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                                                                    Exhibit 10.2

                           [FORM OF 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 IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL ADDRESSED TO THE COMPANY, IN A
GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS. 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
16(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.

                                CONVERTIBLE NOTE

Issuance Date: December 31, 2002                      Principal: U.S. $_________

         FOR VALUE RECEIVED, VIEWPOINT CORPORATION, a Delaware corporation (the
"COMPANY"), hereby promises to pay to the order of _____________, or registered
assigns ("HOLDER") the amount set out above as the Principal (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
rate of 4.95% per annum, subject to periodic adjustment pursuant to Section 2
(the "INTEREST RATE"), 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), the Maturity Date (as defined below),
acceleration, conversion, redemption or otherwise (in each case in accordance
with the terms hereof). This Convertible Note (including all Convertible Notes
issued in exchange, transfer or replacement hereof, this "NOTE") is one of an
issue of Convertible Notes (collectively, the "NOTES" and such other Convertible
Notes, the "OTHER NOTES") issued on the Issuance Date pursuant to the Securities
Purchase Agreement (as defined below). Certain capitalized terms are defined in
Section 29.
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                  (1) MATURITY. On the Maturity Date, the Holder shall surrender
this Note to the Company and the Company shall pay to the Holder an amount in
cash representing all outstanding Principal, accrued and unpaid Interest and
accrued and unpaid Late Charges, if any. The "MATURITY DATE" shall be December
31, 2007 as 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 or any event shall have occurred and be continuing which with
the passage of time and the failure to cure would result in an Event of Default
and (ii) through the date that is ten days after the consummation of a Change of
Control (as defined in Section 5(a)) in the event that a Change of Control is
publicly announced or a Change of Control Notice (as defined in Section 5(a)) is
delivered prior to the Maturity Date.

                  (2) INTEREST; INTEREST RATE. Interest on this Note shall
commence accruing on the Issuance Date and shall be computed on the basis of a
365-day year and actual days elapsed and shall be payable in arrears on the
first day of each 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 Interest Date being April 1, 2003. Interest shall be payable on
each Interest Date in cash or, at the option of the Company, in shares of Common
Stock ("INTEREST SHARES") provided that the Interest which accrued during any
period shall be payable in Interest Shares only if the Company delivers written
notice of such election ("INTEREST ELECTION NOTICE") to each holder of the Notes
and the Separate Tranche Notes at least seven (7) Trading Days prior to the
Interest Date (an "INTEREST ELECTION DATE"). Interest to be paid on an Interest
Date in Interest Shares shall be paid in a number of fully paid and
nonassessable shares (rounded to the nearest whole share in accordance with
Section 3(a)) of Common Stock equal to the quotient of (a) the Interest payable
and (b) the Interest Conversion Price on the applicable Interest Date. If any
Interest Shares are to be paid on an Interest Date, then the Company shall (X)
issue and deliver on the applicable Interest Date, to such address as specified
by the Holder in writing to the Company at least two Business Days prior to the
applicable Interest Date, a certificate, registered in the name of the Holder or
its designee, for the number of Interest Shares to which the Holder shall be
entitled, or (Y) provided that the Company's transfer agent (the "TRANSFER
AGENT") is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer Program, upon the request of the Holder, credit such
aggregate number of Interest Shares 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. Notwithstanding the foregoing, the Company
shall not be entitled to pay Interest in Interest Shares and shall be required
to pay such Interest in cash on the applicable Interest Date if (x) any event
constituting an Event of Default or an event that with the passage of time and
assuming it were not cured would constitute an Event of Default has occurred and
is continuing on the applicable Interest Election Date or the Interest Date,
unless consented to in writing by the Holder, (y) the Registration Statement (as
defined in the Registration Rights Agreement) covering the Interest Shares is
not effective and available for the resale of all of the Registrable Securities
(as defined in the Registration Rights Agreement) relating to this Note on the
Interest Election Date or on the Interest Date or (z) the Company has not
obtained the Stockholder Approval (as defined in the


                                       2
<PAGE>
Securities Purchase Agreement) prior to the Interest Election Date. Prior to the
payment of Interest on an Interest Date, Interest on this Note shall accrue at
the Interest Rate and be payable upon conversion by way of inclusion of the
Interest in the Conversion Amount in accordance with Section 3(b)(i). From and
after the occurrence of an Event of Default, the Interest Rate shall be
increased to 12%. 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 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. The
Company shall pay any and all documentary stamp, transfer or similar taxes that
may be payable with respect to the issuance and delivery of Interest Shares.

                  (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), 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
documentary stamp, transfer or 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. 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 (as defined below) (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, and subject to adjustment as
        provided herein, $2.26.

                        (c) Mechanics of Conversion.

        (i) Optional Conversion. To convert any Conversion Amount into shares of


                                       3
<PAGE>
        Common Stock on any date (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 such date, 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). On or before the first Business 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 Transfer Agent. On or before the second Business Day following the
        date of receipt of a Conversion Notice (the "SHARE DELIVERY DATE"), the
        Company shall (X) 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, or (Y) provided that the Transfer Agent is
        participating in DTC Fast Automated Securities Transfer Program, upon
        the request of the Holder, credit such aggregate number of shares of
        Common Stock 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. If this Note is physically surrendered for
        conversion as required by 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 three 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 19(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 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 Business Days after the Conversion Date (a
        "CONVERSION FAILURE"), then (A) the Company shall pay damages to the
        Holder for each date of such Conversion Failure in an amount equal to
        1.0% 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.

        (iii) Book-Entry. Notwithstanding anything to the contrary set forth
        herein, upon


                                       4
<PAGE>
        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 full Conversion 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 physical surrender and reissue of this Note. The
        Holder and the Company shall maintain records showing the Principal,
        Interest, and Late Charges 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.

        (iv) Pro Rata Conversion; Disputes. In the event that the Company
        receives a Conversion Notice from more than one holder of Notes or
        Separate Tranche 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 or Separate Tranche Notes electing to have Notes or
        Separate Tranche Notes converted on such date a pro rata amount of such
        holder's portion of its Notes or Separate Tranche Notes submitted for
        conversion based on the principal amount of Notes and Separate Tranche
        Notes submitted for conversion on such date by such holder relative to
        the aggregate principal amount of all Notes and Separate Tranche 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 24.

                        (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% 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, Separate Tranche 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


                                       5
<PAGE>
        Securities Exchange Act of 1934, as amended. 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-Q or
        Form 10-K, 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 Business Days confirm 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.

        (ii) Principal 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 that number of
        shares of Common Stock which the Company may issue upon conversion of
        the Notes and the Separate Tranche Notes without breaching the Company's
        obligations under the rules or regulations of the Principal Market (the
        "EXCHANGE CAP"), except that such limitation shall not apply in the
        event that the Company obtains the approval of its stockholders as
        required by the applicable rules of the Principal Market for issuances
        of Common Stock in excess of such amount. Until such approval is
        obtained, no purchaser of the Notes or Separate Tranche Notes pursuant
        to the Securities Purchase Agreement (the "PURCHASERS") shall be issued,
        upon conversion of Notes or Separate Tranche Notes, 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 such Purchaser pursuant to the Securities Purchase
        Agreement on the Initial Issuance 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 Initial Issuance
        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 or Separate Tranche 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 or Separate Tranche Notes shall convert all of such holder's Notes
        or Separate Tranche 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 and Separate Tranche Notes on a pro rata
        basis in proportion to the aggregate principal amount of the Notes and
        Separate Tranche Notes then held by each such holder.


                                       6
<PAGE>
                (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 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) in accordance with the terms of the
        Registration Rights Agreement, and such lapse or unavailability
        continues for a period of 10 consecutive days or for more than an
        aggregate of 30 days in any 365-day period (other than days during an
        Allowable Grace Period (as defined in the Registration Rights
        Agreement));

        (ii) the suspension from trading or failure of the Common Stock to be
        listed on the Principal Market, The New York Stock Exchange, Inc. (the
        "NYSE"), or the American Stock Exchange (the "AMEX") for a period of
        five consecutive days or for more than an aggregate of 10 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, as applicable, within
        10 days after the applicable Conversion Date or (B) written notice 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;

        (iv) upon the Company's receipt of a Conversion Notice, the Company is
        not obligated to issue shares of Common Stock upon such conversion due
        to the provisions of Section 3(d)(ii);

        (v) at any time following the tenth consecutive Business Day that the
        Holder's Authorized Share Allocation 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);

        (vi) 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,
        the Securities Purchase Agreement, the Registration Rights Agreement,
        the Pledge Agreement (as defined in the


                                       7
<PAGE>
        Securities Purchase Agreement) or the Control Agreement (as defined in
        the Pledge Agreement), except, in the case of a failure to pay Interest
        and Late Charges and such other amounts when and as due, in which case
        only if such failure continues for a period of at least five Business
        Days;

        (vii) any default under, redemption of or acceleration prior to maturity
        of any Indebtedness (as defined in Section 3(r) of the Securities
        Purchase Agreement) of the Company or any of its Subsidiaries (as
        defined in Section 3(a) of the Securities Purchase Agreement) other than
        with respect to any Other Notes or Separate Tranche Notes or with
        respect to Purchase Money Indebtedness;

        (viii) the Company or any of its Subsidiaries, pursuant to or within the
        meaning of Title 11, U.S. Code, or any similar Federal 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;

        (ix) any proceeding shall be instituted against the Company or any of
        its Significant Subsidiaries (as defined in Rule 405 of the Exchange
        Act) seeking to adjudicate it a bankrupt or insolvent, or seeking
        dissolution, liquidation, winding up, reorganization, arrangement,
        adjustment, protection, relief of debtors, or seeking the entry of an
        order for relief or the appointment of a Custodian for the Company or
        any such Subsidiary or for any substantial part of its assets or
        properties, and either such proceeding shall remain undismissed or
        unstayed for a period of 60 days or any of the actions sought in such
        proceeding (including, without limitation, the entry of an order for
        relief against the Company or any such Subsidiary or the appointment of
        a Custodian for it or for any substantial part of its assets or
        properties) shall occur;

        (x) a final judgment or judgments for the payment of money aggregating
        in excess of $1,000,000 are rendered against the Company or any of its
        Subsidiaries and which judgments are not, within 60 days after the entry
        thereof, bonded, discharged or stayed pending appeal, or are not
        discharged within 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
        $1,000,000 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 30 days of the issuance of such judgment;

        (xi) the Company breaches any representation, warranty, covenant or
        other term or


                                       8
<PAGE>
        condition of the Securities Purchase Agreement, the Registration Rights
        Agreement, this Note, the Other Notes, the Separate Tranche Notes, the
        Pledge Agreement, the Control Agreement or any other agreement,
        document, certificate or other instrument delivered in connection with
        the transactions contemplated thereby and hereby to which the Holder is
        a party, except to the extent that such breach would not have a Material
        Adverse Effect (as defined in Section 3(a) of the Securities Purchase
        Agreement) and except, in the case of a breach of a covenant which is
        curable, only if such breach continues for a period of at least five
        consecutive Business Days;

        (xii) any breach or failure in any respect to comply with Section 15 of
        this Note;

        (xiii) any Event of Default (as defined in the Other Notes or the
        Separate Tranche Notes) occurs with respect to any Other Notes or
        Separate Tranche Notes; or

        (xiv) the Company shall, directly or indirectly, repay, prepay, redeem,
        defease or otherwise make any payment on any Indebtedness (other than
        Purchase Money Indebtedness) existing on the Initial Issuance Date
        (including, without limitation, any Indebtedness due to Computer
        Associates International, Inc. or any of its affiliates) in cash or cash
        equivalents.

                        (b) Redemption Right. Promptly after the occurrence of
an Event of Default with respect to this Note or any Other Note, the Company
shall 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 portion of this Note the Holder is electing 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 (x) the Conversion Amount to be redeemed and (y) the
Redemption Premium and (ii) the product of (A) 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 (B) the Closing Sale Price of the Common Stock
on the date immediately preceding such Event of Default (the "EVENT OF DEFAULT
REDEMPTION PRICE"). Redemptions required by this Section 4(b) shall be made in
accordance with the provisions of Section 12.

                (5) RIGHTS UPON CHANGE OF CONTROL.

                        (a) Change of Control. Each of the following events
shall constitute a "CHANGE OF CONTROL":

        (i) the consolidation, merger or other business combination (including,
        without


                                       9
<PAGE>
        limitation, a reorganization or recapitalization) of the Company with or
        into another Person (other than (A) a consolidation, merger or other
        business combination (including, without limitation, reorganization or
        recapitalization) in which holders of the Company's voting power
        immediately prior to the transaction continue after the transaction to
        hold, directly or indirectly, the voting power of the surviving entity
        or entities necessary to elect a majority of the members of the board of
        directors (or their equivalent if other than a corporation) of such
        entity or entities, or (B) pursuant to a migratory merger effected
        solely for the purpose of changing the jurisdiction of incorporation of
        the Company);

        (ii) the sale or transfer of all or substantially all of the Company's
        assets; or

        (iii) a purchase, tender or exchange offer made to and accepted by the
        holders of more than the 50% of the outstanding shares of Common Stock.

No sooner than the public announcement of such Change of Control nor later than
10 days prior to the consummation of a Change of Control, the Company shall
deliver written notice thereof via facsimile and overnight courier to the Holder
(a "CHANGE OF CONTROL NOTICE").

                        (b) Assumption. Prior to the consummation of any Change
of Control, the Company will secure from any Person purchasing the Company's
assets or Common Stock or any successor resulting from such Change of Control
(in each case, an "ACQUIRING ENTITY") a written agreement (in form and substance
reasonably satisfactory to the holders of Notes representing at least two-thirds
of the aggregate principal amount of the Notes then outstanding) to deliver to
each holder of Notes in exchange for such Notes, a security of the Acquiring
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 held by such holder, and reasonably satisfactory to the holders of Notes
representing at least two-thirds of the principal amount of the Notes then
outstanding. In the event that an Acquiring Entity is directly or indirectly
controlled by a company or entity whose common stock or similar equity interest
is listed, designated or quoted on a securities exchange or trading market, the
holders of Notes representing at least two-thirds of the aggregate principal
amount of the Notes then outstanding may elect to treat such Person as the
Acquiring Entity for purposes of this Section 5(b).

                        (c) Holder Redemption Right. At any time during the
period beginning after the Holder's receipt of a Change of Control Notice and
ending on the date of the consummation of such Change of Control (or, in the
event a Change of Control Notice is not delivered at least 10 days prior to a
Change of Control, at any time on or after the date which is 10 days prior to a
Change of Control and ending 10 days after 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 redeem. The portion of
this Note subject to redemption pursuant to this Section


                                       10
<PAGE>
5(c) shall be redeemed by the Company at a price equal to the greater of (i) the
product of (x) the Conversion Amount being redeemed and (y) the quotient
determined by dividing (A) the Closing Sale Price of the Common Stock
immediately following the public announcement of such proposed Change of Control
by (B) the Conversion Price and (ii) 115% of the Conversion Amount being
redeemed (the "CHANGE OF CONTROL REDEMPTION PRICE"). Redemptions required by
this Section 5(c) shall be made in accordance with the provisions of Section 12
and shall have priority to payments to other stockholders in connection with a
Change of Control.

                        (d) Acquiring Entity Redemption Right. At any time from
and after the delivery of a Change of Control Notice but not later than the day
immediately preceding the consummation of such Change of Control, the Acquiring
Entity may deliver a written notice via facsimile and overnight courier to the
Holder indicating that if the Company shall not receive from the Holder a Change
of Control Redemption Notice in accordance with Section 5(c), then the Acquiring
Entity is electing to redeem all, but not less than all, of this Note, all Other
Notes and all Separate Tranche Notes (an "ACQUIRING ENTITY CHANGE OF CONTROL
REDEMPTION Notice"). The Acquiring Entity Change of Control Redemption Notice
shall be irrevocable. If the Company shall not receive from the Holder a Change
of Control Redemption Notice in accordance with Section 5(c) and the Conditions
to Acquiring Entity Redemption (as set forth below) are satisfied or waved in
writing by the Holder, then this Note shall be redeemed by the Acquiring Entity
at a price equal to the greater of (i) the Change of Control Redemption Price
and (ii) the Note Valuation Amount (the "ACQUIRING ENTITY CHANGE OF CONTROL
REDEMPTION PRICE"). Notwithstanding the foregoing, the Holder may continue to
convert this Note into Common Stock pursuant to Section 3(a) on or prior to the
date immediately preceding the Acquiring Entity Change of Control Redemption
Date. Redemptions required by this Section 5(d) shall be made in accordance with
the provisions of Section 12 and shall have priority to payments to other
stockholders in connection with a Change of Control. "CONDITIONS TO ACQUIRING
ENTITY REDEMPTION" means the following conditions: (i) on each day during the
period beginning on the date of delivery of the Acquiring Entity Change of
Control Redemption Notice to each holder of the Notes and Separate Tranche Notes
and ending on and including the date immediately preceding the Acquiring Entity
Change of Control Redemption Date, no Grace Period (as defined in the
Registration Rights Agreement) shall be in effect and either (x) the
Registration Statement or Registration Statements required pursuant to the
Registration Rights Agreement shall be effective and available for the sale for
all of the Registrable Securities in accordance with the terms of the
Registration Rights Agreement or (y) all shares of Common Stock issuable upon
conversion of the Notes and the Separate Tranche Notes and shares of Common
Stock issuable upon exercise of the Warrants and the Separate Tranche Warrants
shall be eligible for sale without restriction pursuant to Rule 144(k) and the
state securities laws, (ii) the Company shall have no knowledge of any fact that
would cause (x) the Registration Statements required pursuant to the
Registration Rights Agreement not to be effective and available for the sale of
at least all of the Registrable Securities in accordance with the terms of the
Registration Rights Agreement or (y) any shares of Common Stock issuable upon
conversion or redemption of the Notes and the Separate Tranche Notes and shares
of Common Stock issuable upon exercise of the Warrants and the Separate Tranche
Warrants not to be eligible for


                                       11
<PAGE>
sale without restriction pursuant to Rule 144(k) and any applicable state
securities laws; (iii) on each day during the period beginning on the date of
delivery of the Acquiring Entity Change of Control Redemption Notice and ending
on and including the date immediately preceding the Acquiring Entity Change of
Control Redemption Date, the Common Stock is designated for quotation on the
Principal Market, the NYSE or the AMEX and shall not have been suspended from
trading on such exchange or market nor shall delisting or suspension by such
exchange or market been threatened or pending either (A) in writing by such
exchange or market or (B) by falling below the minimum listing maintenance
requirements of such exchange or market; (iv) during the period beginning on the
Initial Issuance Date and ending on and including the date immediately preceding
the Acquiring Entity Change of Control Redemption Date, the Company shall have
delivered shares of Common Stock upon any conversion of Conversion Amounts on a
timely basis as set forth in Section 3(c)(i) of this Note (and analogous
provisions under the Other Notes) and the Separate Tranche Notes and delivered
shares of Common Stock upon exercise of any Warrants and the Separate Tranche
Warrants on a timely basis as set forth in Section 1(a) of the Warrants and the
Separate Tranche Warrants; (v) the Company has obtained the Stockholder Approval
prior to the date of delivery of the Acquiring Entity Change of Control
Redemption Notice; and (vi) the Company otherwise shall have been in material
compliance with and shall not have breached, in any material respect, any
provision, covenant, representation or warranty of the Securities Purchase
Agreement, the Registration Rights Agreement, any of the Warrants or the
Separate Tranche Warrants, the Pledge Agreement, the Control Agreement or any of
the Notes or Separate Tranche Notes.

                  (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. Prior to the consummation of
any recapitalization, reorganization, consolidation, merger, spin-off or other
business combination (other than a Change of Control) pursuant to which holders
of Common Stock are entitled to receive securities or other assets with respect
to or in exchange for 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, (i) in addition to the


                                       12
<PAGE>
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 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 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
reasonably satisfactory to the holders of Notes representing at least two-thirds
of the aggregate principal amount of the Notes then outstanding.

                  (7) RIGHTS UPON ISSUANCE OF OTHER SECURITIES.

                        (a) Adjustment of Conversion Price upon Issuance of
Common Stock. If and whenever on or after the Initial Issuance 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 (I) in connection with any employee benefit plan which has been approved
by the Board of Directors of the Company, pursuant to which the Company's
securities may be issued to any employee, officer or director for services
provided to the Company (an "APPROVED STOCK PLAN"), (II) upon conversion of the
Notes or the Separate Tranche Notes or upon exercise of the Warrants or the
Separate Tranche Warrants, (III) in connection with the payment of any Interest
Shares on the Notes or (IV) in connection with any Excluded Security) for a
consideration per share 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 issue or sale,
the Conversion Price then in effect shall be reduced to an amount equal to the
Applicable 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


                                       13
<PAGE>
        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 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.

        (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 of sale of such Convertible Securities for such price per
        share. For the purposes of this Section 7(a)(ii), the "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 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 Initial Issuance 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 is issued
        in connection with the issue or sale of other securities of the Company,
        together comprising


                                       14
<PAGE>
        one integrated transaction in which no specific consideration is
        allocated to such Options by the parties thereto, the Options 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 gross 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 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 in good faith by the Board of Directors of
        the Company. The holders of Notes and Separate Tranche Notes
        representing at least two-thirds of the principal amounts of the Notes
        and Separate Tranche Notes then outstanding shall be entitled to dispute
        the determination of the Board of Directors of the Company. If such
        holders and the Company are unable to reach agreement within ten days
        after the occurrence of an event requiring valuation (the "VALUATION
        EVENT"), the fair value of such consideration will be determined within
        five Business Days after the tenth day following the Valuation Event by
        an independent, reputable appraiser jointly selected by the Company and
        the holders of Notes representing at least two-thirds of the principal
        amounts of the Notes and Separate Tranche Notes then outstanding. 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 equally by the Company and the holders.

        (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 issue or sale of the shares of Common Stock deemed to have
        been issued or sold upon the declaration of such dividend or the making
        of such other distribution or the date of the granting of such right of
        subscription or purchase, as the case may be.

                        (b) Adjustment of Conversion Price upon Subdivision or
Combination of Common Stock. If the Company at any time subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the
Conversion Price in effect immediately prior to such subdivision will be
proportionately reduced. If the Company at any time combines (by


                                       15
<PAGE>
combination, reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination will be
proportionately increased.

                        (c) Other Events. (i) If any event occurs of the type
contemplated by the provisions of this Section 7 but not expressly provided for
by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Company's Board of Directors will make an appropriate adjustment in the
Conversion Price so as to protect the rights of the Holder under this Note;
provided that no such adjustment will increase the Conversion Price as otherwise
determined pursuant to this Section 7. (ii) In the event that the Holder has
participated in any dividend or distribution in accordance with the terms of
Section 16, no other adjustment shall be made to the Conversion Price pursuant
to this Section 7.

                  (8) HOLDER RIGHT OF OPTIONAL REDEMPTION.

                        (a) Holder Initial Redemption Option. If at any time
during the Holder Initial Redemption Period, the Weighted Average Price of the
Common Stock is less than the Conversion Price for any 25 consecutive Trading
Days (a "HOLDER INITIAL REDEMPTION MEASURING PERIOD"), the Holder shall have the
right, in its sole discretion, to require that the Company redeem all or any
portion of this Note (a "HOLDER INITIAL REDEMPTION") by delivering written
notice thereof (a "HOLDER INITIAL REDEMPTION NOTICE") to the Company at any time
during the Holder Initial Redemption Period, which Holder Initial Redemption
Notice shall indicate the Conversion Amount the Holder is electing to redeem.
The portion of this Note subject to redemption pursuant to this Section 8(a)
shall be redeemed by the Company at a price equal to the Conversion Amount being
redeemed (the "HOLDER INITIAL REDEMPTION PRICE"). Redemptions required by this
Section 8(a) shall be made in accordance with the provisions of Section 12.

                        (b) Holder Secondary Redemption Option. If at any time
during the Holder Secondary Redemption Period, the Weighted Average Price of the
Common Stock is less than the Conversion Price for any 25 consecutive Trading
Days, the Holder shall have the right, in its sole discretion, to require that
the Company redeem all or any portion of this Note (a "HOLDER SECONDARY
REDEMPTION") by delivering written notice thereof (a "HOLDER SECONDARY
REDEMPTION NOTICE") to the Company at any time during the Holder Secondary
Redemption Period, which Holder Secondary Redemption Notice shall indicate the
Conversion Amount the Holder is electing to redeem. The portion of this Note
subject to redemption pursuant to this Section 8(b) shall be redeemed by the
Company at a price equal to the product derived by multiplying (x) .83 by (y)
the sum of (i) the Principal being redeemed, (ii) accrued and unpaid Interest
with respect to such Principal and (iii) accrued and unpaid Late Charges with
respect to such Principal and Interest on the Conversion Amount being redeemed
(the "HOLDER SECONDARY REDEMPTION PRICE"). Redemptions required by this Section
8(b) shall be made in accordance with the provisions of Section 12.


                                       16
<PAGE>
                        (c) Definitions.

                                (i) "HOLDER INITIAL REDEMPTION PERIOD" means the
period commencing on and including the twenty-fifth (25th) Trading Day prior to
June 30, 2004 and ending on and including the twenty-fourth (24th) Trading Day
after January 1, 2006.

                                (ii) "HOLDER SECONDARY REDEMPTION PERIOD" means
the period commencing on and including January 1, 2006 and ending on and
including the Maturity Date.

                        (d) Partial Redemption In Shares. The Company shall have
the option to indicate in a notice delivered to all holders of Notes, no later
than the close of business on the fifth (5th) consecutive Trading Day that
comprises the first five(5) Trading Days of a Holder Initial Redemption
Measuring Period during which the Weighted Average Price of the Common Stock is
less than the Conversion Price, the percentage, if any (not to exceed 20%) (the
"COMPANY REDEMPTION SHARE PERCENTAGE"), of the applicable Holder Initial
Redemption Price that the Company shall satisfy through the delivery of shares
of Common Stock upon receipt of Holder Initial Redemption Notices (a "COMPANY
REDEMPTION SHARE ELECTION"). Each Company Redemption Share Election shall be
irrevocable. The number of shares of Common Stock to be delivered in connection
with a Company Redemption Share Election shall equal a number of fully paid and
nonassessable shares (rounded to the nearest whole share in accordance with
Section 3(a)) of Common Stock equal to the quotient of (x) the applicable
portion of the Holder Initial Redemption Price, if any, and (b) the Redemption
Conversion Price. If any portion of the Holder Initial Redemption Price is to be
paid in shares of Common Stock, then the Company shall, on the Initial
Redemption Date, (X) issue and deliver to the address as specified in the Holder
Initial Redemption Notice a certificate, registered in the name of the Holder or
its designee, for the number of shares of Common Stock to which the Company is
required to issue and deliver pursuant to a Company Redemption Share Election,
or (Y) provided that the Transfer Agent is participating in DTC Fast Automated
Securities Transfer Program, upon the request of the Holder, credit such
aggregate number of shares of Common Stock to which the Company is required to
issue and deliver pursuant to a Company Redemption Share Election to the
Holder's or its designee's balance account with DTC through its Deposit
Withdrawal Agent Commission system. Notwithstanding the foregoing, the Company
shall not be entitled to pay any of the Holder Initial Redemption Price in
shares of Common Stock and shall be required to pay such Holder Initial
Redemption Price entirely in cash if the Conditions to Holder Initial Redemption
in Shares are not satisfied. "CONDITIONS TO HOLDER INITIAL REDEMPTION IN SHARES"
means the following conditions: (i) during the period beginning on the Initial
Issuance Date and ending on and including the date immediately preceding the
Initial Redemption Date, the Company shall have delivered shares of Common Stock
upon any conversion of Conversion Amounts on a timely basis as set forth in
Section 3(c)(i) of this Note (and analogous provisions under the Other Notes)
and the Separate Tranche Notes and delivered shares of Common Stock upon
exercise of any Warrants and the Separate Tranche Warrants on a


