SECURED CONVERTIBLE PROMISSORY NOTE

FOR VALUE RECEIVED, the undersigned, Equitex, Inc., a Delaware corporation (the “Maker”), hereby promises to pay to the order of Whitebox Hedged High Yield Partners, L.P., a British Virgin Islands limited partnership, or its assigns (the “Payee”), at such place as the Payee may designate in writing, the principal sum of SIX HUNDRED THOUSAND Dollars ($600,000) under the terms set forth herein. This Note is one of a series of two Notes (together, the “Series Notes”) being issued by Maker on the date hereof, but the only Note issued to Payee on such date.

1.  Interest. The unpaid principal balance hereof from time to time outstanding shall bear interest from the date hereof at the rate of ten percent (10%) per annum.

2.  Payment. Except as otherwise provided herein, and subject to any default hereunder, the principal and interest hereof is payable as follows:

(a)  Interest only is payable in cash in arrears on October 15, November 15 and December 15, 2005; and

(b)  Beginning on January 15, 2006, and on the 15th day of each of the following twenty (20) months, Maker shall pay amortized principal and interest of $31,262.89 (the “Monthly Scheduled Payment”) on this Note.

(c)  In the event that Maker fails by the 180th day after the date hereof to obtain effectiveness under the Securities Act of 1933, as amended (the “Securities Act”) and applicable state securities laws of a registration statement (the “Payee Registration Statement”) pursuant to Section 2.1 of that certain Registration Rights Agreement of this date among Maker, Payee and the other purchaser named therein (the “Registration Rights Agreement”), then for each full month (prorated for partial months) that this failure continues (the “Failure Term”), Maker shall pay in arrears in cash, with each next otherwise Monthly Scheduled Payment under Section 2(b) above, additional interest (the “Contingent Additional Interest”) at a rate equal to 2.0% per month of the Failure Term thereafter, of the original principal balance of this Note.

(d)  Except as otherwise provided in Section 6 of this Note, the Maker shall have no right to early prepayment on this Note.

3.  Optional Payment in Stock. 

(a)  In lieu of making a cash payment under Section 2(a) or 2(b), Maker may pay the scheduled payment, or any portion thereof, by the issuance of shares of its common stock, $0.01 par value per share (the “Common Stock”), based on the Per Share Value of the Common Stock. For purposes of this Note, the “Per Share Value” of the Common Stock as of any scheduled payment date is 85% (rounded to the nearest $.01) of the average of the closing bid prices of Maker’s Common Stock on the Trading System for the 20 consecutive trading days immediately preceding the relevant scheduled payment date. For purposes of this Note, the term “Trading System” means the Nasdaq National Market or, if the securities are not then quoted on the Nasdaq National Market, the OTC Bulletin Board as reported by bigcharts.com or, if this service is discontinued, such other reporting services as is mutually acceptable to Maker and Payee.

(b)  Payment in shares of Common Stock shall be deemed to be made by the Maker by giving written notice to Payee; provided that certificates representing those shares are delivered to Payee within five (5) trading days after such payment due date.

(c)  Despite the foregoing, the Maker may not issue shares of its Common Stock as payment pursuant to this Section 3 unless all of the following conditions are met:

(i)  the Maker gives the Payee written notice at least thirty (30) days prior to the relevant payment date of the Maker’s intention to make a payment using shares of Common Stock (and specifying the payment amount to be settled by the issuance of shares);

(ii)  on the date that the relevant payment is due, the Maker has, pursuant to the terms of the Registration Rights Agreement, an effective registration statement under the Securities Act and applicable state securities laws covering the public resale of such shares by Payee;

(iii)  the number of shares of Common Stock that may be issued to pay all or any portion of any particular monthly payment may not exceed 10% of the sum of the trading volume of the Common Stock for the 20 trading days immediately preceding such monthly payment date; and

(iv)  such issuance shall not be violative of Section 9 hereof.

4.  Conversion at Option of Payee.

(a)  At any time after 120 days from the date hereof, while any portion of the principal or interest of this Note is outstanding, the Payee may give the Maker written notice (the “Payee Notice”) of its intention to convert all or any portion of the outstanding principal and/or accrued but unpaid interest on this Note into shares of the Maker’s Common Stock based on a conversion rate as described below (the “Conversion Rate”); provided that, such conversion is not violative of Section 9 hereof. Upon receipt of the Payee Notice, the Maker shall promptly cause certificates dated the Payee Notice date and representing those shares to be delivered to Payee within five (5) trading days of, and payment shall be deemed to have been made on, the date of the Payee Notice.

(b)  The Conversion Rate shall initially be equal to $5.50 per share.

(c)  The Conversion Rate shall be adjusted proportionally for any subsequent stock dividend or split, stock combination or other similar recapitalization, reclassification or reorganization of or affecting Maker’s Common Stock. In case of any consolidation or merger to which the Maker is a party other than a merger or consolidation in which the Maker is the continuing corporation, or in case of any sale or conveyance to another corporation of the property of the Maker as an entirety or substantially as an entirety, or in the case of any statutory exchange of securities with another corporation (including any exchange effected in connection with a merger of a third corporation into the Maker), then instead of receiving shares of Maker’s Common Stock, Payee shall have the right thereafter to receive the kind and amount of shares of stock and other securities and property which the Payee would have owned or have been entitled to receive immediately after such consolidation, merger, statutory exchange, sale or conveyance had the same portion of this Note been paid or converted immediately prior to the effective date of such consolidation, merger, statutory exchange, sale or conveyance and, in any such case, if necessary, appropriate adjustment shall be made in the application of the provisions set forth in this Section with respect to the rights and interests thereafter of the Payee, to the end that the provisions set forth in this Section shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to any shares of stock and other securities and property thereafter deliverable in connection with this Note. The provisions of this subsection shall similarly apply to successive consolidations, mergers, statutory exchanges, sales or conveyances. Notwithstanding the foregoing, the transaction contemplated by the Maker in that certain Merger Agreement dated as of September 13, 2005 by and among the Hydrogen Power, Inc., Maker and EI Acquisition Corp., a wholly owned subsidiary of Maker, shall not constitute an event cause an adjustment to the Conversion Rate pursuant to this Section 4(c).

(d)  The Conversion Rate shall be subject to certain diluting issues as follows: