CALLABLE SECURED CONVERTIBLE NOTE

EXHIBIT 4.3

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


                        CALLABLE SECURED CONVERTIBLE NOTE

New York, New York
September 12, 2006                                                       $46,800

     FOR VALUE RECEIVED, AVITAR 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 $46,800, 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 $.20 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,   $.01 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").

     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.

     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 65.0%.

     (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.

     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:

     (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).

     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).

     (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.

     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
Bor