                                       17
<PAGE>
timely basis as set forth in Section 1(a) of the Warrants and the Separate
Tranche Warrants; (ii) on each day during the period beginning on the first
Trading Day of the Holder Initial Redemption Period and ending on and including
the Initial Redemption Date, the Common Stock shall be listed on the Principal
Market, the NYSE or the AMEX and delisting or suspension by such market or
exchange shall not have been threatened either (A) in writing by such market or
exchange or (B) by falling below the minimum listing maintenance requirements of
such market or exchange; (iii) during the period beginning on the Initial
Issuance Date and ending on and including the Initial Redemption Date, there
shall not have occurred either (x) the public announcement of a pending,
proposed or intended Change of Control which has not been abandoned, terminated
or consummated or (y) an Event of Default; (iv) during the period beginning on
the first Trading Day of the Holder Initial Redemption Period and ending on and
including the Initial Redemption Date, there shall not have occurred an event
that with the passage of time or giving of notice would constitute an Event of
Default; (v) any of the shares of Common Stock to be issued in payment of the
Holder Initial Redemption Price shall be either (x) registered pursuant to an
effective Registration Statement available for the sale for all of such shares
of Common Stock in accordance with the terms set forth in the Registration
Rights Agreement or (y) eligible for sale without restriction pursuant to Rule
144(k) and any applicable state securities laws; (vi) the Company shall have no
knowledge of any fact that would cause (x) the Registration Statements required
pursuant to the Registration Rights Agreement not to be effective and available
for the sale of at least all of the Registrable Securities (including the shares
of Common Stock to be delivered pursuant to a Company Redemption Share Election)
in accordance with the terms of the Registration Rights Agreement or (y) any
shares of Common Stock issuable upon conversion or redemption of the Notes and
the Separate Tranche Notes and shares of Common Stock issuable upon exercise of
the Warrants and the Separate Tranche Warrants not to be eligible for sale
without restriction pursuant to Rule 144(k) and any applicable state securities
laws; (vii) the Company otherwise shall have been in material compliance with
and shall not have breached, in any material respect, any provision, covenant,
representation or warranty of the Securities Purchase Agreement, the
Registration Rights Agreement, any of the Warrants or Separate Tranche Warrants,
the Pledge Agreement, the Control Agreement or any of the Notes or Separate
Tranche Notes; and (viii) the Company has obtained the Stockholder Approval
prior to making the Company Redemption Share Election.

                  (9) COMPANY'S RIGHT OF MANDATORY CONVERSION; COMPANY OPTIONAL
REDEMPTION.

                        (a) Company's Right of Mandatory Conversion.

                                (i) Mandatory Conversion. If at any time from
and after April 15, 2004, the arithmetic average of the Weighted Average Price
of the Common Stock exceeds 150% of the Conversion Price as of the Issuance Date
(subject to appropriate adjustments for stock splits, stock dividends, stock
combinations and other similar transactions after the Issuance Date for any 25
consecutive Trading Days following April 15, 2004 (the "MANDATORY CONVERSION
MEASURING PERIOD") and the Conditions to Mandatory Conversion (as set forth in


                                       18
<PAGE>
Section 9(a)(iii)) are satisfied or waived in writing by the Holder, the Company
shall have the right to require the Holder to convert all or any such portion of
the Conversion Amount of this Note designated in the Mandatory Conversion Notice
into fully paid, validly issued and nonassessable shares of Common Stock in
accordance with Section 3(c) hereof at the Conversion Rate as of the Mandatory
Conversion Date (as defined below) (a "MANDATORY CONVERSION"). The Company may
exercise its right to require conversion under this Section 9(a) by delivering
within not more than three Trading Days following the end of such Mandatory
Conversion Measuring Period a written notice thereof by facsimile and overnight
courier to all, but not less than all, of the holders of Notes and Separate
Tranche Notes and the Transfer Agent (the "MANDATORY CONVERSION NOTICE" and the
date all of the holders received such notice is referred to as the "MANDATORY
CONVERSION NOTICE DATE"). The Mandatory Conversion Notice shall be irrevocable.

                                (ii) Pro Rata Conversion Requirement. If the
Company elects to cause a conversion of all or any portion of the Conversion
Amount of this Note pursuant to Section 9(a)(i), then it must simultaneously
take the similar action with respect to the Other Notes. If the Company elects
to cause the conversion of this Note pursuant to Section 9(a)(i) (or similar
provisions under the Other Notes) with respect to less than all of the
Conversion Amounts of the Notes then outstanding, then the Company shall require
conversion of a Conversion Amount from each of the holders of the Notes equal to
the product of (I) the aggregate Conversion Amount of Notes which the Company
has elected to cause to be converted pursuant to Section 9(a)(i), multiplied by
(II) the fraction, the numerator of which is the sum of the aggregate principal
amount of the Notes initially purchased by such holder on the Issuance Date and
the denominator of which is the sum of the aggregate principal amount of the
Notes purchased by all holders on the Issuance Date (such fraction with respect
to each holder is referred to as its "ALLOCATION PERCENTAGE", and such amount
with respect to each holder is referred to as its "PRO RATA CONVERSION AMOUNT").
In the event that the initial holder of any Notes shall sell or otherwise
transfer any of such holder's Notes, the transferee shall be allocated a pro
rata portion of such holder's Allocation Percentage. The Mandatory Conversion
Notice shall state (A) the Trading Day selected for the Mandatory Conversion in
accordance with Section 9(a)(i), which Trading Day shall be at least 20 Business
Days but not more than 60 Business Days following the Mandatory Conversion
Notice Date (the "MANDATORY CONVERSION DATE"), (B) the aggregate Conversion
Amount of the Notes which the Company has elected to be subject to mandatory
conversion from all of the holders of the Notes pursuant to this Section 9(a)
(and analogous provisions under the Other Notes), (C) each holder's Pro Rata
Conversion Amount of the Conversion Amount of the Notes the Company has elected
to cause to be converted pursuant to this Section 9(a) (and analogous provisions
under the Other Notes) and (D) the number of shares of Common Stock to be issued
to such Holder as of the Mandatory Conversion Date. All Conversion Amounts
converted by the Holder after the Mandatory Conversion Notice Date shall reduce
the Conversion Amount of this Note required to be converted on the Mandatory
Conversion Date. If the Company has elected a Mandatory Conversion, the
mechanics of conversion set forth in Section 3(c) shall apply, to the extent
applicable, as if the Company and the Transfer Agent had received from the
Holder on the


                                       19
<PAGE>
Mandatory Conversion Date a Conversion Notice with respect to the Conversion
Amount being converted pursuant to the Mandatory Conversion.

                                (iii) Conditions to Mandatory Conversion. For
purposes of this Section 9(a), "CONDITIONS TO MANDATORY CONVERSION" means the
following conditions: (A) during the period beginning on the Initial Issuance
Date and ending on and including the Mandatory Conversion Date, the Company
shall have delivered shares of Common Stock upon any conversion of Conversion
Amounts on a timely basis as set forth in Section 3(c)(i) of this Note (and
analogous provisions under the Other Notes) and the Separate Tranche Notes and
delivered shares of Common Stock upon exercise of any Warrants and the Separate
Tranche Warrants on a timely basis as set forth in Section 1(a) of the Warrants
and the Separate Tranche Warrants; (B) on each day during the period beginning
on the first Trading Day of the Mandatory Conversion Measuring Period, and
ending on and including the Mandatory Conversion Date, the Common Stock shall be
listed on the Principal Market, the NYSE or the AMEX and delisting or suspension
by such market or exchange shall not have been threatened either (I) in writing
by such market or exchange or (II) by falling below the minimum listing
maintenance requirements of such market or exchange; (C) during the period
beginning on the Initial Issuance Date and ending on and including the Mandatory
Conversion Date, there shall not have occurred either (I) the public
announcement of a pending, proposed or intended Change of Control which has not
been abandoned, terminated or consummated or (II) an Event of Default; (D)
during the period beginning on the date which is the first Trading Day of the
Mandatory Conversion Measuring Period and ending on and including the Mandatory
Conversion Date, there shall not have occurred an event that with the passage of
time or giving of notice would constitute an Event of Default; (E) on each day
of the period beginning on the date of delivery of the Mandatory Conversion
Notice and ending on the Mandatory Conversion Date either (I) the Registration
Statement or Registration Statements required pursuant to the Registration
Rights Agreement shall be effective and available for the sale for all of the
Registrable Securities in accordance with the terms of the Registration Rights
Agreement or (II) all shares of Common Stock issuable upon conversion of the
Notes and the Separate Tranche Notes and shares of Common Stock issuable upon
exercise of the Warrants and the Separate Tranche Warrants shall be eligible for
sale without restriction pursuant to Rule 144(k) and any applicable state
securities laws, (F) the Company shall have no knowledge of any fact that would
cause (I) the Registration Statements required pursuant to the Registration
Rights Agreement not to be effective and available for the sale of at least all
of the Registrable Securities in accordance with the terms of the Registration
Rights Agreement or (II) any shares of Common Stock issuable upon conversion or
redemption of the Notes and the Separate Tranche Notes and shares of Common
Stock issuable upon exercise of the Warrants and the Separate Tranche Warrants
not to be eligible for sale without restriction pursuant to Rule 144(k) and any
applicable state securities laws, and (G) the Company otherwise shall have been
in material compliance with and shall not have breached, in any material
respect, any provision, covenant, representation or warranty of the Securities
Purchase Agreement, the Registration Rights Agreement, any of the Warrants or
the Separate Tranche Warrants, the Pledge Agreement, the Control Agreement or
any of the Notes or Separate Tranche Notes.


                                       20
<PAGE>
                        (b) Company Optional Redemption Right.

