<PAGE>
                                                                    Exhibit 10.3


                           [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: ____________ __, 200_               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.
<PAGE>
                  (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").
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 Securities Purchase Agreement) prior to the Interest


                                       2
<PAGE>
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, [$_____](1).

--------
(1) Insert $2.71 (as appropriately adjusted for any stock splits, stock
dividends, stock combinations and other similar transactions of the Common Stock
which occur after the Initial Issuance Date and other adjustments pursuant to
Section 7(a)(vi)).


                                       3
<PAGE>
                        (c) Mechanics of Conversion.

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


                                       4
<PAGE>
        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 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


                                       5
<PAGE>
        the limitation contained herein beneficially owned by the Holder or any
        of its affiliates. Except as set forth in the preceding sentence, for
        purposes of this Section 3(d)(i), beneficial ownership shall be
        calculated in accordance with Section 13(d) of the Securities Exchange
        Act of 1934, as amended. 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


                                       6
<PAGE>
        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.

                  (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);


                                       7
<PAGE>
        (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 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


                                       8
<PAGE>
        issuance of such judgment;

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


                                       9
<PAGE>
                  (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 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


                                       10
<PAGE>
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
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)


                                       11
<PAGE>
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 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.


                                       12
<PAGE>
                        (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 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


                                       13
<PAGE>
        been issued and sold by the Company at the time of the granting or sale
        of such Option for such price per share. For purposes of this Section
        7(a)(i), the "lowest price per share for which one share of Common Stock
        is issuable upon the exercise of any such Option or upon conversion or
        exchange or exercise of any Convertible Securities issuable upon
        exercise of such Option" shall be equal to the sum of the lowest amounts
        of consideration (if any) received or receivable by the Company with
        respect to any one share of Common Stock upon granting or sale of the
        Option, upon exercise of the Option and upon conversion or exchange or
        exercise of any Convertible Security issuable upon exercise of such
        Option. No further adjustment of the Conversion Price shall be made upon
        the actual issuance of such 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


                                       14
<PAGE>
        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 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.


                                       15
<PAGE>
        (vi) This Note Deemed Outstanding. If during the period beginning on and
        including the Initial Issuance Date and ending on the date immediately
        preceding the Issuance Date, the Company entered into, or in accordance
        with Section 7(a) would have been deemed to have entered into (had this
        Note been outstanding at such time), any Dilutive Issuance, then solely
        for purposes of determining any adjustment under this Section 7(a) as a
        result of such Dilutive Issuance or deemed Dilutive Issuance, this Note
        shall be deemed to have been outstanding at the time of each such
        Dilutive Issuance or deemed Dilutive Issuance.]

                        (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 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.


                                       16
<PAGE>
                        (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.

                        (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


                                       17
<PAGE>
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 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


                                       18
<PAGE>
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 and for
purposes of this Section 9, not taking into account any adjustment pursuant to
Section 7(a)(vi) above) 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 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


                                       19
<PAGE>
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 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


                                       20
<PAGE>
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.

                        (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


                                       21
<PAGE>
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 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


                                       22
<PAGE>
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 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


                                       23
<PAGE>
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 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


                                       24
<PAGE>
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
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


                                       25
<PAGE>
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 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.


                                       26
<PAGE>
                        (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 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,


                                       27
<PAGE>
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 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.


                                       28
<PAGE>
                  (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.

                  (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


                                       29
<PAGE>
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, 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.


                                       30
<PAGE>
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.

                        (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


                                       31
<PAGE>
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, 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.


                                       32
<PAGE>
                        (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 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


                                       33
<PAGE>
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
issued pursuant to the Securities Purchase Agreement at one or more separate
closings which occurred prior to the Issuance Date or which 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
issued pursuant to the Securities Purchase Agreement at one or more separate
closings which occurred prior to the Issuance Date or which 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).


                                       34
<PAGE>
                        (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.

                            [SIGNATURE PAGE FOLLOWS]

         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


                                       35
<PAGE>
                                                                       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:______________________________________________________

         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: