EXHIBIT 10.14

          THE  SECURITIES  REPRESENTED  BY THIS  NOTE  (INCLUDING  THE
          SHARES OF COMMON STOCK INTO WHICH IT MAY BE CONVERTED)  HAVE
          NOT BEEN  REGISTERED  UNDER THE  SECURITIES  ACT OF 1933, AS
          AMENDED.   SUCH   SECURITIES  MAY  NOT  BE  OFFERED,   SOLD,
          TRANSFERRED,   PLEDGED,  HYPOTHECATED  OR  ASSIGNED,  EXCEPT
          PURSUANT TO EITHER (I) A REGISTRATION STATEMENT WITH RESPECT
          TO SUCH  SECURITIES  WHICH IS EFFECTIVE UNDER SUCH ACT, (II)
          RULE 144 OR RULE  144A  UNDER  SUCH ACT OR (III)  ANY  OTHER
          EXEMPTION FROM  REGISTRATION  UNDER SUCH ACT RELATING TO THE
          DISPOSITION OF SECURITIES,  PROVIDED IN EACH CASE AN OPINION
          OF  COUNSEL  IS  FURNISHED,  IF  REQUESTED  BY THE  COMPANY,
          REASONABLY   SATISFACTORY  IN  FORM  AND  SUBSTANCE  TO  THE
          COMPANY,  THAT RULE 144,  RULE 144A OR SUCH OTHER  EXEMPTION
          FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT IS AVAILABLE.

$125,000.00

8% Subordinated Convertible Note due December 15, 2000

     INRAD, INC.  (including any successor)  promises to pay to CLAREX
LTD.  or  registered  assigns,   the  principal  sum  of  ONE  HUNDRED
TWENTY-FIVE THOUSAND Dollars and 00/100 on December 15, 2000.

     Interest Payment Dates: June 15 and December 15

     Record Dates: June 1 and December 1

     Interest Accrual Date: April 9, 1995

Dated:  As of April 9, 1995

                                        INRAD, Inc.

                                        By: /s/ Warren Ruderman
                                           ----------------------------  
                                             Warren Ruderman, President

Attest:

  /s/ Ronald Tassello
------------------------
Secretary

<PAGE>

                                   INRAD, INC.

                                 8% Subordinated
                                Convertible Notes
                              Due December 15, 2000

1.0     Interest.

     INRAD,  INC.,  a New Jersey  corporation  (the  "Company"  which term shall
include any  successor  corporation),  promises to pay interest on the principal
amount  of this  Note at an  interest  rate per  annum  of 8% from the  Interest
Accrual Date specified on the face of this Note until maturity.

     The Company will pay interest  semi-annually  on June 15 and December 15 of
each year (each an "Interest  Payment Date"),  commencing on the first such date
following the Interest Accrual Date specified on the face of this Note, and upon
redemption  of this Note.  Interest on the Note will accrue from the most recent
date to which interest has been paid or, if no interest has been paid,  from the
Interest  Accrual Date specified on the face of this Note. The Company shall pay
interest  on  overdue  principal  at the  rate of 8% per  annum;  it  shall  pay
interest, to the extent permitted by law, on overdue installments of interest at
the rate of 8% per annum.  Interest  will be  computed on the basis of a 360-day
year of twelve 30-day months.

2.0     Method of Payment.

     2.1 The  Company  will pay  interest  on this Note to the person who is the
registered  Holder of this Note at the close of business on the Record Date next
preceding the Interest  Payment  Date,  as indicated on the Company's  books and
records.  The Holder must surrender this Note to the Company to collect payments
of  principal.  Payments of interest  may be mailed to the  Holder's  registered
address. Except as provided in paragraph 2.2, the Company will pay principal and
interest  in money of the  United  States  that at the time of  payment is legal
tender for payment of public and private debts.  The Company,  however,  may pay
principal  and  interest by its check  payable in such money.  If a payment is a
legal  holiday at a place of  payment,  payment may be made at that place on the
next  succeeding day that is not a legal holiday,  and no interest on the amount
payable on such payment date shall accrue for the intervening period.

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<PAGE>

     2.2 On each  succeeding  Interest  Payment Date through and  including  the
December 15, 1997 Interest Payment Date, the Company shall deliver to the Holder
of this  Note,  in  payment of the  interest  due on this Note on such  Interest
Payment Date, a new Note (an "Accrued Interest Note"), in the form of this Note,
dated such Interest Payment Date (and bearing interest from the Interest Payment
Date) and having a principal  amount  corresponding  to the interest due on this
Note on such Interest Payment Date;  provided,  however,  that the Company shall
not issue new Accrued  Interest  Notes  pursuant to this paragraph in payment of
(a) any interest on this Note due at any time after December 31, 1997 or (b) any
interest payable upon any redemption of this Note. On each Interest Payment Date
following the December 31, 1997 Interest  Payment Date, the Company shall pay to
the Holder of this Note an amount in cash equal to 100% of the interest  payment
due on such Interest Payment Date.