                                (i) Company Optional Redemption. If at any time
from and after the 30 month anniversary of the day the Registration Statement
relating to the Conversion Shares, Interest Shares and any other shares of
Common Stock issuable in connection with this Note and the Other Notes is
declared effective by the SEC, the Conditions to Company Redemption (as set
forth below) are satisfied or waived in writing by the Holder, the Company shall
have the right to redeem this Note (a "COMPANY OPTIONAL REDEMPTION"). The
Company may exercised its right of redemption under this Section 9(b)(i) by
delivering a written notice thereof by facsimile and overnight courier to all of
the holders of Notes and the Transfer Agent (the "COMPANY OPTIONAL REDEMPTION
NOTICE", and, collectively with a Event of Default Redemption Notice, a Change
of Control Redemption Notice, an Acquiring Entity Change of Control Redemption
Notice, a Holder Initial Redemption Notice and a Holder Secondary Redemption
Notice, "REDEMPTION NOTICES" and, individually, each, a "REDEMPTION NOTICE")).
The Company shall not issue a Company Optional Redemption Notice with respect to
this Note and the Other Notes to the extent that any Separate Tranche Notes with
a conversion price that is greater than the Conversion Price pursuant to this
Note and the Other Notes shall remain outstanding. The Company Optional
Redemption Notice shall be irrevocable. This Note shall be redeemed by the
Company pursuant to this Section 9(b)(i) at a price equal to the greater of (i)
the Conversion Amount and (ii) the Note Valuation Amount (the "COMPANY OPTIONAL
REDEMPTION PRICE" and, together with the Event of Default Redemption Price, the
Change of Control Redemption Price, the Acquiring Entity Change of Control
Redemption Price, the Holder Initial Redemption Price, the Holder Secondary
Redemption Price, the "REDEMPTION PRICE"). Notwithstanding the foregoing, the
Holder may continue to convert this Note into Common Stock pursuant to Section
3(a) on or prior to the date immediately preceding the Company Optional
Redemption Date. Redemptions required by this Section 9(b) shall be made in
accordance with the provisions of Section 12.

                                (ii) Pro Rata Redemption Requirement. If the
Company elects to cause a redemption of all or any portion of the Conversion
Amount of this Note pursuant to Section 9(b)(i), then it must simultaneously
take the similar action with respect to the Other Notes. If the Company elects
to cause the redemption of this Note pursuant to Section 9(b)(i) (or similar
provisions under the Other Notes) with respect to less than all of the
Conversion Amounts of the Notes then outstanding, then the Company shall redeem
a Conversion Amount from each of the holders of the Notes equal to the product
of (I) the aggregate Conversion Amount of Notes which the Company has elected to
redeem pursuant to Section 9(b)(i) (or similar provisions under the Other
Notes), multiplied by (II) a fraction, the numerator of which is the sum of the
aggregate principal amount of the Notes initially purchased by such holder on
the applicable Issuance Date and the denominator of which is the sum of the
aggregate principal amount of the Notes purchased by all holders on the
applicable Issuance Date (such fraction with respect to each holder is referred
to as its "REDEMPTION ALLOCATION PERCENTAGE", and such amount with respect to
each holder is referred to as its "PRO RATA REDEMPTION AMOUNT"). In


                                       21
<PAGE>
the event that the initial holder of any Notes shall sell or otherwise transfer
any of such holder's Notes, the transferee shall be allocated a pro rata portion
of such holder's Redemption Allocation Percentage. The Company Optional
Redemption Notice shall state (A) the Trading Day selected for the Company
Optional Redemption in accordance with Section 9(b)(i), which Trading Day shall
be at least 20 Business Days but not more than 60 Business Days following the
Company Optional Redemption Notice Date (the "COMPANY OPTIONAL REDEMPTION
DATE"), (B) the aggregate Conversion Amount of the Notes which the Company has
elected to redeem from all of the holders of the Notes pursuant to this Section
9(b) (and analogous provisions under the Other Notes), (C) each holder's Pro
Rata Redemption Amount of the Conversion Amount of the Notes the Company has
elected to redeem pursuant to this Section 9(b) (and analogous provisions under
the Other Notes) and (D) the Company Optional Redemption Price to be paid to
such Holder as of the Company Optional Redemption Date. All Conversion Amounts
converted by the Holder after delivery of the Company Optional Redemption Notice
Date shall reduce the Conversion Amount of this Note required to be redeemed on
the Company Optional Redemption Date. Redemptions required by this Section 9(b)
shall be made in accordance with the provisions of Section 12.

                                (iii) Conditions to Company Redemption. For
purposes of this Section 9(b), "CONDITIONS TO COMPANY REDEMPTION" means the
following conditions: (i) on each day during the period beginning on the date of
delivery of the Company Optional Redemption Notice to each holder of the Notes
and ending on and including the date immediately preceding the Company Optional
Redemption Date, no Grace Period (as defined in the Registration Rights
Agreement) shall be in effect and either (x) the Registration Statement or
Registration Statements required pursuant to the Registration Rights Agreement
shall be effective and available for the sale for all of the Registrable
Securities in accordance with the terms of the Registration Rights Agreement or
(y) all shares of Common Stock issuable upon conversion and redemption of the
Notes and the Separate Tranche Notes and shares of Common Stock issuable upon
exercise of the Warrants and the Separate Tranche Warrants shall be eligible for
sale without restriction pursuant to Rule 144(k) and any applicable state
securities laws, (ii) the Company shall have no knowledge of any fact that would
cause (x) the Registration Statements required pursuant to the Registration
Rights Agreement not to be effective and available for the sale of at least all
of the Registrable Securities in accordance with the terms of the Registration
Rights Agreement or (y) any shares of Common Stock issuable upon conversion or
redemption of the Notes and the Separate Tranche Notes and shares of Common
Stock issuable upon exercise of the Warrants and the Separate Tranche Warrants
not to be eligible for sale without restriction pursuant to Rule 144(k) and any
applicable state securities laws; (iii) on each day during the period beginning
on the date of delivery of the Company Optional Redemption Notice to each holder
of the Notes and ending on and including the date immediately preceding the
Company Optional Redemption Date, the Common Stock is designated for quotation
on the Principal Market, the NYSE or the AMEX and shall not have been suspended
from trading on such exchange or market nor shall delisting or suspension by
such exchange or market been threatened or pending either (A) in writing by such
exchange or market or (B) by falling below the minimum listing maintenance
requirements of such exchange


                                       22
<PAGE>
or market; (iv) during the period beginning on the Initial Issuance Date and
ending on and including the date immediately preceding the Company Optional
Redemption Date, the Company shall have delivered shares of Common Stock upon
any conversion of Conversion Amounts on a timely basis as set forth in Section
3(c)(i) of this Note (and analogous provisions under the Other Notes) and the
Separate Tranche Notes and delivered shares of Common Stock upon exercise of any
Warrants and the Separate Tranche Warrants on a timely basis as set forth in
Section 1(a) of the Warrants and the Separate Tranche Warrants; (v) the Company
has obtained the Stockholder Approval prior to the date of delivery of the
Company Optional Redemption Notice; (vi) during the period beginning on the
Initial Issuance Date and ending on and including the Company Optional
Redemption Date, there shall not have occurred either (x) the public
announcement of a pending, proposed or intended Change of Control which has not
been abandoned, terminated or consummated or (y) an Event of Default; and (vii)
the Company otherwise shall have been in material compliance with and shall not
have breached, in any material respect, any provision, covenant, representation
or warranty of the Securities Purchase Agreement, the Registration Rights
Agreement, any of the Warrants or the Separate Tranche Warrants, the Pledge
Agreement, the Control Agreement or any of the Notes or Separate Tranche Notes.

                  (10) NONCIRCUMVENTION. The Company hereby covenants and agrees
that the Company will not, by amendment of its Certificate of Incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this Note,
and will at all times in good faith carry out all of the provisions of this
Note.

                  (11) RESERVATION OF AUTHORIZED SHARES.

                        (a) Reservation. The Company shall initially reserve out
of its authorized and unissued Common Stock a number of shares of Common Stock
for each of the Notes equal to 130% of the Conversion Rate with respect to the
Conversion Amount of each such Note as of the Issuance Date. Thereafter, the
Company shall, so long as any of the Notes are outstanding, take all action
necessary to reserve and keep available out of its authorized and unissued
Common Stock, solely for the purpose of effecting the conversion of the Notes,
110% of the number of shares of Common Stock as shall from time to time be
necessary to effect the conversion of all of the Notes then outstanding;
provided that at no time shall the number of shares of Common Stock so reserved
be less than the number of shares required to be reserved by the previous
sentence (without regard to any limitations on conversions) (the "REQUIRED
RESERVE AMOUNT"). The initial number of shares of Common Stock reserved for
conversions of the Notes and each increase in the number of shares so reserved
shall be allocated pro rata among the holders of the Notes based on the
principal amount of the Notes held by each holder at the time of Issuance Date
or increase in the number of reserved shares, as the case may be (the
"AUTHORIZED SHARE ALLOCATION"). In the event that a holder shall sell or
otherwise transfer any of such holder's Notes, each transferee shall be
allocated a pro rata portion of such holder's Authorized Share Allocation. Any
shares of Common Stock reserved and allocated to any


                                       23
<PAGE>
Person which ceases to hold any Notes shall be allocated to the remaining
holders of Notes, pro rata based on the principal amount of the Notes then held
by such holders.

                        (b) Insufficient Authorized Shares. If at any time while
any of the Notes remain outstanding the Company does not have a sufficient
number of authorized and unreserved shares of Common Stock to satisfy its
obligation to reserve for issuance upon conversion of the Notes at least a
number of shares of Common Stock equal to the Required Reserve Amount (an
"AUTHORIZED SHARE FAILURE"), then the Company shall immediately take all action
necessary to increase the Company's authorized shares of Common Stock to an
amount sufficient to allow the Company to reserve the Required Reserve Amount
for the Notes then outstanding. Without limiting the generality of the foregoing
sentence, as soon as practicable after the date of the occurrence of an
Authorized Share Failure, but in no event later than 60 days after the
occurrence of such Authorized Share Failure, the Company shall hold a meeting of
its stockholders for the approval of an increase in the number of authorized
shares of Common Stock. In connection with such meeting, the Company shall
provide each stockholder with a proxy statement and shall use its best efforts
to solicit its stockholders' approval of such increase in authorized shares of
Common Stock and to cause its board of directors to recommend to the
stockholders that they approve such proposal.

                  (12) HOLDER'S REDEMPTIONS.

                        (a) Mechanics. In the event that the Holder has either
sent a Redemption Notice to the Company pursuant to Section 4(b), Section 5(c),
Section 8(a) or Section 8(b), or the Holder has received an Acquiring Entity
Change of Control Redemption Notice pursuant to Section 5(d) or a Company
Optional Redemption Notice pursuant to Section 9(b), then the Holder shall
promptly after receipt of the applicable Redemption Price (and shares of Common
Stock to which the Company is required to issue and deliver pursuant to the
Company Redemption Share Election) submit this Note to the Company. The Company
shall deliver the applicable Event of Default Redemption Price to the Holder
within five Business Days after the Company's receipt of the Holder's Event of
Default Redemption Notice. If the Holder has submitted a Change of Control
Redemption Notice in accordance with Section 5(c), the Company shall deliver the
applicable Change of Control Redemption Price to the Holder concurrently with
the consummation of such Change of Control if such notice is received prior to
the consummation of such Change of Control and within five Business Days after
the Company's receipt of such notice otherwise. If the Holder has received an
Acquiring Entity Change of Control Redemption Notice and the Conditions to
Acquiring Entity Redemption are satisfied pursuant to Section 5(d), then the
Company shall deliver the applicable Acquiring Entity Change of Control
Redemption Price to the Holder concurrently with the consummation of such Change
of Control if such notice is received at least five (5) days prior to the
consummation of such Change of Control and within five Business Days after the
Company's delivery of such notice otherwise (the "ACQUIRING ENTITY CHANGE OF
CONTROL REDEMPTION DATE"). The Company shall deliver the applicable Holder
Initial Redemption Price to the Holder within five Business Days after the
Company's receipt of the Holder Initial Redemption Notice (the "INITIAL


                                       24
<PAGE>
REDEMPTION DATE"). The Company shall deliver the applicable Holder Secondary
Redemption Price to the Holder on (i) April 15, 2006, if the Holder delivers the
Holder Secondary Redemption Notice to the Company on or before April 13, 2006
and (ii) within five Business Days after the Company's receipt of the Holder
Secondary Redemption Notice if delivered after April 13, 2006 (the "SECONDARY
REDEMPTION DATE"). The Company shall deliver the Company Optional Redemption
Amount to the Holder on the fifth Business Day after delivery of the Company
Optional Redemption Notice (the "COMPANY OPTIONAL REDEMPTION DATE"). In the
event of a redemption of less than all of the Conversion Amount of this Note,
the Company shall promptly cause to be issued and delivered to the Holder a new
Note (in accordance with Section 19(d)) representing the outstanding Principal
which has not been redeemed. In the event that the Company does not pay the
Redemption Price to the Holder (or deliver any Common Stock to be issued
pursuant to a Company Redemption Share Election) within the time period
required, at any time thereafter and until the Company pays such unpaid
Redemption Price (and issues any Common Stock required pursuant to a Company
Redemption Share Election) in full, the Holder shall have the option, in lieu of
redemption, to require the Company to promptly return to the Holder all or any
portion of this Note representing the Conversion Amount that was submitted for
redemption and for which the applicable Redemption Price (or any Common Stock
required to be issued pursuant to a Company Redemption Share Election) (together
with any Late Charges thereon) has not been paid. Upon the Company's receipt of
such notice, (x) the Redemption Notice shall be null and void with respect to
such Conversion Amount, (y) the Company shall immediately return this Note, or
issue a new Note (in accordance with Section 19(d)) to the Holder representing
such Conversion Amount and (z) the Conversion Price of this Note or such new
Notes shall be adjusted to the lesser of (A) the Conversion Price as in effect
on the date on which the Redemption Notice is voided and (B) the lowest Closing
Bid Price during the period beginning on and including the date on which the
Redemption Notice is delivered to or by the Company and ending on and including
the date on which the Redemption Notice is voided. The Holder's delivery of a
notice voiding a Redemption Notice and exercise of its rights following such
notice shall not affect the Company's obligations to make any payments of Late
Charges which have accrued prior to the date of such notice with respect to the
Conversion Amount subject to such notice.

                        (b) Redemption by Other Holders. Upon the Company's
receipt of notice from any of the holders of the Other Notes or the Separate
Tranche Notes for redemption or repayment as a result of an event or occurrence
substantially similar to the events or occurrences described in Section 4(b),
Section 5(c), Section 8(a) or Section 8(b), or the delivery to the holders of
the Other Notes or the Separate Tranche Notes of an Acquiring Entity Change of
Control Redemption Notice or Company Optional Redemption Notice or similar
notice based on events or occurrences substantially similar to the events or
occurrences described in Section 5(d) and Section 9(b) (each, an "OTHER
REDEMPTION NOTICE"), the Company shall immediately forward to the Holder by
facsimile a copy of such notice. If the Company receives, or the Acquiring
Entity or the Company delivers, as the case may be, a Redemption Notice and one
or more Other Redemption Notices during the seven Business Day period beginning
on and including the date which is three Business Days prior to the Company's
receipt of the Holder's


                                       25
<PAGE>
Redemption Notice, or the Acquiring Entity's delivery of an Acquiring Entity
Change of Control Redemption Notice or the Company's delivery of a Company
Optional Redemption Notice, as the case may be, and ending on and including the
date which is three Business Days after the Company's receipt of the Holder's
Redemption Notice, or the Acquiring Entity's delivery of an Acquiring Entity
Change of Control Redemption Notice or the Company's delivery of the Company
Optional Redemption Notice, as the case may be, and the Company is unable to
redeem all principal, interest and other amounts designated in such Redemption
Notice and such Other Redemption Notices received or delivered, as the case may
be, during such seven Business Day period, then the Company shall redeem a pro
rata amount from each holder of the Notes (including the Holder) and the
Separate Tranche Notes based on the principal amount of the Notes and the
Separate Tranche Notes submitted for redemption pursuant to such Redemption
Notice and such Other Redemption Notices received or delivered, as the case may
be, during such seven Business Day period.

                  (13) RESTRICTION ON REDEMPTION AND CASH DIVIDENDS. Until all
of the Notes have been converted, redeemed or otherwise satisfied in accordance
with their terms, the Company shall not, directly or indirectly, redeem,
repurchase or declare or pay any cash dividend or distribution on, its capital
stock without the prior express written consent of the holders of Notes
representing at least two-thirds of the aggregate principal amount of the Notes
then outstanding.

                  (14) VOTING RIGHTS. The Holder shall have no voting rights as
the holder of this Note, except as required by law, including but not limited to
the Delaware General Corporation Law, and as expressly provided in this Note.

                  (15) RANK; ADDITIONAL INDEBTEDNESS; LIENS.

                        (a) Rank. Payments of Principal and Interest and other
payments due under this Note (a) shall rank pari passu with all Other Notes and
Separate Tranche Notes and (b) shall be senior to all other Indebtedness (as
defined in Section 3(r) of the Securities Purchase Agreement) of the Company and
its Subsidiaries (as defined in the Securities Purchase Agreement), other than
Purchase Money Indebtedness (as defined below) and Permitted Indebtedness.

                        (b) Incurrence of Indebtedness. So long as this Note is
outstanding the Company shall not, and the Company shall not permit any of its
Subsidiaries to, directly or indirectly, incur or guarantee, assume or suffer to
exist any Indebtedness, other than (i) the Indebtedness evidenced by this Note,
the Other Notes and the Separate Tranche Notes, (ii) Purchase Money Indebtedness
and (iii) Permitted Indebtedness.

                        (c) Existence of Liens. So long as this Note is
outstanding the Company shall not, and the Company shall not permit any of its
Subsidiaries to, directly or indirectly, allow or suffer to exist any mortgage,
lien, pledge, charge, security interest or other


                                       26
<PAGE>
encumbrance upon or in any property or assets (including accounts and contract
rights) owned by the Company or any of its Subsidiaries other than pursuant to
the Pledge Agreement and other than Permitted Liens.

                  (16) PARTICIPATION. The Holder, as the holder of this Note,
shall be entitled to such dividends paid and distributions made to the holders
of Common Stock to the same extent as if the Holder had converted this Note into
Common Stock (without regard to any limitations on conversion herein or
elsewhere) and had held such shares of Common Stock on the record date for such
dividends and distributions. Payments under the preceding sentence shall be made
concurrently with the dividend or distribution to the holders of Common Stock.

                  (17) VOTE TO ISSUE, OR CHANGE THE TERMS OF, NOTES. The
affirmative vote at a meeting duly called for such purpose or the written
consent without a meeting, of the holders of Notes representing not less than
two-thirds of the aggregate principal amount of the then outstanding Notes,
shall be required for any change or amendment to this Note or the Other Notes.

                  (18) TRANSFER. This Note may be offered, sold, assigned or
transferred by the Holder without the consent of the Company, subject only to
the provisions of Section 2(f) of the Securities Purchase Agreement.

                  (19) REISSUANCE OF THIS NOTE.

                        (a) Transfer. If this Note is to be transferred, the
Holder shall surrender this Note to the Company, whereupon the Company will
forthwith issue and deliver upon the order of the Holder a new Note (in
accordance with Section 19(d)), registered as the Holder may request,
representing the outstanding Principal being transferred by the Holder and, if
less then the entire outstanding Principal is being transferred, a new Note (in
accordance with Section 19(d)) to the Holder representing the outstanding
Principal not being transferred. The Holder and any assignee, by acceptance of
this Note, acknowledge and agree that, by reason of the provisions of Section
3(c)(iii) and this Section 19(a), following conversion or redemption of any
portion of this Note, the outstanding Principal represented by this Note may be
less than the Principal stated on the face of this Note.

