Exhibit 4.1



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                        SOY ENVIRONMENTAL PRODUCTS, INC.






                                 NOTE AGREEMENT

                            For the Issuance of Up to
                             $900,000 Senior Secured
                                Convertible Notes


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<PAGE>
                                                                     Exhibit 4.1


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
SECTION                                                                                           PAGE

                         SECTION 1 - DEFINITIONS AND INTERPRETATION................................  1

<S>         <C>                                                                                     <C>
    1.1     Definitions............................................................................  1
    1.2     Accounting Principles..................................................................  4
    1.3     Directly or Indirectly.................................................................  4

                                    SECTION 2 - THE NOTES..........................................  4

    2.1     Issuance of Definitive Notes...........................................................  4
    2.2     Prepayment.............................................................................  4
    2.3     No Sinking Fund........................................................................  4
    2.4     Persons Entitled to Note Interest Payments.............................................  5
    2.5     Security...............................................................................  5
    2.6     Payment of Principal and Interest......................................................  5
    2.7     Extension of Maturity Date.............................................................  5
    2.8     Application of Payment.................................................................  5

                                SECTION 3 - COMPANY COVENANTS......................................  5

    3.1     Corporate Existence....................................................................  5
    3.2     Payment of Taxes and Claims............................................................  5
    3.3     Maintenance of Properties; Business Insurance..........................................  6
    3.4     Limitations on Senior Debt.............................................................  6
    3.5     Dividends..............................................................................  6
    3.6     Transactions with Affiliates...........................................................  6
    3.7     Representation on the Board of Directors...............................................  7

                      SECTION 4 - EVENTS OF DEFAULT & REMEDIES THEREFOR............................  7

    4.1     Events of Default......................................................................  7
    4.2     Notice to Placement Agent..............................................................  8
    4.3     Acceleration; Rescission and Annulment.................................................  8
    4.4     Collection of Indebtedness and Suits for Enforcement by Note Agent.....................  9
    4.5     Note Agent May File Proofs of Claim.................................................... 10
    4.6     Note Agent May Enforce Claims Without Possession of Note
            Certificates........................................................................... 11
    4.7     Application of Money Collected......................................................... 11
</TABLE>
                                       -i-
<PAGE>
                                                                     Exhibit 4.1

<TABLE>
<CAPTION>
<S>         <C>                                                                                     <C>
    4.8     Limitation on Suits.................................................................... 11
    4.9     Unconditional Right of Holders to Receive Principal, Premium and
            Interest............................................................................... 12
    4.10    Restoration of Rights and Remedies..................................................... 12
    4.11    Rights and Remedies Cumulative......................................................... 12
    4.12    Delay or Omission Not Waiver........................................................... 12
    4.13    Control by Holders..................................................................... 13
    4.14    Waiver of Past Defaults................................................................ 13
    4.15    Undertaking for Costs.................................................................. 13
    4.16    Waiver of Stay or Extension Laws....................................................... 13

                         SECTION 5 - AMENDMENTS, WAIVERS & CONSENTS................................ 14

    5.1     Consent Required....................................................................... 14
    5.2     Effect of Amendment or Waiver.......................................................... 14
    5.3     Solicitation of Holders................................................................ 14

                               SECTION 6 - CONVERSION OF NOTES..................................... 15

    6.1     Conversion Rights and Manner of Exercise............................................... 15
    6.2     Issuance of Common Stock Certificates.................................................. 15
    6.3     Cash Adjustments on Conversion......................................................... 15
    6.4     Antidilution Adjustments............................................................... 16
    6.5     Mergers, Consolidations, Sales......................................................... 16
    6.6     Dissolution or Liquidation............................................................. 17
    6.7     Notice of Extraordinary Dividends...................................................... 17
    6.8     Reservation of Common Stock............................................................ 17
    6.9     Fully Paid Stock; Taxes................................................................ 18

                         SECTION 7 - RESTRICTIONS ON TRANSFERABILITY............................... 18

    7.1     Restrictions on Transferability........................................................ 18
    7.2     Restrictive Legends.................................................................... 18
    7.3     Notice of Proposed Transfer; Registration Not Required................................. 19
    7.4     Transfer of Notes...................................................................... 19

                        SECTION 8 - REGISTRATION OF CONVERSION SHARES.............................. 20

    8.1     Shelf Registration......................................................................20
    8.2     Conditions Relating to Shelf Registration.............................................. 20
    8.3     Registration Procedures................................................................ 22
    8.4     Registration Expenses.................................................................. 25
</TABLE>
                                      -ii-
<PAGE>
                                                                     Exhibit 4.1
<TABLE>
<CAPTION>
<S>        <C>                                                                                     <C>
  8.5      Indemnification; Contribution.......................................................... 25
  8.6      Commission Filings..................................................................... 28
  8.7      Lock-up Agreement...................................................................... 28

                                  SECTION 9 - NOTE AGENT...........................................28

  9.1      Duties and Liabilities of Note Agent................................................... 28
  9.2      Reliance on Documents, Opinions, Etc................................................... 30
  9.3      No Responsibility for Recitals, etc.................................................... 31
  9.4      Moneys to be Held in Trust............................................................. 31
  9.5      Expenses of Note Agent................................................................. 31
  9.6      Resignation or Removal of Note Agent................................................... 31

                                SECTION 10 - MISCELLANEOUS........................................ 32

  10.1     Registered Notes....................................................................... 32
  10.2     Exchange of Notes...................................................................... 33
  10.3     Loss, Theft, etc. of Notes............................................................. 33
  10.4     Cancellation of Notes; Acquisition of Notes by Company................................. 34
  10.5     Transfer of Note....................................................................... 34
  10.6     Expenses; Stamp Tax Indemnity.......................................................... 34
  10.7     Acts of Holders; Evidence of Ownership of Notes........................................ 35
  10.8     Holders' List.......................................................................... 35
  10.9     Powers and Rights Not Waived, Remedies Cumulative...................................... 36
  10.10    Notices................................................................................ 36
  10.11    Successors and Assigns................................................................. 36
  10.12    Discharge and Termination.............................................................. 36
  10.13    Survival of Covenants and Representations.............................................. 36
  10.14    Severability........................................................................... 37
  10.15    Governing Law.......................................................................... 37
  10.16    Captions............................................................................... 37
  10.17    Benefits of Provisions of This Agreement............................................... 37
  10.18    Counterparts........................................................................... 37
</TABLE>
                                      -iii-
<PAGE>
                                                                     Exhibit 4.1

                                 NOTE AGREEMENT


                  THIS NOTE AGREEMENT (the  "Agreement") is made effective as of
the 3rd day of July, 1997, among SOY  ENVIRONMENTAL  PRODUCTS,  INC., a Delaware
corporation (the "Company"), and FOX & COMPANY INVESTMENTS, INC. (the "Placement
Agent").

                                    RECITALS:

         A.  The  Company  has  entered  into  an  agreement   (the   "Placement
Agreement")  with the Placement  Agent pursuant to which the Placement Agent has
agreed to assist  the  Company  in the  placement  of up to 15 Units,  each Unit
consisting of one $60,000  Senior Secured  Convertible  Note ("Note") and 60,000
Class A Warrants  ("Warrants"),  subject to the terms of the Placement Agreement
(the "Offering").

         B. The Company  desires to provide for the form and  provisions  of the
Notes,  the terms upon which the Notes  shall be issued and  exercised,  and the
respective  rights,  limitation  of rights and  immunities  of the Company,  the
Placement Agent, and the registered holders of the Notes.

         C. All acts and things  necessary to make the Notes,  when  executed on
behalf of the Company,  the valid, binding and legal obligations of the Company,
and to authorize the execution  and delivery of this  Agreement,  have been done
and performed.

                                   AGREEMENT:

         NOW, THEREFORE, it is hereby agreed as follows:

                                    SECTION 1
                         DEFINITIONS AND INTERPRETATION

         1.1 Definitions. In addition to the terms otherwise defined herein, the
following terms shall mean:

         Affiliate:  any Person (other than a  Subsidiary)  (i) that directly or
indirectly through one or more intermediaries  controls, or is controlled by, or
is under common control with, the Company, (ii) which beneficially owns or holds
10% or more of any class of the Voting Stock of the Company or (iii) 10% or more
of the Voting Stock (or in the case of a Person which is not a corporation, five
percent or more of the equity  interest) of which is beneficially  owned or held
by the  Company  or a  Subsidiary.  The term  "control"  means  the  possession,
directly or  indirectly,  of the power to direct or cause the  direction  of the
management  and policies of a Person,  whether  through the  ownership of Voting
Stock, by contract or otherwise.
<PAGE>
                                                                     Exhibit 4.1

         Business  Day:  any day other than (i) a Saturday or Sunday,  or (ii) a
day on which banking  institutions in Arizona are authorized or obligated by law
or executive order to be closed.

         Closing Date: any Business Day proceeds are  distributed to the Company
under terms of the Escrow Agreement pursuant to the Offering.

         Commission:  the  Securities  and  Exchange  Commission,  or any  other
federal  agency  at the  time  administering  the  Securities  Act or the  Trust
Indenture Act of 1939, as amended, as the case may be.

         Common  Stock:  any  class  of  capital  stock  of the  Company  now or
hereafter  authorized,  the right of which to share in  distributions  either of
earnings  or  assets  of the  Company  is  without  limit  as to any  amount  or
percentage;  provided, however, that the shares of Common Stock deliverable upon
conversion  of the Notes  shall  include  only the Common  Stock of the  Company
authorized  at the  date  hereof  and  any  class  of  Common  Stock  issued  in
substitution therefor.

         Company:  Soy Environmental Products, Inc., a Delaware corporation.

         Conversion Notice: the notice set forth on the reverse side of the Note
Certificate  given by Holders to convert the Notes to shares of Common  Stock as
provided in Section 6.1 hereof.

         Conversion  Price:  $1.00 or such other amount as adjusted  pursuant to
Section 6.4 hereof.

         Conversion  Shares:  the shares of Common  Stock of the Company  issued
upon the conversion of any of the Notes.

         Default: any event or condition the occurrence of which would, with the
lapse of time or the giving of notice,  or both,  constitute an Event of Default
as defined in Section 4.1.

         Escrow  Agreement:  the  Agreement  between the  Company  and  Biltmore
Investors  Bank,  N.A.,  as  escrow  agent,  providing  for the  collection  and
disbursement of funds under the Offering.

         Exchange Act: the Securities  Exchange Act of 1934, as amended,  or any
similar  federal  statute,  and the  rules  and  regulations  of the  Commission
thereunder, all as they may be in effect at the time.

         GAAP:  generally  accepted  accounting  principles  at the  time in the
United States.
                                        2
<PAGE>
                                                                     Exhibit 4.1

         Holder:  any Person that is, at the time of reference,  the  registered
Holder of any Note or any Conversion Shares.

         Interest  Payment  Date:  February  1, 1998 and the first of each month
thereafter during the term of the Notes; provided,  however, if such date is not
a Business  Day, the Interest  Payment Date shall be the  immediately  preceding
Business Day.

         Maturity Date:  January 31, 1998 unless extended as provided in Section
2.7 to July 31, 1998.

         Note: any Senior Secured  Convertible Note issued pursuant to the terms
of this Agreement.

         Note Agent:  any Person appointed by the Placement Agent to act as Note
Agent upon the occurrence of an event of Default as defined in Section 4.1.

         Note  Certificate:  any  certificate  in the form  attached  hereto  as
Exhibit A issued  pursuant to the terms of this Agreement  evidencing the rights
of a Holder with respect to a Note.

         Note Register:  the register of the Holders of Notes issued pursuant to
this Agreement.

         Offering:  the offering for private placement by the Placement Agent on
behalf of the Company of up to 15 Units,  each Unit  consisting  of one Note and
60,000 Warrants.

         Person:   an   individual,    partnership,    corporation,   trust   or
unincorporated organization, and a government or agency or political subdivision
thereof.

         Placement Agent: Fox & Company  Investments,  Inc., the placement agent
on behalf of the Company in connection with the Offering.

         Record  Date:  January 16,  1998 and the 16th of each month  thereafter
during the term of the Notes preceding each Interest Payment Date.

         Registration  Expenses:  All registration and filing fees, all fees and
expenses of compliance with  securities or blue sky laws  (including  reasonable
fees  and  disbursements  of one  firm  of  counsel  for  the  holders  and  any
underwriters  in  connection  with  blue sky  qualifications  of the  Conversion
Shares), printing expenses,  messenger and delivery expenses,  internal expenses
(including,  without  limitation,  all salaries and expenses of the officers and
employees of the Company performing legal or accounting duties),  and reasonable
fees and  disbursement of counsel for the Company and its independent  certified
public  accountants  (including the reasonable  expenses of any special audit or
comfort letters  required by or incident to such  performance),  securities acts
liability insurance (if the Company elects to obtain such insurance),
                                        3
<PAGE>
                                                                     Exhibit 4.1

the reasonable fees and expenses of any special experts  retained by the Company
in connection with such registration,  reasonable fees and expenses of any other
persons  retained by the Company and the fees and expenses  associated  with any
required filing with the National Association of Securities Dealers, Inc.

         Securities Act: the Securities Act of 1933, as amended,  or any similar
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.

         Senior Debt: all  indebtedness  of the Company that is secured by liens
or  encumbrances  on assets of the  Company,  which liens or  encumbrances  have
priority over the security interests that secure the repayment of the Notes.

         Subsidiary: any corporation of which more than fifty percent (by number
of votes) of the voting stock is owned,  directly or indirectly,  by the Company
at any time during the term of this Agreement.

         Warrants:  any Class A Purchase Warrants allowing the holder thereof to
purchase a share of Common Stock issued under the terms of the Offering.

         1.2 Accounting  Principles.  Where the character or amount of any asset
or  liability or item of income or expense is required to be  determined  or any
accounting  computation  is  required  to be  made  for  the  purposes  of  this
Agreement,  the same  shall  be done in  accordance  with  GAAP,  to the  extent
applicable,  except where such principles are inconsistent with the requirements
of this Agreement.

         1.3  Directly or  Indirectly.  Where any  provision  of this  Agreement
refers to action to be taken by any Person,  or which such Person is  prohibited
from taking,  such provision shall be applicable  whether the action in question
is taken  directly or  indirectly  by such Person or any  Subsidiary or agent of
such Person or otherwise  at the  request,  direction or for the benefit of such
Person.

