstanding
principal amount of this Note plus (x) accrued and unpaid interest on the unpaid
principal amount of this Note to the date of payment (the "Mandatory  Prepayment
Date") plus (y) Default Interest,  if any, on the amounts referred to in clauses
(w) and/or (x) plus (z) any amounts owed to the Holder  pursuant to Sections 1.3
and  1.4(g)  hereof or  pursuant  to  Section  2(c) of the  Registration  Rights
Agreement  (the then  outstanding  principal  amount of this Note to the date of
payment  plus  the  amounts  referred  to in  clauses  (x),  (y) and  (z)  shall
collectively  be known as the "Default  Sum") or (ii) the "parity  value" of the
Default Sum to be prepaid,  where parity  value means (a) the highest  number of
shares of Common Stock issuable upon conversion of or otherwise pursuant to such
Default Sum in accordance  with Article I, treating the Trading Day  immediately
preceding the Mandatory Prepayment Date as the "Conversion Date" for purposes of
determining the lowest  applicable  Conversion  Price,  unless the Default Event
arises as a result of a breach in respect of a specific Conversion Date in which
case such Conversion Date shall be the Conversion  Date),  multiplied by (b) the
highest  Closing  Price for the Common Stock during the period  beginning on the
date of first occurrence of the Event of Default and ending one day prior to the
Mandatory  Prepayment Date (the "Default  Amount") and all other amounts payable
hereunder  shall  immediately  become  due  and  payable,  all  without  demand,
presentment or notice,  all of which hereby are expressly waived,  together with
all  costs,  including,   without  limitation,   legal  fees  and  expenses,  of
collection,  and the Holder  shall be entitled to exercise  all other rights and
remedies available at law or in equity. If the Borrower fails to pay the Default
Amount within five (5) business  days of written  notice that such amount is due
and payable,  then the Holder  shall have the right at any time,  so long as the
Borrower  remains  in  default  (and so long and to the  extent  that  there are
sufficient authorized shares), to require the Borrower,  upon written notice, to
immediately issue, in lieu of the Default Amount, the number of shares of Common
Stock of the  Borrower  equal to the Default  Amount  divided by the  Conversion
Price then in effect.

                                       15
<PAGE>

                           ARTICLE IV. MISCELLANEOUS

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

      4.2 Notices.  Any notice herein required or permitted to be given shall be
in  writing  and may be  personally  served or  delivered  by courier or sent by
United  States  mail and  shall be deemed to have been  given  upon  receipt  if
personally served (which shall include telephone line facsimile transmission) or
sent by courier or three (3) days after  being  deposited  in the United  States
mail, certified,  with postage pre-paid and properly addressed, if sent by mail.
For the  purposes  hereof,  the  address of the Holder  shall be as shown on the
records of the  Borrower;  and the address of the  Borrower  shall be 125 Wilbur
Place, Suite 120, Bohemia, NY 11716, facsimile number: (631) 244-7960.  Both the
Holder and the Borrower may change the address for service by service of written
notice to the other as herein provided.

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

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

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

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

                                       16
<PAGE>

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

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

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

                                       17
<PAGE>

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

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

      4.12 Notice of Corporate Events.  Except as otherwise  provided below, the
Holder of this Note shall have no rights as a Holder of Common  Stock unless and
only to the extent that it converts  this Note into Common  Stock.  The Borrower
shall  provide  the  Holder  with  prior  notification  of  any  meeting  of the
Borrower's  shareholders  (and copies of proxy  materials and other  information
sent to shareholders). In the event of any taking by the Borrower of a record of
its shareholders for the purpose of determining shareholders who are entitled to
receive  payment of any dividend or other  distribution,  any right to subscribe
for, purchase or otherwise acquire  (including by way of merger,  consolidation,
reclassification  or  recapitalization)  any  share of any  class  or any  other
securities  or property,  or to receive any other  right,  or for the purpose of
determining  shareholders  who  are  entitled  to vote in  connection  with  any
proposed sale, lease or conveyance of all or substantially  all of the assets of
the  Borrower  or any  proposed  liquidation,  dissolution  or winding up of the
Borrower,  the Borrower shall mail a notice to the Holder,  at least twenty (20)
days prior to the record  date  specified  therein (or thirty (30) days prior to
the consummation of the transaction or event, whichever is earlier), of the date
on which  any such  record  is to be taken  for the  purpose  of such  dividend,
distribution,  right or other event, and a brief statement  regarding the amount
and character of such dividend, distribution, right or other event to the extent
known at such time. The Borrower shall make a public  announcement  of any event
requiring notification to the Holder hereunder substantially simultaneously with
the  notification  to the Holder in  accordance  with the terms of this  Section
4.12.