3.0     Agreement.

     On December 15, 1993, the Company issued 10% Subordinated Convertible Notes
Due December 15, 2000 (the  "Notes")  referred to in the Stock and Note Purchase
Agreement,  dated as of December 15, 1993 (the  "Agreement")  among the Company,
Clarex,  Ltd.  and  William  Nicklin.  All  payments  on this Note shall be made
proportionately  with  payments on the other  Notes and all other  rights of the
holder of this Note shall be pari passu with the rights of the other  holders of
Notes.  Holders of this Note are  entitled to the  benefits of the  covenants of
INRAD set forth in Section 7 of the Agreement (including the financial covenants
set forth in Section 7.12  thereof) as if set forth herein at length.  This Note
and the Notes shall collectively be referred to hereinafter as the "Subordinated
Convertible Notes."

4.0     Optional Redemption.

     4.1 At any time on or after  December 15, 1998,  the Company may redeem the
Notes  in  whole  or in  part at any  time  or from  time to time at 100% of the
principal amount thereof plus accrued interest,  if any, to the redemption date.
If the  redemption  date is  subsequent  to a Record  Date with  respect  to any
Interest  Payment Date and on or prior to such Interest  Payment Date, then such
accrued interest,  if any, will be paid to the person in whose name this Note is
registered  at the close of business  on such Record Date and no other  interest
will be payable thereon.

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<PAGE>

     4.2  Notwithstanding  the above,  the  Company  may redeem up to 25% of the
original  principal  amount of the Notes in whole or in part after  December 15,
1996 and prior to December 15, 1998, in the event that the Company consummates a
public  offering of debt or equity  securities  prior to such date.  The Company
will promptly  notify the Holder of the filing with the  Securities and Exchange
Commission of a registration statement pertaining to such an offering.

5.0  Mandatory Redemption.

     The  Company  is not  required  to redeem  this  Note at any time  prior to
maturity.

6.0  Notes to be Redeemed If Less Than All Notes to be Redeemed; 
     Notice of Redemption.

     If  less  than  all  of the  Notes  are to be  redeemed,  the  Subordinated
Convertible  Notes  shall be redeemed  pro rata.  Notice of  redemption  will be
mailed at least 15 days but not more than 45 days before the redemption  date to
each  Holder  of the  Subordinated  Convertible  Notes  to be  redeemed  at such
Holder's  registered  address. On and after the Redemption Date, interest ceases
to accrue on the Subordinated  Convertible  Notes or portions of them called for
redemption.

7.0  Transfer.

     The Company will not be required to register any attempted transfer of this
Note if such transfer would not comply with (or be exempt from) the registration
provisions of the Securities Act of 1933, as amended,  and any applicable  state
securities laws.

8.0  Persons Deemed Owners.

     The  registered  Holder  of this Note may be  treated  as its owner for all
purposes.

9.0  Defaults and Remedies.

     An Event  of  Default  is:  (A)  default  in  payment  of  interest  on the
Subordinated Convertible Notes for 15 days or default in payment of principal of
the  Subordinated  Convertible  Notes at  maturity or upon  redemption;  (B) the
failure by the  Company  and its  Subsidiaries,  if  applicable,  to perform the
covenants set forth in the  Agreement,  if such  nonperformance  continues for a

                                       -4-
<PAGE>

period of 30 days after  receipt by the Company of a notice of default  from the
Holder of a Note; (C) the material breach of a representation or warranty in the
Agreement  unless  such  breach is cured  within 30 days  after  receipt  by the
Company  of a notice of breach  from the  Holder of a Note;  (D)  default in the
payment of any other debt for borrowed  money by the Company unless such default
is cured or waived  within 30 days after  receipt by the  Company of a notice of
such default (but  excluding  the existing  default to Chemical  Bank and on the
Notes which are not defaults  hereunder);  (E) the  commencement by the Company,
pursuant to or within the meaning of any bankruptcy laws, of a voluntary case or
proceeding;  (F) the  consent by the Company to the entry of an order for relief
against it in an involuntary  bankruptcy case or proceeding;  (G) the consent by
the Company to the  appointment of a custodian for all or  substantially  all of
its property and (H) the making by the Company of a general  assignment  for the
benefit  of its  creditors.  Upon the  occurrence  of an Event of  Default,  all
outstanding  principal  and accrued  interest on this Note shall  become due and
payable,  at the  election of the Holder of this Note,  upon  receipt of written
notice by the Company.

10.0 No Recourse Against Others.

     A director, officer, employee or stockholder, as such, of the Company shall
not have any liability for any obligations of the Company under this Note or for
any claim  based on, in  respect  of or by reason of such  obligations  or their
creation  except a claim based upon fraud.  The Holder of this Note by accepting
this Note waives and releases all such recourse. The waiver and release are part
of the consideration for the issue of the Notes.

11.0 Conversion of this Note.

     11.1 Conversion Right.

     (1) For the purposes of this Section 11.0, "current conversion price" means
as at any  particular  time  the  basic  conversion  price  unless  an  adjusted
conversion  price is in effect pursuant to the provisions of Section 11.5 hereof
in which case it means such adjusted  conversion  price,  and "basic  conversion
price" means $1.00.

     (2) Subject to and upon  compliance  with the  provisions  of this  Section
11.0, the Holder of this Note shall have the right,  at his option,  at any time
during the period commencing on the date hereof and ending  immediately prior to

                                       -5-
<PAGE>

the close of business on December 15, 2000, on at least 30 days advance  written
notice to the  Company,  to convert all or any part of this note into fully paid
and  non-assessable  shares of Common  Stock  ("Common  Shares") by applying the
principal  amount of the Note plus all accrued and unpaid interest  thereon,  as
provided  for  herein,  to the  purchase  of such  Shares  at the  then  current
conversion  price;  except that in case this Note or part  thereof is called for
redemption  such  right  (for  the  Note  or for the  part  thereof  called  for
redemption) shall terminate with respect thereto at the close of business on the
business day three business days prior to the date fixed for such redemption.