                                    SECTION 2
                                    THE NOTES

         2.1 Issuance of Definitive Notes. On any Closing Date, the Company will
issue  Note  Certificates  to all  qualified  Persons  whose  subscriptions  are
accepted  by the  Company  in the  Offering.  Notes  shall be issued in  minimum
principal  amounts of $60,000 (per $50,000 Offering  subscription)  and integral
multiples of $6,000 (per $5,000 Offering  subscription)  in excess thereof.  The
Company shall have the option in its sole discretion to issue Notes in principal
amounts less than  $60,000.  The Notes shall be numbered,  lettered or otherwise
distinguished  in such manner or in accordance with such plan as the Company may
determine.
                                        4
<PAGE>
                                                                     Exhibit 4.1

The Notes  shall be dated as of the date of their  issue,  except  that any Note
issued upon the  transfer,  exchange or  substitution  of another  Note shall be
dated the date of its original authentication.

         2.2  Prepayment.  The Notes are subject to  prepayment at the option of
the  Company  at any time on or prior to  November  15,  1997.  If less than all
outstanding  Notes  are  prepaid  by the  Company,  the  selection  of Notes for
prepayment  may be made on a pro rata or random lot basis as  determined  by the
Company.

         2.3 No Sinking Fund.  The Company shall not be required to set aside or
earmark funds to make required payments with respect to the Notes.

         2.4 Persons  Entitled to Note  Interest  Payments.  The person in whose
name a Note is  registered  at the close of business on any Record Date shall be
entitled  to  receive  any  interest  payable  with  respect to such Note on the
Interest  Payment  Date next  following  such Record Date,  notwithstanding  the
cancellation of such Note upon any  registration of transfer or exchange thereof
subsequent  to such Record Date and prior to such  Interest  Payment  Date.  The
Holder of any Note issued upon the transfer, exchange or substitution of another
Note shall only be entitled to receive  interest  payable  with  respect to that
Note from and after the Interest  Payment Date next  following  the first Record
Date occurring after the issuance of such Note.

         2.5 Security.  The Notes shall be secured by a security interest in all
of the assets,  tangible and  intangible,  of the Company and its  Subsidiaries,
which assets  include  assets  currently  owned on or acquired after any Closing
Date.

         2.6 Payment of Principal and Interest. Interest shall be payable on the
Interest Payment Dates; and principal shall be payable on the Maturity Date. The
Company shall pay the interest on the unpaid  principal  balance of the Notes as
provided herein. The entire remaining principal amount of the Notes shall become
due and payable on the Maturity Date.

         2.7 Extension of Maturity  Date.  The Maturity Date of the Notes may be
extended  from  January 31, 1998 to July 31, 1998 by the Company upon payment to
the holders of an extension  fee equal to five percent of the face amount of the
Notes on or before January 15, 1998.

         2.8 Application of Payment.  All payments  received shall be applied to
the payment of the Notes in the following  order of priority:  (a) first, to the
payment of accrued  interest,  (b) second, to the payment of principal then due,
and (c) third, to the payment of premium, if any.
                                        5
<PAGE>
                                                                     Exhibit 4.1

                                    SECTION 3
                                COMPANY COVENANTS

         3.1 Corporate  Existence.  Except as otherwise  permitted  herein,  the
Company will, and will cause each  Subsidiary to, at all times preserve and keep
in full force and effect its corporate existence, rights and franchises.

         3.2 Payment of Taxes and Claims.  The Company will, and will cause each
Subsidiary to, pay (a) all taxes,  assessments  and other  governmental  charges
imposed upon it or any of its  properties  or assets or in respect of any of its
franchises,  business,  income or  profits,  (b) all trade  accounts  payable in
accordance  with  usual  and  customary  business  terms,  and  (c)  all  claims
(including, without limitation, claims for labor, services, inventory, materials
and  supplies)  for sums which have become due and payable and which by law have
or might become a lien or charge upon any of its properties or assets; provided,
that no such tax, assessment,  charge,  account payable or claim need be paid if
being contested in good faith by appropriate  proceedings promptly initiated and
diligently  conducted and if such reserve or other  appropriate  provisions,  if
any, as shall be required by GAAP shall have been made therefor.

         3.3 Maintenance of Properties;  Business  Insurance.  The Company will,
and will cause each  Subsidiary  to,  maintain or cause to be maintained in good
repair,  working order and condition all  properties  (whether owned in fee or a
leasehold  interest)  used or  useful in the  business  of the  Company  and its
Subsidiaries  and,  from  time to  time,  will  make  or  cause  to be made  all
appropriate  repairs,  renewals  and  replacements  thereof.  The  Company  will
maintain  or  cause to be  maintained,  with  financially  sound  and  reputable
insurers,  insurance with respect to its properties and business against loss or
damage of the kinds  customarily  insured against by corporations of established
reputation  engaged in the same or similar business and similarly  situated,  of
such  types  and in  such  amounts  as are  customarily  carried  under  similar
circumstances by such other corporations.

         3.4  Limitations  on Senior  Debt.  The Company  will not, and will not
permit any Subsidiary to, create,  assume or incur or in any manner be or become
liable in respect  of any Senior  Debt,  except  Senior  Debt that (a) arises by
operation  of law,  (b) arises  pursuant  to the  Uniform  Commercial  Code,  as
applicable,  in connection  with purchase money security  interests,  or (c) was
outstanding prior to the effective date of this Agreement.

         3.5 Dividends. The Company will not:

                  (a) Declare or pay any dividends,  either in cash or property,
         on  any  shares  of  its  Common  Stock  (except   dividends  or  other
         distributions payable solely in shares of Common Stock of the Company);
                                        6
<PAGE>
                                                                     Exhibit 4.1

                  (b) Purchase, redeem or retire any shares of its capital stock
         of any class or any warrants,  rights or options to purchase or acquire
         any shares of its capital stock (except in connection with a repurchase
         or redemption of shares,  rights or options held by any former employee
         of the Company in connection  with the termination or severance of such
         employee); or

                  (c) Make any other payment or  distribution  in respect of its
         Common Stock.

The foregoing notwithstanding, nothing in this Section 3.5 or other provision of
this  Agreement  shall  limit the right of the Company to issue  capital  stock,
subject to Section 6.4 hereof,  and to pay  dividends  as  specified on any such
capital stock other than Common Stock.

         3.6  Transactions  with  Affiliates.  After the effective  date of this
Agreement,  the Company will not, and will not permit any  Subsidiary  to, enter
into  or be a  party  to any  transaction  or  arrangement  with  any  Affiliate
(including,  without  limitation,  the  purchase  from,  sale to or  exchange of
property  with,  or the  rendering  of any  service by or for,  any  Affiliate),
except:

                  (a) in the ordinary  course of and pursuant to the  reasonable
         requirements  of the  Company's or any such  Subsidiary's  business and
         upon fair and reasonable  terms no less favorable to the Company or its
         Subsidiary than would obtain in a comparable  arm's-length  transaction
         with a Person other than an Affiliate; and

                  (b)  employment  agreements  with  executive  officers  of the
         Company or any Subsidiary.


         3.7 Representation on the Board of Directors.  Until the Notes are paid
in full or  otherwise  not  outstanding,  Placement  Agent  shall be entitled to
appoint two persons to the Board of Directors  of the  Company,  and the Company
shall cause such persons to be elected to the Board of Directors of the Company.
On or before the Closing  Date,  the Company shall cause its number of Directors
to be five and  shall  maintain  that  number  so long as this  Agreement  is in
effect.  The foregoing  notwithstanding,  the Company may increase the number of
members of the Board of  Directors  by two upon the  issuance  of an  additional
series of capital stock of the Company other than Common Stock  provided  solely
the holders of such series of capital stock are entitled to elect the members of
the Board of Directors, as a class, so added.
                                        7
<PAGE>
                                                                     Exhibit 4.1

                                    SECTION 4
                      EVENTS OF DEFAULT & REMEDIES THEREFOR

         4.1  Events  of  Default.  Any  one  or  more  of the  following  shall
constitute an "Event of Default" as the term is used herein:

                  (a)  Default in the  payment of the  principal  of any Note or
         premium thereon,  if any, at the expressed or any accelerated  maturity
         date;

                  (b)  Default in the  payment of  interest on any Note when due
         and such default shall continue for more than 15 days;

                  (c)  Default in the  observance  or  performance  of any other
         covenant  or  provision  of  this  Agreement  or the  Note  that is not
         remedied  within 30 days after  written  notice to the Company from the
         Placement  Agent or the holders of at least 25% in aggregate  principal
         amount of the Notes then outstanding;

                  (d) A judgement  or order is obtained for the payment of money
         in an  aggregate  amount  in excess of  $1,000,000  (net of  applicable
         insurance  coverage  that is  acknowledged  in writing by the  insurer)
         having been rendered against the Company or any of its Subsidiaries and
         such judgements or orders shall continue unsatisfied and unstayed for a
         period of 60 days;

                  (e)  The  Company  or  any  Subsidiary  becomes  insolvent  or
         bankrupt, is generally not paying its debts as they become due or makes
         an  assignment  for the  benefit of  creditors,  or the  Company or any
         Subsidiary  causes or suffers  an order for  relief to be entered  with
         respect to it under applicable federal bankruptcy law or applies for or
         consents to the appointment of a custodian, trustee or receiver for the
         Company or any  Subsidiary or for the major part of the property of the
         Company or any Subsidiary;

                  (f) A custodian,  liquidator, trustee or receiver is appointed
         for the Company or any Subsidiary or for the major part of the property
         of the Company or any Subsidiary  and is not discharged  within 30 days
         after such appointment;

                  (g)  Bankruptcy,  reorganization,  arrangement  or  insolvency
         proceedings,  or other  proceedings  for relief under any bankruptcy or
         similar law or laws for the relief of  debtors,  are  instituted  by or
         against the Company or any  Subsidiary  and, if instituted  against the
         Company or any Subsidiary, are consented to or are not dismissed within
         60 days after such institution; or

                  (h) Any representation or warranty made by the Company herein,
         or  made  by  the  Company  in any  written  statement  or  certificate
         furnished by the Company in
                                        8
<PAGE>
                                                                     Exhibit 4.1

         connection  with the  consummation  of the issuance and delivery of the
         Notes on the Offering or furnished by the Company pursuant  hereto,  is
         untrue in any material respect as of the date of the issuance or making
         thereof.

         4.2 Notice to Placement Agent.  When any Event of Default  described in
Section 4.1 has  occurred,  the Company shall give notice  thereof  within three
business days thereafter of such event to the Placement  Agent.  Upon receipt of
such  notice of the  occurrence  of an Event of Default,  Placement  Agent shall
appoint a Note Agent which shall act on behalf of the Holders as provided herein
and shall, within 20 days after the receipt of such notice, mail to all Holders,
as the names and addresses of such Holders appear upon the registration books of
the Company,  notice of all Defaults known to the Placement  Agent,  unless such
Defaults  shall have been cured  before  the  giving of such  notice;  provided,
however,  that, except in the case of Default in the payment of the principal of
or interest on any of the Notes,  the  Placement  Agent  shall be  protected  in
withholding  such notice if Placement  Agent  determines  in good faith that the
withholding of such notice is in the interests of the Holders.

         4.3 Acceleration; Rescission and Annulment.

                  (a) If an Event of Default occurs and is continuing,  then and
in every such case the Note Agent or the Holders of Notes  representing not less
than 25% of the aggregate  principal amount of the outstanding Notes may declare
the unpaid  principal,  premium,  if any, and accrued and unpaid interest of all
the  Notes to be due and  payable  immediately,  by a notice in  writing  to the
Company  (and to the  Note  Agent  if  given  by  Holders),  and  upon  any such
declaration  such  principal,  premium,  if any, and accrued and unpaid interest
shall become immediately due and payable,  notwithstanding anything contained in
this Agreement or the Notes to the contrary. If an Event of Default specified in
Section 4.1(e),  (f) or (g) above occurs,  all unpaid  principal of, and accrued
interest on, the Notes then outstanding will become due and payable, without any
declaration or other act on the part of the Note Agent or any Holder.

                  (b) At any time after such a declaration of  acceleration  has
been made and before a judgment  or decree for payment of the money due has been
obtained  by the Note  Agent  as  hereinafter  provided,  the  Holders  of Notes
representing a majority of the aggregate in principal  amount of the outstanding
Notes,  by written  notice to the Company  and the Note  Agent,  may rescind and
annul such declaration and its consequences if

                           (i) the Company has paid or  deposited  with the Note
Agent a sum sufficient to pay;

                                    (A) all overdue  installments of interest on
         all Notes, 
                                       9
<PAGE>
                                                                     Exhibit 4.1

                                    (B) the principal of (and  premium,  if any,
         on) any Notes which have become due otherwise than by such  declaration
         of  acceleration  and interest  thereon at the rate borne by the Notes,
         and

                                    (C) all sums  paid or  advanced  by the Note
         Agent   hereunder   and   the   reasonable   compensation,    expenses,
         disbursements  and advances of the Note Agent,  its agents and counsel;
         and

                           (ii) all Events of Default, other than the nonpayment
of the  principal  of Notes which have  become due solely by such  acceleration,
have been cured or waived as provided herein.

No such  rescission  shall  affect  any  subsequent  Default or impair any right
consequent thereon.

         4.4 Collection of Indebtedness and Suits for Enforcement by Note Agent.

                  (a) The Company covenants that if:

                           (i) Default is made in the payment of any installment
of  interest  on any Notes when such  interest  becomes due and payable and such
Default continues for a period of 15 days, or

                           (ii) Default is made on the payment of the  principal
of (or premium, if any, on) any Notes at the Maturity Date thereof,

the Company will,  upon demand of the Note Agent,  pay to it, for the benefit of
the Holders of such Notes,  the whole  amount then due and payable on such Notes
for principal (and premium, if any) and interest, with interest upon the overdue
principal (and premium, if any) and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Note Agent,
its agents and counsel.