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

                                       18
<PAGE>

                             ARTICLE V. CALL OPTION

      5.1 Call Option.  Notwithstanding  anything to the  contrary  contained in
this Article V, so long as (i) no Event of Default or Trading Market  Prepayment
Event shall have occurred and be continuing,  (ii) the Borrower has a sufficient
number of  authorized  shares of Common Stock  reserved  for issuance  upon full
conversion  of the Notes,  then at any time after the Issue Date,  and (iii) the
Common Stock is trading at or below $.30 per share,  the Borrower shall have the
right,  exercisable  on not less than ten (10) Trading Days prior written notice
to the Holders of the Notes (which  notice may not be sent to the Holders of the
Notes  until the  Borrower  is  permitted  to prepay the Notes  pursuant to this
Section 5.1),  to prepay all of the  outstanding  Notes in accordance  with this
Section 5.1. Any notice of prepayment hereunder (an "Optional Prepayment") shall
be delivered to the Holders of the Notes at their registered addresses appearing
on the books and records of the  Borrower  and shall state (1) that the Borrower
is exercising  its right to prepay all of the Notes issued on the Issue Date and
(2) the date of prepayment (the "Optional Prepayment Notice"). On the date fixed
for prepayment (the "Optional Prepayment Date"), the Borrower shall make payment
of the Optional Prepayment Amount (as defined below) to or upon the order of the
Holders as  specified by the Holders in writing to the Borrower at least one (1)
business day prior to the Optional  Prepayment  Date. If the Borrower  exercises
its right to prepay the Notes, the Borrower shall make payment to the holders of
an amount in cash (the  "Optional  Prepayment  Amount") equal to either (i) 125%
(for prepayments occurring within thirty (30) days of the Issue Date), (ii) 135%
for  prepayments  occurring  between  thirty-one (31) and sixty (60) days of the
Issue Date, or (iii) 145% (for  prepayments  occurring after the sixtieth (60th)
day following the Issue Date), multiplied by the sum of (w) the then outstanding
principal amount of this Note plus (x) accrued and unpaid interest on the unpaid
principal  amount of this Note to the Optional  Prepayment Date plus (y) Default
Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any
amounts  owed to the  Holder  pursuant  to  Sections  1.3 and  1.4(g)  hereof or
pursuant  to  Section  2(c)  of the  Registration  Rights  Agreement  (the  then
outstanding  principal  amount  of this  Note to the  date of  payment  plus the
amounts  referred to in clauses (x), (y) and (z) shall  collectively be known as
the  "Optional   Prepayment  Sum").   Notwithstanding   notice  of  an  Optional
Prepayment, the Holders shall at all times prior to the Optional Prepayment Date
maintain the right to convert all or any portion of the Notes in accordance with
Article I and any  portion of Notes so  converted  after  receipt of an Optional
Prepayment  Notice and prior to the Optional  Prepayment  Date set forth in such
notice and payment of the aggregate Optional Prepayment Amount shall be deducted
from the  principal  amount of Notes which are  otherwise  subject to prepayment
pursuant to such notice. If the Borrower delivers an Optional  Prepayment Notice
and fails to pay the Optional  Prepayment Amount due to the Holders of the Notes
within two (2)  business  days  following  the  Optional  Prepayment  Date,  the
Borrower  shall forever  forfeit its right to redeem the Notes  pursuant to this
Section 5.1.

      5.2  Partial  Call  Option.   Notwithstanding  anything  to  the  contrary
contained  in this  Article V, in the event that the Average  Daily Price of the
Common Stock,  as reported by the Reporting  Service,  for each day of the month
ending on any Determination Date is below the Initial Market Price, the Borrower
may, at its option,  prepay a portion of the outstanding principal amount of the
Notes equal to 104% of the principal  amount hereof  divided by thirty-six  (36)
plus one month's  interest.  The term  "Initial  Market  Price" means shall mean
$.30.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       19
<PAGE>

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

                                          ADVANCED BIOPHOTONICS INC.

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

                                       20
<PAGE>

                                    EXHIBIT A

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

      The undersigned hereby irrevocably elects to convert $__________ principal
amount of the Note (defined below) into shares of common stock,  par value $.001
per  share  ("Common  Stock"),   of  Advanced   Biophotonics  Inc.,  a  Delaware
corporation  (the  "Borrower")  according to the  conditions of the  convertible
Notes of the Borrower  dated as of September 12, 2006 (the  "Notes"),  as of the
date written below. If securities are to be issued in the name of a person other
than the  undersigned,  the undersigned will pay all transfer taxes payable with
respect  thereto and is delivering  herewith such  certificates.  No fee will be
charged to the Holder for any  conversion,  except for transfer taxes, if any. A
copy of each Note is attached hereto (or evidence of loss,  theft or destruction
thereof).

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

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

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

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

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

            Date of Conversion:___________________________
            Applicable Conversion Price:____________________
            Number of Shares of Common Stock to be Issued Pursuant to
            Conversion of the Notes:______________
            Signature:___________________________________
            Name:______________________________________
            Address:____________________________________

                                       21
<PAGE>

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

                                       22THE  SECURITIES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN
      REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED (THE
      "ACT"). THE SECURITIES MAY NOT BE SOLD,  TRANSFERRED OR ASSIGNED
      IN THE ABSENCE OF AN EFFECTIVE  REGISTRATION  STATEMENT  FOR THE
      SECURITIES  UNDER  SAID ACT,  OR AN  OPINION OF COUNSEL IN FORM,
      SUBSTANCE  AND  SCOPE  CUSTOMARY  FOR  OPINIONS  OF  COUNSEL  IN
      COMPARABLE  TRANSACTIONS THAT REGISTRATION IS NOT REQUIRED UNDER
      SAID ACT OR UNLESS  SOLD  PURSUANT TO RULE 144 OR  REGULATION  S
      UNDER SAID ACT.