     (3) The  Common  Shares  issuable  upon the  conversion  of this  Note,  if
converted at or prior to the time fixed for determining the holders of record of
Common Shares for the payment of dividends on Common  Shares,  shall qualify for
such dividends.  No adjustment  shall be made for dividends on any Common Shares
that shall be issuable upon the conversion of this Note.

     11.2 Conversion in Multiples.

     The Note shall be wholly  convertible  into  Common  Shares in units of one
thousand dollars ($1,000) and whole multiples thereof.

     11.3 Conversion Procedure.

     (1) In order to convert this Note,  the Note shall be delivered at any time
during  usual  business  hours to the Company at its  principal  office for that
purpose,  accompanied by a written notice duly executed by the registered Holder
of the Note or his attorney duly authorized in writing, which notice shall state
that the Holder  elects to convert the Note in  accordance  with the  provisions
hereof.  The  certificate  or  certificates  for Common Shares  issuable on such
conversion shall be issued only to the registered Holder of this Note unless (A)
the Holder duly  requests in writing that the shares be issued to a third party,
(B) the Holder and such third party  provide  proof to the  satisfaction  of the
Company  (including  if requested  opinion  letters of their  counsel) that such
issuance  to the  third  party is in  compliance  with  all  federal  and  state
securities laws and (C) such third party executes such investment representation
letter as is acceptable to the Company.

                                       -6-
<PAGE>

     (2) Subject to Section 11.2 hereof,  the Holder may by such written  notice
elect to convert only part of the principal  amount of this Note, in which event
the  Company  shall  issue and  deliver to such  Holder,  at the  expense of the
Company, a new Note registered in the name of such Holder, in a principal amount
equal to that part of the principal  amount of the Note which the Holder did not
elect to convert.

     (3) Every such notice of election to convert  shall  constitute  a contract
between the Holder of this Note and the Company,  whereby the Holder of the Note
shall be deemed to  subscribe  for the number of Common  Shares which he will be
entitled to receive upon such conversion and in payment and satisfaction of such
subscription,  to  surrender  this  Note and to  release  the  Company  from all
liability  thereon,  and whereby  the Company  shall be deemed to agree that the
surrender  of the  Note  and  the  extinguishment  of  liability  thereon  shall
constitute full payment of such  subscription for the Common Shares to be issued
upon  such  conversion.  If more  than one (1) Note  shall  be  surrendered  for
conversion  at one time by the same  Holder,  the number of full  Common  Shares
which shall be issuable  upon the  conversion  thereof  shall be computed on the
basis of the aggregate principal amount of Notes so surrendered.

     (4) As promptly as practicable after the receipt of such notice of election
to  convert,  the  delivery  of this  Note and  compliance  with all  reasonable
requirements  of the Company as aforesaid,  the Company shall cause the transfer
agent for the Common  Shares to issue and deliver,  to the holder of the Note so
surrendered (i) a certificate or certificates for the number of Common Shares in
which this Note has been converted in accordance  with the provisions of Section
11.0  and (ii)  any  cash  which  the  Company  is  required  to pay or issue in
accordance with the provisions of Section 11.7 hereof.  Such conversion shall be
deemed to have  been made  immediately  prior to the close of  business,  at the
office of the  Company  on the date on which  all  conditions  precedent  to the
conversion  of the Note have been  fulfilled  and the Holder  shall be deemed to
have  become  on the  said  date the  holder  of  record  of the  Common  Shares
represented  thereby;  provided,  however,  that if the  transfer  books  of the
Company for Common  Shares shall be closed on the said date,  the Company  shall
not be required to issue Common  Shares upon such  conversion  until the date on
which  such  transfer  books  shall  be  re-opened,  but such  conversion  shall
nevertheless  be effected  when such  transfer  books shall be  re-opened at the
conversion price in effect on, and otherwise as of, the date of conversion.

                                       -7-
<PAGE>

     (5) The Company covenants that the transfer books of the Company for Common
Shares shall not be closed during any period which  includes a record date for a
dividend or other distribution on the Common Shares.

     11.4 Cancellation of Note.

     This Note,  when  converted as  aforesaid,  shall ipso facto be void and be
cancelled.  The Note  converted as  aforesaid  shall be cancelled by the Company
forthwith  upon  delivery of such Note to it and  subject to Section  11.3(2) no
Note shall be issued in substitution therefor.

     11.5 Adjustment of Price and Terms.

     (1) The conversion  price shall be subject to adjustment  from time to time
as hereinafter provided.

     (a) Stock  Dividends;  Stock  Splits;  Etc. In case the  Company  shall (i)
     declare a dividend or make a distribution on the outstanding  shares of its
     Common Stock in shares of its Common Stock,  (ii) subdivide the outstanding
     shares of its  Common  Stock  into a greater  number  of  shares,  or (iii)
     combine the smaller number of shares, then in each case conversion price in
     effect  immediately after the record date for such dividend or distribution
     or the effective date of such subdivision or combination  shall be adjusted
     so that it shall equal the price  determined by multiplying  the conversion
     price in effect  immediately  prior  thereto  by a  fraction,  of which the
     numerator  shall be the  number  of  shares  of  Common  Stock  outstanding
     immediately after such dividend, distribution,  subdivision or combination.
     Any shares of Common Stock of the Company issuable in payment of a dividend
     shall be deemed to have been  issued  immediately  prior to the record date
     for such dividend.