                        (b) Lost, Stolen or Mutilated Note. Upon receipt by the
Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note, and, in the case of loss, theft or
destruction, of any indemnification undertaking by the Holder to the Company in
customary form and reasonably acceptable to the Company (based in part on the
net worth of, or security provided by, the Holder) and, in the case of
mutilation, upon surrender and cancellation of this Note, the Company shall
execute and deliver to the Holder a new Note (in accordance with Section 19(d))
representing the outstanding Principal.

                        (c) Note Exchangeable for Different Denominations. This
Note is


                                       27
<PAGE>
exchangeable, upon the surrender hereof by the Holder at the principal office of
the Company, for a new Note or Notes (in accordance with Section 19(d) and in
principal amounts of at least $100,000) representing in the aggregate the
outstanding Principal of this Note, and each such new Note will represent such
portion of such outstanding Principal as is designated by the Holder at the time
of such surrender.

                        (d) Issuance of New Notes. Whenever the Company is
required to issue a new Note pursuant to the terms of this Note, such new Note
(i) shall be of like tenor with this Note, (ii) shall represent, as indicated on
the face of such new Note, the Principal remaining outstanding (or in the case
of a new Note being issued pursuant to Section 19(a) or Section 19(c), the
Principal designated by the Holder which, when added to the principal
represented by the other new Notes issued in connection with such issuance, does
not exceed the Principal remaining outstanding under this Note immediately prior
to such issuance of new Notes), (iii) shall have an issuance date, as indicated
on the face of such new Note which is the same as the Issuance Date of this
Note, (iv) shall have the same rights and conditions as this Note, and (v) shall
represent accrued Interest and Late Charges on the Principal and Interest of
this Note, from the Issuance Date.

                  (20) REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES
AND INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note, the Securities
Purchase Agreement, the Pledge Agreement, the Control Agreement, the Warrants
and the Registration Rights Agreement, at law or in equity (including a decree
of specific performance and/or other injunctive relief), and nothing herein
shall limit the Holder's right to pursue actual and consequential damages for
any failure by the Company to comply with the terms of this Note. Amounts set
forth or provided for herein with respect to payments, conversion and the like
(and the computation thereof) shall be the amounts to be received by the Holder
and shall not, except as expressly provided herein, be subject to any other
obligation of the Company (or the performance thereof). The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to
the Holder and that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach or threatened
breach, the Holder shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being required.

                  (21) PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. The
Company agrees to pay, on demand, all costs and expenses of collection or
enforcement of this Note and/or the enforcement of Holder's rights with respect
to, or the administration, supervision, preservation, protection of, or
realization upon, any property securing payment hereof, including, without
limitation, reasonable attorney's fees, including fees related to any suit,
mediation or arbitration proceeding, out of court payment agreement, trial,
appeal, bankruptcy, reorganization, receivership or other proceeding.


                                       28
<PAGE>
                  (22) CONSTRUCTION; HEADINGS. This Note shall be deemed to be
jointly drafted by the Company and all the Purchasers and shall not be construed
against any person as the drafter hereof. The headings of this Note are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Note.

                  (23) FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on
the part of the Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.

                  (24) DISPUTE RESOLUTION. In the case of a dispute as to the
determination of the Redemption Price or the arithmetic calculation of the
Conversion Rate or the Redemption Price, the Company shall submit the disputed
determinations or arithmetic calculations via facsimile within one Business Day
of receipt of the Conversion Notice or Redemption Notice giving rise to such
dispute, as the case may be, to the Holder. If the Holder and the Company are
unable to agree upon such determination or calculation of the Conversion Rate
within one Business Day of such disputed determination or arithmetic calculation
being submitted to the Holder, then the Company shall, within one Business Day
submit via facsimile (a) the disputed determination of the Closing Bid Price or
the Closing Sale Price to an independent, reputable investment bank selected by
the Company and approved by the Holder or (b) the disputed arithmetic
calculation of the Conversion Rate or the Redemption Price to the Company's
independent, outside accountant. The Company shall instruct the investment bank
or the accountant, as the case may be, to perform the determinations or
calculations and notify the Company and the Holder of the results no later than
five Business Days from the time it receives the disputed determinations or
calculations. Such investment bank's or accountant's determination or
calculation, as the case may be, shall be binding upon all parties absent
demonstrable error. The expenses of the investment bank or accountant, as the
case may be, shall be borne by the party whose determination or calculation was
furthest away from the determination or calculation reached by the investment
bank or accountant, as the case may be.

                  (25)     NOTICES; PAYMENTS.

                        (a) Notices. Whenever notice is required to be given
under this Note, unless otherwise provided herein, such notice shall be given in
accordance with Section 9(f) of the Securities Purchase Agreement. The Company
shall provide the Holder with prompt written notice of all actions taken
pursuant to this Note, including in reasonable detail a description of such
action and the reason therefore. Without limiting the generality of the
foregoing, the Company will give written notice to the Holder (i) immediately
upon any adjustment of the Conversion Price, setting forth in reasonable detail,
and certifying, the calculation of such adjustment and (ii) at least twenty days
prior to the date on which the Company closes its books or takes a record (A)
with respect to any dividend or distribution upon the Common Stock, (B) with
respect to any pro rata subscription offer to holders of Common Stock or (C) for
determining rights to vote with respect to any Change of Control, dissolution or
liquidation,


                                       29
<PAGE>
provided in each case that such information shall be made known to the public
prior to or in conjunction with such notice being provided to the Holder.
Notwithstanding the foregoing, Section 4(i) of the Securities Purchase Agreement
shall apply to all notices given pursuant to this Note.

                        (b) Payments. Whenever any payment of cash is to be made
by the Company to any Person pursuant to this Note, such payment shall be made
in lawful money of the United States of America by a check drawn on the account
of the Company and sent via overnight courier service to such Person at such
address as previously provided to the Company in writing (which address, in the
case of each of the Purchasers (as defined in Section 3(d)(ii)), shall initially
be as set forth on the Schedule of Buyers attached to the Securities Purchase
Agreement); provided that the Holder may elect to receive a payment of cash via
wire transfer of immediately available funds by providing the Company with prior
written notice setting out such request and the Holder's wire transfer
instructions. Whenever any amount expressed to be due by the terms of this Note
is due on any day which is not a Business Day, the same shall instead be due on
the next succeeding day which is a Business Day and, in the case of any Interest
Date which is not the date on which this Note is paid in full, the extension of
the due date thereof shall not be taken into account for purposes of determining
the amount of Interest due on such date. Any amount of Interest, Principal or
other amounts due under this Note which is not paid when due shall result in a
late charge being incurred and payable by the Company in an amount equal to
interest on such amount at the rate of 15% per annum from the date such amount
was due until the same is paid in full ("LATE CHARGE").

                  (26) CANCELLATION. After all Principal, accrued Interest and
other amounts at any time owed on this Note has been paid in full, this Note
shall automatically be deemed canceled, shall be surrendered to the Company for
cancellation and shall not be reissued.

                  (27) WAIVER OF NOTICE. To the extent permitted by law, the
Company hereby waives demand, notice, protest and all other demands and notices
in connection with the delivery, acceptance, performance, default or enforcement
of this Note and the Securities Purchase Agreement.

                  (28) GOVERNING LAW. This Note shall be construed and enforced
in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note shall be governed by, the internal
laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of New York.

                  (29) CERTAIN DEFINITIONS. For purposes of this Note, the
following terms shall have the following meanings:

                        (a) "BLOOMBERG" means Bloomberg Financial Markets.


                                       30
<PAGE>
                        (b) "BUSINESS DAY" means any day other than Saturday,
Sunday or other day on which commercial banks in The City of New York are
authorized or required by law to remain closed.

                        (c) "CALENDAR QUARTER" means, each of the period
beginning on and including January 1 and ending on and including March 31, the
period beginning on and including April 1 and ending on and including June 30,
the period beginning on and including July 1 and ending on and including
September 30, and the period beginning on and including October 1 and ending on
and including December 31.

                        (d) "CLOSING BID PRICE" and "CLOSING SALE PRICE" means,
for any security as of any date, the last closing bid price and last closing
trade price, respectively, for such security on the Principal Market, as
reported by Bloomberg, or, if the Principal Market begins to operate on an
extended hours basis and does not designate the closing bid price or the closing
trade price, as the case may be, then the last bid price or last trade price,
respectively, of such security prior to 4:00:00 p.m., New York Time, as reported
by Bloomberg, or, if the Principal Market is not the principal securities
exchange or trading market for such security, the last closing bid price or last
trade price, respectively, of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by
Bloomberg, or if the foregoing do not apply, the last closing bid price or last
trade price, respectively, of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by Bloomberg, or, if
no closing bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in the "pink
sheets" by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If
the Closing Bid Price or the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price, as the case may be, of such security on such
date shall be the fair market value as mutually determined by the Company and
the Holder. If the Company and the Holder are unable to agree upon the fair
market value of such security, then such dispute shall be resolved pursuant to
Section 24. All such determinations to be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar transaction during the
applicable calculation period.

                        (e) "CONVERTIBLE SECURITIES" means any stock or
securities (other than Options) directly or indirectly convertible into or
exercisable or exchangeable for Common Stock.