                        CALLABLE SECURED CONVERTIBLE NOTE

New York, New York
September 12, 2006                                                      $69,750

      FOR VALUE RECEIVED,  ADVANCED  BIOPHOTONICS  INC., a Delaware  corporation
(hereinafter called the "Borrower"),  hereby promises to pay to the order of AJW
PARTNERS,  LLC or  registered  assigns  (the  "Holder")  the sum of $69,750,  on
September  12, 2009 (the  "Maturity  Date"),  and to pay  interest on the unpaid
principal balance hereof at the rate of eight percent (8%) (the "Interest Rate")
per annum from  September 12, 2006 (the "Issue Date") until the same becomes due
and  payable,  whether at  maturity or upon  acceleration  or by  prepayment  or
otherwise.  Any amount of  principal  or interest on this Note which is not paid
when due shall bear interest at the rate of fifteen percent (15%) per annum from
the due date thereof until the same is paid ("Default Interest"). Interest shall
commence accruing on the Issue Date, shall be computed on the basis of a 365-day
year and the  actual  number  of days  elapsed  and shall be  payable  quarterly
provided  that no  interest  shall be due and payable for any month in which the
Trading  Price (as such term is defined  below) is greater  than $.3125 for each
Trading  Day (as such term is defined  below) of the  month.  All  payments  due
hereunder  (to the extent not converted  into common stock,  $.001 par value per
share (the "Common Stock") in accordance with the terms hereof) shall be made in
lawful money of the United States of America. All payments shall be made at such
address as the Holder shall  hereafter  give to the  Borrower by written  notice
made in  accordance  with the  provisions  of this  Note.  Whenever  any  amount
expressed  to be due by the  terms of this Note is due on any day which is not a
business day, the same shall instead be due on the next  succeeding day which is
a business  day and, in the case of any  interest  payment date which is not the
date on which this Note is paid in full,  the  extension of the due date thereof
shall not be taken  into  account  for  purposes  of  determining  the amount of
interest due on such date. As used in this Note,  the term  "business day" shall
mean any day other than a Saturday, Sunday or a day on which commercial banks in
the city of New York,  New York are  authorized  or required by law or executive
order to remain closed.  Each  capitalized  term used herein,  and not otherwise
defined,  shall have the meaning  ascribed  thereto in that  certain  Securities
Purchase  Agreement,  dated September 12, 2006,  pursuant to which this Note was
originally issued (the "Purchase Agreement").

<PAGE>

      This Note is free from all taxes, liens, claims and encumbrances with
respect to the issue thereof and shall not be subject to preemptive rights or
other similar rights of shareholders of the Borrower and will not impose
personal liability upon the holder thereof. The obligations of the Borrower
under this Note shall be secured by that certain Security Agreement and
Intellectual Property Security Agreement, each dated September 12, 2006 by and
between the Borrower and the Holder.

      The following terms shall apply to this Note:

                          ARTICLE I. CONVERSION RIGHTS

      1.1 Conversion  Right.  The Holder shall have the right from time to time,
and at any time on or prior to the earlier of (i) the Maturity Date and (ii) the
date of payment of the Default  Amount (as defined in Article  III)  pursuant to
Section  1.6(a) or Article III, the  Optional  Prepayment  Amount (as defined in
Section  5.1 or any  payments  pursuant to Section  1.7,  each in respect of the
remaining  outstanding  principal amount of this Note to convert all or any part
of the outstanding and unpaid  principal amount of this Note into fully paid and
non-assessable  shares of Common Stock, as such Common Stock exists on the Issue
Date,  or any shares of capital  stock or other  securities of the Borrower into
which such  Common  Stock  shall  hereafter  be changed or  reclassified  at the
conversion  price (the  "Conversion  Price")  determined  as provided  herein (a
"Conversion");  provided, however, that in no event shall the Holder be entitled
to convert any portion of this Note in excess of that  portion of this Note upon
conversion  of  which  the sum of (1) the  number  of  shares  of  Common  Stock
beneficially owned by the Holder and its affiliates (other than shares of Common
Stock  which may be deemed  beneficially  owned  through  the  ownership  of the
unconverted  portion of the Notes or the  unexercised or unconverted  portion of
any other security of the Borrower (including,  without limitation, the warrants
issued  by  the  Borrower  pursuant  to the  Purchase  Agreement)  subject  to a
limitation  on  conversion or exercise  analogous to the  limitations  contained
herein)  and (2) the  number  of  shares  of  Common  Stock  issuable  upon  the
conversion  of the portion of this Note with respect to which the  determination
of this  proviso is being made,  would  result in  beneficial  ownership  by the
Holder and its affiliates of more than 4.99% of the outstanding shares of Common
Stock and provided  further that the Holder shall not be entitled to convert any
portion of this Note during any month  immediately  succeeding  a  Determination
Date on which the Borrower  exercises its prepayment  option pursuant to Section
5.2 of this Note.  For  purposes  of the  proviso to the  immediately  preceding
sentence,  beneficial  ownership  shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended,  and Regulations 13D-G
thereunder,  except as  otherwise  provided in clause (1) of such  proviso.  The
number of shares of Common Stock to be issued upon each  conversion of this Note
shall be determined by dividing the Conversion  Amount (as defined below) by the
applicable  Conversion  Price then in effect on the date specified in the notice
of  conversion,  in the form  attached  hereto  as  Exhibit  A (the  "Notice  of
Conversion"), delivered to the Borrower by the Holder in accordance with Section
1.4 below;  provided that the Notice of Conversion is submitted by facsimile (or
by other means resulting in, or reasonably expected to result in, notice) to the
Borrower  before 6:00 p.m., New York, New York time on such conversion date (the
"Conversion  Date").  The term  "Conversion  Amount" means,  with respect to any
conversion of this Note, the sum of (1) the principal  amount of this Note to be
converted in such  conversion plus (2) accrued and unpaid  interest,  if any, on
such  principal  amount  at the  interest  rates  provided  in this  Note to the
Conversion Date, provided, however, that the Company shall have the right to pay
any or all  interest in cash plus (3) Default  Interest,  if any, on the amounts
referred to in the immediately  preceding clauses (1) and/or (2) plus (4) at the
Holder's  option,  any amounts  owed to the Holder  pursuant to Sections 1.3 and
1.4(g)  hereof or pursuant to Section 2(c) of that certain  Registration  Rights
Agreement,  dated as of September  12,  2006,  executed in  connection  with the
initial  issuance of this Note and the other Notes issued on the Issue Date (the
"Registration  Rights Agreement").  The term "Determination Date" means the last
business day of each month after the Issue Date.

                                       2
<PAGE>

      1.2 Conversion Price.

            (a) Calculation of Conversion  Price.  The Conversion Price shall be
      the Variable Conversion Price (as defined herein) (subject,  in each case,
      to  equitable  adjustments  for stock  splits,  stock  dividends or rights
      offerings by the Borrower  relating to the  Borrower's  securities  or the
      securities   of   any   subsidiary   of   the   Borrower,    combinations,
      recapitalization,   reclassifications,   extraordinary  distributions  and
      similar events). The "Variable Conversion Price" shall mean the Applicable
      Percentage (as defined herein)  multiplied by the Market Price (as defined
      herein).  "Market Price" means the average of the lowest three (3) Trading
      Prices (as  defined  below) for the Common  Stock  during the twenty  (20)
      Trading Day period ending one Trading Day prior to the date the Conversion
      Notice  is  sent  by  the  Holder  to  the  Borrower  via  facsimile  (the
      "Conversion  Date").  "Trading  Price"  means,  for any security as of any
      date, the intraday  trading price on the  Over-the-Counter  Bulletin Board
      (the  "OTCBB")  as reported by a reliable  reporting  service  ("Reporting
      Service")  mutually  acceptable  to  Borrower  and  Holder  and  hereafter
      designated  by  Holders  of a majority  in  interest  of the Notes and the
      Borrower  or, if the OTCBB is not the  principal  trading  market for such
      security,  the intraday  trading  price of such  security on the principal
      securities  exchange or trading  market  where such  security is listed or
      traded or, if no intraday  trading  price of such security is available in
      any of the foregoing  manners,  the average of the intraday trading prices
      of any  market  makers  for such  security  that are  listed  in the "pink
      sheets" by the National Quotation Bureau, Inc. If the Trading Price cannot
      be calculated for such security on such date in the manner provided above,
      the Trading Price shall be the fair market value as mutually determined by
      the  Borrower and the holders of a majority in interest of the Notes being
      converted  for which the  calculation  of the Trading Price is required in
      order to determine the Conversion Price of such Notes. "Trading Day" shall
      mean any day on which the  Common  Stock is traded  for any  period on the
      OTCBB, or on the principal  securities exchange or other securities market
      on which the Common Stock is then being  traded.  "Applicable  Percentage"
      shall mean 60.0%.

                                       3
<PAGE>

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

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

                                       4
<PAGE>

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

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

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

      The Holder's election shall be made in writing to the Borrower at any time
prior to 6:00  p.m.,  New  York,  New York  time,  on the third day of the month
following the month in which  Conversion  Default  payments have accrued.  If no
election is made,  the Holder shall be deemed to have  elected to receive  cash.
Nothing  herein shall limit the Holder's  right to pursue actual damages (to the
extent in excess of the Conversion  Default Payments) for the Borrower's failure
to maintain a sufficient  number of authorized  shares of Common Stock, and each
holder shall have the right to pursue all remedies available at law or in equity
(including degree of specific performance and/or injunctive relief).

                                       5
<PAGE>

      1.4 Method of Conversion.

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

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

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

            (d)  Delivery of Common Stock Upon  Conversion.  Upon receipt by the
      Borrower from the Holder of a facsimile  transmission (or other reasonable
      means of communication) of a Notice of Conversion meeting the requirements
      for  conversion as provided in this Section 1.4, the Borrower  shall issue
      and  deliver or cause to be issued and  delivered  to or upon the order of
      the Holder certificates for the Common Stock issuable upon such conversion
      within three (3) business days after such receipt (and, solely in the case
      of conversion of the entire unpaid principal  amount hereof,  surrender of
      this Note) (such third business day being  hereinafter  referred to as the
      "Deadline") in accordance with the terms hereof and the Purchase Agreement
      (including,  without  limitation,  in accordance with the  requirements of
      Section 2(g) of the Purchase  Agreement  that  certificates  for shares of
      Common Stock  issued on or after the  effective  date of the  Registration
      Statement  upon  conversion  of this Note  shall not bear any  restrictive
      legend).

                                       6
<PAGE>

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

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

            (g) Failure to Deliver  Common Stock Prior to  Deadline.  Without in
      any way limiting the Holder's  right to pursue other  remedies,  including
      actual damages and/or equitable relief, the parties agree that if delivery
      of the Common Stock issuable upon conversion of this Note is more than two
      (2)  business  days after the  Deadline  (other  than a failure due to the
      circumstances  described  in Section  1.3 above,  which  failure  shall be
      governed by such Section) the Borrower  shall pay to the Holder $2,000 per
      day in cash,  for each day beyond the Deadline that the Borrower  fails to
      deliver such Common Stock. Such cash amount shall be paid to Holder by the
      fifth day of the month  following the month in which it has accrued or, at
      the option of the Holder (by written  notice to the  Borrower by the first
      day of the month  following the month in which it has  accrued),  shall be
      added to the principal  amount of this Note, in which event interest shall
      accrue  thereon  in  accordance  with  the  terms  of this  Note  and such
      additional  principal  amount  shall be  convertible  into Common Stock in
      accordance with the terms of this Note.

                                       7
<PAGE>

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

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

      The legend set forth above shall be removed and the  Borrower  shall issue
to the Holder a new certificate  therefor free of any transfer legend if (i) the
Borrower or its  transfer  agent shall have  received an opinion of counsel,  in
form,  substance  and scope  customary  for  opinions  of counsel in  comparable
transactions,  to the effect that a public sale or transfer of such Common Stock
may be made  without  registration  under the Act and the  shares are so sold or
transferred,  (ii) such Holder  provides the Borrower or its transfer agent with
reasonable  assurances  that the Common Stock  issuable upon  conversion of this
Note (to the extent such securities are deemed to have been acquired on the same
date) can be sold  pursuant to Rule 144 or (iii) in the case of the Common Stock
issuable upon  conversion of this Note,  such security is registered for sale by
the Holder  under an  effective  registration  statement  filed under the Act or
otherwise  may be sold  pursuant to Rule 144 without any  restriction  as to the
number of securities as of a particular date that can then be immediately  sold.
Nothing  in this  Note  shall  (i) limit  the  Borrower's  obligation  under the
Registration Rights Agreement or (ii) affect in any way the Holder's obligations
to comply with applicable  prospectus  delivery  requirements upon the resale of
the securities referred to herein.

                                       8
<PAGE>

      1.6 Effect of Certain Events.

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

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

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

                                       9
<PAGE>

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

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

      Additionally,  the Borrower  shall be deemed to have issued or sold shares
of Common  Stock if the Borrower in any manner  issues or sells any  Convertible
Securities,  whether or not immediately  convertible  (other than where the same
are issuable  upon the  exercise of Options),  and the price per share for which
Common  Stock is  issuable  upon such  conversion  or  exchange is less than the
Variable  Conversion  Price then in effect,  then the Variable  Conversion Price
shall be equal to such  price  per  share.  For the  purposes  of the  preceding
sentence,  the "price per share for which  Common  Stock is  issuable  upon such
conversion or exchange" is determined by dividing (i) the total amount,  if any,
received or receivable by the Borrower as consideration for the issuance or sale
of all  such  Convertible  Securities,  plus the  minimum  aggregate  amount  of
additional consideration, if any, payable to the Borrower upon the conversion or
exchange  thereof  at  the  time  such   Convertible   Securities  first  become
convertible  or  exchangeable,  by (ii) the  maximum  total  number of shares of
Common Stock  issuable upon the  conversion or exchange of all such  Convertible
Securities.  No further adjustment to the Variable Conversion Price will be made
upon the actual  issuance of such Common  Stock upon  conversion  or exchange of
such Convertible Securities.

                                       10
<PAGE>

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

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

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

                                       11
<PAGE>

      1.8 Status as Shareholder.  Upon submission of a Notice of Conversion by a
Holder,  (i) the shares covered  thereby  (other than the shares,  if any, which
cannot be issued  because their  issuance  would exceed such Holder's  allocated
portion  of the  Reserved  Amount  or  Maximum  Share  Amount)  shall be  deemed
converted  into shares of Common Stock and (ii) the Holder's  rights as a Holder
of such converted portion of this Note shall cease and terminate, excepting only
the right to receive  certificates  for such  shares of Common  Stock and to any
remedies  provided  herein or  otherwise  available  at law or in equity to such
Holder  because of a failure by the  Borrower  to comply  with the terms of this
Note.  Notwithstanding the foregoing,  if a Holder has not received certificates
for all shares of Common Stock prior to the tenth (10th)  business day after the
expiration  of the Deadline  with respect to a conversion of any portion of this
Note for any  reason,  then  (unless the Holder  otherwise  elects to retain its
status as a holder of Common  Stock by so  notifying  the  Borrower)  the Holder
shall  regain  the  rights  of a  Holder  of  this  Note  with  respect  to such
unconverted   portions  of  this  Note  and  the  Borrower  shall,  as  soon  as
practicable,  return such unconverted Note to the Holder or, if the Note has not
been  surrendered,  adjust its records to reflect that such portion of this Note
has not been converted.  In all cases, the Holder shall retain all of its rights
and remedies (including, without limitation, (i) the right to receive Conversion
Default Payments pursuant to Section 1.3 to the extent required thereby for such
Conversion  Default and any subsequent  Conversion Default and (ii) the right to
have the Conversion Price with respect to subsequent  conversions  determined in
accordance with Section 1.3) for the Borrower's failure to convert this Note.

                         ARTICLE II. CERTAIN COVENANTS

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

                                       12
<PAGE>

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

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

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

            2.5  Advances  and  Loans.  So long as the  Borrower  shall have any
      obligation  under this Note, the Borrower shall not,  without the Holder's
      written consent,  lend money,  give credit or make advances to any person,
      firm,  joint  venture  or  corporation,   including,  without  limitation,
      officers,  directors,  employees,   subsidiaries  and  affiliates  of  the
      Borrower,  except loans, credits or advances (a) in existence or committed
      on the date hereof and which the Borrower  has informed  Holder in writing
      prior to the date hereof,  (b) made in the ordinary  course of business or
      (c) not in excess of $50,000.

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

                         ARTICLE III. EVENTS OF DEFAULT

      If any of the following  events of default  (each,  an "Event of Default")
shall occur:

      3.1 Failure to Pay  Principal or Interest.  The Borrower  fails to pay the
principal hereof or interest thereon when due on this Note, whether at maturity,
upon  a  Trading  Market   Prepayment   Event  pursuant  to  Section  1.7,  upon
acceleration or otherwise;

                                       13
<PAGE>

      3.2  Conversion  and the Shares.  The  Borrower  fails to issue  shares of
Common Stock to the Holder (or announces or threatens that it will not honor its
obligation to do so) upon exercise by the Holder of the conversion rights of the
Holder in accordance with the terms of this Note (for a period of at least sixty
(60) days, if such failure is solely as a result of the  circumstances  governed
by  Section  1.3 and the  Borrower  is using its best  efforts  to  authorize  a
sufficient  number of shares of Common Stock as soon as  practicable),  fails to
transfer  or  cause  its  transfer  agent  to  transfer  (electronically  or  in
certificated  form) any  certificate  for shares of Common  Stock  issued to the
Holder  upon  conversion  of or  otherwise  pursuant  to this  Note as and  when
required by this Note or the Registration  Rights Agreement,  or fails to remove
any restrictive legend (or to withdraw any stop transfer instructions in respect
thereof) on any  certificate for any shares of Common Stock issued to the Holder
upon  conversion  of or otherwise  pursuant to this Note as and when required by
this Note or the  Registration  Rights  Agreement  (or  makes any  announcement,
statement or threat that it does not intend to honor the  obligations  described
in  this  paragraph)  and  any  such  failure  shall  continue  uncured  (or any
announcement,  statement  or threat  not to honor its  obligations  shall not be
rescinded  in  writing)  for ten (10) days  after the  Borrower  shall have been
notified thereof in writing by the Holder;

      3.3  Failure  to Timely  File  Registration  or Effect  Registration.  The
Borrower  fails  to file the  Registration  Statement  within  sixty  (60)  days
following  the Closing  Date (as defined in the  Purchase  Agreement)  or obtain
effectiveness  with the Securities and Exchange  Commission of the  Registration
Statement within one hundred  thirty-five  (135) days following the Closing Date
(as defined in the Purchase Agreement) or such Registration  Statement lapses in
effect (or sales  cannot  otherwise  be made  thereunder  effective,  whether by
reason of the Borrower's failure to amend or supplement the prospectus  included
therein in accordance with the  Registration  Rights Agreement or otherwise) for
more than ten (10)  consecutive  days or twenty  (20) days in any  twelve  month
period after the Registration Statement becomes effective;

      3.4 Breach of Covenants.  The Borrower  breaches any material  covenant or
other  material term or condition  contained in Sections 1.3, 1.6 or 1.7 of this
Note, or Sections 4(c), 4(e),  4(h),  4(i), 4(j) or 5 of the Purchase  Agreement
and such breach  continues  for a period of ten (10) days after  written  notice
thereof to the Borrower from the Holder;

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

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

                                       14
<PAGE>

      3.7  Judgments.  Any money  judgment,  writ or  similar  process  shall be
entered or filed  against the Borrower or any  subsidiary of the Borrower or any
of its  property  or other  assets  for more  than  $50,000,  and  shall  remain
unvacated,  unbonded  or  unstayed  for a period  of  twenty  (20)  days  unless
otherwise  consented to by the Holder,  which  consent will not be  unreasonably
withheld;

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

      3.9  Delisting of Common  Stock.  The Borrower  shall fail to maintain the
listing  of the  Common  Stock on at  least  one of the  OTCBB or an  equivalent
replacement  exchange,  the Nasdaq National Market,  the Nasdaq SmallCap Market,
the New York Stock Exchange, or the American Stock Exchange; or

      3.10 Default  Under Other  Notes.  An Event of Default has occurred and is
continuing  under  any  of the  other  Notes  issued  pursuant  to the  Purchase
Agreement,

then,  upon the occurrence and during the  continuation  of any Event of Default
specified in Section 3.1,  3.2,  3.3, 3.4, 3.5, 3.7, 3.9, or 3.10, at the option
of  the  Holders  of a  majority  of  the  aggregate  principal  amount  of  the
outstanding Notes issued pursuant to the Purchase Agreement  exercisable through
the delivery of written  notice to the  Borrower by such  Holders (the  "Default
Notice"),  and upon the  occurrence of an Event of Default  specified in Section
3.6 or 3.8 (unless, under Section 3.8, such proceeding shall be stayed within 30
days), the Notes shall become immediately due and payable and the Borrower shall
pay to the Holder, in full satisfaction of its obligations hereunder,  an amount
equal to the  greater  of (i)  130%  times  the sum of (w) the then  outstanding
principal amount of this Note plus (x) accrued and unpaid interest on the unpaid
principal amount of this Note to the date of payment (the "Mandatory  Prepayment
Date") plus (y) Default Interest,  if any, on the amounts referred to in clauses
(w) and/or (x) plus (z) any amounts owed to the Holder  pursuant to Sections 1.3
and  1.4(g)  hereof or  pursuant  to  Section  2(c) of the  Registration  Rights
Agreement  (the then  outstanding  principal  amount of this Note to the date of
payment  plus  the  amounts  referred  to in  clauses  (x),  (y) and  (z)  shall
collectively  be known as the "Default  Sum") or (ii) the "parity  value" of the
Default Sum to be prepaid,  where parity  value means (a) the highest  number of
shares of Common Stock issuable upon conversion of or otherwise pursuant to such
Default Sum in accordance  with Article I, treating the Trading Day  immediately
preceding the Mandatory Prepayment Date as the "Conversion Date" for purposes of
determining the lowest  applicable  Conversion  Price,  unless the Default Event
arises as a result of a breach in respect of a specific Conversion Date in which
case such Conversion Date shall be the Conversion  Date),  multiplied by (b) the
highest  Closing  Price for the Common Stock during the period  beginning on the
date of first occurrence of the Event of Default and ending one day prior to the
Mandatory  Prepayment Date (the "Default  Amount") and all other amounts payable
hereunder  shall  immediately  become  due  and  payable,  all  without  demand,
presentment or notice,  all of which hereby are expressly waived,  together with
all  costs,  including,   without  limitation,   legal  fees  and  expenses,  of
collection,  and the Holder  shall be entitled to exercise  all other rights and
remedies available at law or in equity. If the Borrower fails to pay the Default
Amount within five (5) business  days of written  notice that such amount is due
and payable,  then the Holder  shall have the right at any time,  so long as the
Borrower  remains  in  default  (and so long and to the  extent  that  there are
sufficient authorized shares), to require the Borrower,  upon written notice, to
immediately issue, in lieu of the Default Amount, the number of shares of Common
Stock of the  Borrower  equal to the Default  Amount  divided by the  Conversion
Price then in effect.

                                       15
<PAGE>

                            ARTICLE IV. MISCELLANEOUS

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

      4.2 Notices.  Any notice herein required or permitted to be given shall be
in  writing  and may be  personally  served or  delivered  by courier or sent by
United  States  mail and  shall be deemed to have been  given  upon  receipt  if
personally served (which shall include telephone line facsimile transmission) or
sent by courier or three (3) days after  being  deposited  in the United  States
mail, certified,  with postage pre-paid and properly addressed, if sent by mail.
For the  purposes  hereof,  the  address of the Holder  shall be as shown on the
records of the  Borrower;  and the address of the  Borrower  shall be 125 Wilbur
Place, Suite 120, Bohemia, NY 11716, facsimile number: (631) 244-7960.  Both the
Holder and the Borrower may change the address for service by service of written
notice to the other as herein provided.

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

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

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

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

                                       16
<PAGE>

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

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

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

                                       17
<PAGE>

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

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

      4.12 Notice of Corporate Events.  Except as otherwise  provided below, the
Holder of this Note shall have no rights as a Holder of Common  Stock unless and
only to the extent that it converts  this Note into Common  Stock.  The Borrower
shall  provide  the  Holder  with  prior  notification  of  any  meeting  of the
Borrower's  shareholders  (and copies of proxy  materials and other  information
sent to shareholders). In the event of any taking by the Borrower of a record of
its shareholders for the purpose of determining shareholders who are entitled to
receive  payment of any dividend or other  distribution,  any right to subscribe
for, purchase or otherwise acquire  (including by way of merger,  consolidation,
reclassification  or  recapitalization)  any  share of any  class  or any  other
securities  or property,  or to receive any other  right,  or for the purpose of
determining  shareholders  who  are  entitled  to vote in  connection  with  any
proposed sale, lease or conveyance of all or substantially  all of the assets of
the  Borrower  or any  proposed  liquidation,  dissolution  or winding up of the
Borrower,  the Borrower shall mail a notice to the Holder,  at least twenty (20)
days prior to the record  date  specified  therein (or thirty (30) days prior to
the consummation of the transaction or event, whichever is earlier), of the date
on which  any such  record  is to be taken  for the  purpose  of such  dividend,
distribution,  right or other event, and a brief statement  regarding the amount
and character of such dividend, distribution, right or other event to the extent
known at such time. The Borrower shall make a public  announcement  of any event
requiring notification to the Holder hereunder substantially simultaneously with
the  notification  to the Holder in  accordance  with the terms of this  Section
4.12.