     (b) Below Market Sales. Except as hereinafter provided, in case the Company
     shall at any time after the date hereof  issue or sell any shares of Common
     Stock (other than (i) upon the exercise of options or other rights  granted
     to employees,  consultants  or directors of the Company or to  underwriters
     pursuant to any present or future employee  benefit or stock option plan of
     the company or any  underwriting  agreement,  or (ii) any shares  issued to
     employees,  consultants or directors of underwriters  pursuant to any stock

                                       -8-
<PAGE>

     grant agreement or similar  compensatory  agreement to which the Company is
     or may become a party (collectively  "Excluded  Transactions")),  including
     shares held in the Company's  treasury,  for a consideration per share less
     than the then current fair market value of a share of the Company's  Common
     Stock (the "Fair Market Value"), or without  consideration,  then forthwith
     upon such issuance or sale the  conversion  price shall (until another such
     issuance or sale) be reduced to a price  (calculated  to the  nearest  full
     cent)  determined by multiplying  the conversion  price by a fraction,  the
     numerator of which is an amount equal to the sum of (A) the total number of
     shares of Common Stock  outstanding  immediately  prior to such issuance or
     sale,  plus the  aggregate  of the  amount  of all  consideration,  if any,
     received or to be received by the Company upon such  issuance or sale,  and
     the  denominator of which is (B) the total number of shares of Common Stock
     to be outstanding immediately after such issuance or sale multiplied by the
     Fair Market Value; provided, however, that in no event shall the conversion
     price be adjusted pursuant to this computation  contained in this paragraph
     (b) to an amount in excess of the initial conversion price hereunder.

     For the  purposes of any  computation  to be made in  accordance  with this
     paragraph, the following provisions shall be applicable:

          (i) In case of the  issuance  or sale of shares of Common  Stock for a
          consideration  part or all of which  shall be cash,  the amount of the
          cash  consideration  therefor shall be deemed to be the amount of cash
          received by the Company for such shares (or, if shares of Common Stock
          are offered by the Company for subscription,  the subscription  price,
          or, if such  securities  shall be sold to  underwriters or dealers for
          public offering  without a subscription  offering,  the initial public
          offering price) before deducting  therefrom any  compensation  paid or
          discount  allowed in the sale,  underwriting  or  purchase  thereof by
          underwriters or dealers or others performing similar services,  or any
          expenses incurred in connection therewith.

                                       -9-
<PAGE>

          (ii) In case of  issuance  or sale  (otherwise  than as a dividend  or
          other distribution on any stock of the Company,  or on the exercise of
          options,  rights or  warrants  or on the  conversion  of  exchange  of
          convertible or exchangeable  securities) of shares of Common Stock for
          a  consideration  part or all of which  shall be other than cash,  the
          amount of the  consideration  therefor other than cash shall be deemed
          to be the value of such  consideration  as determined in good faith by
          the Board of Directors of the Company.

          (iii)  This  paragraph  (b)  shall  not  apply  to  stock   dividends,
          distributions,  mergers,  reclassifications,   or  other  transactions
          covered by other paragraphs in this Section 11.0.

          (iv) Fair Market  Value shall mean the lowest bid price for a share of
          the Common Stock  during the ten business  days prior to the date that
          the Board of  Directors  of the Company  approves the sale or issuance
          subject to this paragraph (b).

          (v) The number of shares of Common  Stock at any one time  outstanding
          shall  include  the  aggregate  number  of shares  issued or  issuable
          (subject to readjustment  upon the actual  issuance  thereof) upon the
          exercise of  options,  rights,  warrants  and upon the  conversion  or
          exchange of convertible or exchangeable securities.

          (vi) No adjustment  shall be made in the conversion price by reason of
          an issuance of shares  pursuant to (x)  options,  rights,  warrants or
          convertible or exchangeable  securities  unless an adjustment would be
          required  under  paragraph  (c)  immediately  below or (y) warrants or
          convertible  notes being granted  pursuant to the Agreement dated this
          date.

     (c) Options,  Rights, Warrants and Convertible and Exchangeable Securities.
     Except with respect to Excluded Transactions,  in case the Company shall at
     any time  after  the date  hereof  issue  options,  rights or  warrants  to
     subscribe for shares of Common Stock,  or issue any securities  convertible
     into or exchangeable  for shares of Common Stock,  for a consideration  per
     share  less  than  the then  current  Fair  Market  Value of a share of the

                                      -10-
<PAGE>

     Company's  Common  Stock at the date of issuance of such option,  etc.,  or
     without consideration,  the conversion price in effect immediately prior to
     the issuance of such options,  rights or warrants,  or such  convertible or
     exchangeable  securities,  as the case may be,  shall be reduced to a price
     determined by making a computation  in  accordance  with the  provisions of
     paragraph (b) hereof, provided that:

          (x) The aggregate  maximum  number of shares of Common  Stock,  as the
          case may be, issuable under such options,  rights or warrants shall be
          deemed to be issued and  outstanding at the time such options,  rights
          or warrants were issued, and for a consideration  equal to the minimum
          purchase  price  per share  provided  for in such  options,  rights or
          warrants  at the time of  issuance,  plus the  consideration,  if any,
          received  by  the  Company  for  such  options,  rights  or  warrants;
          provided,  however,  that upon the expiration or other  termination of
          such options,  rights or warrants,  if any thereof shall not have been
          exercised,  the number of shares of Common  Stock  deemed to have been
          issued and  outstanding  pursuant to this  paragraph  (x) (and for the
          purposes of  subsection  (v) of paragraph (b) hereof) shall be reduced
          by such number of shares as to which options,  warrants  and/or rights
          shall  have  expired or  terminated  unexercised,  and such  number of
          shares shall no longer be deemed to be issued and outstanding, and the
          conversion  price then in effect  shall  forthwith be  readjusted  and
          thereafter be the price which it would have been had  adjustment  been
          made on the basis of the issuance  only of shares  actually  issued or
          issuable upon the exercise of those options,  rights or warrants as to
          which  the  exercise  rights  shall  not have  expired  or  terminated
          unexercised.

          (y) The aggregate  maximum  number of shares of Common Stock  issuable
          upon  conversion  or  exchange  of  any  convertible  or  exchangeable
          securities shall be deemed to be issued and outstanding at the time of
          issuance  of such  securities,  and for a  consideration  equal to the
          consideration  received by the Company for such  securities,  plus the
          minimum  consideration,  if any,  receivable  by the Company  upon the

                                      -11-
<PAGE>

          conversion or exchange such  convertible  or  exchangeable  securities
          (whether by reason of redemption or  otherwise),  the number of shares
          deemed to be issued and  outstanding  pursuant to this  paragraph  (y)
          (and for the purpose of subsection  (v) of paragraph (b) hereof) shall
          be reduced by such  exchange  rights shall have expired or  terminated
          unexercised, and such number of shares shall no longer be deemed to be
          issued and outstanding  and the conversion  price then in effect shall
          forthwith be  readjusted  and  thereafter  be the price which it would
          have been had  adjustment  been made on the basis of the issuance only
          of the shares  actually  issued or  issuable  upon the  conversion  or
          exchange of those  convertible or exchangeable  securities as to which
          the conversion or exchange rights shall not have expired or terminated
          unexercised.

          (z) If any change  shall occur in the price per share  provided for in
          any of the options,  rights or warrants  referred to in subsection (x)
          of this  paragraph  (c),  or in the  price  per  share  at  which  the
          securities  referred to in  subsection  (y) of this  paragraph (c) are
          convertible  or  exchangeable,  such  options,  rights or  warrants or
          conversion or exchange rights,  as the case may be, shall be deemed to
          have expired or  terminated  on the date when such price change became
          effective in respect of shares not theretofore  issued pursuant to the
          exercise or conversion or exchange  thereof,  and the Company shall be
          deemed to have issued upon such date new  options,  rights or warrants
          or convertible or exchangeable  securities at the new price in respect
          of the  number  of  shares  issuable  upon the  exercise  of rights or
          warrants  or  the  conversion  or  exchange  of  such  convertible  or
          exchangeable securities.

     (d) All  calculations  described  above shall be made to the nearest  whole
     cent.

     (2) No adjustment in the conversion price in accordance with the provisions
described above need be made if such adjustment would amount to a change of less
than 1% in such  conversion  price;  provided  that  the  amount  by  which  any
adjustment is not made by reason of the  provisions of this  paragraph  shall be

                                      -12-
<PAGE>

carried forward and taken into account at the time of any subsequent  adjustment
in the conversion price.

     (3) In the case of any  capital  reorganization,  other  than in the  cases
referred to above,  or the  consolidation  or merger of the Company with or into
another  corporation  (other than a merger or consolidation in which the Company
is the continuing  corporation and which does not result in any reclassification
of the outstanding  shares of Common Stock or the conversion of such outstanding
shares  of  Common  Stock  into  shares of other  stock or other  securities  or
property),  or the  sale  of the  property  of the  Company  as an  entirety  or
substantially  as an  entirety,  or the  conversion,  however  effected,  of the
Company into another form of entity (collectively such actions being hereinafter
referred to as "Reorganizations"), there shall be thereafter be deliverable upon
conversion  of this Note the  number of shares of stock or other  securities  or
property  to which a holder of the  number of shares of Common  Stock that would
otherwise have been deliverable upon the conversion of this Note would have been
entitled  upon  such  Reorganization  if such  Note had been  converted  in full
immediately  prior  to  such  Reorganization.  In  case  of any  Reorganization,
appropriate adjustment, as determined in good faith by the Board of Directors of
the Company, shall be made in the application of the provisions herein set forth
with respect to the rights and  interests of the Holder of this Note so that the
provisions  set  forth  herein  shall  thereafter  be  applicable,  as nearly as
possible,  in relation to any  conversion  of the Notes.  The Company  shall not
effect any such Reorganization, unless upon or prior to the consummation thereof
the successor  entity,  or if the Company  shall be the surviving  entity in any
such  Reorganization  and is not the  issuer  of the  shares  of  stock or other
securities  or  property  to  be  delivered  to  holders  of  the  Common  Stock
outstanding  at the  effective  time  thereof,  then such issuer shall assume by
written instrument the obligation to deliver to the holder such shares of stock,
securities,  cash or other  property as the Holder shall be entitled to purchase
in  accordance  with  the  foregoing  provisions.  In the  event  of a  sale  or
conveyance or other  transfer of all or  substantially  all of the assets of the
Company  as a part of a plan for  liquidation  of the  Company,  all  rights  to
convert any Note shall  terminated  on the date such sale or conveyance or other
transfer is to be consummated.

     (4) If at any time after the date  hereof the  Company  fixes a record date
for the issue of the  distribution  to all or  substantially  all the holders of
shares of its Common Stock of any property or other assets, and if such issuance

                                      -13-
<PAGE>

or distribution  does not constitute a dividend paid in the ordinary  course,  a
stock dividend,  a distribution of equity or debt securities of the Company or a
Reorganization (as defined below) (any of such nonexcluded events being called a
"Special  Distribution"),  the  conversion  price  shall be  adjusted  effective
immediately  after such record date to a price  determined  by  multiplying  the
conversion price in effect on such record date by a fraction:

     (a) The numerator of which shall be:

          (i)  the product of the number of shares of Common  Stock  outstanding
               on such  record date and the  current  Fair Market  Value of such
               shares of Common Stock on such record date; less

          (ii) the fair market value,  as  determined by the Company's  Board of
               Directors  (whose  determination  shall be  conclusive),  of such
               securities  or property or other assets so issued or  distributed
               in the Special Distribution; and

     (b)  the  denominator  of which shall be the product of number of shares of
          the  Company's  Common Stock  outstanding  on such record date and the
          current Fair Market Value of such shares on such record date.

To the extent that any Special Distribution is not so made, the conversion price
shall be readjusted  effective  immediately to the conversion  price which would
then be in  effect  based on such  securities  or  property  or other  assets as
actually distributed.

     (5) The  Company's  regular  independent  auditors,  or,  at the  Company's
option, another firm of independent certified public accountants selected by the
Company and reasonable  acceptable to the Holder hereof,  which selection may be
changed  from time to time,  shall at the  request  of the  Company  verify  the
computations made in accordance with this Section 11.5. The certificate,  report
or other written statement of any such firm shall be conclusive  evidence of the
correctness of any computation made hereunder.

                                      -14-
<PAGE>

     11.6 Postponement of Subscriptions.

     In any case in which this Section 11.0 requires that an adjustment is to be
effective  immediately after a record date for an event referred to herein,  the
Company may defer, until the occurrence of such an event:

     (a)  issuing to the holder of any Note converted after such record date and
          before the  occurrence  of such event,  the  additional  Common Shares
          issuable upon such conversion by reason of the adjustment  required by
          such event; and

     (b)  delivering to such holder any  distributions  declared with respect to
          such additional Common Shares after such exercise date and before such
          event; 

provided,  however,  that the Company  delivers  to such  holder an  appropriate
instrument  evidencing  such holder's  right,  upon the  occurrence of the event
requiring the adjustment, to an adjustment in the conversion price or the number
of  Common  Shares   issuable  on  the  conversion  of  any  Note  and  to  such
distributions  declared with respect to any additional Common Shares issuable on
the conversion of any Note.

     11.7 Treatment of Fractions.

     The Company shall not be required to issue fractional  Common Shares upon a
conversion  of this  Note  pursuant  to this  Section  11.0.  If any  fractional
interest in a Common Share would, except for the provisions of this Section 11.7
be  deliverable  upon the conversion of this Note, the Company shall adjust such
fractional  interest by payment to the Holder of this Note, of an amount in cash
equal (computed, as in the case of a fraction of a cent, to the next lower cent)
to the value of such  fractional  interest  computed on the basis of the current
conversion price for Common Shares.

     11.8 Notice of Adjustment.

     Whenever the conversion price and/or the conversion terms shall be adjusted
pursuant to the provisions of Section 11.5 hereof,  the Company shall  forthwith
file with the transfer  agent for Common Shares of the Company a certificate  of
the Company showing the adjusted  conversion  price and/or  adjusted  conversion
terms,  as the case may be,  determined  as provided in Section  11.5 hereof and

                                      -15-
<PAGE>

setting forth in  reasonable  detail the facts  requiring the  adjustment of the
conversion  price or  conversion  terms,  as the case may be,  and the manner of
determining such  adjustment,  and shall cause notice to be given to the holders
of the Notes stating that such an adjustment  has been effected and the adjusted
conversion price or conversions terms, as the case may be.

     11.9 Reservation of Common Shares.

     The Company  covenants  that it will at all times prior to the  maturity of
the Notes,  while any of the Notes are  outstanding,  reserve and keep available
out of its authorized  shares of Common Stock, a sufficient number of shares for
the purpose of issue upon the exercise of the right of  conversion  of the Notes
as herein provided. The Company covenants that all shares which may be so issued
when so issued shall be duly issued, fully paid and non-assessable.

12.0    Subordination.

     12.1 Subordination to Senior Indebtedness.

     Anything in this Note or in the Agreement to the contrary  notwithstanding,
payment  of the  principal  and  interest  on  this  Note  is  hereby  expressly
subordinated  and  subject  in right of  payment to the extent and in the manner
hereinafter  set forth to the prior payment in full of all Senior  Indebtedness.
For  purposes  of this Note,  "Senior  Indebtedness"  shall  mean the  Company's
indebtedness  pursuant  to (a) any  credit  agreement  with  Chemical  Bank  now
existing or as  modified  or  restructured  from time to time  hereafter  or any
credit agreement with any other bank or financial  institution hereafter entered
into by the  Company,  (b) any  capital  leases  now  outstanding  or  hereafter
incurred in which the Company is the lessee or (c) any secured  indebtedness  of
the Company now outstanding or hereafter incurred. It is understood that payment
of the  principal and interest on this Note is pari passu with payment of a note
dated  December  15,  1993 in the  principal  sum of $566,049 in favor of Warren
Ruderman.

     12.2 Payment of Proceeds in Certain Events.

     (1) Subject to Section 12.6 hereof, in the event of any distribution of the
assets of the  Company  upon any  dissolution  or winding up or partial or total
liquidation of the Company,  whether in bankruptcy,  insolvency or  receivership

                                      -16-
<PAGE>

proceedings,  or upon an  assignment  for the benefit of  creditors or any other
marshalling of the assets and liabilities of the Company,  or any reorganization
or insolvency of the Company:

     (a) all Senior  Indebtedness  shall first be paid in full or provision made
     for such payment  before any payment is made on account of the principal of
     and interest on the Notes; and

     (b) any payment or distribution or assets of the Company,  whether in cash,
     property or securities, to which the holders of the Notes would be entitled
     except for the provisions of this Section 12.0,  shall be paid or delivered
     by the  trustee  in  bankruptcy,  receiver,  assignee  for the  benefit  of
     creditors or other  liquidating  agent making such payment or distribution,
     directly to the holders of Senior  Indebtedness to the extent  necessary to
     pay all Senior  Indebtedness  in full after giving effect to any concurrent
     payments or distribution or provision therefor to or for the benefit of the
     holders of Senior Indebtedness,  and the holders of the Notes by acceptance
     thereof assign to the holders of Senior  Indebtedness  for the purposes and
     to the extent set forth in this Section 12.2(b) all their right,  title and
     interest in and to any such  payment or  distribution  of the assets of the
     Company  as  aforesaid  to which the  holders  of the Notes are or would be
     entitled except for the provisions of this Section 12.2(b); and the holders
     of the Notes shall take such steps as may be  necessary or  appropriate  to
     entitle the holders of Senior  Indebtedness to receive ratably such payment
     of distribution  from the liquidating  trustee or agent or any other person
     making such payment of distribution;

and if, notwithstanding the foregoing,  any payment or distribution of assets of
the Company,  whether in cash, property or securities,  shall be received by the
Holder of this Note on behalf of such Holder before all Senior  Indebtedness  is
paid in full, or provision is made for its payment, such payment or distribution
shall be held in trust for the benefit of the holders of Senior Indebtedness and
shall be paid  over or  delivered  to the  holders  of Senior  Indebtedness  for
application to the payment of all Senior Indebtedness remaining unpaid.

                                      -17-
<PAGE>

     (2) The consolidation or merger of the Company with another  corporation or
the sale,  transfer or leasing of its property as a whole or  substantially as a
whole to another corporation shall not be deemed a winding up for the purpose of
this  Section  12.0  if  such  other   corporation   shall,   as  part  of  such
consolidation,  merger, sale, transfer or lease, remain liable to pay the Senior
Indebtedness and this Note.

     12.3 Subrogation to Senior Indebtedness.

     Subject to the  payment in full of all Senior  Indebtedness  in  accordance
with the terms thereof, the holders of all Notes shall be subrogated pro rata to
the  rights of the  holders  of  Senior  Indebtedness  to  receive  payments  or
distributions of assets of the Company  applicable to such Senior  Indebtedness,
to the extent of the  application  thereto of moneys or other assets which would
have been  received by the holders of the Notes for the benefit of such  holders
but for the provisions of this Section 12.0, until the principal of and interest
on the Notes shall be paid in full; it being  understood  that the provisions of
this Section  12.0 are and are  intended  solely for the purpose of defining the
relative  rights of the  holders of the Notes on the one hand and the holders of
the Senior  Indebtedness  on the other hand, and nothing in this Section 12.0 or
elsewhere  in this  Note is  intended  or shall  impair  the  obligation  of the
Company,  which is unconditional and absolute, to pay to the Holder of this Note
the  principal of an interest on this Note as and when the same shall become due
and payable in accordance  with its terms,  or to affect the relative  rights of
the holders of the Notes and  creditors of the Company other than the holders of
Senior  Indebtedness,  nor shall anything herein prevent the Holder of this Note
from exercising all remedies  otherwise  permitted by this Note or, except as is
expressly  limited  hereby,  by  applicable  law upon  default  under this Note,
subject in any event,  to the rights,  if any,  under this  Section  12.0 of the
holders of Senior  Indebtedness  in respect of any  payment or  distribution  of
cash,  property or securities  of the Company  received upon the exercise of any
such remedy.

     12.4 Senior Indebtedness Default.

     Upon the happening and during the  continuance of an event of default under
the Senior Indebtedness (a "Senior Indebtedness  Default"),  no payment shall be
made by the Company  with  respect to the  principal of and the interest on this
Note. In the event that,  notwithstanding the foregoing,  the Company shall make
any payment of the principal of or interest on this Note after the happening and

                                      -18-
<PAGE>

during the  continuance  of a Senior  Indebtedness  Default,  then such payments
received  by the  Holder  hereof  shall be held in trust for the  benefit of the
holders of Senior Indebtedness,  and shall be paid over to the holders of Senior
Indebtedness for application to the payment of all Senior Indebtedness remaining
unpaid.  Unless  and until  written  notice has been given to the Holder of this
Note by or on behalf of any holder of any  Senior  Indebtedness,  notifying  the
Holder of the  happening  of an event of default  with  respect  to such  Senior
Indebtedness  or of the  existence  of any other facts which would result in the
making  of any  payment  with  respect  to  this  Note in  contravention  of the
provisions of this Section 12.0,  the holder shall be entitled to assume that no
such event of default  has  occurred,  or that no such facts  exist,  and,  with
respect to any moneys  which may at any time be  received by the Holder in trust
pursuant to the provisions of this Indenture, prior to the receipt by it of such
written notice, nothing in this Indenture will prevent the Holder from utilizing
such  moneys,  notwithstanding  the  occurrence  or  continuance  of an event of
default with respect to, or the  existence of such facts with respect to, Senior
Indebtedness.  

     12.5 Notice to Holder of Senior Indebtedness Default.

     The Company shall give prompt written notice to the Holders of this Note of
any dissolution,  winding up or liquidation of the Company within the meaning of
this Section 12.0 or of any other  Senior  Indebtedness  Default or of any other
event the  occurrence of which would cause any payment with respect to this Note
to be in contravention of the provisions of this Section 12.0. The Holder of the
Note will be  entitled  to assume  that no such  event has  occurred  unless the
Company has given such  notice  and,  in the case of notice  given of any Senior
Indebtedness  Default,  that such default is continuing  until the Company gives
written  notice to the Holder that such  default  has ceased to exist.  Upon any
payment or  distribution  of assets of the Company  referred to in this  Section
12.0,  the Holder of this Note shall be entitled to rely upon a  certificate  of
the trustee in bankruptcy,  receiver, assignee for benefit of creditors or other
liquidating agents making such payment or distribution, delivered to the holders
of Notes, for the purpose of ascertaining the persons entitled to participate in
such distribution, the holders of the Senior Indebtedness and other indebtedness
holders of the Company,  the amount  thereof or payable  thereon,  the amount or

                                      -19-
<PAGE>

amounts paid or distributed  thereon and all other facts pertinent thereto or to
this Section 12.0.

     12.6 Certain Exceptions.

     Nothing  contained  in this  Section  12.0 or elsewhere in any of the Notes
shall prevent:

     (a)  the Company from making payment of the principal of or the interest on
          the Notes at any time  except  upon and  during the  continuance  of a
          Senior Indebtedness  Default or during the pendency of any dissolution
          or winding up or partial or total  liquidation of the Company (whether
          in bankruptcy,  insolvency or  receivership  proceedings),  or upon an
          assignment  for the benefit of creditors or any other  marshalling  of
          the assets and liabilities of the Company or during any reorganization
          or insolvency of the Company; or

     (b)  the  Company  from  completing  any  purchase or  redemption  of Notes
          initiated prior to the time of any Senior Indebtedness Default.

Notwithstanding  the  foregoing,  the Holder  hereof by  acceptance of this Note
agrees  that it will not accept any  prepayment  of this Note nor any payment of
principal  or  interest  on this Note  more  than 30 days  prior to its due date
without the express written consent of all holders of Senior Indebtedness.

     12.7 Failure to Act Not Waiver.

     No right of any present or future holder of any Senior  Indebtedness of the
Company to enforce subordination as herein provided shall at any time in any way
be  prejudiced  or  impaired  by any act or  failure  to act on the  part of the
Company or by any act or failure to act, in good faith,  by any such holder,  or
by any non-compliance by the Company with the terms, provisions and covenants of
this Note,  regardless of any knowledge thereof any such holder may have or with
which he may otherwise be charged.

     12.8 Renewal or Extension of Senior Indebtedness.

     The  holders  of any of the  Senior  Indebtedness  may at any time in their
discretion  renew or extend the time of payment  of the Senior  Indebtedness  so
held or  exercise  any  other of their  rights  under the  Senior  Indebtedness,

                                      -20-
<PAGE>

including,  without limitation,  the waiver of default  thereunder,  all without
notice to or assent from the holders of the Notes.

     12.9 Additional Documentation.

     By acceptance of this Note,  the Holder agrees from time to time to execute
any and all documents requested by Chemical Bank or reasonably  requested by any
other holder of Senior Indebtedness to confirm,  amend, supplement or substitute
for the subordination  provisions set forth herein,  including,  but not limited
to,  Chemical  Bank's form of  subordination  agreement,  with such terms as are
required by Chemical Bank.

     12.10 Miscellaneous.

     Any capitalized  terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Agreement or in any of the documents  described
in the Agreement.

                                      -21-
<PAGE>

                                 ASSIGNMENT FORM

To assign this Note, fill in the form below:    (I) or (We)

assign and transfer this Security to


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               (insert assignee's social security or tax I.D. no.)


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

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

--------------------------------------------------------------------------------
             (Print or type assignee's name, address and zip code)


and irrevocably appoint  -------------------------------------------------------

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------------ agent to transfer this Note on the books of the Company.  The agent

may substitute another to act for him.

Date:----------------------  Your Signature:------------------------------------

     (Sign exactly as your name appears on the other side of this Security)

Signature Guarantee:


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