Form Of Convertible Unsecured Note

THE SECURITY REPRESENTED BY THIS INSTRUMENT WAS ORIGINALLY ISSUED ON ______________________, AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY APPLICABLE STATE SECURITIES LAW.


CONVERTIBLE UNSECURED NOTE


$____________ Salt Lake City
______________


FOR VALUE RECEIVED, the undersigned, ALPNET, INC., a Utah corporation (the "Company"), hereby promises to pay to the order of________________, at__________________, _______________________ in three (3) annual installments as described in Paragraph 2 of this Note, the principal amount of $_________or such lesser principal amount thereof as may remain outstanding, together with interest thereon calculated from the date hereof, in accordance with the provisions of this Note.


1. Payment of Interest. Interest shall accrue at a variable interest rate of two percent (2.0%) per annum above the New York Prime Rate (as defined below). Interest shall accrue daily on the outstanding balance of the outstanding Principal both before and after judgment, and shall be calculated on the basis of a 360-day year.


As used in this Promissory Note, the term "New York Prime Rate" shall be deemed to mean an index which is determined quarterly by the lowest Prime Rate published in the Money Rate Section of the West Coast Edition of the Wall Street Journal. This definition of Prime Rate is to be strictly interpreted and is not intended to serve any purpose other than providing an index to determine the variable interest rate used herein. The applicable annual total interest rate, as computed in accordance with the foregoing, shall be adjusted on the first day of January, April, July and October of each year. The Company will notify Lender of the current index rate upon Lender's request. The interest rate change will not occur more often than each quarter.


The Company shall pay to the holder of this Note all accrued interest quarterly, specifically February 1, May 1, August 1, and November 1 of each year, beginning ___________ (collectively, the "Interest Payment Dates"). Any accrued interest, which for any reason has not theretofore been paid, shall be paid in full on the date on which the final principal payment on the Note is made.


2. Payment of Principal. The principal amount of this Note shall be repaid in three (3) equal installments due 36, 48, and 60 months, respectively, from_______________. Maker has a right to pay the full amount, or any portion, of the indebtedness evidenced by this Note without premium or penalty prior to maturity upon thirty (30) days prior notice to the holder; provided, however, that even after receipt of notice from Holder of its intent to make a prepayment, the holder shall continue to have the right to exercise its conversion rights until actual receipt of such prepayment.


3. Events of Default.


(a) Definition. For purposes of this Note, an Event of Default shall be deemed to have occurred if


(i) the Company fails to pay when due and payable the full amount of interest then accrued on the Note or the installment amount of any principal payment on the Note, and such failure shall have continued for a period of 30 days;


(ii) the Company fails to perform or observe any material provision contained in this Note, and such failure is not cured within sixty (60) days after the occurrence thereof;


(iii) any information contained in writing required to be furnished by the Company to any holder of this Note is false or misleading in any material respect on the date made or furnished; or


(iv) the Company makes an assignment for the benefit of creditors or admits in writing its inability to pay its debts generally as they become due; or an order, judgment or decree is entered adjudicating the Company bankrupt or insolvent.


The foregoing shall constitute Events of Default whatever the reason or cause for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.


(b) Consequences of Events of Default. If an Event of Default has occurred, the aggregate principal amount of the Note (together with all accrued interest thereon) shall become immediately due and payable without any action on the part of the holder of this Note, and the Company shall immediately pay to the holder of the Note all amounts due and payable with respect to the Note.


4. Conversion.


(a) Conversion Procedure.


(i) At any time following the date of issuance of this Note and prior to the payment of this Note in full, the holder of this Note may convert all or any portion of the outstanding principal amount of this Note into a number of shares of the Conversion Stock determined by dividing the principal amount designated by such holder to be converted by the Conversion Price. Upon payment of this Note in full, all conversion rights granted herein shall terminate.


(ii) The holder of this Note may convert all or a portion of this Note by delivering to the Company or its agent a written notice of conversion (the "Notice of Conversion" in the form of Exhibit A attached hereto), duly signed by or on behalf of the holder, stating the aggregate principal amount of such holder's Note to be converted. Such notices may be delivered to the Company or its agent by telephone line facsimile, and shall be delivered prior to 5 p.m., Salt Lake City time, on the day prior to the date of requested conversion. The Company will confirm its receipt of the Notice of Conversion, and confirm the calculations therein, or indicate alternative calculations, by return facsimile by 11:00 a.m., Salt Lake City time, on the following Business Day. Notwithstanding anything contained herein to the contrary, a minimum of $50,000 of the Note must be converted at a time or the entire balance due on the Note if less than $50,000.


(iii) Except as otherwise expressly provided herein, each conversion of this Note shall be deemed to have been effected as of the close of business on the date on which the Notice of Conversion is confirmed by the Company. At such time as such conversion has been effected, the rights of the holder of this Note as such holder to the extent of the conversion shall cease, and the Person or Persons in whose name or names any certificate or certificates for shares of Conversion Stock are to be issued upon such conversion shall be deemed to have become the holder or holders of record of the shares of Conversion Stock represented thereby.


(iv) On receipt by the Company from the holder of this Note of a Notice of Conversion by telephone line facsimile transmission, meeting the requirements for conversion in this Note, and confirmation of such by the Company, the Company shall deliver to the holder as soon as is practicable:


(1) a certificate or certificates representing the number of shares of Conversion Stock issuable by reason of such conversion in such name or names and such denomination or denominations as the holder has specified;


(2) payment in an amount equal to the sum of all accrued interest with respect to the principal amount converted, which has not been paid prior thereto, plus the amount payable under subparagraph (v) below; and


(3) a new Note representing any portion of the principal amount that was represented by the Note surrendered to the Company in connection with such conversion but which was not converted.


(v) If any fractional share of Conversion Stock would, except for the provisions hereof, be deliverable upon conversion of this Note, the Company, in lieu of delivering such fractional share, shall pay an amount equal to the Conversion Price of such fractional share as of the date of such conversion.


(vi) The issuance of certificates for shares of Conversion Stock upon conversion of this Note shall be made without charge to the holder hereof for any issuance tax in respect thereof or other cost incurred by the Company in connection with such conversion and the related issuance of shares of Conversion Stock. Upon conversion of this Note, the Company shall take all such actions as are necessary in order to insure that the Conversion Stock issuable with respect to such conversion shall be validly issued, fully paid and nonassessable.


(vii) Each Common Stock certificate issued upon conversion of all or any portion of this Note, shall be stamped or otherwise imprinted with a legend substantially in the following form:


THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR REGISTERED OR OTHERWISE QUALIFIED FOR SALE UNDER ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR SOLD OR OFFERED FOR SALE OR OTHERWISE TRANSFERRED, PLEDGED, HYPOTHECATED OR DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE ACT AND REGISTERED OR OTHERWISE QUALIFIED FOR SALE UNDER SUCH STATE SECURITIES LAWS OR AN EXCEPTION FROM REGISTRATION THEREUNDER IS AVAILABLE.


(viii) The Company shall at all times reserve and keep available, out of its treasury stock or authorized and unissued stock, or both, solely for the purpose of effecting the conversion of this Note, such number of shares of Common Stock as shall from time to time be sufficient to effect the conversion of this Note.


(b) Conversion Price. As used herein, the term "Conversion Price" shall mean the average of the closing bid and ask for ALPNET, Inc.'s Common Stock as quoted on NASDAQ for the five (5) trading days prior to the date of this Note which is $________ per share.


5. Registration Rights.


(a) Piggyback Rights. If at any time prior to the payment of this Note in full, the Company proposes to file a registration statemen ...