                  (b) If the Company  fails to pay such amounts  forthwith  upon
such demand, the Note Agent, in its own name and as trustee of an express trust,
may institute a judicial  proceeding  for the  collection of the sums so due and
unpaid,  and may prosecute such proceeding to judgment or final decree,  and may
enforce the same  against the  Company or any other  obligor  upon the Notes and
collect the moneys  adjudged or decreed to be payable in the manner  provided by
law out of the  property  of the  Company or any other  obligor  upon the Notes,
wherever situated.

                  (c) If an Event of Default occurs and is continuing,  the Note
Agent may in its  discretion  proceed to protect  and enforce its rights and the
rights of the Holders by such
                                       10
<PAGE>
                                                                     Exhibit 4.1

appropriate  judicial proceedings as the Note Agent shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement  in this  Agreement or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.

         4.5 Note Agent May File Proofs of Claim.

                  (a) In case of the pendency of any  receivership,  insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial  proceeding relative to the Company or any other obligor upon the
Note or the property of the Company or of such other obligor or their creditors,
the Note Agent (irrespective of whether the principal of the Notes shall then be
due and  payable  as  therein  expressed  or by  declaration  or  otherwise  and
irrespective of whether the Note Agent shall have made any demand on the Company
for the  payment  of  overdue  principal  or  interest)  shall be  entitled  and
empowered, by intervention in such proceeding or otherwise;

                           (i) to  file  and  prove a claim  for the  amount  of
         principal  (and  premium,  if any) and  interest  owing  and  unpaid in
         respect of the Notes and to file such other  papers or documents as may
         be necessary or advisable in order to have the claims of the Note Agent
         (including  any  claim  for  the  reasonable  compensation,   expenses,
         disbursements  and advances of the Note Agent,  its agents and counsel)
         and of the Holders allowed in such judicial proceeding; and

                           (ii) to  collect  and  receive  any  moneys  or other
         property  payable or  deliverable  on any such claims and to distribute
         the same;

and any receiver, assignee, trustee, liquidator,  sequestrator (or other similar
official) in any such judicial proceeding is hereby authorized by each Holder to
make such payments to the Note Agent, and in the event that the Note Agent shall
consent to the making of such  payments  directly to the Holders,  to pay to the
Note  Agent any  amount  due to it for the  reasonable  compensation,  expenses,
disbursements  and advances of the Note Agent,  its agents and counsel,  and any
other amounts due the Note Agent under this Agreement.

                  (b) The Note Agent  shall not be  required to join the Holders
as necessary parties to any such judicial proceeding,  provided,  however,  that
nothing  herein  contained  shall be  deemed  to  authorize  the  Note  Agent to
authorize and consent to or accept, or adopt on behalf of any Holder any plan of
reorganization,  arrangement,  adjustment or composition  affecting the Notes or
the  rights of any Holder  thereof,  or to  authorize  the Note Agent to vote in
respect of the claim of any Holder in any such proceeding.

         4.6  Note  Agent  May  Enforce  Claims   Without   Possession  of  Note
Certificates.  All rights of action and claims under this Agreement or the Notes
may be prosecuted and enforced
                                       11
<PAGE>
                                                                     Exhibit 4.1

by the Note Agent without the possession of any of the Note  Certificates or the
production thereof in any proceeding  relating thereto,  and any such proceeding
instituted  by the Note Agent  shall be brought in its own name as trustee of an
express  trust,  and any recovery of judgment  shall,  after  provision  for the
payment of the reasonable compensation,  expenses, disbursements and advances of
the Note  Agent,  its  agents and  counsel,  be for the  ratable  benefit of the
Holders of the Notes in respect of which such judgment has been recovered.

         4.7  Application of Money  Collected.  Any money  collected by the Note
Agent pursuant to this Section 4 shall be applied in the following order, at the
date or dates filed by the Note Agent and, in case of the  distribution  of such
money  on  account  of  principal  (or  premium,  if  any)  or  interest,   upon
presentation of the Note Certificates and the notation thereon of the payment if
partially paid and upon surrender thereof if fully paid;

                  FIRST:  To the payment of all amounts due the Note Agent under
this Agreement;

                  SECOND: To the payment of the amounts then due and unpaid upon
the Notes for principal (and premium, if any) and interest,  in respect of which
or for the  benefit  of which such money has been  collected,  ratably,  without
preference or priority of any kind,  according to the amounts due and payable on
such Notes, for principal (and premium, if any) and interest; and

                  THIRD: To the Company.

         4.8  Limitation on Suits.  Except as provided in Section 4.9, no Holder
of any Note  shall  have any right to  institute  any  proceeding,  judicial  or
otherwise,  with respect to this Agreement, or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless:

                  (a) such Holder has  previously  given  written  notice to the
Note Agent of a continuing Event of Default;

                  (b)  the  Holders  of not  less  than  25%  of  the  aggregate
principal  amount of the outstanding Note shall have made written request to the
Note Agent to institute  proceedings  in respect of such Event of Default in its
own name as Note Agent hereunder;

                  (c) such  Holder or  Holders  have  offered  to the Note Agent
reasonable indemnity against the costs,  expenses and liabilities to be incurred
in compliance with such request;

                  (d) the Note  Agent  for 60 days  after  its  receipt  of such
notice,  request  and  offer of  indemnity  has  failed  to  institute  any such
proceeding; and
                                       12
<PAGE>
                                                                     Exhibit 4.1

                  (e) no direction  inconsistent  with such written  request has
been given to the Note  Agent  during  such  60-day  period by the  Holders of a
majority of the aggregate principal amount of the outstanding Notes;

it being understood and intended that no one or more Holders of Notes shall have
any right in any manner  whatever by virtue of, or by availing of, any provision
of this  Agreement to affect,  disturb or prejudice the rights of any Holders of
Notes,  or to obtain or to seek to obtain  priority or preference over any other
Holders  or to enforce  any right  under  this  Agreement,  except in the manner
herein  provided  and for the equal and  ratable  benefit of all the  Holders of
Notes.

         4.9 Unconditional  Right of Holders to Receive  Principal,  Premium and
Interest.  Notwithstanding any other provision in this Agreement,  the Holder of
any Note shall have the right which is  absolute  and  unconditional  to receive
payment of the principal of (and  premium,  if any) and interest on such Note on
the Maturity Date and to institute suit for the enforcement of any such payment,
and such right shall not be impaired without the consent of such Holder.

         4.10  Restoration  of Rights  and  Remedies.  If the Note  Agent or any
Holder has  instituted  any proceeding to enforce any right or remedy under this
Agreement and such proceeding has been discontinued or abandoned for any reason,
or has been determined  adversely to the Note Agent or to such Holder,  then and
in every such case the Company, the Note Agent and the Holders shall, subject to
any determination in such proceeding,  be restored severally and respectively to
their former positions hereunder,  and thereafter all rights and remedies of the
Note Agent and the Holders shall continue as though no such  proceeding had been
instituted.

         4.11  Rights  and  Remedies  Cumulative.  No  right  or  remedy  herein
conferred upon or reserved to the Note Agent or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent  permitted by law, be cumulative and in addition to every other right and
remedy  given  hereunder  or now or  hereafter  existing  at law or in equity or
otherwise.  The  assertion  or  employment  of any right or remedy  hereunder or
otherwise shall not prevent the concurrent  assertion or employment of any other
appropriate right or remedy.

         4.12 Delay or  Omission  Not  Waiver.  No delay or omission of the Note
Agent or of any Holder to exercise any right or remedy  occurring upon any Event
of Default  shall impair any such right or remedy or  constitute a waiver of any
such Event of Default or an acquiescence  therein.  Every right and remedy given
by this  Agreement  or by law to the Note Agent or to Holders  may be  exercised
from time to time and as often as may be deemed  expedient  by the Note Agent or
by the Holders, as the case may be.

         4.13  Control by Holders.  The  Holders of a majority of the  aggregate
principal  amount of the  outstanding  Notes  shall have the right to direct the
time, method and place of
                                       13
<PAGE>
                                                                     Exhibit 4.1

conducting  any  proceeding  for any  remedy  available  to the  Note  Agent  or
exercising any trust or power conferred on the Note Agent, provided that:

                  (a) such  direction  shall not be in conflict with any rule of
law or with this Agreement; and

                  (b) the Note Agent may take any other action  deemed proper by
the Note Agent which is not inconsistent with such direction.

         4.14  Waiver  of  Past  Defaults.  The  Holders  of a  majority  of the
aggregate principal amount of the outstanding Notes may on behalf of the Holders
of all the Notes waive any past Default hereunder and its consequences, except a
default:

                  (a) in the payment of the principal of (or premium, if any) or
interest on any Note, or

                  (b) in respect of a covenant or  provision  hereof which under
this Agreement  cannot be modified or amended  without the consent of the Holder
of each outstanding Note affected.

Upon any such  waiver,  such  Default  shall  cease to  exist,  and any Event of
Default arising  therefrom shall be deemed to have been cured, for every purpose
of this  Agreement;  but no such waiver shall extend to any  subsequent or other
Default or impair any right consequent thereon.

         4.15  Undertaking for Costs.  All parties to this Agreement  agree, and
each  Holder  of any Note by his  acceptance  thereof  shall be  deemed  to have
agreed,  that  any  court  may in its  discretion  require,  in any suit for the
enforcement of any right or remedy under this Agreement,  or in any suit against
the Note Agent for any action  taken or omitted by it as Note Agent,  the filing
by any party  litigant in such suit of an  undertaking  to pay the costs of such
suit,  and that  such  court  may in its  discretion  assess  reasonable  costs,
including  reasonable  attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant.

         4.16 Waiver of Stay or Extension  Laws.  The Company  covenants (to the
extent that it may lawfully do so) that it will not at any time insist upon,  or
plead,  or in any manner  whatsoever  claim or take the benefit or advantage of,
any stay or extension  law  wherever  enacted,  now or at any time  hereafter in
force, which may affect the covenants or the performance of this Agreement;  and
the Company (to the extent that it may lawfully do so) hereby  expressly  waives
all benefit or advantage of any such law, and covenants that it or they will not
hinder,  delay or impede the  execution of any power herein  granted to the Note
Agent, but will suffer and permit the execution of every such power as though no
such law had been enacted.
                                       14
<PAGE>
                                                                     Exhibit 4.1

                                    SECTION 5
                         AMENDMENTS, WAIVERS & CONSENTS

         5.1 Consent Required.

                  (a) Except as  otherwise  provided in this  Section  5.1,  any
term,  covenant,  agreement or condition of this Agreement may, with the consent
of the  Company,  be  amended  or  compliance  therewith  may be waived  (either
generally   or  in  a   particular   instance   and  either   retroactively   or
prospectively), if the Company shall have obtained the consent in writing of the
Placement  Agent,  which  rights to amend  include,  but are not limited to, the
rights to: (i) cure any ambiguity,  omission,  defect or  inconsistency  of this
Agreement,  (ii) provide for the  assumption of the  obligations  of the Company
under this Agreement upon the merger, consolidation or sale or other disposition
of all or  substantially  all of the assets of the  Company,  (iii)  provide for
uncertificated  Notes in addition to or in place of certificated  Notes, or (iv)
make any change that would provide  additional rights or benefits to the holders
of Notes or that does not adversely  affect the rights of any holder of Notes in
any material respect.

                  (b)  Notwithstanding  anything  herein  to the  contrary,  the
written  consent of all of the  Holders of Notes shall be required to (i) extend
the time of payment  of the  principal  of or the  interest,  including  default
interest, or premium, if any, on any Note or reduce the principal amount thereof
or change the rate of interest  thereon,  (ii) change any of the  provisions  of
Section 6 or Section 8 hereof,  (iii) change the percentage of Holders  required
to consent to any such waiver,  amendment,  alteration or modification of any of
the  provisions of Section 3 or Section 4 hereof,  (iv) make any Note payable in
money other than that stated herein,  (v) impair the right to institute suit for
the enforcement of any payment of principal of, or premium,  if any, or interest
on, any Note,  (vi) make any change in the  percentage  of  principal  amount of
Notes necessary to waive  compliance  with any provision of this  Agreement,  or
(vii) waive a continuing Default or Event of Default in the payment of principal
of, premium, if any, or interest on the Notes.

         5.2 Effect of Amendment or Waiver.  Any such  amendment or waiver shall
apply  equally to all of the Holders and shall be binding  upon them,  upon each
future  Holder  and upon the  Company,  whether  or not any Note shall have been
marked to indicate such  amendment or waiver.  No such amendment or waiver shall
extend to or affect any obligation not expressly amended or waived or impair any
right consequent thereon.

         5.3 Solicitation of Holders.  The Company will not solicit,  request or
negotiate for or with respect to any proposed  waiver or amendment of any of the
provisions of this  Agreement or the Notes unless each Holder  (irrespective  of
the amount of Notes then owned by it) shall be concurrently  informed thereof by
the Company and shall be afforded the  opportunity of  considering  the same and
shall be supplied by the Company  with  sufficient  information  to enable it to
make an informed  decision  with respect  thereto.  Executed or true and correct
copies of any
                                       15
<PAGE>
                                                                     Exhibit 4.1

waiver or consent effected pursuant to the provisions of this Section 5 shall be
delivered by the Company to each Holder  forthwith  following  the date on which
the same shall have been  executed and delivered by the Holder or Holders of the
requisite  percentage of outstanding  Notes.  The Company will not,  directly or
indirectly,  pay or cause to be paid any fee (whether  denominated  as servicing
fee or otherwise) or other  remuneration,  including  supplemental or additional
interest,  expenses or other amount, to any Holder as consideration for or as an
inducement to the  consideration or review of or entering into by such Holder of
any waiver or amendment of any of the terms and provisions of this Agreement (or
any  proposed   waiver  or  amendment   hereof)  unless  such   remuneration  is
concurrently paid, on the same terms, ratably to all Holders.

                                    SECTION 6
                               CONVERSION OF NOTES

         6.1 Conversion Rights and Manner of Exercise.  Upon compliance with the
provisions hereof, any Holder shall have the right, at any time and from time to
time, to convert not less than $5,000  portions of the principal  amount of such
Note into one share of Common  Stock of the Company  for each $1.00  (subject to
Section 6.4) of unpaid principal amount of the Note or, in case an adjustment of
such price has taken place pursuant to the following  provisions hereof, then at
the price as last  adjusted  and in  effect  at the date  such  Note or  portion
thereof is  surrendered  for  conversion.  The Company  shall have the option to
allow Notes to be converted into Common Stock in minimum denominations less than
$5,000.  To  exercise  such  conversion  privilege,  the  Holder  thereof  shall
surrender  such Note to the Company at its  principal  office  accompanied  by a
completed Conversion Notice designating the unpaid principal amount of such Note
to be  converted  and  stating  the name and address of the Person in whose name
certificates for shares of Common Stock are to be registered.

         6.2 Issuance of Common Stock  Certificates.  As promptly as practicable
(but in any event  within 10 business  days)  after the receipt of a  Conversion
Notice and  surrender of the Note as provided in Section 6.1, the Company  shall
issue and  deliver  to such  Holder,  issued in the name of such  Holder or such
other Person or Persons as such Holder may reasonably  request, a certificate or
certificates  for the number of full shares of Common  Stock  issuable  upon the
conversion of such Note (or specified portion thereof). Such conversion shall be
deemed to have been effected and the Conversion  Price shall be determined as of
the close of business  on the date on which such  Conversion  Notice  shall have
been  received  by the  Company  and at such time the  rights of the  Holder (or
specified portion thereof) as such Holder shall cease, and the Person or Persons
in whose  name or names any  certificate  or  certificates  for shares of Common
Stock shall be issuable upon such conversion  shall be deemed to have become the
holder or holders of record of the shares of Common Stock represented thereby.

         6.3 Cash  Adjustments on Conversion.  No payment or adjustment shall be
made upon any conversion on account of any cash  dividends  declared for payment
as of a record date
                                       16
<PAGE>
                                                                     Exhibit 4.1

prior to the date of  conversion  on the  shares of  Common  Stock  issued  upon
conversion  of a Note.  In the case of any Note that is  converted in part only,
the  Company  shall,  upon such  conversion,  execute  and deliver to the Holder
thereof,  at the expense of the Company, a new Note in principal amount equal to
the  unconverted  portion of the Note  surrendered  and  otherwise of like tenor
therewith.  No fractional  share of Common Stock shall be issued upon conversion
of any Note,  but if the  conversion  results in a fraction,  an amount equal to
such fraction  multiplied by the  applicable  Conversion  Price shall be paid in
cash to the Holder of the Note being converted.

         6.4 Antidilution Adjustments.

                  (a) In the event the  Company at any time or from time to time
after the issuance of any Notes shall declare or pay any dividend on its capital
stock payable in Common Stock,  or effect a subdivision  or  combination  of the
outstanding  shares of Common Stock (by  reclassification  or otherwise  than by
payment  of a  dividend  in  Common  Stock),  then  and in any such  event,  the
Conversion  Price shall be adjusted by multiplying the Conversion Price prior to
the adjustment by the number of shares of Common Stock  outstanding  immediately
prior to the effective  time of such event and dividing the result by the number
of shares of Common Stock  outstanding  immediately  after the effective time of
such event, effective in the case of such dividend,  immediately after the close
of business on the record date for the determination of holders of capital stock
entitled  to  receive  such  dividend,  or  in  the  case  of a  subdivision  or
combination,  at the close of business  immediately prior to the date upon which
such corporate action becomes effective.

                  (b) In the event the  Company at any time or from time to time
makes, or fixes a record date for the  determination  of holders of Common Stock
entitled to receive a dividend or other distribution payable in capital stock of
the  Company  other  than  shares of Common  Stock,  then and in each such event
provision shall be made so that the Holders receive upon conversion  thereof, in
addition  to the  number of shares of Common  Stock  receivable  thereupon,  the
amount of  securities  which such Holders would have received had the Notes been
converted prior to such effective record date.

                  (c) Whenever the Conversion  Price shall be adjusted  pursuant
to this Section 6.4, the Company shall promptly deliver a certificate  signed by
the President or a Vice President and by the Treasurer or an Assistant Treasurer
or the Secretary or an Assistant  Secretary of the Company,  setting  forth,  in
reasonable  detail,  the  event  requiring  the  adjustment,  the  amount of the
adjustment,  the method by which such  adjustment  was  calculated  (including a
description of the basis on which the Board of Directors of the Company made any
determination hereunder), by first class mail postage prepaid to each Holder.

         6.5 Mergers, Consolidations, Sales. In the case of any consolidation or
merger of the Company with another entity,  or the sale of all or  substantially
all of its assets to another
                                       17
<PAGE>
                                                                     Exhibit 4.1

entity, or any reorganization or  reclassification  of the Common Stock or other
equity securities of the Company (except a subdivision or combination  provision
for which is made in  Section  6.4(a)  hereof),  then,  as a  condition  of such
consolidation,  merger,  sale,  reorganization or  reclassification,  lawful and
adequate  provision shall be made whereby the Holders shall  thereafter have the
right to  receive  upon the basis and upon the  terms and  conditions  specified
herein  and in  lieu of the  shares  of  Common  Stock  immediately  theretofore
receivable  upon  conversion of their Notes,  such shares of stock,  securities,
assets  or  cash  as  may  (by  virtue  of  such  consolidation,  merger,  sale,
reorganization or  reclassification)  be issued or payable with respect to or in
exchange for a number of outstanding  shares of Common Stock equal to the number
of shares of Common Stock  immediately  theretofore so receivable  hereunder had
such consolidation,  merger, sale,  reorganization or reclassification not taken
place, and in any such case appropriate provisions shall be made with respect to
the rights and  interests of the Holders to the end that the  provisions of this
Section 6 (including,  without limitation,  provisions for adjustment of the per
share  Conversion  Price) shall thereafter be applicable as nearly as may be, in
relation  to  any  shares  of  stock,  securities,  assets  or  cash  thereafter
deliverable upon conversion of such Notes. The Company shall not effect any such
consolidation,  merger  or  sale,  unless  prior to or  simultaneously  with the
consummation thereof, the successor entity (if other than the Company) resulting
from such  consolidation  or merger or the entity  purchasing  such assets shall
assume by written  instrument  executed  and mailed or delivered to each Holder,
the  obligation  to deliver to such  Holder  such  shares of stock,  securities,
assets or cash as, in accordance with the foregoing provisions,  such Holder may
be entitled to receive.

         6.6  Dissolution  or   Liquidation.   In  the  event  of  any  proposed
distribution of the assets of the Company in dissolution or liquidation  (except
under  circumstances  when Section 6.4 shall be  applicable),  the Company shall
mail  notice  thereof  to  the  Holders  and  shall  make  no   distribution  to
shareholders  until  the  expiration  of 30 days from the date of  mailing  such
notice and, in any such case,  the Holders may  exercise the  conversion  rights
with  respect to their Notes within 30 days from the date of mailing such notice
and all rights herein  granted not so exercised  within such 30 day period shall
thereafter become null and void.

         6.7 Notice of Extraordinary Dividends. If the Board of Directors of the
Company  shall  declare any dividend or other  distribution  on its Common Stock
except out of retained  earnings or by way of a stock dividend payable in shares
of its Common Stock on its Common Stock,  the Company shall mail notice  thereof
to the  registered  Holders not less than 15 days prior to the record date fixed
for determining  shareholders  entitled to participate in such dividend or other
distribution  and the Holders  shall not  participate  in such dividend or other
distribution  or be  entitled  to any rights on  account or as a result  thereof
(except adjustments as provided in Section 6.4(b)) unless and to the extent that
such  conversion  rights are exercised prior to such record date. The provisions
of this Section 6.7 shall not apply to  distributions  covered by Section 6.4(a)
or made in connection with transactions covered by Section 6.5 hereof.
                                       18
<PAGE>
                                                                     Exhibit 4.1

         6.8 Reservation of Common Stock.  The Company will at all times reserve
and keep available such number of authorized shares of its Common Stock,  solely
for the purpose of issue upon the conversion of Notes as herein provided for, as
shall then be issuable upon the conversion of all outstanding Notes.

         6.9 Fully Paid Stock;  Taxes. The Company covenants and agrees that the
shares of stock  represented by each and every  certificate for its Common Stock
to be delivered on the exercise of the  conversion  rights  herein  provided for
shall,  at the time of such delivery,  be validly issued and  outstanding and be
fully paid and  nonassessable.  The Company further covenants and agrees that it
will pay when due and payable  any and all  federal and state taxes  (other than
income taxes) that may be payable in respect of the Notes or any Common Stock or
certificates therefor upon the exercise of the conversion rights herein provided
for  pursuant to the  provisions  hereof.  The Company  shall not,  however,  be
required to pay any tax that may be payable in respect of any transfer  involved
in the transfer and delivery of stock  certificates  in the name other than that
of the  Holder  of the Note  converted,  and any such tax  shall be paid by such
Holder at the time of presentation.

                                    SECTION 7
                         RESTRICTIONS ON TRANSFERABILITY

         7.1  Restrictions  on  Transferability.  The Notes  and the  Conversion
Shares  shall  not  be  transferable  except  upon  the  conditions  hereinafter
specified,   which  conditions  are  intended  to  ensure  compliance  with  the
provisions of the Securities Act and any applicable  state  securities  laws, in
respect of the transfer of any Notes or any such Conversion Shares.

         7.2 Restrictive Legends.

                  (a) Each Note  initially  issued under this Agreement and each
Note  issued  in  exchange  therefor  shall  bear on the face  thereof  a legend
substantially as follows:

         THIS NOTE AND THE  SHARES  OF COMMON  STOCK  ISSUABLE  UPON  CONVERSION
         HEREOF HAVE NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933,
         AS  AMENDED,  AND MAY BE  OFFERED  OR SOLD  ONLY  IF  REGISTERED  UNDER
         APPLICABLE  SECURITIES LAWS OR IF AN EXEMPTION  THEREFROM IS AVAILABLE.
         THIS NOTE AND THE  SHARES  OF COMMON  STOCK  ISSUABLE  UPON  CONVERSION
         HEREOF ARE TRANSFERABLE ONLY UPON THE CONDITIONS  SPECIFIED IN THE NOTE
         AGREEMENT  REFERRED  TO HEREIN.  A COPY OF THE NOTE  AGREEMENT  WILL BE
         PROVIDED TO THE REGISTERED HOLDER THEREOF UPON REQUEST TO THE COMPANY.
                                       19
<PAGE>
                                                                     Exhibit 4.1

                  (b) Each  certificate  for  shares of Common  Stock  initially
issued upon the conversion of any Note and each certificate for shares of Common
Stock  issued to a  subsequent  transferee  of such  certificate  shall,  unless
otherwise permitted by the provisions of this Section 7 bear on the face thereof
a legend substantially as follows:

         THE SHARES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN  REGISTERED
         PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED,  AND MAY BE OFFERED
         OR SOLD ONLY IF REGISTERED UNDER APPLICABLE  SECURITIES LAW OR PURSUANT
         TO AN OPINION OF COUNSEL  SATISFACTORY TO THE COMPANY STATING THAT SUCH
         REGISTRATION IS NOT REQUIRED. THE TRANSFER OF SUCH SHARES IS SUBJECT TO
         CERTAIN  CONDITIONS,  THE  PROVISIONS  OF WHICH WILL BE PROVIDED TO THE
         REGISTERED  HOLDER HEREOF UPON REQUEST BY THE COMPANY,  AND NO TRANSFER
         OF SUCH SHARES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS  SHALL
         HAVE BEEN FULFILLED.

In the event that a registration  statement covering any Conversion Shares shall
become  effective  under  the  Securities  Act and under  any  applicable  state
securities laws or in the event that the Company shall receive an opinion of its
counsel  that,  in the  opinion of such  counsel,  such  legend is not, or is no
longer,  necessary or required with respect to such shares  (including,  without
limitation, because of the availability of the exemption afforded by Rule 144 of
the general rules and regulations of the Commission), the Company shall or shall
instruct  its transfer  agents and  registrars  to,  remove such legend from the
certificates evidencing such Conversion Shares or issue new certificates without
such  legend in lieu  thereof.  Upon the  written  request  of any Holder or the
holder of any Conversion  Shares,  the Company covenants and agrees forthwith to
request its counsel to render an opinion with respect to the matters  covered by
this  paragraph and to bear all expenses in connection  with such opinion of its
counsel.

         7.3 Notice of Proposed Transfer;  Registration Not Required. The Holder
of each Note or any Conversion  Shares,  by acceptance  thereof,  agrees to give
prior written notice to the Company of such Holder's  intention to transfer such
Note or such Conversion Shares (or any portion thereof),  describing briefly the
manner and circumstances of the proposed  transfer,  together with an opinion of
counsel  to the  effect  that the  proposed  transfer  may be  effected  without
registration or qualification under any federal or state law. Unless the Company
shall have received an opinion from counsel to the Company  (which opinion shall
be obtained  by the  Company  not more than ten days after  notice of a proposed
transfer) that the proposed transfer may not be effected without registration or
qualification  under  federal or state law,  such  Holder  shall be  entitled to
transfer such Note or such Conversion  Shares,  all in accordance with the terms
of the notice delivered by such holder to the Company.  All fees and expenses of
counsel for the Company in connection with the rendition of the opinion provided
for in this Section 7.3 shall be paid by the Company.
                                       20
<PAGE>
                                                                     Exhibit 4.1

         7.4 Transfer of Notes. If in the opinion of either counsel  referred to
in Section 7.3 a proposed  transfer of a Note or Conversion  Shares requested by
the Holder thereof may not be effected  without  registration  or  qualification
under  applicable  federal or state law, the Company shall promptly give written
notice to the Holder who proposes to transfer the Note or such Conversion Shares
(or any portion  thereof)  that the Holder  shall not  consummate  the  proposed
transfer and the reasons therefor.  No Note or Conversion Shares (or any portion
thereof) for which a transfer has been  proposed  pursuant to Section 7.3 may be
transferred in the manner proposed if registration  thereof under the Securities
Act would be required in the opinion of either counsel mentioned above.

                                    SECTION 8
                        REGISTRATION OF CONVERSION SHARES

         8.1 Shelf  Registration.  The  Company  shall use its  reasonable  best
efforts to cause to be filed  with the  Commission  no later  than three  months
after the final  closing of the  Offering a shelf  registration  statement on an
appropriate  form under Rule 415 under the  Securities  Act or any similar  rule
that may be adopted by the Commission,  providing for the sale by the Holders of
the Conversion Shares. The Company shall use its reasonable best efforts to have
such shelf  registration  statement declared effective by the Commission as soon
as practicable after such filing.  The Company agrees to use its best efforts to
keep the shelf registration  statement  continuously  effective (and to take any
and all other actions  reasonably  necessary in order to permit public resale of
the Conversion Shares covered by such shelf registration statement in accordance
with this Agreement) for a period of two years after the registration  statement
is declared effective.  The Company further agrees, if necessary,  to supplement
or amend the shelf registration statement, if required by the rules, regulations
or instructions applicable to the registration form used by the Company for such
shelf registration  statement or by the Securities Act or by any other rules and
regulations thereunder for shelf registration, and the Company agrees to furnish
notice thereof to the Holders of the Conversion Shares.

         8.2 Conditions Relating to Shelf Registration.

                  (a)  Subject  to  paragraph  (b)  of  this  Section  8.2,  the
registration rights of the Holders pursuant to this Agreement and the ability to
offer and sell Conversion  Shares pursuant to the shelf  registration  statement
are subject to the following conditions and limitations,  and each Holder agrees
with the Company that:

                           (i) If the  Company  determines  in  its  good  faith
         judgment  that the  filing of the shelf  registration  statement  under
         Section  8.1  hereof or the use of any  prospectus  would  require  the
         disclosure of important  information  which the Company has a bona fide
         business  purpose for preserving as  confidential  or the disclosure of
         which would impede the  Company's  ability to  consummate a significant
         transaction,  upon written notice of such determination by the Company,
         the rights of the Holders to offer,
                                       21
<PAGE>
                                                                     Exhibit 4.1

         sell or distribute  any securities  pursuant to the shelf  registration
         statement  or to require the Company to take action with respect to the
         registration   or  sale  of  any  securities   pursuant  to  the  shelf
         registration  statement  (including any action  contemplated by Section
         8.4 hereof)  will for up to 60 days in any 12 month period be suspended
         until the date upon which the Company  notifies  the Holders in writing
         that  suspension  of such  rights  for the  grounds  set  forth in this
         Section 8.2(a)(i) is no longer necessary.

                           (ii)  If all  reports  required  to be  filed  by the
         Company  pursuant  to the  Exchange  Act  have  not  been  filed by the
         required date without regard to any extension,  or if  consummation  of
         any business combination by the Company has occurred or is probable for
         purposes  of Rule  3-05 or  Article  11 of  Regulation  S-X  under  the
         Securities  Act,  upon  written  notice  thereof by the  Company to the
         Holders,  the rights of the Holders to offer,  sell or  distribute  any
         securities  pursuant to the shelf registration  statement or to require
         the Company to take action with respect to the  registration or sale of
         any securities pursuant to the shelf registration  statement (including
         any action  contemplated  by Section 8.4 hereof) will for up to 60 days
         in any 12 month  period be  suspended  until  the date  upon  which the
         Company has filed such  reports or obtained the  financial  information
         required by Rule 3-05 or Article 11 of Regulation S-X to be included in
         the shelf registration statement.

                           (iii)  In  the  case  of  the   registration  of  any
         underwritten  primary equity  offering  initiated by the Company (other
         than any  registration  by the Company on Form S-8,  or a successor  or
         substantially  similar  form, of (A) an employee  stock  option,  stock
         purchase  or  compensation  plan or of  securities  issued or  issuable
         pursuant to any such plan, or (B) a dividend  reinvestment  plan), each
         Holder agrees,  if requested in writing by the managing  underwriter or
         underwriters administering such offering, not to effect any offer, sale
         or  distribution  of  securities  (or any  option  or right to  acquire
         securities)  during the period  commencing on the 10th day prior to the
         effective date of the registration statement covering such underwritten
         primary  equity  offering  and  ending  on the date  specified  by such
         managing  underwriter  in such written  request to such  Holder,  which
         period may be of a duration of 90 days or more.

                           (iv)  In  the  event  that  the   Company   plans  to
         repurchase or bid for securities of the Company in the open market,  on
         a private solicited basis or otherwise, and the Company determines,  in
         its reasonable good faith judgment and based upon the advice of counsel
         to the Company (which  counsel shall be experienced in securities  laws
         matters),  that any such  repurchase  or bid may not,  under Rule 10b-6
         under the Exchange  Act, or any successor or similar rule, be commenced
         or consummated  due to the existence or the possible  commencement of a
         "distribution"  (within  the  meaning of Rule 10b-6) as a result of any
         offers or sales by Holders of any  Conversion  Shares,  as the case may
         be, under any registration  statement filed pursuant to this Agreement,
         the Company shall be entitled, for a period of 90 days or more, to
                                       22
<PAGE>
                                                                     Exhibit 4.1

         request that Holders of Conversion  Shares, to suspend or postpone such
         distribution  pursuant  to such  registration  statement.  The  Company
         shall, as promptly as practicable,  give such Holder or Holders written
         notice  of  such   election,   stating  the  basis  for  the  Company's
         determination.  As promptly as practicable  following the determination
         by the  Company  that the  Holders may  commence  or  recommence  their
         distribution pursuant to the registration statement without causing the
         Company to be in violation of Rule 10b-6,  the Company  shall give such
         Holder or Holders written notice of such determination.

                  (b)  Notwithstanding  the  provisions of Section 8.2(a) above,
the  aggregate  number of days  (whether or not  consecutive)  during  which the
Company  may delay the  effectiveness  of the shelf  registration  statement  or
prevent offerings,  sales or distribution by the Holders thereunder  pursuant to
Section 8.2(a) shall in no event exceed 180 days during any 12- month period.

                  (c) The Company may require each selling  Holder of Conversion
Shares, as a condition to the inclusion of the Conversion Shares of such selling
Holder in the shelf registration statement or in any offering thereunder, as the
case may be, to furnish to the Company such information regarding the Holder and
the  distribution  of such  securities  as the  Company  may  from  time to time
reasonably  request (which request shall be confirmed in writing if requested by
the Company) in order to comply with  applicable law and such other  information
as may be legally required in connection with such registration or offering, and
the Holder shall promptly  provide such information and a written consent to the
inclusion of such information in the registration statement or any prospectus or
supplement  thereto;  provided  that the  failure of any Holder to provide  such
information  to the Company shall not in any way affect the  obligations  of the
Company hereunder with respect to any other Holder.

         8.3 Registration Procedures.  In connection with the obligations of the
Company with respect to a registration  statement pursuant to Section 8.1 hereof
and subject to Section 8.2 hereof, the Company shall:

                  (a) (i) prepare and file with the  Commission  a  registration
statement on the appropriate form under the Securities Act, (A) which form shall
be selected by the Company and shall be available for the sale of the Conversion
Shares in accordance  with the intended method or methods of distribution by the
selling Holders thereof  (provided that the Company shall not be required to use
any form other than Form S-1, S-2,  S-3, SB-1 or SB-2 or any successor  form and
shall not be  required  to file more than one  registration  statement  with the
Commission) and (B) which registration  statement shall comply as to form in all
material  respects with the  requirements  of the applicable form and include or
incorporate by reference all financial  statements required by the Commission to
be so included or  incorporated by reference,  further  provided that subject to
the  registration   statement  and  prospectus  being  in  compliance  with  the
requirements of the Securities Act and the Exchange Act (including all rules and
regulations of the Commission  thereunder),  the Company has the sole discretion
to determine the form,
                                       23
<PAGE>
                                                                     Exhibit 4.1

substance and presentation of any financial or other information included in any
registration  statement or prospectus,  and whether such  information  should be
included  in  such  registration  statement  or  prospectus;  and  (ii)  use its
reasonable best efforts to cause such registration statement to become effective
and remain effective in accordance with Section 8.1 hereof;

                  (b) prepare and file with the Commission  such  amendments and
post- effective amendments to the registration  statement as may be necessary to
keep such registration  statement effective for the applicable period; and cause
each prospectus to be supplemented by any required prospectus supplement, and as
so supplemented to be filed pursuant to Rule 424 under the Securities Act;

                  (c) in the event that any federal law or regulation binding on
the  Company and  adopted  after the date hereof so requires  (and would also so
require if the Conversion Shares were being offered in a primary offering by the
Company rather than by the Holders),  use its  reasonable  best efforts to cause
such  Conversion  Shares to be registered with or approved by such other federal
governmental  agencies or authorities  in the United  States,  if any, as may be
required by virtue of the business and  operations  of the Company to enable the
selling Holders to consummate the disposition of such Conversion Shares;

                  (d)  furnish to each Holder of  Conversion  Shares and to each
managing  underwriter of an underwritten  offering of Conversion Shares pursuant
to Section 4(1) of the Securities Act, if any, without charge, as many copies of
each  prospectus,  including each preliminary  prospectus,  and any amendment or
supplement  thereto as such Holder or  underwriter  may reasonably  request,  in
order to  facilitate  the public  sale or other  disposition  of the  Conversion
Shares;

                  (e) use its reasonable best efforts to register or qualify the
Conversion  Shares under all applicable  state  securities or "blue sky" laws of
such  jurisdictions as any Holder of Conversion  Shares of such class covered by
the registration  statement  shall, on 20 days prior written notice,  reasonably
request in writing.  Such notice to be sent at any time prior to the  applicable
registration  statement being declared effective by the Commission.  The Company
shall  maintain  such   registration  or  qualification  in  effect  during  the
applicable period provided in Section 8.1 hereof;  provided,  however,  that the
Company  shall not be required to (i)  qualify  generally  to do business in any
jurisdiction  where it would not  otherwise  be required to qualify but for this
Section 8.3;  (ii) subject  itself to taxation in any such  jurisdiction;  (iii)
make any change to its  Articles  or  Incorporation  or Bylaws;  or (iv)  become
subject to general service of process in any  jurisdiction  where it is not then
so subject;

                  (f) notify  each  Holder of  Conversion  Shares as promptly as
practicable  after  becoming aware thereof and (if requested by any such Holder)
confirm such notice in writing (i) when the  registration  statement  has become
effective and when any post-effective  amendments and supplements thereto become
effective; (ii) of any request by the Commission or any state
                                       24
<PAGE>
                                                                     Exhibit 4.1

securities   authority  for  amendments  and  supplements  to  the  registration
statement  and any  prospectus  or for  additional  information  relating to the
Conversion  Shares  or the  registration  or  qualification  thereof  after  the
registration  statement  has  become  effective;  (iii) of the  issuance  by the
Commission or any state  securities  authority of any stop order  suspending the
effectiveness of the registration statement or the initiation of any proceedings
for that  purpose;  (iv) if the  representations  and  warranties of the Company
contained in any  underwriting  agreement,  securities  sales agreement or other
similar  agreement,  if any,  relating to the Conversion Shares cease to be true
and correct in any material  respect prior to the closing date specified in such
agreement (provided such notice shall be given only to Holders which are parties
to the  agreements  pursuant to which such  representations  and  warranties are
made),  or if  the  Company  receives  any  notification  with  respect  to  the
suspension  of the  qualification  of the  Conversion  Shares  for  sale  in any
jurisdiction  or the initiation of any  proceeding for such purpose;  and (v) of
the happening of any event during the period (other than any  suspension  period
referred to in Section 8.2) during which the registration  statement is required
hereunder to be effective as a result of which the registration statement or any
prospectus would contain an untrue statement of material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading;

                  (g) use its  reasonable  best efforts to obtain the withdrawal
of any order suspending the  effectiveness of the registration  statement or the
qualification of the Conversion  Shares for sale in any jurisdiction as promptly
as practicable;

                  (h)  furnish  to each  Holder of  Conversion  Shares,  without
charge,  at least  one  conformed  copy of the  registration  statement  and any
post-effective  amendment  thereto (without  documents  incorporated  therein by
reference or exhibits thereto, unless requested in writing);

                  (i)  cooperate  with  the  Holders  of  Conversion  Shares  to
facilitate  the timely  preparation  and delivery of  certificates  representing
Conversion  Shares to be sold  pursuant to the  registration  statement  and not
bearing any restrictive legends; and enable such Conversion Shares to be in such
denominations and registered in such names as the selling Holders may reasonably
request (in each case,  provided such  certificates  are requested in writing at
least three business days prior to any delivery thereof);

                  (j) upon the occurrence of any event  contemplated  by Section
8.3(f)(v) hereof,  use its reasonable best efforts as promptly as practicable to
prepare and file with the Commission a supplement or post-effective amendment to
the   registration   statement  or  the  related   prospectus  or  any  document
incorporated  therein by reference or file any other required  document so that,
as  thereafter  delivered  to the  purchasers  of the  Conversion  Shares,  such
prospectus  will not contain any untrue  statement of a material fact or omit to
state a material fact necessary to make the statements  therein, in light of the
circumstances under which they were made, not misleading;
                                       25
<PAGE>
                                                                     Exhibit 4.1

                  (k) otherwise use its  reasonable  best efforts to comply with
all applicable  rules and regulations of the  Commission,  and make available to
its security Holders, as soon as reasonably  practicable,  an earnings statement
covering  a period  of 12  months,  beginning  within  three  months  after  the
effective date of the  registration  statement,  which earnings  statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 under
the Securities Act;

                  (l)  use  its  reasonable   best  efforts  to  (i)  cause  all
Conversion Shares to be listed or quoted on any securities exchange or quotation
system on which the Company's outstanding Common Stock is then listed or quoted;
and

                  (m) obtain a CUSIP number for all Conversion  Shares not later
than the effective date of the registration statement.

Each  Holder  agrees  that,  upon  receipt of any notice from the Company of the
happening of any event of the kind described in Section 8.3 hereof,  such Holder
will  forthwith  discontinue  disposition of Conversion  Shares  pursuant to the
registration  statement  covering  such  Conversion  Shares until such  Holder's
receipt of the copies of the supplemented or amended prospectus  contemplated by
Section 8.3(j) hereof, or until it is advised in writing by the Company that the
use of such  prospectus may be resumed and, if so directed by the Company,  such
Holder will deliver to the Company (at the Company's expense) all copies,  other
than permanent file copies then in such Holder's  possession,  of the prospectus
covering such  Conversion  Shares current at the time of receipt of such notice;
provided,  however,  that the Company shall use its  reasonable  best efforts to
promptly prepare and provide to the Holders a supplemented or amended prospectus
contemplated by such Section 8.4(j) hereof.  In the event the Company shall give
any such notice,  the period during which such  registration  statement shall be
maintained  effective  shall be extended by the number of days during the period
from and  including  the date of the giving of such  notice  pursuant to Section
8.4(f)(v)  hereof to including  the date when each Holder of  Conversion  Shares
covered by such  registration  statement  shall have  received the copies of the
supplemented or amended prospectus contemplated by Section 8.4(j) hereof.

         8.4 Registration Expenses.

                  (a) The Company will bear all reasonable Registration Expenses
incident to the  performance of or compliance  with its  obligations  under this
Agreement. Notwithstanding the foregoing, the Company is not required to pay any
fees or expenses of Holders,  underwriters,  the  Holder's or any  underwriter's
counsel  (other than blue sky  counsel)  or  accountant  or any other  advisers,
including any transfer  taxes,  underwriting,  brokerage and other discounts and
commissions  and finders' and similar fees payable in the respect of  Conversion
Shares.
                                       26
<PAGE>
                                                                     Exhibit 4.1

                  (b) Each Holder shall pay all costs and  expenses  incurred by
such Holder,  including all transfer  taxes,  underwriting,  brokerage and other
discounts  and  commissions  and finders' and similar fees payable in respect of
Conversion  Shares.  To the extent that any Registration  Expenses are incurred,
assumed  or paid by any  Holder or any  placement  or sales  agent  therefor  or
underwriter thereof with the Company's prior written consent,  the Company shall
reimburse  such  person  for the full  amount of the  Registration  Expenses  so
incurred,  assumed or paid within a reasonable  time after  receipt of a written
request therefor.  Any Registration Expenses submitted by any Holder,  placement
or sales agent or underwriter or on behalf of any such person for payment by the
Company shall be itemized in detail and contain  clear and accurate  receipts of
all expenditures made by such parties.

         8.5 Indemnification; Contribution.

                  (a) The Company  agrees to indemnify  and hold  harmless  each
Holder and each  "person," if any,  that controls such Holder within the meaning
of Section 15 of the  Securities  Act for,  from and  against  any and all loss,
liability,  claim, damage and expense (including  attorneys' fees) to the extent
resulting from any untrue  statement or alleged  untrue  statement of a material
fact contained in any registration statement pursuant to which Conversion Shares
were registered under the Securities Act (or any amendment  thereto),  including
all documents incorporated therein by reference, or from the omission or alleged
omission therefrom of a material fact required to be stated therein or necessary
to make the  statement  therein  not  misleading  or  arising  out of any untrue
statement  or alleged  untrue  statement  of a material  fact  contained  in any
prospectus  (or any  amendment or supplement  thereto),  including all documents
incorporated therein by reference, or the omission or alleged omission therefrom
of a material fact  necessary in order to make the  statements  therein,  in the
light of the  circumstances  under which they were made, not misleading,  except
insofar as any such misstatement or omission or alleged misstatement or omission
is made therein in reliance upon and in conformity with information furnished to
the  Company  by such  Holder in  writing  expressly  for use in a  registration
statement  (or any  amendment  thereto) or any  prospectus  (or any amendment or
supplement  thereto) relating to the Conversion  Shares. As used in this Section
8.5(a), the term "Holder" shall include its officers, directors and agents.

                  (b) Each Holder  agrees to  indemnify  and hold  harmless  the
Company,  its directors and officers and each "person," if any, who controls the
Company  within the  meaning of  Section  15 of the  Securities  Act to the same
extent as the foregoing indemnity from the Company to such Holder, but only with
respect to  information  furnished in writing by such Holder or on such Holder's
behalf  expressly  for  use in any  registration  statement  (or  any  amendment
thereto) or any prospectus (or any amendment or supplement  thereto) relating to
the Conversion Shares, or any amendment or supplement thereto; provided that the
obligations  or any  Holder to  indemnify  the  Company  and the  other  persons
referred to above shall be limited to the proceeds  received by such Holder from
the sale of such Conversion Shares pursuant to such registration statement.
                                       27
<PAGE>
                                                                     Exhibit 4.1


                  (c) If any action or proceeding  (including  any  governmental
investigation)  shall be brought or  asserted  against  any person  entitled  to
indemnification  hereunder,  the  indemnified  party shall give  prompt  written
notice to the indemnifying  party,  and the indemnifying  party shall assume the
defense thereof,  including the employment of counsel reasonably satisfactory to
the  indemnified  party,  and  shall  assume  the  payment  of all  expenses  in
connection with such defense. The indemnified party or any controlling person of
such  indemnified  party shall have the right to employ separate  counsel in any
such action and to participate in the defense thereof, but the fees and expenses
of such  counsel  shall  be at the  expense  of the  indemnified  party  or such
controlling  person unless (i) the  indemnifying  party shall have agreed to pay
such fees and  expenses;  or (ii) the  indemnifying  party  shall have failed to
assume  the  defense  for  such  action  or  proceeding  and to  employ  counsel
reasonably  satisfactory  to  the  indemnified  party  in  any  such  action  or
proceeding;  or (iii)  the  named  parties  to any  such  action  or  proceeding
(including any impleaded  parties)  include both the  indemnified  party or such
controlling  person and the indemnifying  party,  and such indemnified  party or
such controlling person shall have been advised by counsel that counsel employed
by the indemnifying party would, under applicable professional standards, have a
conflict in representing  both the indemnifying  party and the indemnified party
or such controlling  person,  in which case, if such indemnified  person or such
controlling  person notifies the indemnifying party in writing that it elects to
employ  separate  counsel  at  the  expense  of  the  indemnifying   party,  the
indemnifying party shall not have the right to assume the defense of such action
or  proceeding  of  separate  but  substantially  similar or related  actions or
proceedings in the same jurisdiction arising out of the same general allegations
or  circumstances,  and shall not be liable for the reasonable fees and expenses
of more than one separate firm of attorneys  (together  with  appropriate  local
counsel) at any time for such indemnified  party and such  controlling  persons,
which firm shall be designated,  if the Holders (or their  controlling  persons)
are the  indemnified  parties,  in writing by the  Holders of a majority  of the
outstanding  Conversion  Shares  owned by Holders who are then  entitled to such
indemnity in connection with such action or proceeding and if the Company is the
indemnified  party, by the Company.  No party shall be liable for any settlement
of any such action or proceeding  effected  without its written  consent  (which
consent  shall not be  unreasonably  withheld),  but if settled with its written
consent, or if there is a final judgment for the plaintiff in any such action or
proceeding,  the  indemnifying  party agrees to indemnify and hold harmless such
indemnified  party and such  controlling  person  from and  against  any loss or
liability (to the extent stated above) by reason of such settlement or judgment.

                  (d) (i) If the  indemnification  provided  for in this Section
8.5 is unavailable to an indemnified  party  hereunder in respect of any losses,
claims, damages,  liabilities or expenses, then each such indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or  payable  by such  indemnified  party as a  result  of such  losses,  claims,
damages,  liabilities  and  expenses in such  proportion  as is  appropriate  to
reflect the relative fault of the indemnified  party and the indemnifying  party
in connection  with the  statements or omissions  which resulted in such losses,
claims,  damages,  liabilities  or  expenses,  as  well  as any  other  relevant
equitable considerations. The relative fault of the indemnified party
                                       28
<PAGE>
                                                                     Exhibit 4.1

and the  indemnifying  party shall be  determined  by reference  to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged  omission to state a material  fact  relates to  information
supplied by such party, and the parties' relative intent,  knowledge,  access to
information and opportunity to correct or prevent such statement or omission.

                           (ii) The  parties  hereto  agree that it would not be
just  and  equitable  if  contribution  pursuant  to this  Section  8.5(d)  were
determined by pro rata  allocation  or by any other method of  allocation  which
does  not  take  account  of the  equitable  considerations  referred  to in the
immediately  preceding  paragraph.  The amount paid or payable by an indemnified
party as a result of the losses,  claims,  damages,  expenses,  liabilities,  or
judgements referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably  incurred by such indemnified party in connection with  investigating
or defending any such action or claim.  Notwithstanding  the  provisions of this
Section  8.5(d),  no Holder shall be required to contribute any amount in excess
of the amount by which the total  price at which the  Conversion  Shares of such
selling  Holder  were  offered  to the  public  pursuant  to  such  registration
statement  exceeds  the  amount of any  damages  which such  selling  Holder has
otherwise  been  required  to pay by reason of such  untrue  or  alleged  untrue
statement or omission or alleged omission.  No person found guilty by a court of
competent  jurisdiction of fraudulent  misrepresentation  (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution  from any
person who was not found  guilty by a court of  competent  jurisdiction  of such
fraudulent misrepresentation.

                  (e)  Neither  the  Company  nor the  Holders  shall  have  any
obligation under this Agreement (other than as set forth in this Section 8.5) to
provide the other with indemnification or contribution in respect of any losses,
claims,  damages,  liabilities  or  expenses  referred to in this  Section  8.5;
provided,  however, that the provisions of this Section 8.5 shall not relieve an
indemnifying  party from  liability  which it may have to an  indemnified  party
other than with respect to the matters referred to in this Section 8.5.

         8.6  Commission  Filings.  The Company  covenants that it will file the
reports  required  to be filed by it under  the  Exchange  Act and the rules and
regulations  adopted  by  the  Commission  thereunder  in  a  timely  manner  as
determined by applicable rules and interpretations  under the Exchange Act. Upon
the written request of any Holder of Conversion Shares, the Company will deliver
to such  Holder a written  statement  as to  whether it has  complied  with such
requirements.

         8.7 Lock-up Agreement.  Prior to the registration  statement related to
the Conversion Shares being declared effective, the Holders of Conversion Shares
shall not offer, sell, dispose of, transfer or otherwise reduce market risk with
respect to such  Registerable  Securities,  directly or indirectly,  without the
prior consent of the Company and except for
                                       29
<PAGE>
                                                                     Exhibit 4.1

transfers  occurring by operation of law.  The  foregoing  notwithstanding,  the
percentage of Conversion Shares shall be released from the above restrictions at
the time periods as follows:

                      Time                    Cumulative Percentage Transferable
                      ----                    ----------------------------------

         Effective Date of Registration                      25%

         Three Months After Effective Date                   50%

         Six Months After Effective Date                     75%

         Nine Months After Effective Date                   100%

The  above  percentages  apply  to all  securities  of  Holder  acquired  in the
Offering.  The  Company  shall  place  appropriate  legends on the  certificates
representing  the  Conversion  Shares and  instructions  with its transfer agent
specifying that the Conversion Shares are subject to the restriction on transfer
as set forth above.

                                    SECTION 9
                                   NOTE AGENT

         9.1 Duties and Liabilities of Note Agent.

                  (a) The Note Agent upon appointment shall undertake to perform
such  duties  and  only  such  duties  as are  specifically  set  forth  in this
Agreement.  In case an Event of Default has occurred (which has not been cured),
the Note Agent shall exercise such of the rights and powers vested in it by this
Agreement and use the same degree of care and skill in its exercise as a prudent
man would  exercise  or use under the  circumstances  in the  conduct of his own
affairs.

                  (b) No  provision  of this  Agreement  shall be  construed  to
relieve the Note Agent from liability for its own gross  negligence in acting or
omitting to act, or its own willful misconduct, except that:

                           (i) prior to the  occurrence  of an Event of  Default
         which may have occurred:

                                    (A) the duties and  obligations  of the Note
                  Agent shall be determined solely by the express  provisions of
                  this Agreement,  and the Note Agent shall not be liable except
                  for the  performance  of such  duties and  obligations  as are
                  specifically set forth in this Agreement, and no implied
                                       30
<PAGE>
                                                                     Exhibit 4.1

                  covenants  or  obligations  shall be read into this  Agreement
                  against the Note Agent; and

                                    (B) in the  absence of bad faith on the part
                  of the Note Agent, the Note Agent may conclusively rely, as to
                  the  truth  of  the  statements  and  the  correctness  of the
                  opinions expressed therein,  upon any certificates or opinions
                  furnished to the Note Agent and conforming to the requirements
                  of this Agreement; but in the case of any such certificates or
                  opinions  that  by  any  provision   hereof  arc  specifically
                  required to bc  furnished  to the Note  Agent,  the Note Agent
                  shall be under a duty to examine the same to determine whether
                  or not they conform to the requirements of this Agreement.

                           (ii) the Note Agent shall not be liable for any error
         of judgment made in good faith, unless it shall be proved that the Note
         Agent was grossly negligent in ascertaining the pertinent facts;

                           (iii) the Note Agent shall not be liable with respect
         to any  action  taken or  omitted  to be  taken by it in good  faith in
         accordance with the direction of the Holders of a majority in aggregate
         principal  amount of the Notes then  outstanding  relating to the time,
         method and place of conducting any proceeding for any remedy  available
         to the Holders,  or exercising any power conferred upon the Note Agent,
         under this Agreement; and

                           (iv) none of the provisions of this  Agreement  shall
         require  the Note  Agent to expend  or risk its own funds or  otherwise
         incur any personal financial liability in the performance of any of its
         duties hereunder, or in the exercise of any of its rights or powers, if
         it shall have  reasonable  grounds for believing that repayment of such
         funds or  adequate  indemnity  against  such risk or  liability  is not
         reasonably assured to it.

                  (c)  Whether  or  not  herein  expressly  so  provided,  every
provision of this  Agreement  relating to the conduct or affecting the liability
of or affording  protection to the Note Agent shall be subject to the provisions
of this Section 9.

         9.2 Reliance on Documents,  Opinions, Etc. Except as otherwise provided
in Section 9.1:

                  (a) the Note Agent may rely and shall be  protected  in acting
upon  any  resolution,  certificate,  statement,  instrument,  opinion,  report,
notice,  request,  consent,  order, note, bond. note, or other paper or document
reasonably  believed by it to be genuine and to have been signed or presented by
the proper party or parties;
                                       31
<PAGE>
                                                                     Exhibit 4.1

                  (b) whenever in the  administration  of the provisions of this
Agreement  the Note Agent shall deem it necessary or desirable  that a matter be
proved or  established  prior to taking or omitting any action  hereunder,  such
matter  (unless  other  evidence  in  respect  thereof  be  herein  specifically
prescribed)  may, in the absence of gross negligence or bad faith on the part of
the Note  Agent,  be deemed  to be  conclusively  proved  and  established  by a
certificate  signed by the Company  and  delivered  to the Note Agent,  and such
certificate,  in the absence of gross negligence or bad faith on the part of the
Note Agent,  shall be full warrant to Note Agent for any action taken or omitted
by it under the provisions of this Agreement upon the faith thereof;

                  (c) any  request,  direction,  order or demand of the  Company
mentioned herein shall be sufficiently evidenced by a certificate of the Company
(unless other evidence in respect thereof be herein specifically prescribed);

                  (d) the Note  Agent may  consult  with legal  counsel  and any
opinion of Counsel shall be full and complete  authorization  and  protection in
respect of any action  taken or  omitted  by it  hereunder  in good faith and in
accordance with such opinion of Counsel;

                  (e) the Note Agent  shall be under no  obligation  to exercise
any of the rights or powers vested in it by this Agreement at the request, order
or  direction  of  any of the  Holders,  pursuant  to  the  provisions  of  this
Agreement,  unless such Holders shall have offered to the Note Agent  reasonable
security or indemnify  against the costs,  expenses and liabilities which may be
incurred therein or thereby;  nothing herein contained shall,  however,  relieve
the Note Agent of the  obligations,  upon the occurrence of any Event of Default
(which has not been cured),  to exercise such of the rights and powers vested in
it by this  Agreement  and to use the same  degree  of care  and  skill in their
exercise as a prudent man would exercise or use under the  circumstances  in the
conduct of his own affairs;

                  (f) the Note Agent shall not be liable for any action taken or
omitted by it in good faith and  reasonably  believed by it to be  authorized or
within the discretion or rights or powers conferred upon it by this Agreement;

                  (g) prior to the  occurrence of an Event of Default  hereunder
and after the curing of all Events of Default, the Note Agent shall not be bound
to make any  investigation  into the facts or matters stated in the  resolution,
certificate,  statement,  instrument, opinion, report, notice, request, consent,
order, note, bond note, or other paper or document,  unless requested in writing
so to do by the Holders of more than one half in aggregate  principal  amount of
the Notes then  outstanding;  provided  that if the payment  within a reasonable
time to the Note  Agent of the  costs,  expenses  or  liabilities  likely  to be
incurred by it in the making of such investigation is not, in the opinion of the
Note Agent,  reasonably assured to the Note Agent by the security afforded to it
by the terms of this Agreement,  the Note Agent may require reasonable indemnity
against  such  expense  or  liability  as a  condition  to  so  proceeding,  the
reasonable expense of every
                                       32
<PAGE>
                                                                     Exhibit 4.1

such  examination  shall be paid by the Company,  or, if paid by the Note Agent,
shall be repaid by the Company upon demand; and

                  (h) the Note  Agent may  execute  any of the  rights or powers
hereunder  or perform  any duties  hereunder  either  directly  or by or through
agents or attorneys.

         9.3 No Responsibility for Recitals,  etc. The recitals contained herein
and in the Note shall be taken as the  statements  of the  Company  and the Note
Agent assumes no responsibility  for the correctness of the same. The Note Agent
makes no  representations as to the validity or sufficiency of this Agreement or
of the Notes. The Note Agent shall not be accountable for the use or application
by the  Company  of any Notes or the  proceeds  of any Notes  authenticated  and
delivered by the Note Agent in conformity with the provisions of this Agreement.

         9.4 Moneys to be Held in Trust.  All moneys  received by the Note Agent
shall,  until  used or  applied  as  herein  provided,  be held in trust for the
purposes for which they are received.

         9.5 Expenses of Note Agent. The Company shall pay or reimburse the Note
Agent upon its request for all reasonable  expenses,  disbursements and advances
incurred or made by the Note Agent in connection  with the  performance  of Note
Agent's  obligations  with  respect  to a Default by Company or by reason of the
occurrence of an Event of Default  (including  the reasonable  compensation  and
expenses and  disbursements  of its counsel and of all persons not  regularly in
its employ) except any such expense,  disbursement  or advance as may arise from
its gross  negligence,  willful  misconduct or bad faith. The Company also shall
indemnify the Note Agent for, and hold it harmless against,  any loss, liability
or expense  incurred  without  gross  negligence or bad faith on the part of the
Note  Agent  and  arising  out  of or  in  connection  with  the  acceptance  or
administration  of this agency,  including the reasonable  costs and expenses of
defending itself against any claim of liability in the premises.

         9.6 Resignation or Removal of Note Agent.

                  (a) The Note  Agent may at any time  resign by giving  written
notice of such  resignation  to the Company and by mailing notice thereof to the
Holders at their  addresses as they shall  appear on the  registry  books of the
Company.  Upon receiving  such notice of  resignation,  the Placement  Agent may
appoint a successor agent by written instrument,  in duplicate,  executed by the
Placement Agent one copy of which instrument shall be delivered to the resigning
Note Agent and one copy to the successor Note Agent.  If no successor Note Agent
shall have been so appointed and have accepted  appointment within 60 days after
the  publication  of such notice of  resignation,  the resigning  Note Agent may
petition any court of competent  jurisdiction for the appointment of a successor
Note Agent, or any Holder who has been a bona fide holder of a Note or Notes for
at least six months may on behalf of himself and all others
                                       33
<PAGE>
                                                                     Exhibit 4.1

similarly  situated,  petition any such court for the appointment of a successor
Note Agent. Such court may thereupon,  after such notice, if any, as it may deem
proper and prescribe,  appoint a successor Note Agent. In the event the Event of
Default causing the appointment of the Note Agent is cured,  the Placement Agent
has no duty to appoint a substitute  Note Agent until the subsequent  occurrence
of an additional Event of Default.

                  (b) In case at any time the Note Agent shall become  incapable
of acting;  or in connection with the  performance of its obligations  hereunder
shall have acted in bad faith,  shall have been grossly  negligent or shall have
willfully breached this Agreement; or shall be adjudged a bankrupt or insolvent,
or a receiver of the Note Agent or of its property  shall be  appointed,  or any
public officer shall take charge or control of the Note Agent or of its property
or affairs for the purpose of rehabilitation,  conservation or liquidation, then
in any such case the  Placement  Agent may remove  the Note Agent and  appoint a
successor Note Agent by written instrument,  in duplicate,  executed by order of
the Placement Agent, one copy of which instrument shall be delivered to the Note
Agent so removed and one copy to the successor Note Agent, or any Holder who has
been a bona  fide  holder of a Note or Notes for at least  six  months  may,  on
behalf of  himself  and all others  similarly  situated,  petition  any court of
competent  jurisdiction for the removal of the Note Agent and the appointment of
a successor Note Agent. Such court may thereupon,  after such notice, if any, as
it may deem proper and prescribe,  remove the Note Agent and appoint a successor
Note Agent.

                  (c)  Any   resignation  or  removal  of  the  Note  Agent  and
appointment  of a successor Note Agent pursuant to any of the provisions of this
Section  9.6 shall  become  effective  upon  acceptance  of  appointment  by the
successor Note Agent.

                                   SECTION 10
                                  MISCELLANEOUS

         10.1  Registered  Notes.  The  Company  shall  cause  to be kept at its
principal  office the Note Register and the Company will register or transfer or
cause to be registered or transferred  as  hereinafter  provided any Note issued
pursuant to this Agreement.  The Company will serve as its own registrar for the
Notes.  Subject to the restrictions on  transferability of the Notes pursuant to
Section  7, upon  surrender  for  registration  of  transfer  of any Note at its
principal place of business,  the Company shall execute and deliver, in the name
of the  transferee  or  transferees,  a new Note or Notes  for a like  aggregate
principal  amount of authorized  denominations.  Notes to be exchanged  shall be
surrendered  at the  principal  place of  business of the  Company,  which shall
execute and shall deliver in exchange therefor the Note or Notes that the Holder
making the exchange  shall be entitled to receive,  bearing  serial  numbers not
then outstanding.  All Notes presented for registration of transfer, exchange or
payment  shall,  if so  required  by the  Company,  be  duly  endorsed  by or be
accompanied  by  a  written  instrument  or  instruments  of  transfer  in  form
satisfactory  to the Company,  duly executed by the registered  Holder or by the
Holder's duly authorized attorney. Any exchange or registration of transfer
                                       34
<PAGE>
                                                                     Exhibit 4.1

shall be without  charge,  except that the Company may require  payment of a sum
sufficient to cover any tax or other governmental  charge that may be imposed in
relation thereto.

         10.2  Exchange  of Notes.  At any time and from time to time,  upon not
less  than ten  days'  notice  to that  effect  given by any  Holder of any Note
initially  delivered  or of any Note  substituted  therefor  pursuant to Section
10.1,  this Section  10.2 or Section 10.3 and upon  surrender of any Note to the
Company at its office,  the Company will deliver in exchange  therefor,  without
expense to such Holder,  except as set forth below, Notes for the same aggregate
principal amount as the then unpaid principal amount of the Note so surrendered,
in a denomination equal to the Note so surrendered or in such other denomination
equal to or in excess of $5,000 as such Holder  shall  specify,  dated as of the
date to which  interest  has been  paid on the Note so  surrendered  or, if such
surrender is prior to the payment of any interest thereon,  then dated as of the
date of  issue,  registered  in the name of such  Person  or  Persons  as may be
designated by such Holder,  and otherwise of the same form and tenor as the Note
so  surrendered  for  exchange.  The  Company  may  require the payment of a sum
sufficient  to cover any  stamp tax or  governmental  charge  imposed  upon such
exchange or transfer.

         10.3 Loss, Theft, etc. of Notes.

                  (a) If any Note shall become  mutilated or be destroyed,  lost
or stolen,  the Company shall,  upon the written  request of the Holder thereof,
execute and deliver a new Note, bearing a serial number not then outstanding, in
exchange and  substitution for the mutilated Note or in lieu of and substitution
for the Note  destroyed,  lost or stolen;  provided,  however,  that the Company
shall not be obligated  to execute and deliver a new Note  unless,  (i) in every
case, the applicant  requesting a substituted  Note shall furnish to the Company
such  security  or  indemnity  as may be  reasonably  required  by it to save it
harmless,  and (ii) in every case of destruction,  loss or theft, such applicant
shall also furnish to the Company evidence reasonably  satisfactory to it of the
destruction, loss or theft of such Note and of the ownership thereof.

                  (b) Upon the issuance of any substituted Note, the Company may
require the payment of a sum  sufficient to cover any tax or other  governmental
charge that may be imposed in relation thereto and any other expenses  connected
therewith,  including,  without limitation,  counsel fees of the Company and the
Note Agent.  In case any Note that has matured or is about to mature  shall have
become  mutilated or be  destroyed,  lost or stolen,  the Company may,  with the
consent of the applicant, instead of issuing a substitute Note, pay or authorize
the  payment of the same  (without  surrender  thereof,  except in the case of a
mutilated  Note),  if the  applicant  for such payment shall furnish the Company
with such security or indemnity as it may reasonably require to save it harmless
and, in case of destruction,  loss or theft, evidence reasonably satisfactory to
the Company of the destruction,  loss or theft of such Note and of the ownership
thereof.  Every  substituted  Note  issued  pursuant to the  provisions  of this
Section by virtue of the fact that any Note is destroyed,  lost or stolen, shall
constitute an additional contractual  obligation of the Company,  whether or not
the destroyed, lost or stolen Note shall
                                       35
<PAGE>
                                                                     Exhibit 4.1

be found at any  time,  and shall be  entitled  to all of the  benefits  of this
Agreement equally and  proportionately  with any and all other Notes duly issued
hereunder. All Notes shall be held and owned upon the express condition that the
foregoing provisions are exclusive with respect to the replacement or payment of
mutilated,  destroyed, lost or stolen Notes and shall preclude any and all other
rights and remedies,  notwithstanding  any law or statute  existing or hereafter
enacted to the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.

         10.4 Cancellation of Notes;  Acquisition of Notes by Company. All Notes
surrendered for the purpose of payment, redemption,  exchange or registration of
transfer  shall be  delivered  to the Company for  cancellation  and the Company
shall cancel such Notes and all Notes that have been surrendered directly to the
Company for cancellation, and no Notes shall be issued in lieu thereof except as
expressly  permitted by any of the  provisions  of this  Agreement.  The Company
shall  indicate  clearly on the face and on each and every page of such canceled
Notes the fact that such Notes are canceled. If the Company shall acquire any of
the Notes, such acquisition shall not operate as a redemption or satisfaction of
the  indebtedness  represented  by such  Notes,  unless  and  until the same are
canceled,  and the  Company  shall not be  entitled  to vote or  participate  in
directing  the  activities  of the Note Agent  pursuant to this  Agreement  with
respect to any such acquired Notes.

         10.5  Transfer of Note.  Any Holder to which this  Section 10.5 applies
agrees  that in the event it shall sell or transfer  any Note it will,  prior to
the  delivery  of such Note  (unless it has  already  done so),  make a notation
thereon  of all  principal,  if any,  prepaid  on such  Note and will  also note
thereon  the date to which  interest  has been  paid on such  Note,  and it will
promptly  notify the  Company of the name and address of the  transferee  of any
Note so  transferred.  With respect to Notes to which this Section 10.5 applies,
the Company shall be entitled to presume  conclusively that the original or such
subsequent  Holder as shall have requested the provisions hereof to apply to its
Note  remains  the Holder of such Notes until the  Company  shall have  received
notice in writing of the transfer of such Notes,  and of the name and address of
the  transferee,  or such Notes  shall  have been  presented  to the  Company as
evidence of the transfer.

         10.6 Expenses;  Stamp Tax Indemnity. The Company will pay the following
expenses in connection  with this  Agreement and the  transactions  contemplated
hereby:  (a)  duplicating and printing costs and charges for shipping the Notes,
adequately  insured to each  original  Holder's  home or office or at such other
place as such Holder may  designate,  and (b) all such expenses  relating to any
amendment,  waivers or  consents  (whether or not  consummated)  pursuant to the
provisions hereof, including,  without limitation,  any amendments,  waivers, or
consents resulting from any work-out, renegotiation or restructuring relating to
the performance by the Company of its  obligations  under this Agreement and the
Notes.  The Company will pay, and  indemnify  each Holder  against any liability
for,  brokerage  fees and  commissions  payable  or claimed to be payable to any
Person in connection with the transactions contemplated by this Agreement and
                                       36
<PAGE>
                                                                     Exhibit 4.1

resulting  from an agreement or alleged  agreement  between the Company and such
Person.  As a condition  to  transferring  the  ownership  of a Note on the Note
Register,  the Company may require  that the Holder of the Note first pay to the
Company the amount of any tax or governmental  charge applicable to the transfer
of the Note.

         10.7 Acts of Holders; Evidence of Ownership of Notes.

                  (a) Any action to be taken by Holders may be  evidenced by one
or more  concurrent  written  instruments of similar tenor signed or executed by
such Holders in person or by an agent appointed in writing. The fact and date of
the  execution  by  any  person  or  any  such   instrument  may  be  proved  by
acknowledgement  before  a Notary  Public  or other  officer  empowered  to take
acknowledgements, or by an affidavit of a witness to such execution.

                  (b) Prior to due  presentment of any Note for  registration of
transfer,  the  Company  may deem the  person  in whose  name the Note  shall be
registered  upon the books of the  Company  as the  absolute  owner of such Note
(whether or not such Notes shall be overdue and  notwithstanding any notation of
ownership or writing thereon by anyone other than the Company),  for the purpose
of  receiving  payment of or on account of the  principal  of,  interest on, and
premium, if any, on such Note and for all other purposes,  and the Company shall
not be affected by any notice to the  contrary.  Payment of or on account of the
principal of, interest on, and premium,  if any, on such Note shall be made only
to or upon the  order in  writing  of the  registered  owner  thereof.  All such
payments shall be valid and, to the extent of the sum or sums so paid, effectual
to satisfy and discharge the liability for moneys payable upon any such Note.

                  (c) Any action  taken by the  holders of more than one half in
aggregate  principal  amount  of  the  Notes  specified  in  this  Agreement  in
connection with such action shall be  conclusively  binding upon the Company and
the Holders.  Any action by any Holder shall bind all future Holders of the same
Note in  respect of  anything  done or  suffered  by the  Company  in  pursuance
thereof.

         10.8 Holders' List. The Company  covenants and agrees that it and every
obligor  upon the Notes will furnish or cause to be furnished to the Note Agent,
within  three  days of  appointment,  a list in such form as the Note  Agent may
reasonably  require  containing all  information in the possession or control of
the Company as to the name and addresses of the Holders obtained (in the case of
each  list  other  than the  first  list)  since  the date as of which  the next
previous list was furnished.  Any such list may be dated as of the date not more
than 15 days  before  the time any  information  is  furnished  or  caused to be
furnished and need not include  information  received  after such date. The Note
Agent shall  preserve,  in as current a form as is reasonably  practicable,  all
information  as to the names and addresses of the Holders  contained in the most
recent list furnished to it as provided in this Section 10.8 and received by it
                                       37
<PAGE>
                                                                     Exhibit 4.1

hereunder.  The Note Agent may destroy any list  furnished  to it as provided in
this Section upon receipt of a new list as provided herein.

         10.9 Powers and Rights Not  Waived,  Remedies  Cumulative.  No delay or
failure on the part of any Holder in the  exercise  of any power or right  shall
operate as a waiver  thereof;  nor shall any single or partial  exercise  of the
same  preclude  any other or further  exercise  thereof,  or the exercise of any
other power or right,  and the rights and remedies of each Holder are cumulative
to and are not  exclusive  of any  rights  or  remedies  any such  Holder  would
otherwise  have,  and no waiver or consent,  given or  extended  pursuant to the
provisions of this Agreement,  shall extend to or affect any obligation or right
not expressly waived or consented to.

         10.10 Notices.  All  communications  provided for hereunder shall be in
writing and, if to a Holder or the Note Agent,  delivered  or mailed  prepaid by
registered  or  certified  mail  or  overnight  air  courier,  or  by  facsimile
communication,  in each case  addressed  to such  Holder at the  address  of the
Holder on the  registration  books of the  Company,  or to the Note Agent at the
address as the Note Agent may  designate,  and if to the  Company,  delivered or
mailed by registered  or certified  mail or overnight  courier,  or by facsimile
communication, to the Company at the address of its corporate offices; provided,
however,  that a notice to a Holder  by  overnight  air  courier  shall  only be
effective if delivered to such Holder at a street  address  designated  for such
purpose in accordance  with this Section  10.10,  and a notice to such Holder by
facsimile   communication   shall  only  be   effective  if  made  by  confirmed
transmission to such Holder at a telephone number designated for such purpose in
accordance  with this Section  10.10 and  promptly  followed by delivery of such
notice by  registered or certified  mail or overnight air courier,  as set forth
above.

         10.11 Successors and Assigns.  This Agreement shall be binding upon the
Company  and its  successors  and assigns and shall inure to the benefit of each
Holder and its successors and assigns, including each successive Holder.

         10.12  Discharge  and  Termination.  The  Company  may,  at  any  time,
terminate its obligations  hereunder and the Notes by irrevocably  depositing in
trust cash or obligations  of the United States  government and its agencies for
payment  of  principal  of,  premium,  if any,  and  interest  on,  the Notes to
maturity.  In such  event,  this Note  Agreement  shall cease to have any effect
except as to (a) rights of registration of transfer,  substitution  and exchange
of Notes, (b) rights of holders to receive payments of principal or premium,  of
any,  and interest on the Notes,  (c) the right to convert  Notes into shares of
Company Common Stock, and (d) the rights, obligations and immunities of the Note
Agreement.

         10.13  Survival  of  Covenants  and  Representations.   All  covenants,
representations   and  warranties   made  by  the  Company  herein  and  in  any
certificates delivered pursuant hereto,
                                       38
<PAGE>
                                   Exhibit 4.1

whether or not in connection with any Closing Date, will survive the closing and
the delivery of this Agreement and the Notes.

         10.14 Severability. Should any part of this Agreement for any reason be
declared invalid or unenforceable, such decision will not affect the validity or
unenforceability  of any remaining portion,  which remaining portion will remain
in force and effect as if this  Agreement  had been  executed  with the  invalid
portion  thereof  eliminated  and it is hereby  declared  the  intention  of the
parties  hereto  that they would have  executed  the  remaining  portion of this
Agreement  without including therein any such part or portion which may, for any
reason, be hereafter declared invalid or unenforceable.

         10.15  Governing  Law.  This  Agreement  and the Notes  issued and sold
hereunder  shall be governed by and construed in accordance with the laws of the
State of Arizona.

         10.16  Captions.  The descriptive  headings of the various  Sections or
parts of this  Agreement  are for  convenience  only and  shall not  affect  the
meaning or construction of any of the provisions hereof.

         10.17  Benefits  of  Provisions  of  This  Agreement.  Nothing  in this
Agreement or in the Notes,  expressed or implied,  shall give or be construed to
give any person,  firm or  corporation,  other than the parties  thereto and the
Holders,  any legal or equitable  right,  remedy or claim under or in respect of
this Agreement, or under any covenant,  condition or provision herein contained,
all the covenants,  conditions and provisions  contained in this Agreement or in
the Notes being for the sole benefit of the parties hereto and the Holders.

         10.18  Counterparts.  This  Agreement  may be executed in any number of
counterparts,  each  executed  counterpart  constituting  an  original  but  all
together only one agreement.

                                SOY ENVIRONMENTAL PRODUCTS, INC.


                                By   /s/ Sean F. Lee
                                   ---------------------------------------------
                                     Sean F. Lee, Chief Executive Officer


                                FOX & COMPANY INVESTMENTS, INC.


                                By   /s/ Thomas A. Cifelli
                                   ---------------------------------------------
                                     Thomas A. Cifelli, Executive Vice President
                                       39
<PAGE>
                                                                     Exhibit 4.1

                                    EXHIBIT A


THIS NOTE AND THE SHARES OF COMMON STOCK  ISSUABLE UPON  CONVERSION  HEREOF HAVE
NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED,  AND MAY
BE OFFERED OR SOLD ONLY IF REGISTERED UNDER APPLICABLE  SECURITIES LAWS OR IF AN
EXEMPTION  THEREFROM  IS  AVAILABLE.  THIS NOTES AND THE SHARES OF COMMON  STOCK
ISSUABLE  UPON  CONVERSION  HEREOF  ARE  TRANSFERABLE  ONLY UPON THE  CONDITIONS
SPECIFIED  IN THE  NOTES  AGREEMENT  REFERRED  TO  HEREIN.  A COPY  OF THE  NOTE
AGREEMENT WILL BE PROVIDED TO THE  REGISTERED  HOLDER HEREOF UPON REQUEST TO THE
COMPANY.

                        SOY ENVIRONMENTAL PRODUCTS, INC.


                         Senior Secured Convertible Note


No.  R-*[insert Note number]                                *[insert issue date]
$*[insert principal amount]

         Soy  Environmental   Products,   Inc.,  a  Delaware   corporation  (the
"Company"),  for value  received,  hereby  promises to pay to [insert name(s) of
Note holder(s)] or registered assigns on the Maturity Date, the principal amount
of *[insert  principal amount of Note written out] DOLLARS  ($[insert  principal
amount of Note in  numbers])  and to pay  interest  (computed  on the basis of a
360-day year of twelve 30-day months) on the principal  amount from time to time
remaining  unpaid  heron in an amount  equal to four  percent  (4%) per month in
advance  commencing  on  February  1,  1998,  and on the first day of each month
thereafter through the Maturity Date. The "Maturity Date" shall mean January 31,
1998  unless  extended  at the  discretion  of the  Company to July 31,  1998 by
payment of an extension fee equal to five percent (5%) of the  outstanding  face
amount of the Note.  Interest payments shall be paid to the person listed as the
registered  holder of this Note on the books of the  Company  as of the close of
business on the 15th day of the month  preceding the month in which the interest
payment date occurs.  Both the principal  hereof and interest hereon are payable
at the principal office of the Company, in coin or currency of the United States
of America,  which at the time of payment  shall be legal tender for the payment
of public and private  debts.  The Company shall have the option to pay interest
payments in the form of a check mailed to the  registered  address of the person
entitled thereto.

         This Note is one of the Notes of the Company in the aggregate principal
amount of up to $900,000  issued or to be issued under and pursuant to the terms
and provisions of the Note
                                       A-1
<PAGE>
                                                                     Exhibit 4.1

Agreement,  dated as of ____________,  1997, entered into by the Company and the
Placement  Agent and this Note and the holder  hereof are  entitled  equally and
ratably with the holders of all other Notes outstanding under the Note Agreement
to all the benefits  provided for thereby or referred to therein,  to which Note
Agreement reference is hereby made for the statement thereof.

         This Note and the other Notes  outstanding under the Note Agreement may
be declared due before their  expressed  maturity dates and certain  prepayments
are  required to be made  thereon,  all in the  events,  on the terms and in the
manner and amounts as provided in the Note Agreement.

         Subject  to and  upon  compliance  with  the  provisions  of  the  Note
Agreement,  the holder  hereof shall have the right and option at any time after
November  16, 1997 to convert the  principal  hereof or any portion  hereof into
fully  paid  and  nonassessable  shares  of  Common  Stock of the  Company  at a
conversion  price  per share of  $1.00.  Such  conversion  price is  subject  to
adjustment in certain events as more fully set forth in the Note Agreement.

         The Notes are subject to  prepayment at the option of the Company on or
before November 15, 1997.

         This Note is registered on the books of the Company and is transferable
only by surrender  thereof at the principal  office of the Company duly endorsed
or  accompanied  by a  written  instrument  of  transfer  duly  executed  by the
registered  holder of this Note or its  attorney  duly  authorized  in  writing.
Payment of or on account of  principal,  premium,  if any,  and interest on this
Note  shall be made  only to or upon  the  order in  writing  of the  registered
holder.

                                         SOY ENVIRONMENTAL PRODUCTS, INC.



                                         By_____________________________________

                                         Its____________________________________
                                       A-2
<PAGE>
                                                                     Exhibit 4.1


                       FORM OF REVERSE SIDE OF CERTIFICATE

                                 ASSIGNMENT FORM

To assign this Note, fill in the form below:

I or we assign and transfer this Note to: (Insert  Assignee's Social Security or
Tax Identification No.)

________________________________________________________________________________

________________________________________________________________________________
               (Pen or type assignee's name, address and zip code)

and irrevocably appoint _______________________________as 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 Note Certificate)

Signature Guarantee:____________________________________________________________



By____________________________________
The signature should be guaranteed by an eligible guarantor institution (a bank,
stockbroker,  savings and loan association or credit union with membership in an
approved signature  guarantee medallion program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.
                                       A-3
<PAGE>
                                                                     Exhibit 4.1

                                CONVERSION NOTICE
                (To be completed and signed only upon conversion
                        of the Notes in whole or in part)

TO: SOY ENVIRONMENTAL PRODUCTS, INC.


       The undersigned,  Holder of the attached Note, hereby  irrevocably elects
to convert $_______  principal amount of the Note for shares of Common Stock (as
such terms are defined in the Note  Agreement  dated  _________________,  1997),
from Soy  Environmental  Products,  Inc. (or other securities or property).  The
undersigned  hereby  requests  that the  Certificate(s)  for such  securities be
issued in the name(s) and delivered to the address(es) as follows:

Name:___________________________________________________________________________

Address:________________________________________________________________________

Deliver to:_____________________________________________________________________

Address:________________________________________________________________________

         If the foregoing  Conversion Notice evidences a conversion of less than
the total principal amount of this Note, please issue a new Note, of like tenor,
for the  remaining  principal  balance (or other  securities or property) in the
name(s), and deliver the same to the address(es), as follows:

Name:___________________________________________________________________________

Address:________________________________________________________________________

Dated:_________________________________, 19__.

                                   _____________________________________________
                                   (Name of Holder)

                                   _____________________________________________
                                   (Signature of Holder or Authorized Signatory)
                                             
                                   _____________________________________________
                                   (Social Security or Taxpayer Identification 
                                   Number of Holder)
                                       A-4