EXHIBIT 4.3

      THIS NOTE AND THE SECURITIES  REPRESENTED  HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  THEY MAY NOT BE SOLD, OFFERED FOR
SALE,  PLEDGED  OR  HYPOTHECATED  IN THE  ABSENCE OF AN  EFFECTIVE  REGISTRATION
STATEMENT  AS TO  THE  SECURITIES  UNDER  SAID  ACT  OR AN  OPINION  OF  COUNSEL
REASONABLY  SATISFACTORY  TO  THE  CORPORATION  THAT  SUCH  REGISTRATION  IS NOT
REQUIRED.


                SUBORDINATED SECURED CONVERTIBLE PROMISSORY NOTE


$1,000,000.00                                                 December ___, 2004
New York, New York


      FOR  VALUE  RECEIVED,   RG  America,   Inc.,  a  Nevada  corporation  (the
"Company"),  promises to pay to - (the "Holder"),  or its assigns, the principal
sum of One Million Dollars ($1,000,000.00), or such lesser amount as shall equal
the outstanding  principal  amount  subscribed to hereof and hereby noted on the
signature  page below,  together with interest from the date of this Note on the
unpaid  principal  balance  at a rate equal to twelve  percent  (12%) per annum,
computed  on the basis of the actual  number of days  elapsed  and a year of 365
days. All unpaid  principal,  together with any then unpaid and accrued interest
and other amounts payable  hereunder,  shall be due and payable on the "Maturity
Date"  which date shall be the earlier of (i) July 31,  2005,  or (ii) when such
amounts are  declared due and payable by the Holder (or made  automatically  due
and  payable)  upon or after the  occurrence  of an Event of Default (as defined
below).

      THE  OBLIGATIONS  DUE UNDER THIS NOTE ARE SECURED BY A SECURITY  AGREEMENT
(THE  "SECURITY  AGREEMENT")  DATED AS OF THE DATE  HEREOF AND  EXECUTED  BY THE
COMPANY IN FAVOR OF THE HOLDER. ADDITIONAL RIGHTS OF THE HOLDER ARE SET FORTH IN
THE SECURITY AGREEMENT.

      The  following  is a  statement  of the  rights  of  the  Holder  and  the
conditions  to which  this  Note is  subject,  and to which the  Holder,  by the
acceptance of this Note, agrees:

      1.    DEFINITIONS.  As used in this Note, the following  capitalized terms
have the following meanings:

            (a)   the "Company"  includes the  corporation  initially  executing
this Note and any Person which shall succeed to or assume the obligations of the
Company under this Note.


<PAGE>

            (b) "Certificate"  shall mean the Restated Articles of Incorporation
of Company as in effect on the date hereof.

            (c)  "Equity  Securities"  of any  Person  shall mean (a) all common
stock, preferred stock,  participations,  shares, partnership interests or other
equity interests in and of such Person (regardless of how designated and whether
or not voting or non-voting)  and (b) all warrants,  options and other rights to
acquire any of the foregoing.

            (d) "Event of Default" has the meaning given in Section 7 hereof.

            (e)  "Financial   Statements"   shall  mean,  with  respect  to  any
accounting  period for any Person,  statements of operations,  retained earnings
and cash flows of such Person for such period, and balance sheets of such Person
as of the end of such period,  setting  forth in each case in  comparative  form
figures for the corresponding period in the preceding fiscal year if such period
is less than a full  fiscal  year or,  if such  period  is a full  fiscal  year,
corresponding figures from the preceding fiscal year, all prepared in reasonable
detail and in accordance with generally accepted accounting  principles (except,
with  respect to monthly or quarterly  financials,  for  footnotes  and year end
adjustments). Unless otherwise indicated, each reference to Financial Statements
of any Person  shall be deemed to refer to  Financial  Statements  prepared on a
consolidated basis.

            (f) "Holder"  shall mean the Person  specified  in the  introductory
paragraph of this Note or any Person who shall at the time be the holder of this
Note.

            (g)  "Indebtedness"  shall mean and include the aggregate amount of,
without  duplication (a) all obligations for borrowed money, (b) all obligations
evidenced by bonds,  debentures,  notes or other  similar  instruments,  (c) all
obligations to pay the deferred  purchase  price of property or services  (other
than accounts payable incurred in the ordinary course of business  determined in
accordance with generally accepted accounting  principals),  (d) all obligations
with  respect  to  capital  leases,  (e)  all  guaranty  obligations;   (f)  all
obligations  created  or  arising  under  any  conditional  sale or other  title
retention  agreement with respect to property  acquired by such Person,  (g) all
reimbursement and other payment obligations, contingent or otherwise, in respect
of letters of credit and/or obligations under taxing authorities.

            (h)  "Investment"  of any  Person  shall mean any loan or advance of
funds by such Person to any other  Person  (other than  advances to employees of
such  Person for  moving  and  travel  expense,  drawing  accounts  and  similar
expenditures  in the  ordinary  course  of  business),  any  purchase  or  other
acquisition of any Equity  Securities or Indebtedness  of any other Person,  any
capital contribution by such Person to or any other investment by such Person in
any other Person (including,  without limitation,  any Indebtedness  incurred by
such Person of the type  described in clauses (a) and (b) of the  definition  of
"Indebtedness"  on  behalf  of  any  other  Person);  provided,   however,  that
Investments shall not include accounts  receivable or other indebtedness owed by
customers  of such  Person,  which are  current  assets  and arose from sales or
non-exclusive licensing in the ordinary course of such Person's business.


                                       2
<PAGE>

            (i) "Lien" shall mean,  with respect to any  property,  any security
interest,  mortgage, pledge, lien, claim, charge or other encumbrance in, of, or
on such property or the income therefrom,  including,  without  limitation,  the
interest of a vendor or lessor under a conditional sale agreement, capital lease
or other  title  retention  agreement,  or any  agreement  to provide any of the
foregoing, and the filing of any financing statement or similar instrument under
the Uniform Commercial Code or comparable law of any jurisdiction.

             (j) "Material  Adverse Effect" shall mean a material adverse effect
on (a) the business,  assets, operations, or financial or other condition of the
Company;  (b) the ability of the Company to pay or perform  the  Obligations  in
accordance with the terms of this Note and the other  Transaction  Documents and
to avoid a default or Event of Default under any  Transaction  Document;  or (c)
the rights  and  remedies  of Holder  under  this  Note,  the other  Transaction
Documents or any related document, instrument or agreement.

            (l) "Obligations" has the meaning given in Section 1 of the Security
Agreement.

            (m) "Permitted Indebtedness" means:

                  (i)  Indebtedness  of Company  in favor of the Holder  arising
under this Note;

                  (ii) The  existing  Indebtedness  disclosed  on the RG AMERICA
Disclosure Schedule (the "Schedule");

                  (iii)  Indebtedness  to trade  creditors,  including,  without
limitation, affiliates of Company, incurred in the ordinary course of business;

                  (iv) Other Indebtedness of Company, not exceeding $1.0 million
in the aggregate outstanding at any time;

                  (v) Contingent obligations of Company consisting of guarantees
(and other  credit  support)  of the  obligations  of vendors and  suppliers  of
Company  in respect  of  transactions  entered  into in the  ordinary  course of
business;

                  (vi)  Indebtedness  with respect to capital lease  obligations
and Indebtedness secured by Permitted Liens;

                  (vii)   Extensions,   renewals,   refundings,    refinancings,
modifications,  amendments  and  restatements  of any of the items of  Permitted
Indebtedness  (a) through (f) above,  provided that the principal amount thereof
is not increased or the terms thereof are not modified to impose more burdensome
terms upon Company.


                                       3
<PAGE>

            (n)  "Permitted  Investments"  shall mean and include:  (a) deposits
with  commercial  banks organized under the laws of the United States or a state
thereof to the extent such  deposits  are fully  insured by the Federal  Deposit
Insurance Corporation; (b) Investments in marketable obligations issued or fully
guaranteed by the United States and maturing not more than one (1) year from the
date of issuance; (c) Investments in open market commercial paper rated at least
"A1" or "P1" or higher by a national  credit rating agency and maturing not more
than one (1) year from the  creation  thereof;  (d)  Investments  pursuant to or
arising under currency  agreements or interest rate  agreements  entered into in
connection with bona fide hedging  arrangements;  (e) Investments  consisting of
deposit  accounts of the  Company in which the Holder has a  perfected  security
interest and deposit  accounts of its  Subsidiaries  maintained  in the ordinary
course of business;  (f)  Investments  existing on the Closing Date disclosed in
the Schedule;  (g) Extensions of credit in the nature of accounts  receivable or
notes  receivable  arising  from the same or lease of goods or  services  in the
ordinary course of business;  (h)  Investments  consisting of the endorsement of
negotiable  instruments for deposit or collection or similar transactions in the
ordinary  course of  business;  (i)  Investments  (including  debt  obligations)
received in connection  with the  bankruptcy or  reorganization  of customers or
suppliers and in settlement of  delinquent  obligations  of, and other  disputes
with,  customers or suppliers  arising in the ordinary  course of business;  (j)
Investments consisting of (i) compensation of employees,  officers and directors
of borrower so long as the Board of  Directors of Company  determines  that such
compensation is in the best interests of Company, (ii) travel advances, employee
relocation loans and other employee loans and advances in the ordinary course of
business,  (iii)  loans to  employees,  officers  or  directors  relating to the
purchase  of equity  securities  of Company,  (iv) other  loans to officers  and
employees  approved  by the  Board  of  Directors;  and  (k)  other  Investments
aggregating not in excess of $1,000,000 at any time.

            (o) "Permitted Liens" shall mean and include: (i) Liens for taxes or
other  governmental  charges not at the time  delinquent or  thereafter  payable
without penalty or being contested in good faith,  provided provision is made to
the  reasonable  satisfaction  of Holder  for the  eventual  payment  thereof if
subsequently  found payable;  (ii) Liens of carriers,  warehousemen,  mechanics,
materialmen,  vendors, and landlords incurred in the ordinary course of business
for sums not overdue or being  contested  in good faith,  provided  provision is
made to the reasonable  satisfaction of Holder for the eventual  payment thereof
if  subsequently  found payable;  (iii)  deposits  under workers'  compensation,
unemployment  insurance and social security laws or to secure the performance of
bids,  tenders,  contracts  (other than for the repayment of borrowed  money) or
leases,  or to secure  statutory  obligations  of  surety or appeal  bonds or to
secure  indemnity,  performance or other similar bonds in the ordinary course of
business; (iv) Liens securing obligations under a capital lease if such lease is
permitted under the Security  Agreement and such Liens do not extend to property
other than the  property  leased under such  capital  lease;  (v) Liens upon any
equipment  acquired or held by Company or any of its  Subsidiaries to secure the
purchase price of such equipment or indebtedness incurred solely for the purpose
of financing the  acquisition of such equipment;  (vi) easements,  reservations,
rights of way, restrictions,  minor defects or irregularities in title and other


                                       4
<PAGE>

similar  charges or affecting the value or use of such property;  (vii) Liens in
favor of the  Holder;  (viii)  Liens  existing  on the date  hereof  in favor of
holders of Senior  Indebtedness;  (ix) any liens  existing as of the date hereof
and disclosed in the Schedule; (x) liens on equipment leased by Company pursuant
to an operating  lease in the ordinary  course of business  (including  proceeds
thereof and accessions thereto) incurred solely for the purpose of financing the
lease of such equipment  (including Liens arising from UCC financing  statements
regarding  such  leases);  (xi)  liens  arising  from  judgements,   decrees  or
attachments  to the  extent  and  only  so  long as  such  judgment,  decree  or
attachment  does not  constitute an Event of Default under 7(h);  (xii) liens in
favor of customs  and revenue  authorities  arising as a matter of law to secure
payment of customs duties in connection  with the  importation of goods;  (xiii)
liens arising solely by virtue of any statutory or common law provision relating
to  banker's  liens,  rights  off setoff or similar  rights and  remedies  as to
deposit  accounts  or  other  funds   maintained  with  a  creditor   depository
institution; and (xiv) liens incurred in connection with the extension, renewal,
refunding,   refinancing,   modification,   amendment  or   restatement  of  the
indebtedness  secured by Liens of the type  described  in clauses (i) and (xiii)
above, provided that any extension, renewal or replacement Lien shall be limited
to the property  encumbered by the existing Lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase.

            (p) "Person" shall mean and include an individual, a partnership,  a
corporation  (including  a business  trust),  a joint stock  company,  a limited
liability  company,  an  unincorporated  association,  a joint  venture or other
entity or a governmental authority.

            (q)  "Senior  Indebtedness"  shall  mean the  principal  of,  unpaid
interest on and other amounts due in connection with the Company's Business Loan
Agreement  with Town North Bank in an amount not to exceed $0.50  million at any
time.

            (r) "Preferred shares" shall mean the Company's presently authorized
Preferred Stock.

            (s)  "Subsidiary"  shall mean (a) any corporation of which more than
50% of the issued and outstanding equity securities having ordinary voting power
to elect a majority of the Board of Directors of such corporation is at the time
directly or  indirectly  owned or controlled  by Company,  (b) any  partnership,
joint  venture,  or other  association  of  which  more  than 50% of the  equity
interest  having the power to vote,  direct or control  the  management  of such
partnership,  joint  venture or other  association  is at the time  directly  or
indirectly  owned and controlled by Company (c) any other entity included in the
financial statements of Company on a consolidated basis.

            (t)  "Transaction  Documents"  shall  mean this Note,  the  Security
Agreement, the Warrant (as defined in Section 11 hereof).


                                       5
<PAGE>

      2.    REPRESENTATIONS  AND WARRANTIES OF COMPANY.  The Company  represents
and warrants to the Holder that except as disclosed in the RG AMERICA Disclosure
Schedule delivered concurrently herewith:

            (a) Due  Incorporation  and  Qualification.  Each of Company and its
Subsidiaries (i) is a corporation  duly organized,  validly existing and in good
standing under the laws of its jurisdiction of incorporation; (ii) has the power
and authority to own, lease and operate its properties and carry on its business
as now conducted and as proposed to be conducted;  and (iii) is duly  qualified,
licensed to do business and in good  standing as a foreign  corporation  in each
jurisdiction  where the failure to be so qualified or licensed could  reasonably
be expected to have a Material Adverse Effect.

            (b) Authority. The execution, delivery and performance by Company of
each Transaction  Document to be executed by Company and the consummation of the
transactions  contemplated  thereby (i) are within the power of Company and (ii)
have been duly authorized by all necessary actions on the part of Company.

            (c)  Enforceability.  Each Transaction  Document executed,  or to be
executed,  by Company  has been,  or will be, duly  executed  and  delivered  by
Company  and  constitutes,  or will  constitute,  a  legal,  valid  and  binding
obligation of Company, enforceable against Company in accordance with its terms,
except as limited by bankruptcy, insolvency or other laws of general application
relating to or affecting  the  enforcement  of creditors'  rights  generally and
general principles of equity.

            (d) Non-Contravention.  The execution and delivery by Company of the
Transaction  Documents  executed by Company and the performance and consummation
of the  transactions  contemplated  thereby do not and will not (i)  violate the
Certificate of Incorporation or Bylaws of the Company or any material  judgment,
order, writ, decree,  statute,  rule or regulation  applicable to Company;  (ii)
violate any  provision  of, or result in the breach or the  acceleration  of, or
entitle any other Person to  accelerate  (whether  after the giving of notice or
lapse of time or both), any material mortgage, indenture,  agreement, instrument
or contract to which Company is a party or by which it is bound; or (iii) result
in the creation or imposition of any Lien upon any property, asset or revenue of
Company  (other than any Lien arising  under the  Transaction  Documents) or the
suspension,  revocation,  impairment,  forfeiture, or nonrenewal of any material
permit,  license,  authorization or approval applicable to Company, its business
or operations, or any of its assets or properties.

            (e) Approvals. No consent,  approval,  order or authorization of, or
registration,  declaration or filing with, any  governmental  authority or other
Person  (including,  without  limitation,  the  shareholders  of any  Person) is
required in  connection  with the  execution  and  delivery  of the  Transaction
Documents  executed  by Company  and the  performance  and  consummation  of the
transactions contemplated thereby.

            (f) No  Violation or Default.  None of the Company or the  Company's
Subsidiaries  is  in  violation  of  or in  default  with  respect  to  (i)  its
Certificate of  Incorporation  or Bylaws or equivalent  charter  document or any


                                       6
<PAGE>

material judgment,  order, writ, decree,  statute, rule or regulation applicable
to such Person; (ii) any material mortgage, indenture,  agreement, instrument or
contract  to which such  Person is a party or by which it is bound (nor is there
any waiver in effect which,  if not in effect,  would result in such a violation
or default),  where, in each case, such violation or default,  individually,  or
together with all such violations or defaults,  could  reasonably be expected to
have a Material Adverse Effect.

            (g)  Litigation.   No  actions   (including,   without   limitation,
derivative actions), suits, proceedings or investigations are pending or, to the
knowledge  of the  Company,  threatened  against  the  Company or the  Company's
Subsidiaries  at law or in equity in any court or before any other  governmental
authority  which if adversely  determined  (i) would (alone or in the aggregate)
have a  Material  Adverse  Effect or (ii) seeks to enjoin,  either  directly  or
indirectly,  the  execution,  delivery  or  performance  by the  Company  of the
Transaction Documents or the transactions contemplated thereby.

            (h) Title.  The Company and the Company's  Subsidiaries own and have
good and  marketable  title in fee  simple  absolute  to,  or a valid  leasehold
interest in, all their  respective real properties and good title to their other
respective  assets and  properties  as  reflected  in the most recent  Financial
Statements  delivered to Purchasers (except those assets and properties disposed
of in the  ordinary  course  of  business  since  the  date  of  such  Financial
Statements)  and all respective  assets and  properties  acquired by Company and
Company's Subsidiaries since such date (except those disposed of in the ordinary
course of business).  Such assets and properties are subject to no Lien,  except
for Permitted Liens.

            (i) Equity  Securities.  The authorized capital stock of the Company
consists of 300,000,000  shares of Common Stock, $.001 par value, and 35,000,000
shares of  Preferred  Stock,  $.001 par  value,  of which  there are  issued and
outstanding,  118,885,605  shares of Common Stock and zero (0) Preferred shares.
Additionally,  there are  27,614,850  shares of common stock that are subscribed
and issuable  There are no other  outstanding  shares of capital stock or voting
securities.  All  outstanding  shares  of the  Company's  Common  Stock  and the
Company's  Series A Preferred Stock are duly authorized,  validly issued,  fully
paid and  non-assessable  and are free of any Liens other than any Liens created
by or imposed upon the holders thereof, and are not subject to preemptive rights
or rights of first refusal created by statute,  the Certificate of Incorporation
or Bylaws of the Company or any  agreement to which the Company is a party or by
which  it is  bound.  There  are no  other  options,  warrants,  calls,  rights,
commitments or agreements of any character to which the Company is a party or by
which it is bound obligating the Company to issue, deliver,  sell, repurchase or
redeem, or cause to be issued,  delivered,  sold,  repurchased or redeemed,  any
shares of capital  stock of the  Company  or  obligating  the  Company to grant,
extend,  accelerate  the vesting of, change the price of, or otherwise  amend or
enter into any such option, warrant, call, right, commitment or agreement.


                                       7
<PAGE>

      3.    REPRESENTATIONS  AND WARRANTIES OF HOLDER. The Holder represents and
warrants to the Company that such Holder has been advised that neither this Note
nor the  securities  which may be issued  upon the  conversion  hereof have been
registered  under  the  Securities  Act,  or  any  state  securities  laws  and,
therefore,  cannot be resold  unless  registered  under the  Securities  Act and
applicable state  securities laws or unless an exemption from such  registration
requirements  is  available.  Such  Holder is aware that the Company is under no
obligation to effect any such  registration  with respect to the Note or to file
for or comply with any  exemption  from  registration.  Such Holder has not been
formed solely for the purpose of making this  investment  and is purchasing  the
Note to be acquired by such Holder hereunder for its own account for investment,
not as a nominee or agent,  and not with a view to, or for resale in  connection
with, the distribution thereof. Such Holder has such knowledge and experience in
financial and business  matters that such Purchaser is capable of evaluating the
merits and risks of such  investment,  is able to incur a complete  loss of such
investment  and is able to bear  the  economic  risk of such  investment  for an
indefinite period of time. Such Holder is an accredited investor as such term is
defined in Rule 501 of Regulation D under the Securities Act.

      4.    INTEREST.  Accrued interest on the outstanding  principal balance on
this Note shall be payable on the Maturity Date.