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

                                       18
<PAGE>

                             ARTICLE V. CALL OPTION

      5.1 Call Option.  Notwithstanding  anything to the  contrary  contained in
this Article V, so long as (i) no Event of Default or Trading Market  Prepayment
Event shall have occurred and be continuing,  (ii) the Borrower has a sufficient
number of  authorized  shares of Common Stock  reserved  for issuance  upon full
conversion  of the Notes,  then at any time after the Issue Date,  and (iii) the
Common Stock is trading at or below $.30 per share,  the Borrower shall have the
right,  exercisable  on not less than ten (10) Trading Days prior written notice
to the Holders of the Notes (which  notice may not be sent to the Holders of the
Notes  until the  Borrower  is  permitted  to prepay the Notes  pursuant to this
Section 5.1),  to prepay all of the  outstanding  Notes in accordance  with this
Section 5.1. Any notice of prepayment hereunder (an "Optional Prepayment") shall
be delivered to the Holders of the Notes at their registered addresses appearing
on the books and records of the  Borrower  and shall state (1) that the Borrower
is exercising  its right to prepay all of the Notes issued on the Issue Date and
(2) the date of prepayment (the "Optional Prepayment Notice"). On the date fixed
for prepayment (the "Optional Prepayment Date"), the Borrower shall make payment
of the Optional Prepayment Amount (as defined below) to or upon the order of the
Holders as  specified by the Holders in writing to the Borrower at least one (1)
business day prior to the Optional  Prepayment  Date. If the Borrower  exercises
its right to prepay the Notes, the Borrower shall make payment to the holders of
an amount in cash (the  "Optional  Prepayment  Amount") equal to either (i) 125%
(for prepayments occurring within thirty (30) days of the Issue Date), (ii) 135%
for  prepayments  occurring  between  thirty-one (31) and sixty (60) days of the
Issue Date, or (iii) 145% (for  prepayments  occurring after the sixtieth (60th)
day following the Issue Date), multiplied by the sum of (w) the then outstanding
principal amount of this Note plus (x) accrued and unpaid interest on the unpaid
principal  amount of this Note to the Optional  Prepayment Date plus (y) Default
Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any
amounts  owed to the  Holder  pursuant  to  Sections  1.3 and  1.4(g)  hereof or
pursuant  to  Section  2(c)  of the  Registration  Rights  Agreement  (the  then
outstanding  principal  amount  of this  Note to the  date of  payment  plus the
amounts  referred to in clauses (x), (y) and (z) shall  collectively be known as
the  "Optional   Prepayment  Sum").   Notwithstanding   notice  of  an  Optional
Prepayment, the Holders shall at all times prior to the Optional Prepayment Date
maintain the right to convert all or any portion of the Notes in accordance with
Article I and any  portion of Notes so  converted  after  receipt of an Optional
Prepayment  Notice and prior to the Optional  Prepayment  Date set forth in such
notice and payment of the aggregate Optional Prepayment Amount shall be deducted
from the  principal  amount of Notes which are  otherwise  subject to prepayment
pursuant to such notice. If the Borrower delivers an Optional  Prepayment Notice
and fails to pay the Optional  Prepayment Amount due to the Holders of the Notes
within two (2)  business  days  following  the  Optional  Prepayment  Date,  the
Borrower  shall forever  forfeit its right to redeem the Notes  pursuant to this
Section 5.1.

      5.2  Partial  Call  Option.   Notwithstanding  anything  to  the  contrary
contained  in this  Article V, in the event that the Average  Daily Price of the
Common Stock,  as reported by the Reporting  Service,  for each day of the month
ending on any Determination Date is below the Initial Market Price, the Borrower
may, at its option,  prepay a portion of the outstanding principal amount of the
Notes equal to 104% of the principal  amount hereof  divided by thirty-six  (36)
plus one month's interest. The term "Initial Market Price" means shall $.30.

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       19
<PAGE>

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

                                          ADVANCED BIOPHOTONICS INC.

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

                                       20
<PAGE>

                                    EXHIBIT A

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

      The undersigned hereby irrevocably elects to convert $__________ principal
amount of the Note (defined below) into shares of common stock,  par value $.001
per  share  ("Common  Stock"),   of  Advanced   Biophotonics  Inc.,  a  Delaware
corporation  (the  "Borrower")  according to the  conditions of the  convertible
Notes of the Borrower  dated as of September 12, 2006 (the  "Notes"),  as of the
date written below. If securities are to be issued in the name of a person other
than the  undersigned,  the undersigned will pay all transfer taxes payable with
respect  thereto and is delivering  herewith such  certificates.  No fee will be
charged to the Holder for any  conversion,  except for transfer taxes, if any. A
copy of each Note is attached hereto (or evidence of loss,  theft or destruction
thereof).

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

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

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

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

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

            Date of Conversion:___________________________
            Applicable Conversion Price:____________________
            Number of Shares of Common Stock to be Issued Pursuant to
            Conversion of the Notes:______________
            Signature:___________________________________
            Name:______________________________________
            Address:____________________________________

                                       21
<PAGE>

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

                                       22

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