                        (f) "EXCLUDED SECURITIES" means any shares of Common
Stock issued or issuable (i) in connection with one or more strategic
partnerships or joint ventures in which there is a significant commercial
relationship with the Company, in an amount not to exceed, in the aggregate,
gross proceeds to the Company of $10,000,000 or an aggregate of 5,000,000 shares
of Common Stock, (ii) in connection with any acquisition by the Company,


                                       31
<PAGE>
whether through an acquisition for stock or a merger, of any business, assets or
technologies the primary purpose of which is not to raise equity capital, in an
amount not to exceed, in the aggregate, 19.99% of the total outstanding shares
of Common Stock in any calendar year, (iii) pursuant to a bona fide firm
commitment underwritten public offering with a nationally recognized underwriter
which generates gross proceeds to the Company in excess of $22,500,000 (other
than an "at-the-market offering" as defined in Rule 415(a)(4) under the 1933 Act
and "equity lines") and (iv) upon conversion of any Options or Convertible
Securities which are outstanding under any stock option plan of the Company on
the day immediately preceding the Initial Issuance Date, provided that the terms
of such Options or Convertible Securities are not amended, modified or changed
on or after the Initial Issuance Date.

                        (g) "INITIAL ISSUANCE DATE" means December 31, 2002.

                        (h) "INTEREST CONVERSION PRICE" means, with respect to
any Interest Date, that price which shall be computed as 95% of the arithmetic
average of the Weighted Average Price of the Common Stock on each of the five
consecutive Trading Days immediately preceding such Interest Date. All such
determinations to be appropriately adjusted for any stock split, stock dividend,
stock combination or other similar transaction during such period.

                        (i) "OPTIONS" means any rights, warrants or options to
subscribe for or purchase Common Stock or Convertible Securities.

                        (j) "NOTE VALUATION AMOUNT" means, as of the Acquiring
Entity Change of Control Redemption Date or the Company Optional Redemption
Date, as applicable, the current value of this Note as determined (using
established methodologies for valuing convertible instruments similar to this
Note) by an independent, reputable investment bank or major financial
institution jointly selected by the Company and the holders of Notes and
Separate Tranche Notes representing at least two-thirds of the principal amounts
of the Notes and Separate Tranche Notes then outstanding. The determination of
such investment bank or financial institution shall be made prior to the date of
the Acquiring Entity Change of Control Redemption Date or the Company Optional
Redemption Date, as applicable, and shall be deemed binding upon all parties
absent manifest error. The fees and expenses of such investment bank or
financial institution shall be borne by the Company.

                        (k) "PERMITTED INDEBTEDNESS" means Indebtedness that is
unsecured, that is subordinate or pari passu in right of payment to this Note,
the Other Notes and the Separate Tranche Notes and that provides for an interest
that is no greater than market rate interests; provided that the amount of
Permitted Indebtedness shall not in the aggregate exceed the sum of $1,500,000
in the aggregate.

                        (l) "PERMITTED LIENS" means (i) any lien for taxes not
yet due or delinquent or being contested in good faith by appropriate
proceedings for which adequate reserves have been established in accordance with
generally acceptable accounting principles in


                                       32
<PAGE>
the United States applied on a consistent basis, (ii) any statutory lien arising
in the ordinary course of business by operation of law with respect to a
liability that is not yet due or delinquent and (iii) any minor imperfection of
title or similar lien which individually or in the aggregate with other such
liens would not reasonably be expected to have a Material Adverse Effect.

                        (m) "PERSON" means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, any other entity and a government or any department
or agency thereof.

                        (n) "PRINCIPAL MARKET" means the Nasdaq National Market.

                        (o) "PURCHASE MONEY INDEBTEDNESS" means Indebtedness of
the Company or any Subsidiary incurred solely for the purpose of financing all
or any part of the purchase price of equipment, furniture or fixtures or the
cost of construction or improvement of any property; provided, however, that the
aggregate principal amount of any such Indebtedness does not exceed the lesser
of the fair market value of such property, as determined in the good faith
judgment of the Company's Board of Directors, or such purchase price or cost,
including any refinancing of such Indebtedness that does not increase the
aggregate principal amount (or accreted amount, if less) thereof as of the date
of refinancing.

                        (p) "REDEMPTION CONVERSION PRICE" means with respect to
the Holder Initial Redemption, that price which shall be computed as 95% of the
arithmetic average of the Weighted Average Price of the Common Stock on each of
the twenty consecutive Trading Days immediately preceding the applicable Holder
Initial Redemption Date. All such determinations to be appropriately adjusted
for any stock split, stock dividend, stock combination or other similar
transaction during such period.

                        (q) "REDEMPTION PREMIUM" means (i) in the case of the
Events of Default described in Section 4(a)(i) - (vii) and (xi) - (xiv), 120% or
(ii) in the case of the Events of Default described in Section 4(a)(vii) - (x),
100%.

                        (r) "REGISTRATION RIGHTS AGREEMENT" means that certain
registration rights agreement between the Company and the initial holders of the
Notes relating to the registration of the resale of the shares of Common Stock
issuable upon conversion of the Notes.

                        (s) "SEC" means the United States Securities and
Exchange Commission.

                        (t) "SECURITIES PURCHASE AGREEMENT" means that certain
securities purchase agreement between the Company and the initial holders of the
Notes pursuant to which the Company issued the Notes.

                        (u) "SEPARATE TRANCHE NOTES" means the convertible notes
which


                                       33
<PAGE>
may be have been issued or may be issued pursuant to the Securities Purchase
Agreement at one or more separate closings following the Issuance Date.

                        (v) "SEPARATE TRANCHE WARRANTS" means the warrants which
may be have been issued or may be issued pursuant to the Securities Purchase
Agreement at one or more separate closings following the Issuance Date.

                        (w) "TRADING DAY" means any day on which the Common
Stock is traded on the Principal Market, or, if the Principal Market is not the
principal trading market for the Common Stock, then on the principal securities
exchange or securities market on which the Common Stock is then traded; provided
that "Trading Day" shall not include any day on which the Common Stock is
scheduled to trade on such exchange or market for less than 4.5 hours or any day
that the Common Stock is suspended from trading during the final hour of trading
on such exchange or market (or if such exchange or market does not designate in
advance the closing time of trading on such exchange or market, then during the
hour ending at 4:00 p.m., Eastern Time).

                        (x) "WARRANTS" has the meaning ascribed to such term in
the Securities Purchase Agreement, and shall include all warrants issued in
exchange therefore or replacement thereof.

                        (y) "WEIGHTED AVERAGE PRICE" means, for any security as
of any date, the dollar volume-weighted average price for such security on the
Principal Market during the period beginning at 9:30:01 a.m., New York Time (or
such other time as the Principal Market publicly announces is the official open
of trading), and ending at 4:00:00 p.m., New York Time (or such other time as
the Principal Market publicly announces is the official close of trading) as
reported by Bloomberg through its "Volume at Price" functions, or, if the
foregoing does not apply, the dollar volume-weighted average price of such
security in the over-the-counter market on the electronic bulletin board for
such security during the period beginning at 9:30:01 a.m., New York Time (or
such other time as the Principal Market publicly announces is the official open
of trading), and ending at 4:00:00 p.m., New York Time (or such other time as
the Principal Market publicly announces is the official close of trading) as
reported by Bloomberg, or, if no dollar volume-weighted average price is
reported for such security by Bloomberg for such hours, the average of the
highest closing bid price and the lowest closing ask price of any of the market
makers for such security as reported in the "pink sheets" by Pink Sheets LLC
(formerly the National Quotation Bureau, Inc.). If the Weighted Average Price
cannot be calculated for a security on a particular date on any of the foregoing
bases, the Weighted Average Price of such security on such date shall be the
fair market value as mutually determined by the Company and the Holder. If the
Company and the Holder are unable to agree upon the fair market value of such
security, then such dispute shall be resolved pursuant to Section 24. All such
determinations to be appropriately adjusted for any stock dividend, stock split,
stock combination or other similar transaction during the applicable calculation
period.


                                       34
<PAGE>
                            [SIGNATURE PAGE FOLLOWS]


                                       35
<PAGE>
         IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed as of the Issuance Date set out above.

                                VIEWPOINT CORPORATION



                                By: ____________________________________________
                                      Name:
                                      Title: President / Chief Executive Officer

                                                                       EXHIBIT I

                              VIEWPOINT CORPORATION
                                CONVERSION NOTICE

Reference is made to the Convertible Note (the "NOTE") issued to the undersigned
by Viewpoint Corporation (the "COMPANY"). In accordance with and pursuant to the
Note, the undersigned hereby elects to convert the Conversion Amount (as defined
in the Note) of the Note indicated below into shares of Common Stock, par value
$0.001 per share (the "COMMON STOCK"), of the Company as of the date specified
below.

         Date of Conversion:____________________________________________________

         Aggregate Conversion Amount to be converted:___________________________


Please confirm the following information:

         Conversion Price:______________________________________________________

         Number of shares of Common Stock to be issued:_________________________

Please issue the Common Stock into which the Note is being converted in the
following name and to the following address:

         Issue to:______________________________________________________________
                  ______________________________________________________________
                  ______________________________________________________________

         Facsimile Number:______________________________________________________


                                       36
<PAGE>
         Authorization:_________________________________________________________

                  By:___________________________________________________________
                                                      Title:____________________

Dated:__________________________________________________________________________

         Account Number:________________________________________________________
          (if electronic book entry transfer)

         Transaction Code Number:_______________________________________________
          (if electronic book entry transfer)
<PAGE>
                                 ACKNOWLEDGMENT

         The Company hereby acknowledges this Conversion Notice and hereby
directs Equiserve Trust Company to issue the above indicated number of shares of
Common Stock in accordance with the Transfer Agent Instructions dated December
31, 2002, from the Company and acknowledged and agreed to by Equiserve Trust
Company.

                                       VIEWPOINT CORPORATION

                                       By:______________________________________
                                            Name:
                                            Title: