SENIOR SECURED CONVERTIBLE NOTE

<PAGE>

Exhibit 10.3

                                                                  EXECUTION COPY


                    [FORM OF SENIOR SECURED CONVERTIBLE 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 HOLDER OF THIS
NOTE AGREES TO THE TERMS AND PROVISIONS SET FORTH IN SECTION 4(Q) OF THE
SECURITIES PURCHASE AGREEMENT REGARDING THE COLLATERAL AGENT (AS DEFINED IN THE
SECURITIES PURCHASE AGREEMENT). 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:   July 28, 2008            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 as may be required by Section 2, 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.


<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 July 28, 2010 (the "SCHEDULED MATURITY DATE"), as may
be extended at the option of the Holder (a) 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, (b) 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
(c) in its sole discretion, upon delivering a notice to the Company at least ten
(10) Business Days prior to the 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 Scheduled Maturity Date deferred up to a date that is two (2)
years from the Scheduled Maturity Date. Any notice delivered by the Holder
pursuant to the preceding subclause (c) 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 subclause (c) 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.

         (2) INTEREST; INTEREST RATE. Interest on this Note for the period from
the date set out above as the Issuance Date (the "ISSUANCE DATE") to the
Scheduled Maturity Date has been prepaid to the Holder as of the Issuance Date.
Notwithstanding the foregoing, in the event the Maturity Date is extended by the
Holder in accordance with Section 1(c), Interest on this Note shall accrue at a
rate equal to ten percent (10.0%) per annum (the "INTEREST RATE") for such
period commencing on the Scheduled Maturity Date through such extended Maturity
Date. To the extent Interest becomes payable hereunder, Interest 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 (each, an "INTEREST DATE") with the
first (1st) Interest Date being October 1, 2010. 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; provided, however, that in the event an Event of Default
occurs at any time prior to July 28, 2010, the Company shall pay interest to the
Holder, in addition to any previously paid interest, at an Interest Rate equal
to five percent (5.0%) per annum. In the event that such Event of Default is


                                      - 2 -

<PAGE>

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. Interest accrued prior to July 28, 2010 pursuant
to this Section 2 shall be due and payable to the Holder in cash at the earlier
of (i) the first (1st) day of the succeeding Calendar Quarter and (ii) within
five (5) Business Days of the date such Interest ceases to accrue hereunder
(each such date, also an "INTEREST DATE" hereunder).

         (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.

                    (ii) "CONVERSION PRICE" means, as of any Conversion Date (as
defined below) or other date of determination, $1.00, 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


                                      - 3 -

<PAGE>

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) by inclusion in the Conversion Amount 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.

                   (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


                                     - 4 -

<PAGE>

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
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).

                                     - 5 -

<PAGE>

                   (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
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.

                                     - 6 -

<PAGE>

                   (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
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;

                                     - 7 -

<PAGE>

                   (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;

                   (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;

                                     - 8 -

<PAGE>

                    (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 10 or Section 16 of this Note or Section 4(r) of the
Securities Purchase Agreement;

                   (xii) the Company receives (x) any oral or written request
for information from the Enforcement Division of the SEC regarding the Company
or any of its Subsidiaries or any of its officers or directors or (y) written
notice that the SEC has commenced a formal investigation of or enforcement
action against the Company and/or its Subsidiaries, or a formal investigation of
or enforcement action against any of the officers or directors of the Company or
entered a consent or other order against the Company and/or its Subsidiaries or
any of the officers or directors of the Company (any of the foregoing, an "SEC
EVENT"); provided, that the forgoing shall not apply to any such officer or
director if (A) such information request, investigation, enforcement action or
consent does not relate to any of such officer's or director's actions as an
officer or director of the Company or any of its Subsidiaries and (B) no later
than five (5) Trading Days after the Company's receipt of written notification
of such information request, investigation, enforcement action or consent, such
officer or director no longer serves as an officer or director of the Company or
any of its Subsidiaries;

                   (xiii) 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;

                   (xiv) 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;

                                     - 9 -

<PAGE>

                   (xv) 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;

                   (xvi) 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 (xvi)); or

                   (xvii) 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.

                                     - 10 -

<PAGE>

         (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


                                     - 11 -

<PAGE>

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
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 (I) the Closing Sale Price of such
securities as of the Trading Day immediately prior to the consummation of such
Change of Control, (II) the Closing Sale Price of such securities as of the
Trading Day immediately following the public announcement of such proposed
Change of Control and (III) 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.

                                     - 12 -

<PAGE>

              (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
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 or with respect to the Replacement Warrants) 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