      5.    PREPAYMENT.  Upon  fifteen  (15) days  prior  written  notice to the
Holder, the Company may prepay this Note in whole or in part;  provided that any
such  prepayment will be applied first to the payment of expenses due under this
Note,  second to  interest  accrued  on this Note and  third,  if the  amount of
prepayment exceeds the amount of all such expenses and accrued interest,  to the
payment of principal of this Note.

      6.    CERTAIN  COVENANTS.  While any amount is outstanding under the Note,
without the prior  written  consent of the Holder,  which  consent  shall not be
unreasonably withheld or delayed:

            (a) Indebtedness.  Neither Company nor any of its Subsidiaries shall
create,  incur,  assume  or  permit  to exist  any  Indebtedness  except  Senior
Indebtedness and Permitted Indebtedness.

            (b) Liens.  Neither the Company  nor any of its  Subsidiaries  shall
create,  incur,  assume or permit to exist any Lien on or with respect to any of
its  assets  or  property  of any  character,  whether  now  owned or  hereafter
acquired, except for Permitted Liens.

            (c)  Asset  Dispositions.   Neither  the  Company  nor  any  of  its
Subsidiaries shall sell, lease, transfer, license or otherwise dispose of any of
its  assets or  property  (collectively,  a  "Transfer"),  whether  now owned or
hereafter acquired,  except (i) transfers in the ordinary course of its business
consisting of the sale of inventory and sales of worn-out or obsolete  equipment
and (ii)  transfers  not in excess of $1.0 million for fair value and other than
to any affiliate of the Company.


                                       8
<PAGE>

            (d) Mergers,  Acquisitions,  Etc. Neither the Company nor any of its
Subsidiaries shall consolidate with or merge into any other Person or permit any
other Person to merge into it, or acquire all or substantially all of the assets
or capital stock of any other Person.

            (e)  Investments.  Neither the  Company nor any of its  Subsidiaries
shall make any Investment  except for Permitted  Investments.  Without  previous
notice to Holder,  Company  will not sell an amount  greater  than  $100,000  in
equity securities.

            (f) Dividends,  Redemptions, Etc. Neither the Company nor any of its
Subsidiaries shall (i) pay any dividends or make any distributions on its equity
securities;  (ii) purchase,  redeem,  retire,  decease or otherwise  acquire for
value any of its equity  securities;  (iii)  return any capital to any holder of
its equity securities;  (iv) make any distribution of assets, Equity Securities,
obligations  or  securities to any holder of its Equity  Securities;  or (v) set
apart  any sum for any such  purpose;  other  than  payments  of  principal  and
interest on outstanding  bridge loans and  repurchases of shares from terminated
employees  pursuant to the terms of restricted  stock purchase  agreements,  and
provided, however, that any Subsidiary may pay cash dividends to Company.

            (g)  Indebtedness  Payments.  Except  as  set  forth  on RG  AMERICA
Disclosure  Schedule (as defined in the Merger  Agreement),  neither the Company
nor any of its  Subsidiaries  shall (i) prepay,  redeem,  purchase,  decrease or
otherwise  satisfy in any manner prior to the  scheduled  repayment  thereof any
Indebtedness  for borrowed money (other than (A) amounts due under this Note and
(B) Senior  Indebtedness) or lease obligations,  (ii) amend, modify or otherwise
change  the  terms  of any  Indebtedness  for  borrowed  money  (other  than (A)
Obligations under this Note and (B) Senior Indebtedness) or lease obligations so
as to  accelerate  the scheduled  repayment  thereof or (iii) repay any notes to
officers, directors or stockholders.

            (h) Information  Rights;  Notices.  The Company shall furnish to the
Holder the following:

                  (i) Quarterly  Financial  Statements.  Within ninety (90) days
after the last day of each quarter,  a copy of the  Financial  Statements of the
Company for such quarter and for the fiscal year to date, certified by the chief
financial  officer or controller of the Company to present  fairly the financial
condition,  results of operations and other information presented therein and to
have been prepared in accordance with generally accepted  accounting  principals
consistently applied,  subject to normal year end adjustments and except that no
footnotes need be included with such Financial Statements;

                  (ii)  Annual  Financial  Statements.  Within  ninety (90) days
after the close of each  fiscal year of the  Company,  (i) copies of the audited
Financial  Statements  of  Company  for  such  year,  audited  by  a  recognized


                                       9
<PAGE>

independent  certified  public  accountants,  (ii)  copies  of  the  unqualified
opinions and management letters delivered by such accountants in connection with
such  Financial  Statements,  and (iii) a report  containing  a  description  of
projected business prospects  (including capital  expenditures) and management's
discussion  and  analysis of  financial  condition  and results of  operation of
Company and its Subsidiaries;

                  (iii) SEC  Reports.  At such time as the Company is subject to
the  reporting  requirement  of the Exchange  Act, as soon as possible and in no
event  later than five (5) days after they are sent,  made  available  or filed,
copies of all  registration  statements  and reports  filed by Company  with the
Securities  and  Exchange  Commission  and all  reports,  proxy  statements  and
financial  statements  sent or made  available  by Company  to its  stockholders
generally; and

                  (iv) Notice of Defaults. Promptly upon the occurrence thereof,
written notice of the occurrence of any Event of Default  hereunder or any event
of default with respect to any Senior Indebtedness.

            (i) Inspection Rights. The Holder and its representatives shall have
the right,  at any time during normal  business  hours,  upon  reasonable  prior
notice,  to visit and inspect the  properties of the Company and its  corporate,
financial and operating records,  and make abstracts  therefrom,  and to discuss
the Company's  affairs,  finances and accounts with its directors,  officers and
independent public accountants.

            (j) Use of Proceeds.  The Company  shall use the  proceeds  from all
borrowings under this Note solely for working capital purposes.

      7.    EVENTS OF DEFAULT.  The  occurrence  of any of the  following  shall
constitute  an  "Event of  Default"  under  this Note and the other  Transaction
Documents:

            (a) Failure to Pay.  The Company  shall fail to pay (i) when due any
principal  payment  on the due  date  hereunder  or (ii) any  interest  or other
payment required under the terms of this Note or any other Transaction  Document
on the date due and such  payment  shall not have been made within five (5) days
of Company's  receipt of the Holder's  written notice to Company of such failure
to pay; or

            (b)  Breaches  of  Certain  Covenants.  The  Company  or  any of its
Subsidiaries  shall  fail  to  observe  or  perform  any  covenant,  obligation,
condition or agreement set forth in Section 6(d), 6(f) or 6(j) of this Note; or

            (c)  Breaches  of  Other  Covenants.  The  Company  or  any  of  its
Subsidiaries  shall fail to observe or perform any other  covenant,  Transaction
Documents  (other than those  specified in Sections  7(a) and 7(b)) and (i) such
failure  shall  continue for fifteen (15) days, or (ii) if such failure does not
result  from the payment of money or the failure to pay money and is not curable
within such fifteen (15) day period,  but is  reasonably  capable of cure within


                                       10
<PAGE>

forty-five (45) days, either (A) such failure shall continue for forty-five (45)
days or (B) the Company or its  Subsidiary  shall not have commenced a cure in a
manner reasonably satisfactory to the Holder within the initial fifteen (15) day
period; or

            (d)  Representations and Warranties.  Any representation,  warranty,
certificate, or other statement (financial or otherwise) made or furnished by or
on behalf of the Company to the Holder in writing in  connection  with this Note
or any of the other Transaction Documents,  or as an inducement to the Holder to
enter  into  this  Note and the  other  Transaction  Documents,  shall be false,
incorrect,  incomplete  or  misleading  in any respect  when made or  furnished,
except any such false, incorrect,  incomplete or misleading statement which will
not result in a Material Adverse Effect on the Company; or

            (e) Other  Payment  Obligations.  Except  pursuant to the  Company's
Business Loan Agreement  with Town North  National  Bank,  which may be replaced
with an equivalent entity indebtedness as described in the RG AMERICA Disclosure
Schedule,  the Company or any of its Subsidiaries  shall (i)(A) fail to make any
payment when due under the terms of any bond, debenture,  note or other evidence
of Indebtedness,  including the Senior  Indebtedness,  to be paid by such Person
(excluding this Note and the other Transaction Documents but including any other
evidence of  Indebtedness  of Company or any of its  Subsidiaries to the Holder)
and such failure shall continue beyond any period of grace provided with respect
thereto, or (B) default in the observance or performance of any other agreement,
term or condition contained in any such bond, debenture,  note or other evidence
of Indebtedness,  and (ii) the effect of such failure or default is to cause, or
permit the holder or holders  thereof  to cause,  Indebtedness  in an  aggregate
amount of Two Hundred Fifty  Thousand  Dollars  ($250,000) or more to become due
prior to its stated date of maturity,  unless such acceleration  shall have been
rescinded and such failure to pay cured within thirty (30) days from the date of
such acceleration; or

            (f) Voluntary Bankruptcy or Insolvency  Proceedings.  The Company or
any of its  Subsidiaries  shall (i) apply for or consent to the appointment of a
receiver,  trustee, liquidator or custodian of itself or of all or a substantial
part of its property,  (ii) be unable, or admit in writing its inability, to pay
its debts  generally as they  mature,  (iii) make a general  assignment  for the
benefit of its or any of its creditors,  (iv) be dissolved or liquidated in full
or in part,  (v) become  insolvent  (as such term may be defined or  interpreted
under  any  applicable  statute),  (vi)  commence  a  voluntary  case  or  other
proceeding seeking  liquidation,  reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter  in effect or consent to any such relief or to the  appointment  of or
taking  possession  of its  property by any official in an  involuntary  case or
other proceeding  commenced against it, or (vii) take any action for the purpose
of effecting any of the foregoing; or

            (g) Involuntary  Bankruptcy or Insolvency  Proceedings.  Proceedings
for the  appointment  of a receiver,  trustee,  liquidator  or  custodian of the
Company  or any of its  Subsidiaries  or of  all or a  substantial  part  of the


                                       11
<PAGE>

property  thereof,   or  an  involuntary  case  or  other  proceedings   seeking
liquidation,  reorganization  or other relief with respect to the Company or any
of its  Subsidiaries  or the debts thereof under any  bankruptcy,  insolvency or
other similar law now or hereafter in effect shall be commenced and an order for
relief entered or such  proceeding  shall not be dismissed or discharged  within
sixty (60) days of commencement; or

            (h) Judgments. A final judgment or order for the payment of money in
excess of Two Hundred Fifty Thousand  Dollars  ($250,000)  (exclusive of amounts
covered by insurance  issued by an insurer not an affiliate of Company) shall be
rendered  against  the  Company  or any of its  Subsidiaries  and the same shall
remain  undischarged  for a period of thirty  (30) days during  which  execution
shall not be effectively stayed, or any judgment,  writ, assessment,  warrant of
attachment,  or execution or similar process shall be issued or levied against a
substantial  part of the property of the Company or any of its  Subsidiaries and
such judgment,  writ, or similar process shall not be released,  stayed, vacated
or otherwise dismissed within thirty (30) days after issue or levy; or

            (i) Transaction Documents.  Any Transaction Document or any material
term  thereof  shall  cease to be, or be  asserted  by the  Company not to be, a
legal,  valid and binding  obligation of Company  enforceable in accordance with
its terms or if the Liens of the  Holder in any of the  assets of Company or its
Subsidiaries  shall cease to be or shall not be valid and perfected Liens or the
Company  or any  Subsidiary  shall  assert  that  such  Liens  are not valid and
perfected Liens.

      8.    RIGHTS OF HOLDER UPON DEFAULT.  Upon the  occurrence or existence of
any Event of Default  (other  than an Event of Default  referred  to in Sections
7(f) and 7(g)) and at any time  thereafter  during the continuance of such Event
of  Default,  the Holder  may,  by written  notice to the  Company,  declare all
outstanding  Obligations  payable by the Company hereunder to be immediately due
and payable  without  presentment,  demand,  protest or any other  notice of any
kind, all of which are hereby expressly waived,  anything contained herein or in
the  other  Transaction  Documents  to the  contrary  notwithstanding.  Upon the
occurrence  or existence of any Event of Default  described in Sections 7(f) and
7(g),  immediately and without notice,  all outstanding  Obligations  payable by
Company  hereunder  shall  automatically  become  immediately  due and  payable,
without  presentment,  demand,  protest or any other notice of any kind,  all of
which are hereby  expressly  waived,  anything  contained herein or in the other
Transaction  Documents  to the  contrary  notwithstanding.  In  addition  to the
foregoing  remedies,  upon the  occurrence or existence of any Event of Default,
the Holder may exercise any other  right,  power or remedy  granted to it by the
Transaction  Documents  or otherwise  permitted to it by law,  either by suit in
equity or by action at law, or both.

      9.    SUBORDINATION.  The  indebtedness  evidenced  by this Note is hereby
expressly  subordinated,  to the extent and in the manner hereinafter set forth,
in right of payment to the prior payment in full of the Senior Indebtedness.


                                       12
<PAGE>

            (a) Insolvency  Proceedings.  If there shall occur any receivership,
insolvency, assignment for the benefit of creditors, bankruptcy, reorganization,
or arrangements  with creditors  (whether or not pursuant to bankruptcy or other
insolvency laws),  sale of all or substantially all of the assets,  dissolution,
liquidation,  or any other  marshaling  of the  assets  and  liabilities  of the
Company,  (i) no amount shall be paid by the Company in respect of the principal
of,  interest  on or other  amounts  due with  respect  to this Note at the time
outstanding,  unless  and until the  principal  of and  interest  on the  Senior
Indebtedness  then outstanding shall be paid in full, and (ii) no claim or proof
of claim  shall be filed with the Company by or on behalf of Holder of this Note
which shall assert any right to receive any payments in respect of the principal
of and  interest  on this Note  except  subject  to the  payment  in full of the
principal of and interest on all of the Senior Indebtedness then outstanding.

            (b) Default on Senior Indebtedness. If there shall occur an event of
default  which  has  been  declared  in  writing  with  respect  to  any  Senior
Indebtedness,  as  defined  therein,  or in the  instrument  under  which  it is
outstanding,  permitting the holder to accelerate  the maturity  thereof and the
Holder shall have received written notice thereof from the holder of such Senior
Indebtedness, then, unless and until such event of default shall have been cured
or waived or shall have ceased to exist, or all Senior  Indebtedness  shall have
been paid in full,  no payment  shall be made in respect of the  principal of or
interest on this Note,  unless  within one hundred  eighty  (180) days after the
happening  of such event of default,  the  maturity of such Senior  Indebtedness
shall not have been accelerated. Not more than one notice may be given to Holder
pursuant to the terms of this Section 9(b) during any 360 day period.

            (c)  Further  Assurances.  By  acceptance  of this Note,  the Holder
agrees  to  execute  and  deliver  customary  forms of  subordination  agreement
requested  from  time  to time  by  holders  of  Senior  Indebtedness,  and as a
condition to the  Holder's  rights  hereunder,  the Company may require that the
Holder execute such forms of subordination  agreement;  provided that such forms
shall not impose on the Holder terms less favorable  than those provided  herein
and in the Security Agreement.

            (d) Other  Indebtedness.  No indebtedness  which does not constitute
Senior  Indebtedness  shall  be  senior  in  any  respect  to  the  indebtedness
represented by this Note.

            (e)  Subrogation.  Subject  to the  payment  in full  of all  Senior
Indebtedness,  the Holder shall be  subrogated to the rights of the holder(s) of
such Senior Indebtedness (to the extent of the payments or distributions made to
the  holder(s) of such Senior  Indebtedness  pursuant to the  provisions of this
Section  9) to  receive  payments  and  distributions  of assets of the  Company
applicable  to the  Senior  Indebtedness.  No  such  payments  or  distributions
applicable  to the Senior  Indebtedness  shall,  as between  the Company and its
creditors,  other than the holders of Senior  Indebtedness  and the  Holder,  be
deemed to be a payment by the  Company  to or on  account of this Note;  and for
purposes of such  subrogation,  no payments or  distributions  to the holders of
Senior  Indebtedness  to which  the  Holder  would be  entitled  except  for the
provisions  of this Section 9 shall,  as between the Company and its  creditors,
other than the holders of Senior  Indebtedness and the Holder, be deemed to be a
payment by the Company to or on account of the Senior Indebtedness.


                                       13
<PAGE>

            (f) No Impairment.  Subject to the rights, if any, of the holders of
Senior  Indebtedness  under this Section 9 to receive cash,  securities or other
properties otherwise payable or deliverable to the Holder,  nothing contained in
this  Section 9 shall  impair,  as  between  the  Company  and the  Holder,  the
obligation of the Company, subject to the terms and conditions hereof, to pay to
the Holder the principal  hereof and interest hereon as and when the same become
due and  payable,  or shall  prevent the Holder,  upon default  hereunder,  from
exercising  all rights,  powers and  remedies  otherwise  provided  herein or by
applicable law.

            (g) Lien  Subordination.  Any  Lien of the  Holder,  whether  now or
hereafter  existing in  connection  with the amounts due under this Note, on any
assets or property of the Company or any  proceeds or revenues  therefrom  which
the Holder may have at any time as security for any amounts due and  obligations
under this Note shall be subordinate to all Liens now or hereafter  granted to a
holder of Senior  Indebtedness by Company or by law,  notwithstanding  the date,
order or method of attachment  or perfection of any such Lien or the  provisions
of any applicable law.

            (h) Reliance of Holders of Senior  Indebtedness.  The Holder, by its
acceptance  hereof,  shall be deemed to acknowledge and agree that the foregoing
subordination  provisions  are, and are intended to be, an  inducement  to and a
consideration  of each  holder  of  Senior  Indebtedness,  whether  such  Senior
Indebtedness  was  created  or  acquired  before  or after the  creation  of the
indebtedness evidenced by this Note, and each such holder of Senior Indebtedness
shall be deemed conclusively to have relied on such subordination  provisions in
acquiring and holding, or in continuing to hold, such Senior Indebtedness.

      10.   CONVERSION.

            (a)  Conversion  by Holder.  At any time prior to payment in full of
the  principal  balance of this Note,  the Holder  shall have the right,  at the
Holder's  option,  to convert this Note,  in accordance  with the  provisions of
Section 10(c)  hereof,  in whole or in part,  into fully paid and  nonassessable
shares of Common  Stock,  provided that the Holder shall provide at least thirty
(30) days notice to the Company of Holder's  election to convert  this Note into
shares of RG America's  Common Stock upon the occurrence of an Event of Default.
The number of shares of RG  America's  Common  Stock into which this Note may be
converted  shall be determined by dividing the aggregate  amount of this Note to
be converted by the Conversion Price (as defined below) in effect at the time of
such  conversion.  The initial  "Conversion  Price"  shall be equal to $0.60 per
share post  reverse-split.  The Conversion  Price shall be subject to adjustment
from time to time  pursuant to Section 12 hereof and the terms of the  Company's
Certificate.


                                       14
<PAGE>

            (b)  Conversion  by the Company.  The Company  shall have the right,
with the  Holder's  consent,  to  convert  this  Note,  in  accordance  with the
provisions  of Section 10(c)  hereof,  in whole or in part,  into fully paid and
nonassessable  shares of RG  America's  common  stock.  The  number of shares of
common  stock into  which  this Note may be  converted  shall be  determined  by
dividing the  aggregate  amount of this Note to be  converted by the  Conversion
Price in effect at the time of such conversion.

            (c)   Conversion Procedure.

                  (i) Conversion  Pursuant to Section  10(a).  Before the Holder
shall be entitled to convert this Note into shares of RG America's Common Stock,
it shall  surrender this Note,  duly endorsed,  at the office of the Company and
shall give written  notice,  postage  prepaid,  to the Company at its  principal
corporate office, of the election to convert the same pursuant to Section 10(a),
and shall state therein the amount of the unpaid  principal  amount of this Note
to be converted and the name or names in which the  certificate or  certificates
for shares of RG America's Common Stock are to be issued.  The Company shall, as
soon  as  practicable  thereafter  (but  in  any  event  within  ten  (10)  days
thereafter),  issue and  deliver  to the  Holder of this Note a  certificate  or
certificates  for the number of shares of RG America's Common Stock to which the
Holder shall be entitled upon  conversion  (bearing such legends as are required
by applicable state and federal  securities  laws),  together with a replacement
Note (if any principal  amount is not  converted)  and any other  securities and
property to which the Holder is entitled upon such conversion under the terms of
this Note,  including a check payable to Holder for any cash amounts  payable as
described in Section  10(d).  The  conversion  shall be deemed to have been made
immediately  prior to the close of business on the date of the surrender of this
Note,  and the Person or Persons  entitled to receive the shares of RG America's
Common  Stock upon such  conversion  shall be treated  for all  purposes  as the
record holder or holders of such shares of RG America's  Common Stock as of such
date.

                  (ii)  Conversion  Pursuant to Section  10(b).  If this Note is
converted  by the Company  pursuant to Section  10(b),  written  notice shall be
delivered to the Holder  notifying the Holder of the  conversion to be effected,
specifying  the  Conversion  Price,  the  principal  amount  of the  Note  to be
converted,  the date on which such  conversion  is expected to occur and calling
upon  such  Holder to  surrender  to  Company,  in the  manner  and at the place
designated,  the Note.  Upon such  conversion  of this Note,  the  Holder  shall
surrender this Note, duly endorsed,  at the principal office of Company.  At its
expense, the Company shall, as soon as practicable  thereafter (but in any event
within ten (10) days thereafter), issue and deliver to such Holder a certificate
or certificates  for the number of shares to which Holder shall be entitled upon
such  conversion  (bearing such legends as are required by applicable  state and
federal  securities  laws),  together with any other  securities and property to
which the Holder is entitled upon such conversion  under the terms of this Note,
including  a check  payable  to the  Holder  for any  cash  amounts  payable  as
described in Section  10(d).  Any  conversion  of this Note  pursuant to Section
10(b) shall be deemed to have been made immediately  prior to the closing of the
issuance and sale of shares as described in Section  10(b) and on and after such
date the Person  entitled to receive the shares  issuable  upon such  conversion
shall be treated for all purpose as the record  Holder of such shares as of such
date.


                                       15
<PAGE>

            (d) Fractional Shares; Interest; Effect of Conversion. No fractional
shares  shall be issued  upon  conversion  of this Note.  In lieu of the Company
issuing any  fractional  shares to the Holder upon the  conversion of this Note,
the Company  shall pay to the Holder an amount equal to the product  obtained by
multiplying the Conversion  Price by the fraction of a share not issued pursuant
to the previous sentence.  In addition,  the Company shall pay to the Holder any
interest  accrued  on the amount  converted  and on the amount to be paid to the
Company pursuant to the previous sentence.  Upon conversion of this Note in full
and the payment of the amounts  specified  in this  Section  10(d),  the Company
shall  be  forever   released  and  discharged  from  all  its  obligations  and
liabilities under this Note.

      11.   ISSUANCES  OF  WARRANTS.  In the  event  that the  Holder  elects to
convert all or any portion of this Note into shares of RG America's Common Stock
pursuant to Section 10(a) hereof,  or in the event the Company elects to convert
all or any  portion  of this  Note  into  shares of RG  America's  Common  Stock
pursuant  to Section  10(b)  hereof the  Company  hereby  agrees to issue to the
Holder warrants to purchase shares of RG America's  Common Stock (the "Warrant")
as set forth below:

            (a) No Warrant shall be issued if the aggregate  principal amount of
this  Note to be  converted  together  with any  principal  amount  of this Note
previously converted is less than $100,001. This threshold amount applies to the
aggregate  of all  individual  Holders of Notes.  A Holder of $25,000 or more is
entitled to warrants, in accordance with the provisions of Section 11(b) hereof,
if the aggregate of all Notes is more than $100,001.

      t 12 (b) If the  aggregate  principal  amount of this Note to be converted
together with any  principal  amount of this Note  previously  converted is more
than  $100,001,  the  Company  shall  issue to the  Holder  concurrent  with the
issuance  of the  shares of RG  America's  Common  Stock to be issued  upon such
conversion,  a Warrant to purchase up to 1,500,000 shares of RG America's Common
Stock.  The number of shares  subject to the first Warrant to be issued shall be
determined by multiplying  1.05 times a fraction,  the numerator of which is the
amount by which the aggregate  principal amount to be converted exceeds $100,001
and the denominator of which is a minimum of $0.60. The number of shares subject
to any subsequent  Warrant to be issued shall be determined by multiplying  1.05
times a fraction, the numerator of which is the aggregate principal amount to be
converted and the denominator of which is a minimum $0.60.

            (c) Each  Warrant  to be  issued  by the  Company  pursuant  to this
Section 11 shall have an exercise price of a minimum of $ 0.60 per share, a term
of three (3) years and such other  terms as are set forth in the form of Warrant
attached hereto as Exhibit A.

            (d) The  shares  of RG  America's  Common  Stock  issuable  upon the
exercise of any Warrants issued pursuant to this Section 11 shall be entitled to
"piggy back" registration rights.


                                       16
<PAGE>

      12.   CONVERSION PRICE ADJUSTMENTS.

            (a) Adjustments for Stock Splits and Subdivisions.  In the event the
Company  should  at any time or from  time to time  after  the date of  issuance
hereof fix a record date for the  effectuation  of a split or subdivision of the
outstanding  shares of RG America's Common Stock or the determination of holders
of Series A  Preferred  entitled  to  receive a dividend  or other  distribution
payable in additional shares of RG America's Common Stock or other securities or
rights  convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of RG America's Common Stock (hereinafter referred
to  as  "RG  America's  Common  Stock  Equivalents")   without  payment  of  any
consideration by such holder for the additional  shares of Series A Preferred or
the RG America's Common Stock Equivalents (including the additional shares of RG
America's Common Stock issuable upon conversion or exercise  thereof),  then, as
of such  record  date  (or the  date of such  dividend  distribution,  split  or
subdivision if no record date is fixed), the Conversion Price of this Note shall
be  appropriately  decreased so that the number of shares of RG America's Common
Stock issuable upon  conversion of this Note shall be increased in proportion to
such increase of outstanding shares.

            (b) Adjustments for Reverse Stock Splits. If the number of shares of
RG  America's  Common  Stock  outstanding  at any time after the date  hereof is
decreased by a  combination  of the  outstanding  shares of RG America's  Common
Stock, then, following the record date of such combination, the Conversion Price
for this Note shall be  appropriately  increased so that the number of shares of
RG America's  Common Stock  issuable on conversion  hereof shall be decreased in
proportion to such decrease in outstanding shares.

            (c)   Notices of Record Date, etc. In the event of:

                  (i) Any taking by the  Company  of a record of the  holders of
any class of  securities  of the  Company  for the  purpose of  determining  the
holders  thereof who are  entitled to receive  any  dividend  (other than a cash
dividend payable out of earned surplus at the same rate as that of the last such
cash dividend theretofore paid) or other distribution, or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right; or

                  (ii)  Any  capital   reorganization   of  the   Company,   any
reclassification  or recapitalization of the capital stock of the Company or any
transfer of all or  substantially  all of the assets of the Company to any other
Person or any consolidation or merger involving the Company; or

                  (iii) Any voluntary or involuntary dissolution, liquidation or
windingup of the Company,  the Company will mail to Holder of this Note at least
ten (10) days prior to the earliest date specified  therein, a notice specifying
(A) the date on which any such  record is to be taken  for the  purpose  of such
dividend,  distribution or right, and the amount and character of such dividend,
distribution or right;


                                       17
<PAGE>

and (B) the date on which any such reorganization,  reclassification,  transfer,
consolidation,  merger,  dissolution,  liquidation  or winding-up is expected to
become  effective and the record date for determining  stockholders  entitled to
vote thereon.

            (d) Reservation of Stock Issuable Upon Conversion. The Company shall
at all times  reserve and keep  available  out of its  authorized  but  unissued
shares of RG America's  Common  Stock  solely for the purpose of  effecting  the
conversion  of this Note such number of its shares of RG America's  Common Stock
(and  shares of its Common  Stock for  issuance on  conversion  of such Series A
Preferred) as shall from time to time be sufficient to effect the  conversion of
the Note; and if at any time the number of authorized but unissued  shares of RG
America's  Common  Stock  (and  shares  of its  Common  Stock  for  issuance  on
conversion of such RG America's  Common Stock) shall not be sufficient to effect
the conversion of the entire outstanding  principal amount of this Note, without
limitation  of such other  remedies as shall be  available to the holder of this
Note,  the Company  will use its best efforts to take such  corporate  action as
may, in the opinion of counsel,  be  necessary to increase  its  authorized  but
unissued shares of RG America's Common Stock (and shares of its Common Stock for
issuance on  conversion  of such RG  America's  Common  Stock) to such number of
shares as shall be sufficient for such purposes.

      13.   SUCCESSORS  AND  ASSIGNS.  Neither  this Note nor any of the rights,
interests  or  obligations  hereunder  may be  assigned,  by operation of law or
otherwise, in whole or in part, by the Company without the prior written consent
of the Holder or by the Holder without the prior written consent of the Company.
Subject to the foregoing and the  restrictions on transfer  described in Section
15 below,  the rights and  obligations  of the Company  and the Holder  shall be
binding upon and benefit the  successors,  assigns,  heirs,  administrators  and
transferees of the parties.

      14.   WAIVER AND  AMENDMENT.  Any  provision  of this Note may be amended,
waived or modified upon the written consent of the Company and the Holder.

      15.   TRANSFER OF THIS NOTE OR SECURITIES  ISSUABLE ON CONVERSION  HEREOF.
With  respect  to any  offer,  sale or  other  disposition  of this  Note or any
securities  into which this Note may be converted,  the Holder will give written
notice to the Company  prior  thereto,  describing  briefly the manner  thereof,
together with a written opinion of the Holder's counsel, to the effect that such
offer,  sale or other  distribution  may be  effected  without  registration  or
qualification  under any  federal  or state law then in  effect.  Promptly  upon
receiving  such  written  notice  and  reasonably  satisfactory  opinion,  if so
requested  and subject to Section 13, the Company,  as promptly as  practicable,
shall  notify the Holder that the Holder may sell or  otherwise  dispose of this
Note  or such  securities,  all in  accordance  with  the  terms  of the  notice
delivered  to the Company.  If a  determination  has been made  pursuant to this
Section  15 that  the  opinion  of  counsel  for the  Holder  is not  reasonably
satisfactory  to the Company,  the Company  shall so notify the Holder  promptly
after such  determination  has been made.  Each Note thus  transferred  and each
certificate  representing the securities thus transferred shall bear a legend as
to the applicable restrictions on transferability in order


                                       18
<PAGE>

to ensure  compliance  with the Act,  unless in the  opinion of counsel  for the
Company such legend is not required in order to ensure  compliance with the Act.
The  Company  may issue stop  transfer  instructions  to its  transfer  agent in
connection with such restrictions.

      16.   NOTICES.  Any  notice,  request or other  communication  required or
permitted  hereunder  shall be in writing  and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail, postage
prepaid, or by recognized overnight courier or personal delivery,  addressed (i)
if to the  Holder,  at  such  Holder's  address  set  forth  at the  end of this
Agreement,  or at such other  address as such Holder  shall have  furnished  the
Company in writing,  or (ii) if to the Company,  at its address set forth at the
end of this  Agreement,  or at such  other  address  as the  Company  shall have
furnished  to the  Holder in  writing.  Any party  hereto may by notice so given
change its address for future notice  hereunder.  Notice shall  conclusively  be
deemed to have been given when received.

      17.   PAYMENT.  Payment  shall  be made in  lawful  tender  of the  United
States.

      18.   DEFAULT RATE; USURY.  During any period in which an Event of Default
has occurred  and is  continuing,  the Company  shall pay interest on the unpaid
principal  balance  hereof  at a rate per  annum  equal  to the  rate  otherwise
applicable hereunder plus two percent (2%). In the event any interest is paid on
this Note which is deemed to be in excess of the then legal maximum  rate,  then
that portion of the  interest  payment  representing  an amount in excess of the
then  legal  maximum  rate shall be deemed a payment of  principal  and  applied
against the principal of this Note.

      19.   EXPENSES; WAIVERS. If action is instituted to collect this Note, the
Company promises to pay all costs and expenses,  including,  without limitation,
reasonable  attorneys' fees and costs,  incurred in connection with such action.
The Company hereby waives notice of default,  presentment or demand for payment,
protest or notice of  nonpayment  or dishonor  and all other  notices or demands
relative to this instrument. The Company shall pay on demand all reasonable fees
and expenses, including reasonable attorneys' fees and expenses, incurred by the
Holder with respect to the  enforcement  or attempted  enforcement of any of the
obligations of the Company to the Holder under the  Transaction  Documents or in
preserving  any  of  the  Holder's  rights  and  remedies  (including,   without
limitation, all such fees and expenses incurred in connection with any "workout"
or  restructuring   affecting  the  Transaction  Documents  or  the  obligations
thereunder or any bankruptcy or similar  proceeding  involving Company or any of
its Subsidiaries).

      20.   FINANCING  STATEMENTS.  The  Company  agrees  to  execute  all  UCC1
financing  statements and other documents and  instruments  which the Holder may
reasonably request to perfect its security interest in the collateral  described
in the Security Agreement.


                                       19
<PAGE>

      21.   REPLACEMENT NOTE. Upon receipt by the Company of evidence reasonably
satisfactory  to it of the  ownership  of and the loss,  theft,  destruction  or
mutilation  of any Note and (a) in the case of loss,  theft or  destruction,  of
indemnity reasonably satisfactory to it; or (b) in the case of mutilation,  upon
surrender thereof; the Company, at its expense, will execute and deliver in lieu
thereof a new Note  executed in the same manner as the Note being  replaced,  in
the same principal  amount as the unpaid principal amount of such Note and dated
the date to which  interest shall have been paid on such Note or, if no interest
shall have yet been so paid, dated the date of such Note.

      22.   GOVERNING  LAW.  This  Note  and all  actions  arising  out of or in
connection  with this Note shall be governed by and construed in accordance with
the  laws  of the  State  of  Texas,  without  regard  to the  conflicts  of law
provisions of the State of Texas or of any other state.

      IN WITNESS  WHEREOF,  the  Company has caused this Note to be issued as of
the date first written above.


By:______________________________          Amount:______________________________

Name:____________________________

Address:_________________________

        _________________________


Accepted and Agreed to, as of _______________________, 2004:

_________________________________
By:

Its:_____________________________


                                       20