SENIOR SECURED CONVERTIBLE NOTE

<PAGE>

EXHIBIT 10.3

[FORM OF NOTE]

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE

NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN

REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE

SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED

OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR

THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION

OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED

UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID

ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION

WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED

BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS

OF THIS NOTE, INCLUDING SECTIONS 3(C)(III) AND 20(A) HEREOF. THE PRINCIPAL

AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON

CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF

PURSUANT TO SECTION 3(C)(III) OF THIS NOTE.

RAPTOR NETWORKS TECHNOLOGY, INC.

SENIOR SECURED CONVERTIBLE NOTE

Issuance Date: August 1, 2007 Original Principal Amount: U.S. $[*]

FOR VALUE RECEIVED, Raptor Networks Technology, Inc., a Colorado

corporation (the "COMPANY"), hereby promises to pay to [CASTLERIGG MASTER

INVESTMENTS LTD.] [CEDAR HILL CAPITAL PARTNERS ONSHORE, LP] [CEDAR HILL CAPITAL

PARTNERS OFFSHORE. LTD.] or registered assigns ("HOLDER") the amount set out

above as the Original Principal Amount (as reduced pursuant to the terms hereof

pursuant to redemption, conversion or otherwise, the "PRINCIPAL") when due,

whether upon the Maturity Date (as defined below), acceleration, redemption or

otherwise (in each case in accordance with the terms hereof) and to pay interest

("INTEREST") on any outstanding Principal at the applicable Interest Rate (as

defined below) from the date set out above as the Issuance Date (the "Issuance

DATE") until the same becomes due and payable, whether upon an Interest Date (as

defined below) or, the Maturity Date, acceleration, conversion, redemption or

otherwise (in each case in accordance with the terms hereof). This Senior

Secured Convertible Note (including all Senior Secured Convertible Notes issued

in exchange, transfer or replacement hereof, this "NOTE") is one of an issue of

Senior Secured Convertible Notes issued pursuant to the Securities Purchase

Agreement on the Closing Date (collectively, the "NOTES" and such other Senior

Secured Convertible Notes, the "OTHER NOTES"). Certain capitalized terms used

herein are defined in Section 30.

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

* Notes issued in the in the following original principal amounts: Castlerigg

Master Investments Ltd. ($2,500,000); Cedar Hill Capital Partners Onshore, LP

($495,000); and Cedar Hill Capital Partners Offshore, Ltd. ($505,000)

<PAGE>

(1) PAYMENTS OF PRINCIPAL. On the Maturity Date, the Company shall pay

to the Holder an amount (the "FINAL PAYMENT AMOUNT") in cash representing all

outstanding Principal, accrued and unpaid Interest and accrued and unpaid Late

Charges (as defined in Section 26), if any, on such Principal and Interest. The

"MATURITY DATE" shall be August 1, 2010, as may be extended at the option of the

Holder (i) in the event that, and for so long as, an Event of Default (as

defined in Section 4(a)) shall have occurred and be continuing on the Maturity

Date (as may be extended pursuant to this Section 1) or any event shall have

occurred and be continuing on the Maturity Date (as may be extended pursuant to

this Section 1) that with the passage of time and the failure to cure would

result in an Event of Default, (ii) through the date that is ten (10) Business

Days after the consummation of a Change of Control in the event that a Change of

Control is publicly announced or a Change of Control Notice (as defined in

Section 5(b)) is delivered prior to the Maturity Date and (iii) in its sole

discretion, upon delivering a notice to the Company at least ten (10) Business

Days prior to the originally scheduled Maturity Date indicating such Holder's

electing to have the payment of all or any portion of its Final Payment Amount

payable on the originally scheduled Maturity Date deferred up to a date that is

two (2) years from the originally scheduled Maturity Date. Any notice delivered

by the Holder pursuant to the preceding subparagraph (iii) shall set forth (1)

the amount of the Final Payment Amount being deferred and (2) the date that such

amount shall now be payable. Any amount deferred pursuant to the preceding

subparagraph (iii) shall continue to accrue Interest through the designated

payment date unless such amount is earlier converted into Common Stock,

redeemed, repurchased, liquidated or otherwise becomes no longer outstanding in

accordance with the terms hereof. Other than as specifically permitted by this

Note, the Company may not prepay any portion of the outstanding Principal,

accrued and unpaid interest or accrued and unpaid Late Charges on Principal and

Interest, if any.

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(2) INTEREST; INTEREST RATE. Interest on this Note shall commence

accruing on the Issuance Date and shall be computed on the basis of a 360-day

year comprised of twelve (12) thirty (30) day months and shall be payable in

arrears for each Calendar Quarter on the first (1st) day of the succeeding

Calendar Quarter during the period beginning on the Issuance Date and ending on,

and including, the Maturity Date (each, an "INTEREST DATE") with the first (1st)

Interest Date being October 1, 2007. Interest shall be payable on each Interest

Date, to the record holder of this Note on the applicable Interest Date, and to

the extent that any Principal amount of this Note is converted prior to such

Interest Date, accrued and unpaid Interest with respect to such converted

Principal amount and accrued and unpaid Late Charges, if any, with respect to

such Principal and Interest shall be payable by way of inclusion of such

Interest and Late Charges in the Conversion Amount, in accordance with Section

3(b)(i). From and after the occurrence and during the continuance of an Event of

Default, the Interest Rate shall be increased to fifteen percent (15.0%) per

annum. In the event that such Event of Default is subsequently cured, the

adjustment referred to in the preceding sentence shall cease to be effective as

of the date of such cure; provided that the Interest as calculated and unpaid at

such increased rate during the continuance of such Event of Default shall

continue to apply to the extent relating to the days after the occurrence of

such Event of Default through and including the date of cure of such Event of

Default.

(3) CONVERSION OF NOTES. This Note shall be convertible into shares of

the Company's common stock, par value $0.001 per share (the "COMMON STOCK"), on

the terms and conditions set forth in this Section 3.

(a) CONVERSION RIGHT. Subject to the provisions of Section 3(d)

and subject to the Company's right to elect to pay accrued and unpaid Interest

and Late Charges, if any, in cash as set forth in Section 3(c)(i), at any time

or times on or after the Issuance Date, the Holder shall be entitled to convert

any portion of the outstanding and unpaid Conversion Amount (as defined below)

into fully paid and nonassessable shares of Common Stock in accordance with

Section 3(c), at the Conversion Rate (as defined below). The Company shall not

issue any fraction of a share of Common Stock upon any conversion. If the

issuance would result in the issuance of a fraction of a share of Common Stock,

the Company shall round such fraction of a share of Common Stock up to the

nearest whole share. The Company shall pay any and all transfer, stamp and

similar taxes that may be payable with respect to the issuance and delivery of

Common Stock upon conversion of any Conversion Amount.

(b) CONVERSION RATE. Subject to the Company's right to elect to

pay accrued and unpaid Interest and Late Charges, if any, in cash as set forth

in Section 3(c)(i), the number of shares of Common Stock issuable upon

conversion of any Conversion Amount pursuant to Section 3(a) shall be determined

by dividing (x) such Conversion Amount by (y) the Conversion Price (the

"CONVERSION RATE").

(i) "CONVERSION AMOUNT" means the sum of (A) the portion of

the Principal to be converted, redeemed or otherwise with respect to which this

determination is being made, (B) accrued and unpaid Interest with respect to

such Principal and (C) accrued and unpaid Late Charges with respect to such

Principal and Interest.

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(ii) "CONVERSION PRICE" means, as of any Conversion Date (as

defined below) or other date of determination, $1.2029, subject to adjustment as

provided herein.

(c) MECHANICS OF CONVERSION.

(i) OPTIONAL CONVERSION. To convert any Conversion Amount

into shares of Common Stock on any Trading Day (a "CONVERSION DATE"), the Holder

shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior

to 11:59 p.m., New York Time, on a Business Day, a copy of an executed notice of

conversion in the form attached hereto as EXHIBIT I (the "CONVERSION NOTICE") to

the Company and (B) if required by Section 3(c)(iii), surrender this Note to a

common carrier for delivery to the Company as soon as practicable on or

following such date (or an indemnification undertaking with respect to this Note

in the case of its loss, theft or destruction). Accrued and unpaid Interest and

Late Charges, if any, on any Principal portion of the Conversion Amount being

converted shall be payable to the record holder of this Note on the applicable

Share Delivery Date (as defined below) in shares of Common Stock so long as

there has been no Equity Conditions Failure; provided however, that the Company

may, at its option following notice to the Holder, pay accrued and unpaid

Interest and/or Late Charges, if any, on any Principal portion of the Conversion

Amount being converted on the applicable Share Delivery Date in cash ("CASH

INTEREST/CHARGES"). On or before the second (2nd) Trading Day following the date

of receipt of a Conversion Notice, the Company shall transmit by facsimile a

confirmation of receipt of such Conversion Notice to the Holder and the

Company's transfer agent (the "TRANSFER AGENT"). On or before the third (3rd)

Business Day following the date of receipt of a Conversion Notice (the "SHARE

DELIVERY DATE"), the Company shall (1) (x) provided that the Transfer Agent is

participating in the Depository Trust Company ("DTC") Fast Automated Securities

Transfer Program and that securities are to be issued without legends pursuant

to Section 2(g) of the Securities Purchase Agreement, credit such aggregate

number of shares of Common Stock (including any shares of Common Stock delivered

in respect of Interest and/or Late Charges) to which the Holder shall be

entitled to the Holder's or its designee's balance account with DTC through its

Deposit Withdrawal Agent Commission system or (y) if the Transfer Agent is not

participating in the DTC Fast Automated Securities Transfer Program or if

securities are to be issued with legends pursuant to Section 2(g) of the

Securities Purchase Agreement, issue and deliver to the address as specified in

the Conversion Notice, a certificate, registered in the name of the Holder or

its designee, for the number of shares of Common Stock to which the Holder shall

be entitled and (2) if the Company has elected to pay Cash Interest/Charges, pay

to the Holder in cash an amount equal to the accrued and unpaid Interest and/or

Late Charges, if any, on the Principal portion of the Conversion Amount up to

and including the Conversion Date. If this Note is physically surrendered for

conversion pursuant to Section 3(c)(iii) and the outstanding Principal of this

Note is greater than the Principal portion of the Conversion Amount being

converted, then the Company shall as soon as practicable and in no event later

than five (5) Business Days after receipt of this Note and at its own expense,

issue and deliver to the holder a new Note (in accordance with Section 20(d))

representing the outstanding Principal not converted. The Person or Persons

entitled to receive the shares of Common Stock issuable upon a conversion of

this Note shall be treated for all purposes as the record holder or holders of

such shares of Common Stock on the Conversion Date.

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<PAGE>

(ii) COMPANY'S FAILURE TO TIMELY CONVERT. If the Company

shall fail to issue a certificate to the Holder or credit the Holder's balance

account with DTC, as applicable, for the number of shares of Common Stock to

which the Holder is entitled upon conversion of any Conversion Amount on or

prior to the date which is five (5) Trading Days after the Conversion Date (a

"CONVERSION FAILURE"), then (A) the Company shall pay damages to the Holder for

each Trading Day of such Conversion Failure in an amount equal to 1.5% of the

product of (I) the sum of the number of shares of Common Stock not issued to the

Holder on or prior to the Share Delivery Date and to which the Holder is

entitled, and (II) the Closing Sale Price of the Common Stock on the Share

Delivery Date and (B) the Holder, upon written notice to the Company, may void

its Conversion Notice with respect to, and retain or have returned, as the case

may be, any portion of this Note that has not been converted pursuant to such

Conversion Notice; PROVIDED that the voiding of a Conversion Notice shall not

affect the Company's obligations to make any payments which have accrued prior

to the date of such notice pursuant to this Section 3(c)(ii) or otherwise. In

addition to the foregoing, if within three (3) Trading Days after the Company's

receipt of the facsimile copy of a Conversion Notice the Company shall fail to

issue and deliver a certificate to the Holder or credit the Holder's balance

account with DTC for the number of shares of Common Stock to which the Holder is

entitled upon such holder's conversion of any Conversion Amount, and if on or

after such Trading Day the Holder purchases (in an open market transaction or

otherwise) Common Stock to deliver in satisfaction of a sale by the Holder of

the number of shares of Common Stock issuable upon such conversion that the

Holder anticipated receiving from the Company (a "BUY-IN"), then the Company

shall, within five (5) Trading Days after the Holder's request and in the

Holder's discretion, either (A) pay cash to the Holder in an amount equal to the

Holder's total purchase price (including brokerage commissions and other out of

pocket expenses, if any) for such number of shares of Common Stock so purchased

(the "BUY-IN PRICE"), at which point the Company's obligation to deliver such

certificate (and to issue such Common Stock) shall terminate, or (B) promptly

honor its obligation to deliver to the Holder a certificate or certificates

representing such Common Stock and pay cash to the Holder in an amount equal to

the excess (if any) of the Buy-In Price over the product of (1) such number of

shares of Common Stock, times (2) the Closing Bid Price on the Conversion Date.

(iii) REGISTRATION; BOOK-ENTRY. The Company shall maintain a

register (the "REGISTER") for the recordation of the names and addresses of the

holders of each Note and the principal amount of the Notes held by such holders

(the "REGISTERED NOTES"). The entries in the Register shall be conclusive and

binding for all purposes absent manifest error. The Company and the holders of

the Notes shall treat each Person whose name is recorded in the Register as the

owner of a Note for all purposes, including, without limitation, the right to

receive payments of Principal and Interest hereunder, notwithstanding notice to

the contrary. A Registered Note may be assigned or sold in whole or in part only

by registration of such assignment or sale on the Register. Upon its receipt of

a request to assign or sell all or part of any Registered Note by a Holder, the

Company shall record the information contained therein in the Register and issue

one or more new Registered Notes in the same aggregate principal amount as the

principal amount of the surrendered Registered Note to the designated assignee

or transferee pursuant to Section 20. Notwithstanding anything to the contrary

set forth herein, upon conversion of any portion of this Note in accordance with

the terms hereof, the Holder shall not be required to physically surrender this

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<PAGE>

Note to the Company unless (A) the entire outstanding Principal amount

represented by this Note is being converted or (B) the Holder has provided the

Company with prior written notice (which notice may be included in a Conversion

Notice) requesting reissuance of this Note upon physical surrender of this Note.

The Holder and the Company shall maintain records showing the Principal,

Interest and Late Charges, if any, converted and the dates of such conversions

or shall use such other method, reasonably satisfactory to the Holder and the

Company, so as not to require physical surrender of this Note upon conversion

(except as required above).

(iv) PRO RATA CONVERSION; DISPUTES. In the event that the

Company receives a Conversion Notice from more than one holder of Notes for the

same Conversion Date and the Company can convert some, but not all, of such

portions of the Notes submitted for conversion, the Company, subject to Section

3(d), shall convert from each holder of Notes electing to have Notes converted

on such date a pro rata amount of such holder's portion of its Notes submitted

for conversion based on the principal amount of Notes submitted for conversion

on such date by such holder relative to the aggregate principal amount of all

Notes submitted for conversion on such date. In the event of a dispute as to the

number of shares of Common Stock issuable to the Holder in connection with a

conversion of this Note, the Company shall issue to the Holder the number of

shares of Common Stock not in dispute and resolve such dispute in accordance

with Section 25.

(d) LIMITATIONS ON CONVERSIONS.

(i) BENEFICIAL OWNERSHIP. The Company shall not effect any

conversion of this Note, and the Holder of this Note shall not have the right to

convert any portion of this Note pursuant to Section 3(a), to the extent that

after giving effect to such conversion, the Holder (together with the Holder's

affiliates) would beneficially own in excess of 4.99% (the "MAXIMUM PERCENTAGE")

of the number of shares of Common Stock outstanding immediately after giving

effect to such conversion. For purposes of the foregoing sentence, the number of

shares of Common Stock beneficially owned by the Holder and its affiliates shall

include the number of shares of Common Stock issuable upon conversion of this

Note with respect to which the determination of such sentence is being made, but

shall exclude the number of shares of Common Stock which would be issuable upon

(A) conversion of the remaining, nonconverted portion of this Note beneficially

owned by the Holder or any of its affiliates and (B) exercise or conversion of

the unexercised or nonconverted portion of any other securities of the Company

(including, without limitation, any Other Notes or warrants) subject to a

limitation on conversion or exercise analogous to the limitation contained

herein beneficially owned by the Holder or any of its affiliates. Except as set

forth in the preceding sentence, for purposes of this Section 3(d)(i),

beneficial ownership shall be calculated in accordance with Section 13(d) of the

Securities Exchange Act of 1934, as amended (the "1934 ACT"). For purposes of

this Section 3(d)(i), in determining the number of outstanding shares of Common

Stock, the Holder may rely on the number of outstanding shares of Common Stock

as reflected in (x) the Company's most recent Form 10-K, Form 10-KSB, Form 10-Q,

Form 10-QSB, Form 8-K or other public filing with the Securities Exchange

Commission, as the case may be (y) a more recent public announcement by the

Company or (z) any other notice by the Company or the Transfer Agent setting

forth the number of shares of Common Stock outstanding. For any reason at any

time, upon the written or oral request of the Holder, the Company shall within

two (2) Business Days confirm orally and in writing to the Holder the number of

shares of Common Stock then outstanding. In any case, the number of outstanding

shares of Common Stock shall be determined after giving effect to the conversion

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<PAGE>

or exercise of securities of the Company, including this Note, by the Holder or

its affiliates since the date as of which such number of outstanding shares of

Common Stock was reported. By written notice to the Company, the Holder may

increase or decrease the Maximum Percentage to any other percentage not in

excess of 9.99% specified in such notice; provided that (i) any such increase

will not be effective until the sixty-first (61st) day after such notice is

delivered to the Company, and (ii) any such increase or decrease will apply only

to the Holder and not to any other holder of Notes.

(ii) ELIGIBLE MARKET REGULATION. The Company shall not be

obligated to issue any shares of Common Stock upon conversion of this Note if

the issuance of such shares of Common Stock would exceed the aggregate number of

shares of Common Stock which the Company may issue upon conversion or exercise,

as applicable, of the Notes and Warrants without breaching the Company's

obligations under the rules or regulations of any applicable Eligible Market

(the "EXCHANGE CAP"), except that such limitation shall not apply in the event

that the Company (A) obtains the approval of its stockholders as required by the

applicable rules of such Eligible Market for issuances of Common Stock in excess

of such amount or (B) obtains a written opinion from outside counsel to the

Company that such approval is not required, which opinion shall be reasonably

satisfactory to the Required Holders. Until such approval or written opinion is

obtained, no purchaser of the Notes pursuant to the Securities Purchase

Agreement (the "PURCHASERS") shall be issued in the aggregate, upon conversion

or exercise or otherwise, as applicable, of Notes or Warrants, shares of Common

Stock in an amount greater than the product of the Exchange Cap multiplied by a

fraction, the numerator of which is the principal amount of Notes issued to a

Purchaser pursuant to the Securities Purchase Agreement on the Closing Date and

the denominator of which is the aggregate principal amount of all Notes issued

to the Purchasers pursuant to the Securities Purchase Agreement on the Closing

Date (with respect to each Purchaser, the "EXCHANGE CAP ALLOCATION"). In the

event that any Purchaser shall sell or otherwise transfer any of such

Purchaser's Notes, the transferee shall be allocated a pro rata portion of such

Purchaser's Exchange Cap Allocation, and the restrictions of the prior sentence

shall apply to such transferee with respect to the portion of the Exchange Cap

Allocation allocated to such transferee. In the event that any holder of Notes

shall convert all of such holder's Notes into a number of shares of Common Stock

which, in the aggregate, is less than such holder's Exchange Cap Allocation,

then the difference between such holder's Exchange Cap Allocation and the number

of shares of Common Stock actually issued to such holder shall be allocated to

the respective Exchange Cap Allocations of the remaining holders of Notes on a

pro rata basis in proportion to the aggregate principal amount of the Notes then

held by each such holder.

(4) RIGHTS UPON EVENT OF DEFAULT.

(a) EVENT OF DEFAULT. Each of the following events shall

constitute an "EVENT OF DEFAULT":

(i) the failure of the applicable Registration Statement

required to be filed pursuant to the Registration Rights Agreement to be

declared effective by the SEC on or prior to the date that is sixty (60) days

after the applicable Effectiveness Deadline (as defined in the Registration

Rights Agreement), or, while the applicable Registration Statement is required

to be maintained effective pursuant to the terms of the Registration Rights

Agreement, the effectiveness of the applicable Registration Statement lapses for

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<PAGE>

any reason (including, without limitation, the issuance of a stop order) or is

unavailable to any holder of the Notes for sale of all of such holder's

Registrable Securities (as defined in the Registration Rights Agreement)

required to be registered thereon in accordance with the terms of the

Registration Rights Agreement, and such lapse or unavailability continues for a

period of ten (10) consecutive days or for more than an aggregate of thirty (30)

days in any 365-day period (other than days during an Allowable Grace Period (as

defined in the Registration Rights Agreement)); provided, however, that

notwithstanding anything to the contrary contained herein, the Company's failure

to meet one or more of the requirements of this Section 4(a) shall not

constitute an Event of Default where such failure is solely the result of a

comment received by the SEC requiring a limit on the number of Registrable

Securities included in the applicable Registration Statement in order for such

Registration Statement to be able to avail itself of Rule 415 under the 1933

Act;

(ii) the suspension from trading or failure of the Common

Stock to be listed on an Eligible Market for a period of five (5) consecutive

Trading Days or for more than an aggregate of ten (10) Trading Days in any

365-day period;

(iii) the Company's (A) failure to cure a Conversion Failure

by delivery of the required number of shares of Common Stock within ten (10)

Business Days after the applicable Conversion Date or (B) notice, written or

oral, to any holder of the Notes, including by way of public announcement or

through any of its agents, at any time, of its intention not to comply with a

request for conversion of any Notes into shares of Common Stock that is tendered

in accordance with the provisions of the Notes, other than pursuant to Section

3(d);

(iv) at any time following the tenth (10th) consecutive

Business Day that the Holder's Authorized Share Allocation (as defined below) is

less than the number of shares of Common Stock that the Holder would be entitled

to receive upon a conversion of the full Conversion Amount of this Note (without

regard to any limitations on conversion set forth in Section 3(d) or otherwise);

(v) the Company's failure to pay to the Holder any amount of

Principal, Interest, Late Charges or other amounts when and as due under this

Note (including, without limitation, the Company's failure to pay any redemption

payments or amounts hereunder) or any other Transaction Document (as defined in

the Securities Purchase Agreement) or any other agreement, document, certificate

or other instrument delivered in connection with the transactions contemplated

hereby and thereby to which the Holder is a party, except, in the case of a

failure to pay Interest and Late Charges when and as due, in which case only if

such failure continues for a period of at least five (5) Business Days;

(vi) any default under, redemption of or acceleration prior

to maturity of any Indebtedness of the Company or any of its Subsidiaries (as

defined in Section 3(a) of the Securities Purchase Agreement) which,

individually or in the aggregate, exceeds $50,000, other than with respect to

any Other Notes;

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<PAGE>

(vii) the Company or any of its Subsidiaries, pursuant to or

within the meaning of Title 11, U.S. Code, or any similar Federal, foreign or

state law for the relief of debtors (collectively, "BANKRUPTCY LAW"), (A)

commences a voluntary case, (B) consents to the entry of an order for relief

against it in an involuntary case, (C) consents to the appointment of a

receiver, trustee, assignee, liquidator or similar official (a "CUSTODIAN"), (D)

makes a general assignment for the benefit of its creditors or (E) admits in

writing that it is generally unable to pay its debts as they become due;

(viii) a court of competent jurisdiction enters an order or

decree under any Bankruptcy Law that (A) is for relief against the Company or

any of its Subsidiaries in an involuntary case, (B) appoints a Custodian of the

Company or any of its Subsidiaries or (C) orders the liquidation of the Company

or any of its Subsidiaries;

(ix) a final judgment or judgments for the payment of money

aggregating in excess of $350,000 are rendered against the Company or any of its

Subsidiaries and which judgments are not, within sixty (60) days after the entry

thereof, bonded, discharged or stayed pending appeal, or are not discharged

within sixty (60) days after the expiration of such stay; provided, however,

that any judgment which is covered by insurance or an indemnity from a credit

worthy party shall not be included in calculating the $350,000 amount set forth

above so long as the Company provides the Holder a written statement from such

insurer or indemnity provider (which written statement shall be reasonably

satisfactory to the Holder) to the effect that such judgment is covered by

insurance or an indemnity and the Company will receive the proceeds of such

insurance or indemnity within thirty (30) days of the issuance of such judgment;

(x) the Company breaches any representation, warranty,

covenant or other term or condition of any Transaction Document, except, in the

case of a breach of a covenant or other term or condition of any Transaction

Document which is curable, only if such breach continues for a period of at

least ten (10) consecutive Business Days;

(xi) any breach or failure in any respect to comply with

either of Section 16 of this Note or Section 4(r) of the Securities Purchase

Agreement;

(xii) the Company or any Subsidiary shall fail to perform or

comply with any covenant or agreement contained in the Security Agreement (as

defined in the Securities Purchase Agreement) to which it is a party, in the

case of a breach of a covenant or other term or condition which is curable and

except where such failure to comply with such covenant or agreement contained in

the Security Agreement shall for any reason fail or cease to create a valid and

perfected first priority security interest in favor of the Collateral Agent for

the benefit of the Buyers, only if such breach continues for a period of at

least ten (10) consecutive Business Days;

(xiii) any material provision (as determined by the

Collateral Agent) of any Security Document (as defined in the Securities

Purchase Agreement) shall at any time for any reason (other than pursuant to the

express terms thereof) cease to be valid and binding on or enforceable against

the Company or any Subsidiary intended to be a party thereto, or the validity or

enforceability thereof shall be contested by any party thereto other then the

Collateral Agent, or a proceeding shall be commenced by the Company or any

Subsidiary or any governmental authority having jurisdiction over any of them,

seeking to establish the invalidity or unenforceability thereof, or the Company

or any Subsidiary shall deny in writing that it has any liability or obligation

purported to be created under any Security Document;

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<PAGE>

(xiv) the Security Agreement or any other Security Document,

after delivery thereof pursuant hereto, shall for any reason fail or cease to

create a valid and perfected and, except to the extent permitted by the terms

hereof or thereof, first priority Lien in favor of the Collateral Agent for the

benefit of the holders of the Notes on any Collateral (as defined in the

Security Documents) purported to be covered thereby;

(xv) any bank at which any deposit account, blocked account,

or lockbox account of the Company or any Subsidiary is maintained shall fail to

comply with any material term of any deposit account, blocked account, lockbox

account or similar agreement to which such bank is a party or any securities

intermediary, commodity intermediary or other financial institution at any time

in custody, control or possession of any investment property of the Company or

any Subsidiary shall fail to comply with any of the material terms of any

investment property control agreement to which such Person is a party (it being

understood that only accounts pursuant to which the Collateral Agent has

requested account control agreements should be subject to this clause (xv)); OR

(xvi) any Event of Default (as defined in the Other Notes)

occurs with respect to any Other Notes.

(b) REDEMPTION RIGHT. Upon the occurrence of an Event of Default

with respect to this Note, the Company shall within two (2) Business Days

deliver written notice thereof via facsimile and overnight courier (an "EVENT OF

DEFAULT NOTICE") to the Holder. At any time after the earlier of the Holder's

receipt of an Event of Default Notice and the Holder becoming aware of an Event

of Default, the Holder may require the Company to redeem all or any portion of

this Note by delivering written notice thereof (the "EVENT OF DEFAULT REDEMPTION

NOTICE") to the Company, which Event of Default Redemption Notice shall indicate

the Conversion Amount of this Note the Holder is electing to require the Company

to redeem. Each portion of this Note subject to redemption by the Company

pursuant to this Section 4(b) shall be redeemed by the Company at a price equal

to the greater of (i) the product of (A) the Conversion Amount to be redeemed

and (B) the Redemption Premium and (ii) the product of (A) the product of (1)

the Conversion Rate with respect to such Conversion Amount in effect at such

time as the Holder delivers an Event of Default Redemption Notice and (2) the

Equity Value Redemption Premium and (B) the greater of (1) the Closing Sale

Price of the Common Stock on the date immediately preceding such Event of

Default, (2) the Closing Sale Price of the Common Stock on the date immediately

after such Event of Default and (3) the Closing Sale Price of the Common Stock

on the date the Holder delivers the Event of Default Redemption Notice (the

"EVENT OF DEFAULT REDEMPTION PRICE"). Redemptions required by this Section 4(b)

shall be made in accordance with the provisions of Section 14. To the extent

redemptions required by this Section 4(b) are deemed or determined by a court of

competent jurisdiction to be prepayments of the Note by the Company, such

redemptions shall be deemed to be permitted voluntary prepayments. The parties

hereto agree that in the event of the Company's redemption of any portion of the

Note under this Section 4(b), the Holder's damages would be uncertain and

difficult to estimate because of the parties' inability to predict future

interest rates and the uncertainty of the availability of a suitable substitute

investment opportunity for the Holder. Accordingly, any Redemption Premium due

under this Section 4(b) is intended by the parties to be, and shall be deemed, a

reasonable estimate of the Holder's actual loss of its investment opportunity

and not as a penalty.

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(5) RIGHTS UPON FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL.

(a) ASSUMPTION. The Company shall not enter into or be party to a

Fundamental Transaction unless (i) the Successor Entity assumes in writing all

of the obligations of the Company under this Note and the other Transaction

Documents in accordance with the provisions of this Section 5(a) pursuant to

written agreements in form and substance reasonably satisfactory to the Required

Holders and approved by the Required Holders prior to such Fundamental

Transaction, including agreements to deliver to each holder of Notes in exchange

for such Notes a security of the Successor Entity evidenced by a written

instrument substantially similar in form and substance to the Notes, including,

without limitation, having a principal amount and interest rate equal to the

principal amounts and the interest rates of the Notes then outstanding held by

such holder, having similar conversion rights and having similar ranking to the

Notes, and satisfactory to the Required Holders and (ii) the Successor Entity

(including its Parent Entity) is a publicly traded corporation whose common

stock is quoted on or listed for trading on an Eligible Market (a "PUBLIC

SUCCESSOR ENTITY"). Upon the occurrence of any Fundamental Transaction, the

Successor Entity shall succeed to, and be substituted for (so that from and

after the date of such Fundamental Transaction, the provisions of this Note

referring to the "Company" shall refer instead to the Successor Entity), and may

exercise every right and power of the Company and shall assume all of the

obligations of the Company under this Note with the same effect as if such

Successor Entity had been named as the Company herein. Upon consummation of the

Fundamental Transaction, the Successor Entity shall deliver to the Holder

confirmation that there shall be issued upon conversion or redemption of this

Note at any time after the consummation of the Fundamental Transaction, in lieu

of the shares of the Company's Common Stock (or other securities, cash, assets

or other property) issuable upon the conversion or redemption of the Notes prior

to such Fundamental Transaction, such shares of the publicly traded common stock

(or their equivalent) of the Successor Entity (including its Parent Entity), as

adjusted in accordance with the provisions of this Note. The provisions of this

Section shall apply similarly and equally to successive Fundamental Transactions

and shall be applied without regard to any limitations on the conversion or

redemption of this Note.

(b) REDEMPTION RIGHT. No sooner than fifteen (15) days nor later

than ten (10) days prior to the consummation of a Change of Control, but not

prior to the public announcement of such Change of Control, the Company shall

deliver written notice thereof via facsimile and overnight courier to the Holder

(a "CHANGE OF CONTROL NOTICE"). At any time during the period beginning after

the Holder's receipt of a Change of Control Notice and ending twenty (20)

Trading Days after the date of the consummation of such Change of Control, the

Holder may require the Company to redeem all or any portion of this Note by

delivering written notice thereof ("CHANGE OF CONTROL REDEMPTION NOTICE") to the

Company, which Change of Control Redemption Notice shall indicate the Conversion

Amount the Holder is electing to require the Company to redeem. The portion of

this Note subject to redemption pursuant to this Section 5 shall be redeemed by

the Company in cash at a price equal to the greater of (i) 200% of the

Conversion Amount being redeemed and (ii) the product of (A) the product of (1)

the Equity Value Redemption Premium and (2) the Conversion Amount being redeemed

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multiplied by (B) the quotient determined by dividing (x) the aggregate cash

consideration and the aggregate cash value of any non-cash consideration per

Common Share to be paid to the holders of the Common Shares upon consummation of

the Change of Control (any such non-cash consideration consisting of marketable

securities to be valued at the higher of (x) the Closing Sale Price of such

securities as of the Trading Day immediately prior to the consummation of such

Change of Control, (y) the Closing Sale Price as of the Trading Day immediately

following the public announcement of such proposed Change of Control and (z) the

Closing Sale Price as of the Trading Day immediately prior to the public

announcement of such proposed Change of Control) by (y) the Conversion Price

(the "CHANGE OF CONTROL REDEMPTION PRICE"). Redemptions required by this Section

5 shall be made in accordance with the provisions of Section 14 and shall have

priority to payments to stockholders in connection with a Change of Control. To

the extent redemptions required by this Section 5(b) are deemed or determined by

a court of competent jurisdiction to be prepayments of the Note by the Company,

such redemptions shall be deemed to be voluntary prepayments. Notwithstanding

anything to the contrary in this Section 5, but subject to Section 3(d), until

the Change of Control Redemption Price (together with any interest thereon) is

paid in full, the Conversion Amount submitted for redemption under this Section

5(c) (together with any interest thereon) may be converted, in whole or in part,

by the Holder into Common Stock pursuant to Section 3. The parties hereto agree

that in the event of the Company's redemption of any portion of the Note under

this Section 5(b), the Holder's damages would be uncertain and difficult to

estimate because of the parties' inability to predict future interest rates and

the uncertainty of the availability of a suitable substitute investment

opportunity for the Holder. Accordingly, any Change of Control redemption

premium due under this Section 5(b) is intended by the parties to be, and shall

be deemed, a reasonable estimate of the Holder's actual loss of its investment

opportunity and not as a penalty.

(6) RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.

(a) PURCHASE RIGHTS. If at any time the Company grants, issues or

sells any Options, Convertible Securities or rights to purchase stock, warrants,

securities or other property pro rata to the record holders of any class of

Common Stock (the "PURCHASE RIGHTS"), then the Holder will be entitled to

acquire, upon the terms applicable to such Purchase Rights, the aggregate

Purchase Rights which the Holder could have acquired if the Holder had held the

number of shares of Common Stock acquirable upon complete conversion of this

Note (without taking into account any limitations or restrictions on the

convertibility of this Note) 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.

(b) OTHER CORPORATE EVENTS. In addition to and not in substitution

for any other rights hereunder, prior to the consummation of any Fundamental

Transaction pursuant to which holders of shares of Common Stock are entitled to

receive securities or other assets with respect to or in exchange for shares of

Common Stock (a "CORPORATE EVENT"), the Company shall make appropriate provision

to insure that the Holder will thereafter have the right to receive upon a

conversion of this Note, at the Holder's option, (i) in addition to the shares

of Common Stock receivable upon such conversion, such securities or other assets

to which the Holder would have been entitled with respect to such shares of

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Common Stock had such shares of Common Stock been held by the Holder upon the

consummation of such Corporate Event (without taking into account any

limitations or restrictions on the convertibility of this Note) or (ii) in lieu

of the shares of Common Stock otherwise receivable upon such conversion, such

securities or other assets received by the holders of shares of Common Stock in

connection with the consummation of such Corporate Event in such amounts as the

Holder would have been entitled to receive had this Note initially been issued

with conversion rights for the form of such consideration (as opposed to shares

of Common Stock) at a conversion rate for such consideration commensurate with

the Conversion Rate. Provision made pursuant to the preceding sentence shall be

in a form and substance satisfactory to the Required Holders. The provisions of

this Section shall apply similarly and equally to successive Corporate Events

and shall be applied without regard to any limitations on the conversion or

redemption of this Note.

(7) RIGHTS UPON ISSUANCE OF OTHER SECURITIES.

(a) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF COMMON STOCK.

If and whenever on or after the Subscription Date, the Company issues or sells,

or in accordance with this Section 7(a) is deemed to have issued or sold, any

shares of Common Stock (including the issuance or sale of shares of Common Stock

owned or held by or for the account of the Company, but excluding shares of

Common Stock deemed to have been issued or sold by the Company in connection

with any Excluded Security) for a consideration per share (the "NEW ISSUANCE

PRICE") less than a price (the "APPLICABLE PRICE") equal to the Conversion Price

in effect immediately prior to such issue or sale (the foregoing a "DILUTIVE

ISSUANCE"), then immediately after such Dilutive Issuance the Conversion Price

then in effect shall be reduced to an amount equal to the New Issuance Price.

For purposes of determining the adjusted Conversion Price under this Section

7(a), the following shall be applicable:

(i) ISSUANCE OF OPTIONS. If the Company in any manner grants

or sells any Options and the lowest price per share for which one share of

Common Stock is issuable upon the exercise of any such Option or upon conversion

or exchange or exercise of any Convertible Securities issuable upon exercise of

such Option is less than the Applicable Price, then such share of Common Stock

shall be deemed to be outstanding and to have been issued and sold by the

Company at the time of the granting or sale of such Option for such price per

share. For purposes of this Section 7(a)(i), the "lowest price per share for

which one share of Common Stock is issuable upon the exercise of any such Option

or upon conversion or exchange or exercise of any Convertible Securities

issuable upon exercise of such Option" shall be equal to the sum of the lowest

amounts of consideration (if any) received or receivable by the Company with

respect to any one share of Common Stock upon granting or sale of the Option,

upon exercise of the Option and upon conversion or exchange or exercise of any

Convertible Security issuable upon exercise of such Option. No further

adjustment of the Conversion Price shall be made upon the actual issuance of

such share of Common Stock or of such Convertible Securities upon the exercise

of such Options or upon the actual issuance of such Common Stock upon conversion

or exchange or exercise of such Convertible Securities.

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(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the Company in

any manner issues or sells any Convertible Securities and the lowest price per

share for which one share of Common Stock is issuable upon such conversion or

exchange or exercise thereof is less than the Applicable Price, then such share

of Common Stock shall be deemed to be outstanding and to have been issued and

sold by the Company at the time of the issuance or sale of such Convertible

Securities for such price per share. For the purposes of this Section 7(a)(ii),

the "lowest price per share for which one share of Common Stock is issuable upon

such conversion or exchange or exercise" shall be equal to the sum of the lowest

amounts of consideration (if any) received or receivable by the Company with

respect to any one share of Common Stock upon the issuance or sale of the

Convertible Security and upon the conversion or exchange or exercise of such

Convertible Security. No further adjustment of the Conversion Price shall be

made upon the actual issuance of such share of Common Stock upon conversion or

exchange or exercise of such Convertible Securities, and if any such issue or

sale of such Convertible Securities is made upon exercise of any Options for

which adjustment of the Conversion Price had been or are to be made pursuant to

other provisions of this Section 7(a), no further adjustment of the Conversion

Price shall be made by reason of such issue or sale.

(iii) CHANGE IN OPTION PRICE OR RATE OF CONVERSION. If the

purchase price provided for in any Options, the additional consideration, if

any, payable upon the issue, conversion, exchange or exercise of any Convertible

Securities, or the rate at which any Convertible Securities are convertible into

or exchangeable or exercisable for Common Stock changes at any time, the

Conversion Price in effect at the time of such change shall be adjusted to the

Conversion Price which would have been in effect at such time had such Options

or Convertible Securities provided for such changed purchase price, additional

consideration or changed conversion rate, as the case may be, at the time

initially granted, issued or sold. For purposes of this Section 7(a)(iii), if

the terms of any Option or Convertible Security that was outstanding as of the

Subscription Date are changed in the manner described in the immediately

preceding sentence, then such Option or Convertible Security and the Common

Stock deemed issuable upon exercise, conversion or exchange thereof shall be

deemed to have been issued as of the date of such change. No adjustment shall be

made if such adjustment would result in an increase of the Conversion Price then

in effect.

(iv) CALCULATION OF CONSIDERATION RECEIVED. In case any

Option or Convertible Security is issued in connection with the issue or sale of

other securities of the Company, together comprising one integrated transaction

in which no specific consideration is allocated to such Option or Convertible

Security by the parties thereto, the Option or Convertible Security will be

deemed to have been issued for a consideration of $.01. If any Common Stock,

Options or Convertible Securities are issued or sold or deemed to have been

issued or sold for cash, the consideration received therefor will be deemed to

be the net amount received by the Company therefor. If any Common Stock, Options

or Convertible Securities are issued or sold for a consideration other than

cash, the amount of the consideration other than cash received by the Company

will be the fair value of such consideration, except where such consideration

consists of securities, in which case the amount of consideration received by

the Company will be the Closing Sale Price of such securities on the date of

receipt. If any Common Stock, Options or Convertible Securities are issued to

the owners of the non-surviving entity in connection with any merger in which

the Company is the surviving entity, the amount of consideration therefor will

be deemed to be the fair value of such portion of the net assets and business of

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the non-surviving entity as is attributable to such Common Stock, Options or

Convertible Securities, as the case may be. The fair value of any consideration

other than cash or securities will be determined jointly by the Company and the

Required Holders. If such parties are unable to reach agreement within ten (10)

days after the occurrence of an event requiring valuation (the "VALUATION

EVENT"), the fair value of such consideration will be determined within five (5)

Business Days after the tenth (10th) day following the Valuation Event by an

independent, reputable appraiser jointly selected by the Company and the

Required Holders. The determination of such appraiser shall be deemed binding

upon all parties absent manifest error and the fees and expenses of such

appraiser shall be borne by the Company.

(v) RECORD DATE. If the Company takes a record of the holders

of Common Stock for the purpose of entitling them (A) to receive a dividend or

other distribution payable in Common Stock, Options or in Convertible Securities

or (B) to subscribe for or purchase Common Stock, Options or Convertible

Securities, then such record date will be deemed to be the date of the