Document:

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                              EMPLOYMENT AGREEMENT

         THIS AGREEMENT entered into as of the 22nd day of October, 1999, by and
between Audio Book Club, Inc., a Florida corporation, with offices at 2295
Corporate Boulevard, N.W., Suite 222, P.O. Box 5002, Boca Raton, Florida
33431-0802 (the "Company"), and John F. Levy, residing at 110 Oak Tree Pass,
Westfield, New Jersey (the "Executive").

                              W I T N E S S E T H:

         WHEREAS, the Company is engaged in the audio book club business; and

         WHEREAS, the Company desires to continue to employ the Executive beyond
the expiration date of the current Employment Agreement between the Company and
the Executive; and

         WHEREAS, the Executive is willing to commit himself to continue to
serve and to establish a minimum period during which he will continue to serve
the Company on the terms and conditions herein provided.

         NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained and intending to be
legally bound hereby, the parties agree as follows:

         1. Recitals. The Whereas clauses recited above are hereby incorporated
by reference as though they were fully set forth herein.

         2. Employment. The Company shall employ the Executive and the Executive
shall serve the Company, on the terms and conditions set forth herein.

         3. Term. The employment of the Executive by the Company as provided in
paragraph 2 shall commence on November 10, 1999 and end on the second (2nd)
anniversary of such commencement, subject, however, to the other termination
provisions contained herein.

         4. Position and Duties. The Executive shall be employed by the Company
as an Executive Vice President and Chief Financial Officer. His power and
authority shall be and remain subject to the direction and control of the Board
of Directors and all officers senior to him including but not limited to the
Co-Chief Executive Officers Michael Herrick and Norton Herrick. The Executive
shall have responsibility for the financial oversight of the business and
affairs of the Company, including without limitation responsibility for all
filings with the Securities and Exchange Commission, the Internal Revenue
Service and all other agencies (federal, state or local) and/or stock

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exchanges to which the Company must report, subject to appropriate review and
approval of the Board of Directors and senior officers and such further
revisions as the Executive deems necessary. The scope of his duties and the
extent of his responsibilities shall be substantially the same as the duties and
responsibilities of other chief financial officers of public companies. The
Executive shall be required to spend his full time and attention, without other
outside business interests, in the performance of his duties and the Company's
business and affairs.

         5.       Compensation and Related Matters.

                  (a) Salary. During the term of this Agreement, the Company
shall pay to the Executive, as compensation for his services, an initial annual
salary of $165,000 in equal monthly installments during the first year of the
term of this Agreement; and $180,000 during the second year of the term of this
Agreement. In addition, the Executive may receive a performance-based bonus to
be determined by the Chief Executive Officer in his sole and absolute discretion
with a minimum bonus at the end of year one, provided the Executive is still
employed by the Company at that time, of Fifteen Thousand and 00/100 U.S.
Dollars ($15,000.00) and a minimum bonus at the end of year two, provided the
Executive is still employed by the Company at that time, of Seventeen Thousand
Five Hundred and 00/100 U.S. Dollars ($17,500.00); such bonuses shall be paid
within forty-five (45) days after the end of each year.

                  (b) Expenses. The Executive shall receive prompt reimbursement
for all reasonable travel and business expenses in connection with services
performed hereunder in accordance with normal Company policy, as the same may be
determined from time to time.

                  (c) Insurance and Employee Benefits. The Executive shall
receive employee benefits applicable to all officers of the Company except the
executive will not receive medical insurance unless his wife is no longer
employed at a position which provides family coverage. In addition, the
Executive shall be reimbursed for reasonable costs associated with up to
twenty-four (24) hours of continuing education courses with respect to topics
germane to his duties, including reasonable local travel costs to attend such
courses and reasonable fees for such courses. In addition, the Company will
reimburse the Executive for his dues to the AICPA and ISCPA and subscriptions to
the Wall Street Journal, Business Week, Forbes Magazine and America Online. The
Executive will be provided with a portable computer, cellular phone and pocket
electronic organizer at the Company's expense.

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                  (d) Vacation. The Executive shall receive, prorata during each
full year of his employment, three (3) weeks paid vacation approved one (1)
month in advance. The Executive will make every effort to schedule the vacation
time at a time most convenient for the Company, with the Company recognizing
that the Executive's flexibility is limited by school calendars. Notwithstanding
the foregoing, the Executive shall not be entitled to vacation during the three
(3) week period prior to the date on which the Company's Annual Report on Form
10-KSB (or Form 10-K) or Quarterly Report on Form 10-QSB (or Form 10-Q) are
required to be filed with the Securities and Exchange Commission. In addition,
the Executive will receive normal Company holidays, plus two (2) days off for
Rosh Hashanah and one (1) day off for Yom Kippur unless such holy days fall on a
weekend.

                  (e) Stock Options. The Executive is hereby granted stock
options to acquire thirty thousand (30,000) shares of Common Stock in the
Company pursuant to and in accordance with the Company's Stock Option Plan.
Options with respect to ten thousand (10,000) shares shall vest on November 10,
2000, provided that the Executive is an employee of the Company at that time and
options with respect to twenty thousand (20,000) shares will vest on November
10, 2001, provided that the Executive is still employed by the Company at that
time. Such options shall be exercisable at a price per share of Thirteen Dollars
($13.00), and will be on the terms and conditions as more specifically provided
for in the Company's Stock Option Plan.

         6. Termination by the Company. The Executive's employment hereunder may
be terminated by the Company without any breach of this Agreement only under the
circumstances described below.

                  (a) Death. The Executive's employment hereunder shall
terminate upon his death.

                  (b) Disability. If, as a result of the Executive's incapacity
due to physical or mental illness, as determined by a physician mutually chosen
by the Executive and the Company, the Executive shall have been absent from his
duties hereunder for a consecutive period of forty-five (45) days and after
notice of termination is given (which may be given before or after the end of
such 45 day period but which will in no event be effective until, at the
earliest, the day following the forty- fifth day of the period) shall not have
returned to the performance of his duties hereunder, as that concept is
contemplated in this Agreement, within ten (10) days after the notice of
termination is given, the Company may terminate the Executive's employment
hereunder.

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                  (c) Cause. The Company may terminate the Executive's
employment under this Agreement at any time for cause. For purposes of this
Agreement, the term "cause" shall include one or more of the following: (i)
willful misconduct, (ii) continued failure by the Executive to perform his
duties, as contemplated in this Agreement, as Chief Financial Officer (other
than through disability as defined in paragraph 6(b), above), (iii) conviction
of a crime or alcohol or drug abuse, or (iv) the Executive's breach of this
Agreement. The termination shall be evidenced by written notice thereof to the
Executive.

                  (d) Without Cause. In addition to any other rights the Company
has to terminate the Executive's employment under this Agreement, the Company
may, at any time, by a vote of not less than sixty percent (60%) of the
directors then in office (excluding the vote of the Executive if he is also a
director), terminate the Executive without cause upon ninety (90) days' prior
written notice to the Executive setting forth the reasons, if any, for the
termination. For purposes of this Agreement, the term "without cause" shall mean
termination by the Company on any grounds other than those set forth in
paragraphs 6(a), (b) or (c) hereof. It shall also be a termination without
cause, at the election of the Executive, if the Executive is asked to work at a
business location of the Company which is more than fifty (50) miles from
Westfield, New Jersey. Notwithstanding the foregoing, it is understood that
travel in connection with the performance of Executive's duties shall not be
deemed to be termination without cause and that the 10 West Building on Route
10, Parsippany-Troy Hills is within fifty (50) miles.

                  (e) Severance Pay. In the event that the Company has
terminated the Executive's employment under this Agreement (i) "without cause"
or (ii) in the event there is a "Change of Control" (as defined below), then the
Executive will be entitled to receive severance pay equal to fifty percent (50%)
of his base salary for the unexpired period of his two (2) year employment term;
such payment, if any, shall be made to the Executive within thirty (30) days of
such termination of the Executive's employment.

                  (f) Change of Control. For purposes of this Agreement, a
"Change of Control" shall be deemed to occur, unless previously consented to in
writing by the Executive, and only if the Executive is not offered continued
employment, upon (i) the actual acquisition of fifty percent (50%) or more of
the voting securities of the Company by any company or entity or affiliated
group of companies or entities (other than pursuant to a bona fide underwriting
agreement relating to a public distribution of securities of the Company), (ii)
the completion of a tender or exchange offer for more than fifty percent (50%)
of the voting securities of the Company by any company or entity or affiliated
group of companies or entities not affiliated with the Executive, (iii) the
completion of a

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proxy contest against the management for the election of a majority of the Board
of Directors of the Company if the group conducting the proxy contest owns, has
or gains the power to vote at least fifty percent (50%) of the voting securities
of the Company, or (iv) a merger or consolidation in which the Company is not
the surviving entity or a sale of or substantially all of the assets of the
Company.

                  (g) Change of Control Compensation. In the event of a
completion of a tender or exchange offer for more than fifty percent (50%) of
the voting securities of the Company by any company or entity or affiliated
group of companies or entities not affiliated with the Executive, the stock
options, described in paragraph 5(e), shall immediately be exercisable and any
unvested shall immediately vest.

                  (h) The Executive shall not be required to mitigate the amount
of any payment provided for in this paragraph 6 by seeking other employment or
otherwise nor shall the amount of any payment provided for in this paragraph 6
be reduced by any compensation earned by the Executive as the result of
employment by another employer or business or by profits earned by the Executive
from any other source at any time before and after the date of termination. The
amounts payable to the Executive under this Agreement shall not be treated as
damages, but as severance pay to which the Executive is entitled by reason of
his employment and the circumstances contemplated by this Agreement.

                  (i) The severance pay which the Executive will be entitled to
receive as a result of the termination of his employment under this Agreement,
shall be the Executive's exclusive remedy in the event of such termination.

         7. Non-Competition and Confidentiality Covenant. The Executive hereby
covenants and agrees that he will not serve as an officer of or perform any
functions for any other company during the term of his employment under this
Agreement, except that the Executive shall be permitted to serve as a board
member of the Israel Histradrut Group Foundation, a not-for-profit entity,
provided serving as a board member for such entity does not interfere with the
performance of the Executive's duties under this Agreement. In addition, during
the term of this Agreement and for a period of two (2) years immediately
following the termination of his employment, whether said termination is
occasioned by the Company, the Executive or a mutual agreement of the parties,
the Executive shall not, for himself or on behalf of any other person, persons,
firm, partnership, corporation or company, engage or participate in any
activities which are in direct or indirect conflict with the interests of the
Company or solicit or attempt to solicit the business or patronage of any
person, firm, corporation, company or partnership, which had previously been a
customer of the

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Company, for the purpose of selling products and services similar to those
provided by the Company.

                  Furthermore, the Executive acknowledges and agrees that: all
mailing lists; customer, member and prospect names; license or arrangement;
front-end and back-end marketing performance; financial statements; operating
system, database and other computer software, specific to the Company; and all
information which is known by the Executive to be subject to a confidentiality
agreement or obligation of confidentiality, even without a confidentiality
agreement between the Company and another person or party, shall be maintained
by the Executive in a confidential manner and the Executive agrees that the
Executive will not use such information to the detriment of the Company or
disclose such information to any third party, except as may be necessary in the
course of performing the Executive's job responsibilities. The Executive further
agrees that these obligations of confidentiality with respect to such
information shall continue after the Executive ceases to be employed by the
Company. Disclosure of the aforementioned information shall not be prohibited if
such disclosure is directly pursuant to a valid and existing order of a court or
other governmental body or agency within the United States; provided, however,
that (i) the Executive shall first have given prompt notice to the Company of
any such possible or prospective order (or proceeding pursuant to which any such
order may result), (ii) the Company shall have been afforded a reasonable
opportunity to review such disclosure and to prevent or limit any such
disclosure, and (iii) the Executive shall, if requested by the Company and at
the Company's cost and expense, use his best efforts to prevent or limit any
such disclosure by means of a protective order or a request for confidential
treatment.

                  The Executive further acknowledges that the Executive will not
disclose any information with respect to the Company, its operations or its
officers and directors, whether or not such information is confidential, to
Stephen Swid or any entity or company in which Stephen Swid has an ownership
interest or is a director, officer or employee or to any attorneys, accountants,
agents or representatives of Stephen Swid or any of the aforementioned companies
or entities.

         8. Indemnification. To the maximum extent permitted under the corporate
laws of the State of Florida or, if more favorable, the Articles of
Incorporation and/or By-Laws of the Company as in effect on the date of this
Agreement, (a) the Executive shall be indemnified and held harmless by the
Company, as provided under such corporate laws or such Articles of Incorporation
and/or ByLaws, as applicable, for any and all actions taken or matters
undertaken, directly or indirectly, in the performance of his duties and
responsibilities under this Agreement or otherwise on behalf of the

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Company, provided the Executive did not act wantonly or recklessly or was not
grossly negligent or engaged in willful misconduct, and (b) without limiting
clause (a), the Company shall indemnify and hold harmless the Executive from and
against (i) any claim, loss, liability, obligation, damage, cost, expense,
action, suit, proceeding or cause of action (collectively, "Claims") arising
from or out of or relating to the Executive's acting as an officer, director,
employee or agent of the Company or any of its affiliates or in any other
capacity, including, without limitation, any fiduciary capacity, in which the
Executive serves at the request of the Company, and (ii) any cost or expense
(including, without limitation, fees and disbursements of counsel)
(collectively, "Expenses") incurred by the Executive in connection with the
defense or investigation thereof. If any Claim is asserted or other matter
arises with respect to which the Executive believes in good faith the Executive
is entitled to indemnification as contemplated hereby, the Company shall, at its
election, to be determined in its sole and absolute discretion, either assume
the defense or investigation of such Claim or matter or pay the Expenses
incurred by the Executive in connection with the defense or investigation of
such Claim or matter, provided that the Executive shall reimburse the Company
for such amounts, plus simple interest thereon at the then current Prime Rate as
in effect from time to time, compounded annually, if the Executive shall be
found, as finally judicially determined by a court of competent jurisdiction,
not to have been entitled to indemnification hereunder.

         9. Binding Agreement. This Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, divisees and legatees. In addition, this Agreement and the
obligations and rights of the Company hereunder shall be binding on any person,
firm or corporation which is a successor-in-interest to the Company.

         10. Notice. For the purpose of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally, or by private
overnight courier or mail service, postage prepaid or (unless otherwise
specified) mailed by United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:

         If to the Executive:         To the address at the head of this
                                      Agreement

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If to the Company:                    Audio Book Club, Inc.
                                      2295 Corporate Boulevard, N.W., Suite 222
                                      P.O. Box 5002
                                      Boca Raton, Florida  33431-0802
                                      (561) 241-1426

or to such other address as the parties may furnish to each other in writing.
Copies of all notices, demands and communications shall be sent to the home
addresses of all members of the Board of Directors of the Company.

         11.      Miscellaneous.

                  (a) No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
signed by the parties hereto, provided, however, that this Agreement may be
modified, waived or discharged by mutual agreement in writing.

                  (b) No delay, waiver, omission or forbearance (whether by
conduct or otherwise) by any party hereto at any time to exercise any right,
option, duty or power arising out of breach or default by the other party of any
of the terms, conditions or provisions of this Agreement to be performed by such
other party shall constitute a waiver by such party or a waiver of such party's
rights to enforce any right, option or power as against the other party or as to
subsequent breach or default by such other party, and no explicit waiver shall
constitute a waiver of similar or dissimilar terms, provisions or conditions at
the same time or at any prior or subsequent time.

         12. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Florida and any action brought by either party shall be
commenced in the courts of the State of Florida. The Executive and the Company
hereby irrevocably and unconditionally consent to submit to the exclusive
jurisdiction of the courts of the State of Florida and the United States of
America located in Palm Beach County, Florida for any and all actions, suits or
proceedings arising out of or resulting from or relating to this Agreement and
the transactions contemplated hereby and the parties agree not to commence any
action, suit or proceeding relating thereto except in such courts. The parties
hereby irrevocably and unconditionally waive any objection to the laying of
venue of any such action, suit or proceeding arising out of, resulting from or
relating to this Agreement or the transactions contemplated hereby in such
courts and hereby further irrevocably and

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unconditionally waive and agree not to plead or claim in any such court that
such action, suit or proceeding brought in any such court has been brought in an
inconvenient forum.

         13. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

         14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

         15. Entire Agreement. This Agreement contains the entire understanding
of the Company and the Executive with respect to his employment by the Company.
This Agreement supersedes all prior agreements and understandings whether
written or oral between the Executive and the Company, and there are no
restrictions, agreements, promises, warranties or covenants other than those
stated in this Agreement.

         IN WITNESS WHEREOF, the parties have executed this Agreement on the
date shown below effective as of the date first written above.

                                        "COMPANY"

Date Signed: October 22, 1999           AUDIO BOOK CLUB, INC., a Florida
                                        corporation

                                        By:            /s/ Michael Herrick
                                           -------------------------------------
                                        Printed Name:      Michael Herrick
                                                      --------------------------
                                        Title:              Co-CEO
                                              ----------------------------------

                                        "EXECUTIVE"

Date Signed: October 22, 1999                        John F. Levy
                                        ----------------------------------------
                                        Printed Name:      John F. Levy
                                                      --------------------------

                                        9<PAGE>

NEITHER THIS NOTE, NOR ANY SECURITY ISSUABLE UPON CONVERSION HEREOF, HAS BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS. NO INTEREST IN THIS NOTE MAY BE OFFERED OR
SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT,
OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE ACT WHERE THE HOLDER HAS
FURNISHED TO THE COMPANY AN OPINION OF ITS COUNSEL REASONABLY SATISFACTORY TO
THE COMPANY THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS AVAILABLE.

                              AUDIO BOOK CLUB, INC.

               9% CONVERTIBLE SENIOR SUBORDINATED PROMISSORY NOTE
                              DUE DECEMBER 31, 2004

$4,800,000.00                                                   August 26, 1999

     AUDIO BOOK CLUB, INC. (together with its successors, the "Company"), a
Florida corporation, for value received, hereby promises to pay to ABC
Investment, L.L.C. or registered assigns (the "Holder"), the principal sum of
FOUR MILLION EIGHT HUNDRED THOUSAND DOLLARS ($4,800,000) on December 31, 2004
(the "Maturity Date"), and to pay interest on the unpaid principal balance
hereof from the date hereof to the Maturity Date at the rate of nine percent
(9.0%) per annum, in arrears, quarterly on March 31, June 30, September 30 and
December 31 in each year, commencing on September 30, 1999, until the principal
amount hereof shall become due and payable; and to pay on demand interest on any
overdue principal (including any overdue partial payment of principal and
principal payable at the maturity hereof), and (to the extent permitted by
applicable law) on any overdue installment of interest (the due date of such
payments to be determined without giving effect to any grace period) at the rate
of eleven percent (11.0%) per annum.

                                      -1-

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1. Interest and Payment

     1.1 Interest shall be computed on the basis of a 360 day year of twelve 30
day months for the actual time elapsed.

     1.2 At the option of the Holder, the Company may pay a scheduled interest
payment in a number of whole shares of common stock, without par value ("Common
Stock"), of the Company, in lieu of paying such interest in cash, equal to the
quotient of dividing the amount of accrued and unpaid interest payable on such
interest payment date by an amount equal to the then current Conversion Price
(as hereinafter defined). No fractional shares of Common Stock will be issued to
the Holder in lieu of cash interest. Instead of any fractional share which would
otherwise be issuable in lieu of cash interest, the Company will calculate and
pay a cash adjustment in respect of such fraction (calculated to the nearest
1/100th of a share) in an amount equal to the same fraction of the Conversion
Price at the close of business on the fifth business day immediately preceding
such interest payment date. The Holder may exercise its option to cause the
Company to issue shares of Common Stock, in lieu of cash interest payable on an
interest payment date, by giving the Company written notice of its exercise of
such option at least five business days prior to such interest payment date and
the Company will deliver or cause its transfer agent to deliver, to the Holder
or its designee on such interest payment date, duly executed certificates for
the number of whole shares of Common Stock so issuable to the Holder registered
in the Holder's name or such other name or names and in such denominations as
the Holder shall have designated in its notice of exercise, and, if applicable,
a check payable to the Holder for any cash adjustment in lieu of a fractional
share.

     1.3 Except as provided in Section 1.2 hereof, payments of principal, Change
in Control Purchase Price (as hereinafter defined), if any, and accrued interest
shall be made in such coin or currency of the United States of America as at the
time of payment is legal tender for the payment of public and private Debts to
the Holder hereof at its address shown in the register maintained by the Company
for such purpose.

     1.4 (a) The Company shall pay all amounts payable with respect to this Note
(without any presentment of this Note) by crediting, by federal funds bank wire
transfer, the account of the Holder in any bank in the United States of America
as may be designated in writing by the Holder or in such other manner or to such
other address in the United States of America as may be designated in writing by
the Holder (and as to which, absent subsequent notice from the Holder, the
Company may conclusively rely). Annex 1 shall be deemed to constitute notice,
direction or designation (as appropriate) by the payee of this Note to the
Company with respect to payments to be made to such payee as above provided. In
the absence of such written direction, all amounts payable with respect to this
Note shall be paid by check mailed and addressed to the Holder at its address
shown in the register maintained by the Company pursuant to Section 2.1.

                  (b) All payments received on account of this Note shall be
applied first to the payment of accrued and unpaid interest on this Note and
then to the reduction of the unpaid principal amount of this Note. In case the
entire principal amount of this Note is paid or this Note is purchased by the
Company, this Note shall be surrendered to the Company for cancellation and
shall not be reissued, and no Note shall be issued in lieu of the paid principal
amount of any Note.

     1.5 (a) If any payment due on account of this Note shall fall due on a day
other than a business day, then such payment shall be made on the first business
day following the day on which such payment shall have so fallen due; provided
that if all or any portion of such payment shall consist of a payment of
interest, for purposes of calculating such interest, such payment shall be
deemed to have been originally due on such first following Business Day, such
interest shall accrue and be payable to (but not including) the actual date of
payment, and the amount of the next succeeding interest payment shall be
adjusted accordingly.

                  (b) Any payment to be made to the Holder on account of this
Note shall be deemed to have been made on the business day such payment actually
becomes available at such Holder's bank prior to the close of business of such
bank, provided that interest for one day at the non-default interest rate of
this Note shall be due on the amount of any such payment that actually becomes
available to the Holder at the Holder's bank after 1:00 p.m. (local time of such
bank).

     1.6 The Company may, upon at least three business days prior written notice
to the Holder specifying the date of the prepayment (the "Prepayment Date") and
the principal amount to be prepaid, prepay the unpaid principal balance of this
Note in whole at any time or in part from time to time, without penalty or
premium, in multiples of $100,000 (or if the outstanding principal amount is
less than $100,000 at such time, then such principal amount) together with
interest on the principal amount being prepaid accrued to the designated
Prepayment Date.

                                      -2-
<PAGE>

     1.7 In the event of a Change in Control, the Company will, within 15
business days after the occurrence of such event, give notice of such Change in
Control to the Holder. Such notice shall contain an irrevocable offer to the
Holder to repurchase this Note on a date (the "Change in Control Payment Date")
specified in such notice that is not less than thirty (30) days and not more
than ninety (90) days after the date of such notice, at a purchase price equal
to 100% of the aggregate principal amount thereof and all interest accrued and
unpaid on such principal amount to the Change in Control Payment Date (the
"Change in Control Purchase Price"). Each such notice shall: (i) be dated the
date of the sending of such notice; (ii) be executed by an executive officer of
the Company; (ii) specify, in reasonable detail, the nature and date of the
Change in Control; (iv) specify the Change in Control Payment Date; (v) specify
the principal amount of this Note outstanding; (vi) specify the interest that
would be due on this Note, accrued to the Change in Control Payment Date; and
(vii) specify that this Note shall be purchased at the Change in Control
Purchase Price. The Holder shall have the option to accept or reject such
offered payment. In order to accept such offered payment, the Holder shall cause
a notice of such acceptance to be delivered to the Company at least five days
prior to the Change in Control Payment Date. A failure to accept in writing such
written offer of payment as provided in this Section 1.7, or a written rejection
of such offered prepayment, shall be deemed to constitute a rejection of such
offer. The offered payment shall be made at the Change in Control Purchase Price
determined as of the Change in Control Payment Date.

     1.8 Upon any partial payment of the outstanding principal amount of this
Note, the Holder shall mark this Note with a notation of the principal amount so
paid and the date of such payment.

2. Registration; Exercise; Substitution

     2.1 The Company will keep at its principal executive office a register for
the registration and transfer of this Note. The name and address of the Holder
of this Note, each transfer hereof made in accordance with Section 2.2(a) and
the name and address of each transferee of this Note shall be registered in such
register. The person in whose name this Note shall be registered shall be deemed
and treated as the owner and holder thereof, and the Company shall not be
affected by any notice or knowledge to the contrary, other than in accordance
with Section 2.2(a)

     2.2 (a) Upon surrender of this Note at the principal executive office of
the Company, duly endorsed or accompanied by a written instrument of transfer
duly executed by the Holder or the Holder's attorney duly authorized in writing,
the Company will execute and deliver, at the Company's expense (except as
provided in Section 2.2(c)), a new Note (or Notes) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Subject to Section 2.2(b), the new Note(s) shall be registered
in such name(s) as the Holder may request. Each such new Note shall be dated and
bear interest from the date to which interest shall have been paid on the
surrendered Note or dated the date of the surrendered Note, if no interest shall
have been paid thereon. Each such new Note shall carry the same rights to unpaid
interest and interest to accrue on the unpaid principal amount thereof as were
carried by the Note so exchanged or transferred.

                  (b) This Note has been acquired for investment and has not
been registered under the securities laws of the United States of America or any
state thereof. Accordingly, notwithstanding Section 2.2(a), neither this Note
nor any interest thereon may be offered for sale, sold or transferred in the
absence of registration and qualification of this Note under applicable federal
and state securities laws or an opinion of counsel of the Holder reasonably
satisfactory to the Company that such registration and qualification are not
required. This Note shall not be transferred in denominations of less than
$100,000 and integral multiples thereof, provided that the Holder may transfer
this Note as an entirety regardless of the principal amount thereof.

                  (c) The Company may require payment of a sum sufficient to
cover any stamp tax or governmental change imposed in respect of any such
transfer of this Note.

                                      -3-
<PAGE>

     2.3 Upon receipt by the Company from the Holder of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Note (which evidence shall be, if the Holder is the payee or an
institutional investor, notice from the payee or such institutional investor of
such loss, theft, destruction or mutilation), and (a) in the case of loss, theft
or destruction, of indemnity reasonably satisfactory to the Company; provided,
however, that if the Holder is the payee or an institutional investor, the
unsecured agreement of indemnity of the payee or such institutional investor
shall be deemed to be satisfactory; or (b) in the case of mutilation, upon
surrender and cancellation thereof; the Company at its own expense will execute
and deliver, in lieu thereof, a replacement Note, dated and bearing interest
from the date to which interest shall have been paid on such lost, stolen,
destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or
mutilated Note, if no interest shall have been paid thereon.

     2.4 The Company will pay taxes (if any) due (but not, in any event, income
taxes of the Holder) in connection with and as the result of the initial
issuance of this Note and in connection with any modification, waiver or
amendment of this Note and shall save the Holder harmless, without limitation as
to time, against any and all liabilities with respect to all such taxes.

3. Subordination

     3.1 Notwithstanding any other provision contained in this Agreement, the
Subordinated Debt is subordinate and junior in right of payment to all Senior
Debt to the extent provided in this Section 3.

     3.2 In the event of: (a) any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other similar
proceeding relating to the Company; (b) any proceeding for the liquidation,
dissolution or other winding-up of the Company, voluntary or involuntary,
whether or not involving insolvency or bankruptcy proceedings; (c) any general
assignment by the Company for the benefit of creditors; or (d) any other
marshaling of the assets of the Company; all Senior Debt shall first be paid in
full, in cash or Cash Equivalents (as defined in Section 8 hereof and, for all
purposes of this Section 3, as so defined), before any payment or distribution,
whether in cash, securities or other property, shall be made to any holder of
any Subordinated Debt on account of any Subordinated Debt. Any payment or
distribution, whether in cash, securities or other property (other than
securities of the Company or any other corporation provided for by a plan of
reorganization or readjustment, the payment of which is subordinated, at least
to the extent provided in this Section 3 with respect to Subordinated Debt, to
the payment of all Senior Debt at the time outstanding and to any securities
issued in respect thereof under any such plan of reorganization or readjustment,
but only if the rights of the holders of the Senior Debt are not impaired by
such plan without their consent), which would otherwise (but for this Section 3)
be payable or deliverable in respect of Subordinated Debt, shall be paid or
delivered directly to the holders of Senior Debt in accordance with the
priorities then existing among such holders, until all Senior Debt shall have
been paid in full, in cash or Cash Equivalents.

     3.3 If any holder of Subordinated Debt does not file a proper claim or
proof of Debt therefor prior to 20 days before the expiration of the time to
file such claim or proof, then the Senior Agent is hereby authorized and
empowered (but not obligated) as the agent and attorney-in-fact for such holder
for the specific and limited purpose set forth in this Section 3.3 to file such
claim or proof for or on behalf of such holder; provided, however, that the
Senior Agent shall have, prior to taking any such action, given 15 days prior
written notice (which notice may be given up to 60 days prior to the expiration
of the time to file such claim or proof) to such holder of Subordinated Debt
that it intends to file such claim or proof of Debt. In no event may the Senior
Agent or any holder of the Senior Debt vote any claim on behalf of any holder of
the Subordinated Debt, and such agency and appointment of attorney-in-fact shall
not extend to any such right to vote any such claim.

     3.4 If (a) the Company shall default in the payment or prepayment of any
principal of, premium, if any, or interest on, or commitment fee or letter of
credit fee or Administrative Agent fee or indemnity under Section 2.10 or 2.12
or 11.4(c) (or comparable sections under any replacement Senior Debt) in respect
of, any Senior Debt (a "Senior Payment Default") when the same becomes due and
payable, whether at maturity, at a date fixed for prepayment, by declaration of
acceleration or otherwise, or shall fail to comply with any covenant or
agreement in respect of Senior Debt which covenant or agreement default results
in actual acceleration of the maturity of such Senior Debt ("Covenant
Acceleration"); and (b) the Company receives from the Senior Agent written
notice of the happening of such Senior Payment Default or Covenant Acceleration,
stating that such notice is a payment blockage notice pursuant to this Section
3.4; no direct or indirect payment (in cash, property or securities or by
set-off or otherwise) shall be made or agreed to be made on account of any
Subordinated Debt, or as a sinking fund for any Subordinated Debt, or in respect
of any redemption, retirement, purchase, prepayment or other acquisition or
payment of any Subordinated Debt, unless and until such Senior Payment Default
shall have been cured or waived or otherwise shall have ceased to exist or such
Covenant Acceleration shall have been rescinded and the underlying covenant
default shall have been cured or waived or shall have otherwise ceased to exist.

                                      -4-
<PAGE>

     The Company shall give prompt written notice to each holder of Subordinated
Debt of its receipt of any such notice from the Senior Agent under this Section
3.4.

     3.5 If (a) any Significant Nonpayment Default shall have occurred; and (b)
the Company and the Holder receive from the Senior Agent written notice (a "Stop
Payment Notice") of the happening of such Significant Nonpayment Default,
stating that such notice is a payment blockage notice pursuant to this Section
3.5; no direct or indirect payment (in cash, property or securities or by
set-off or otherwise) shall be made or agreed to be made for or on account of
any Subordinated Debt, or as a sinking fund for any Subordinated Debt, or in
respect of any redemption, retirement, repurchase, prepayment, purchase or other
acquisition or payment of any Subordinated Debt, for a period (each, a "Payment
Blockage Period") commencing on the date such Stop Payment Notice is delivered
to the Company and ending on the earliest to occur of the following: (a) the
time as of which each Significant Nonpayment Default which is the subject of
such Stop Payment Notice shall have been waived or cured (whether by amendment
of any provisions of the Senior Credit Agreement or otherwise), (b) a number of
days shall have elapsed as is necessary to prevent the total number of days that
a Stop Payment Notice (or Stop Payment Notices in the event that more than one
Stop Payment Notice has been given) is in effect during any consecutive 365 day
period from exceeding 180 days in the aggregate, and (c) the date of the
repayment in full in cash or Cash Equivalents of the Senior Debt and the
termination of any commitment to make further loans or advances in respect of
the Senior Debt; provided, however, that (i) the Senior Agent shall not be
permitted to issue a Stop Payment Notice more than six times in the aggregate;
(ii) only two Stop Payment Notices may be issued in any period of 365
consecutive days; (iii) Payment Blockage Periods may not be in effect for more
than 180 days (whether or not such days are consecutive) during any period of
365 consecutive days, and if any Payment Blockage Period is in effect on the
181st day in any period of 365 consecutive days, such Payment Blockage Period
will terminate immediately; and (iv) no Payment Blockage Period may be imposed
as a result of a Significant Nonpayment Default which served as the basis for or
was continuing during any previous Payment Blockage Period, unless any such
Significant Nonpayment Default shall have been cured or waived or otherwise
ceased to exist for a period of not less than 60 consecutive days after the date
that the previous Stop Payment Notice was given.

     3.6 If, at any time during which the Senior Credit Facility is in effect,
the Holder elects to exercise any Remedies in respect of any Event of Default,
the Holder shall deliver to the Company and to the Senior Agent written notice
(an "Enforcement Notice") specifying the Event or Events of Default which are
the basis for the exercise of such Remedies and stating that the Holder intends
to exercise Remedies; provided, however, that the failure to deliver such
Enforcement Notice to the Senior Agent shall not affect the validity of the
Enforcement Notice as between such holder or holders and the Company.

     3.7 Notwithstanding anything contained in this Note to the contrary, for so
long as any amount is outstanding under the Senior Credit Facility including any
letter of credit reimbursement obligations or commitments, the Holder shall not
exercise any Remedies in respect thereof during any period (a "Standstill
Period") commencing on the first date the Holder, but for the provisions of this
Section 3, would have been entitled to exercise any Remedies and ending upon the
earliest of:

                                      -5-
<PAGE>

          (a) the date which is 10 business days after the Enforcement Notice is
     delivered to the Company and the Senior Agent pursuant to Section 3.6;
     provided, however, that if any Payment Blockage Period arising from the
     giving of a Stop Payment Notice is in effect on such 10th business day
     after the Enforcement Notice is so delivered, this clause (a) shall be
     ineffective to terminate such Standstill Period;

          (b) in the event that a Payment Blockage Period arising from the
     giving of a Stop Payment Notice is in effect on the date which is 10
     business days after an Enforcement Notice is delivered to the Company and
     the Senior Agent pursuant to Section 3.6, the expiration of such Payment
     Blockage Period;

          (c) the date that any holder of any Senior Debt commences the exercise
     of any Remedies in respect of such Senior Debt; and

          (d) the first date upon which any of the Events of Default described
     in Section 7.1(f) and (g) shall have occurred and be continuing beyond any
     period of grace specified therein; and, in such event, the automatic
     acceleration of this Note contemplated in respect of such Event of Default
     pursuant to Section 7.2(a) shall occur immediately upon the termination of
     the Standstill Period.

     3.8 If (a) any payment or distribution shall be paid to or collected or
received by any holders of Subordinated Debt in contravention of any of the
terms of this Section 3 but whether or not any Stop Payment Notice or (pursuant
to Section 3.4) payment blockage notice shall theretofore have been given (i.e.,
if paid, collected or received at a time when either such notice could have been
given had the Senior Agent been aware of circumstances giving rise to the right
to deliver any such notice); and (b) the Senior Agent shall have notified the
holders of Subordinated Debt in writing, within 30 days after the date such
payment or distribution is made, of the facts by reason of which such payment or
collection or receipt so contravenes this Section 3 or constituted a Significant
Nonpayment Default; then such holders of Subordinated Debt will deliver such
payment or distribution, to the extent necessary to pay all such Senior Debt in
full, in cash or Cash Equivalents, to the Senior Agent, on behalf of the holders
of the Senior Debt, and, until so delivered, the same shall be held in trust by
such holders of Subordinated Debt as the property of the holders of such Senior
Debt. If any amount is delivered to the Senior Agent pursuant to this Section
3.8, whether or not such amounts have been applied to the payment of Senior
Debt, and the outstanding Senior Debt shall thereafter be paid in full, in cash
or Cash Equivalents, by the Company or otherwise other than pursuant to this
Section 3.8, the holders of Senior Debt shall return to such holders of
Subordinated Debt an amount equal to the amount delivered to such holders of
Senior Debt pursuant to this Section 3.8, so long as after the return of such
amounts the Senior Debt shall remain indefeasibly paid in full, in cash or Cash
Equivalents.

     3.9 Except as provided in this Section 3, the rights set forth in this
Section 3 of the holders of the Senior Debt as against each holder of
Subordinated Debt shall remain in full force and effect without regard to, and
shall not be impaired by:

          (a) any act or failure to act on the part of the Company;

          (b) any extension or indulgence in respect of or change in the time,
     manner or place of any payment or prepayment of the Senior Debt or any part
     thereof or in respect of any other amount payable to any holder of Senior
     Debt, including, without limitation, any increase in the Senior Debt
     resulting from extension of additional credit to the Company or any
     subsidiary or otherwise and permitted by Section 6.3(iii) or (iv) hereof;

                                      -6-
<PAGE>

          (c) any amendment, modification, restatement, refinancing or waiver
     of, or addition or supplement to, or deletion from, or compromise, release,
     consent or other action in respect of, any of the terms of any Senior Debt
     or any other agreement which may be relating to any Senior Debt, other than
     such as would cause all or any portion of such Debt to fail to meet the
     definition of "Senior Debt;"

          (d) any exercise or non-exercise by any holder of Senior Debt of any
     right, power, privilege or remedy under or in respect of any Senior Debt or
     Subordinated Debt or any waiver of any such right, power, privilege or
     remedy or any default in respect of any Senior Debt or the Subordinated
     Debt, any dealing with or action against or application of proceeds from
     any collateral security therefor or any receipt by any holder of Senior
     Debt of any security, or any failure by any holder of Senior Debt to
     perfect a security interest in, or any release by any such Senior Debt of,
     any security for or guaranty of the payment of any Senior Debt or any
     manner of sale or other disposition of any assets of the Company or any
     subsidiary;

          (e) any merger or consolidation of the Company or any of its
     subsidiaries into or with any other subsidiaries of the Company or into or
     with any person, or any transfer of any or all of the property of the
     Company or any of its subsidiaries to any other person or any change,
     restructuring or termination of the corporate structure or existence of the
     Company or any of its subsidiaries;

          (f) the absence of any notice to, or knowledge by, any holder of
     Subordinated Debt of the existence or occurrence of any of the matters or
     events set forth in the foregoing clauses (a) through (e).

          (g) any lack of validity or enforceability of any instrument or
     agreement evidencing or securing any Senior Debt or any other agreement or
     instrument relating thereto; or

          (h) any other circumstance which might otherwise constitute a defense
     available to, or a discharge of, the Company or any holder of Subordinated
     Debt.

     3.10 Each holder of Subordinated Debt and the Company hereby waives
promptness, diligence, notice of appearance and any other notice with respect to
any of the Senior Debt and these provisions and any requirement that any holder
of the Senior Debt protect, secure, perfect or insure any security interest or
lien or any property subject thereto or exhaust any right to take any action
against the Company or any other person or entity or any collateral.

     3.11 The Company will, and will use its reasonable efforts to cause each
holder of Subordinated Debt to, at the Company's expense and at any time and
from time to time, promptly execute and deliver all further instruments and
documents, and take all further actions, that may be necessary or desirable, or
that any holder of any Senior Debt may reasonably request, in order to protect
any right or interest granted or purported to be granted under this Section 3 or
enable the holders of the Senior Debt to exercise and enforce their rights and
remedies under these provisions.

                                      -7-
<PAGE>

     3.12 Each holder of Subordinated Debt waives any and all notices of the
acceptance of the provisions of this Section 3 or of the creation, renewal,
extension or accrual, now or at any time in the future, of any Senior Debt.

     3.13 The obligations of each holder of Subordinated Debt under the
provisions set forth in this Section 3 shall continue to be effective, or be
reinstated, as the case may be, as to any payment in respect of any Senior Debt
that is rescinded or must otherwise be returned by the holder of such Senior
Debt upon the occurrence or as a result of any bankruptcy or judicial
proceeding, all as though such payment had not been made.

     3.14 Nothing contained in this Section 3 shall impair, as between the
Company and any holder of Subordinated Debt, the obligation of the Company to
pay to such holder the principal thereof and interest thereon as and when the
same shall become due and payable in accordance with the terms thereof and to
comply with each and every provision of this Note or prevent any holder of any
Subordinated Debt from exercising all rights, powers and remedies otherwise
permitted by applicable law or under this Note, all subject to the rights of the
holders of the Senior Debt hereunder including rights to receive cash,
securities or other property otherwise payable or deliverable to the holders of
Subordinated Debt.

     3.15 Upon the payment in full of all Senior Debt, the holders of
Subordinated Debt shall be subrogated to all rights of any holder of Senior Debt
to receive any further payments or distributions applicable to the Senior Debt
until the Subordinated Debt shall have been paid in full, and such payments or
distributions received by the holders of Subordinated Debt by reason of such
subrogation, of cash, securities or other property which otherwise would be paid
or distributed to the holders of Senior Debt, shall, as between the Company and
its creditors other than the holders of Senior Debt, on the one hand, and the
holders of Subordinated Debt, on the other hand, be deemed to be a payment by
the Company on account of Senior Debt and not on account of Subordinated Debt.
Notwithstanding the foregoing provisions of this Section 3.15 or any other
provision of this Note each holder of Subordinated Debt hereby waives any and
all exoneration and impairment defenses that it may at any time have by law or
otherwise in respect of subrogation rights.

     3.16 Each holder of Subordinated Debt, by its acceptance thereof, 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
any Senior Debt, whether such Senior Debt was created or acquired before or
after the creation of Subordinated Debt, to acquire and hold, or to continue to
hold, such Senior Debt, and such holder of Senior Debt shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
holding, or in continuing to hold, such Senior Debt. Each such holder of Senior
Debt is intended to be, and is, a third party beneficiary of this Section 3.
Each holder of Subordinated Debt acknowledges and agrees that the provisions set
forth in this Section 3 shall be enforceable against such holder of Subordinated
Debt by the holders of the Senior Debt. Notwithstanding anything contained in
this Note to the contrary, none of the provisions of this Section 3 (including,
without limitation, this Section 3.16 and defined terms used herein) may,
directly or indirectly, be amended, modified, supplemented or waived without the
prior written consent of the Senior Agent, on behalf of the holders of the
Senior Debt.

     3.17 Notwithstanding the other provisions of this Section 3.17, no
amendment to or refinancing of the Senior Debt or any agreement or instrument
related thereto shall be entitled to the benefits of this Section 3 without the
consent of the Holder to the extent that such amendment would prohibit directly
and expressly the Company or any subsidiary from making scheduled payments in
respect of the Subordinated Debt in accordance with the terms of this Agreement
as in effect on the date hereof or as may be amended to the extent permitted by
the Senior Credit Agreement; provided that no change of financial covenants or
increase in the restrictiveness of negative covenants or events of default under
the Senior Debt documents (that do not by their terms refer to this Note) shall
be deemed to constitute a prohibition from making scheduled payments, even if
the ultimate effect of any such change would cause the Company to be in default
under the Senior Debt if such a scheduled payment were made.

                                      -8-
<PAGE>

     3.18 As used in this Section 3 and elsewhere in this Agreement, the
following terms have the respective meanings set forth below:

                  "Credit Facility" means and includes a credit agreement or
similar agreement pursuant to which the lender or lenders commit(s) to permit
the Company, subject to the conditions therein, to obtain from time to time
thereunder term or revolving loans and/or letters of credit and periodically
repay the same.

                  "Junior Subordinated Debt" means any Debt of the Company or
any subsidiary which is (a) issued on or after the Issue Date of this Note and
which is expressly subordinated in right of payment to any Debt of the Company,
or (b) owing to any subsidiary or affiliate of the Company.

                  "Remedies" means and includes, with respect to any Debt
(including, without limitation, the Senior Debt and the Subordinated Debt):

                  (a) the acceleration of the maturity of any of such Debt;

                  (b) the exercise of any put right or other similar right to
require the Company or any subsidiary to repurchase any of such Debt prior to
the stated maturity thereof;

                  (c) the collection or commencement of proceedings against the
Company, any subsidiary thereof or any other person obligated on such Debt or
any of their respective property, to enforce or collect any of such Debt;

                  (d) taking possession of or foreclosing upon (whether by
judicial proceedings or otherwise) any Liens or other collateral security for
such Debt; or causing a marshaling of any property of the Company or any
subsidiary;

                  (e) the making of a demand in respect of any Guaranty given by
the Company or any subsidiary of the Company of such Debt;

                  (f) commencing or joining in or causing the Company to
commence or join in or assist the Company in commencing, any proceeding of the
nature referred to in Section 7.1(f) or 7.1(g); or

                  (g) exercising any other remedies with respect to such Debt or
any claim with respect thereto.

                  "Senior Agent" means, for so long as the Senior Credit
Agreement remains outstanding, Fleet National Bank, as administrative agent in
respect of the Senior Credit Agreement, and thereafter, any one agent or lender
in respect of the Senior Credit Facility, or a representative of either,
designated in writing to the Holder by the Company as being the "Senior Agent".

                  "Senior Credit Agreement" means the Credit Agreement dated as
of the date hereof among the Company, Fleet National Bank as administrative
agent (together with its successors in such capacity) and the banks, financial
institutions and other institutional lenders from time to time named therein, as
it may be amended, supplemented, extended, renewed, refinanced, restated or
replaced in whole or in part.

                                      -9-
<PAGE>

                  "Senior Credit Facility" means and includes:

                  (a) the Senior Credit Agreement; and

                  (b) any Credit Facility (whether or not secured), which Credit
Facility has refinanced in whole or in part the Senior Debt governed by the
terms of a Senior Credit Facility which the Company has designated in writing to
the Holder as being the "Senior Credit Facility;" provided, however, that, by
making such designation, the predecessor Senior Credit Facility shall cease to
be the Senior Credit Facility (but any Debt outstanding or incurred thereunder
shall continue to be Senior Debt for so long as such Debt meets the definition
thereof).

                  "Senior Debt" means and includes all obligations, liabilities
and indebtedness of the Company now or hereafter existing, whether fixed or
contingent, and whether for principal or interest (including interest (at the
rate specified in the applicable Senior Credit Facility) accruing after the
filing of a petition under the Bankruptcy Code, whether or not allowed), fees,
expenses, indemnification or otherwise (including letter of credit reimbursement
obligations whether or not any draw has occurred), in respect of:

                  (a) the Senior Credit Facility; and

                  (b) any other Debt of the Company owing to the Senior Agent or
any lender under the Senior Credit Facility (whether or not such lender
continues to be a lender thereunder) with respect to any obligations under Bank
Hedge Agreements (as defined in the Senior Credit Agreement) related to the
Senior Credit Agreement that are or may become owed by the Company directly or
indirectly, other than Debt incurred pursuant to a Senior Credit Facility.

                  Notwithstanding the foregoing, in no event shall "Senior Debt"
include any Junior Subordinated Debt.

                  "Significant Nonpayment Default" means and includes:

                  (a) an event of default under the Senior Credit Facility in
respect of the failure of the Company to comply with any material covenant or
agreement in respect of the Senior Credit Facility or documents executed or
delivered in connection therewith (it being understood that the provisions of
Sections 2.14, 5.2, 5.5, 5.6, 5.7, 5.13 and 5.14, Article 6 and Article 8 of the
Senior Credit Agreement, as in effect on the date hereof and any comparable
provisions in effect after the date hereof, are "material covenants" for such
purpose); and any event of default under Sections 9.2, 9.5, 9.7 through 9.14
(inclusively) under the Senior Credit Agreement (or any comparable provision in
effect after the date hereof); and

                  (b) an event of default in respect of the Senior Credit
Facility arising out of any Event of Default in respect of this Note.

                  "Subordinated Debt" means and includes all obligations,
liabilities and indebtedness of the Company now or hereafter existing, whether
fixed or contingent, and whether for principal, interest (including interest
accruing after the filing of a petition under the Federal Bankruptcy Code, to
the extent allowed), fees, expenses, indemnification or otherwise, in respect of
this Note.

                                      -10-
<PAGE>

4. Conversion

     4.1 The Holder may convert the outstanding principal amount of this Note,
and accrued and unpaid interest thereon (or a portion of such outstanding
principal amount as provided in Section 4.3) into fully paid and nonassessable
shares of Common Stock of the Company ("Conversion Shares") at any time prior to
the time the outstanding principal amount of this Note, and accrued and unpaid
interest thereon is paid in full, at the Conversion Price then in effect, except
that if this Note is to be prepaid in full or repurchased pursuant to the
provisions hereof, such conversion right shall terminate at the close of
business on the Prepayment Date or the Change in Control Purchase Date, as the
case may be. The number of shares of Common Stock issuable upon conversion of
this Note shall be determined by dividing the principal amount (and accrued and
unpaid interest, if any) to be converted by the conversion price in effect on
the Conversion Date (the "Conversion Price"). The initial Conversion Price is
$11.125 and is subject to adjustment as provided in this Section 4.

     The provisions of this Note that apply to conversion of the outstanding
principal amount of this Note and accrued and unpaid interest thereon also apply
to a partial conversion of this Note. The Holder is not entitled to any rights
of a holder of Conversion Shares until the Holder has converted this Note (or a
portion thereof) into Conversion Shares, and only to the extent that this Note
is deemed to have been converted into Conversion Shares under this Section 4.

     4.2 To convert all or a portion of this Note, the Holder must (a) complete
and sign a notice of election to convert substantially in the form annexed
hereto (each, a "Conversion Notice"), (b) surrender the Note to the Company, (c)
furnish appropriate endorsements or transfer documents if required by the
Company and (d) pay any transfer or similar tax, if required. The date on which
the Holder satisfies all of such requirements is the conversion date (the
"Conversion Date"). As soon as practicable, and in any event within three (3)
business days, after the Conversion Date, the Company will deliver, or cause to
be delivered, to the Holder a certificate for the number of whole Conversion
Shares issuable upon such conversion and a check for any fractional Conversion
Share determined pursuant to Section 4.4 and for interest on this Note accrued
and unpaid through the Conversion Date (unless such interest has also been
converted as permitted by this Section 4). The person in whose name the
certificate for Conversion Shares is to be registered shall become the
shareholder of record on the Conversion Date and, as of the Conversion Date, the
rights of the Holder shall cease as to the portion thereof so converted;
provided, however, that no surrender of a Note on any date when the stock
transfer books of the Company shall be closed shall be effective to constitute
the person entitled to receive the Conversion Shares upon such conversion as the
shareholder of record of such Conversion Shares on such date, but such surrender
shall be effective to constitute the person entitled to receive such Conversion
Shares as the shareholder of record thereof for all purposes at the close of
business on the next succeeding day on which such stock transfer books are open;
provided further that such conversion shall be at the Conversion Price in effect
on the date that this Note shall have been surrendered for conversion, as if the
stock transfer books of the Company had not been closed.

     4.3 In the case of a partial conversion of this Note, upon such conversion,
the Company shall execute and deliver to the Holder, at the expense of the
Company, a new Note in an aggregate principal amount equal to the unconverted
portion of the principal amount. This Note may be converted in part in a
principal amount equal $100,000 or an integral multiple thereof, unless the
outstanding principal amount of this Note is less than $100,000, in which case,
only such outstanding principal amount and accrued and unpaid interest thereon
is convertible into Conversion Shares.

     4.4 No fractional Conversion Shares shall be issued upon conversion of this
Note. Instead of any fractional Conversion Share which would otherwise be
issuable upon conversion of this Note, the Company shall calculate and pay a
cash adjustment in respect of such fraction (calculated to the nearest 1/100th
of a share) in an amount equal to the same fraction of the Conversion Price at
the close of business on the Conversion Date.

     4.5 The issuance of certificates for Conversion Shares upon the conversion
of any Security shall be made without charge to the Holder for such certificates
or for any tax in respect of the issuance of such certificates, and such
certificates shall be issued in the name of, or in such names as may be directed
by, the Holder; provided, however, that in the event that certificates for
Conversion Shares are to be issued in a name or names other than the name of the
Holder, such Note, when surrendered for conversion, shall be accompanied by an
instrument of transfer, in form satisfactory to the Company, duly executed by
the Holder or his duly authorized attorney; and provided further, moreover, that
the Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any such certificates
in a name or names other than that of the Holder, and the Company shall not be
required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid or is not applicable.

                                      -11-
<PAGE>

     4.6 (a) In case the Company shall at any time after the date hereof issue,
grant or sell any Additional Stock (as hereinafter defined) for a consideration,
exercise or conversion price per share less than the Conversion Price in effect
immediately prior to the issuance or sale of such Additional Stock, or without
consideration, then forthwith upon such issuance or sale, the Conversion Price
shall (upon such issuance or sale) be reduced to a price determined by dividing
(i) an amount equal to the sum of (a) the total number of shares of Common Stock
outstanding immediately prior to such issuance or sale multiplied by the
Conversion Price then in effect, plus (b) the consideration, if any, received by
the Company upon such issuance or sale, by (ii) the total number of shares of
Common Stock outstanding immediately after such issuance or sale; provided,
however, that in no event shall the Conversion Price be adjusted pursuant to
this computation to an amount in excess of the Conversion Price in effect
immediately prior to such computation, except as provided in 4.6(d) hereof.
"Additional Stock" shall mean Common Stock or options, warrants or other rights
to acquire or securities convertible into or exchangeable for shares of Common
Stock, including shares held in the Company's treasury, and shares of Common
Stock issued upon the exercise of any options, rights or warrants to subscribe
for shares of Common Stock and shares of Common Stock issued upon the direct or
indirect conversion or exchange of securities for shares of Common Stock, other
than:

                  (A) This Note.

                  (B) Common Stock issued or issuable upon conversion of this
         Note.

                  (C) Common Stock issued or issuable upon the conversion or
         exercise of options, warrants, rights and other securities or debt
         convertible into or exercisable or exchangeable for Common Stock
         outstanding on the date hereof;

                  (D) The grant of options, warrants, stock appreciation rights
         or other rights available for future grant under the Company's stock
         option plan or any future stock option or incentive plan approved by
         the Company's shareholders;

                  (E) Common Stock issuable upon exercise of options, warrants,
         stock appreciation rights or other rights outstanding or available for
         future grant under the Company's stock option plan or any future stock
         option or incentive plan approved by the Company's shareholders;
         provided, that, any such options, warrants, stock appreciation rights
         or other rights provide for an exercise price or conversion price at
         least equal to the lesser of the Market Price (as hereinafter defined)
         or the last sale price of the Common Stock on the day of or day prior
         to (i) the date of approval of such grant by the Board of Directors or
         (ii) the date of execution of an agreement relating to such grant;

                  (F) Warrants to be issued in connection with the Senior Credit
         Agreement and shares of Common Stock issuable upon the exercise
         thereof, and

                  (G) Common Stock or options, warrants, rights or other
         securities or debt convertible into, or exercisable or exchangeable
         for, Common Stock (or shares of Common Stock issuable upon the
         conversion or exercise thereof) in connection with future acquisitions.

                                      -12-
<PAGE>

     The term "Market Price" shall mean the average of the daily closing prices
of a share of Common Stock for the 10 consecutive trading days immediately prior
to the day in question. The closing price for each day shall be (a) the last
reported sales price or, in the case no such reported sale takes place on such
day, the average of the reported closing bid and asked prices, in either case on
the principal national securities exchange on which the Common stock is listed
or admitted to trading or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, on The Nasdaq Stock Market, Inc.
("Nasdaq"), (b) if the Common Stock is not listed or admitted to trading on any
national securities exchange or quoted on Nasdaq, the average of the closing bid
and asked prices in the over-the-counter market as furnished by any New York
Stock Exchange member firm reasonably selected from time to time by the Company
for that purpose, or (c) if the Common Stock is not listed or admitted to
trading on any national securities exchange or quoted on Nasdaq and the average
price cannot be determined as contemplated by clause (b), the fair market value
of the Common Stock as determined in good faith by resolution of the independent
directors of the Company. For the purposes of the preceding sentence, the term
"trading day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday,
other than any day on which securities are not traded on such exchange or in
such market.

     (b) For the purpose of any computation to be made in accordance with
Section 4.6(a), the following provisions shall apply:

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

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

                           (iii) The reclassification of securities of the
Company other than shares of Common Stock into securities including shares of
Common Stock shall be deemed to involve the issuance of such shares of Common
Stock for a consideration other than cash immediately prior to the close of
business on the date fixed for the determination of security holders entitled to
receive such shares, and the value of the consideration allocable to such shares
of Common Stock shall be determined as provided in Section 4.6(b)(ii).

                           (iv) In the case of the issuance of options, rights,
or warrants to purchase or subscribe for shares of Common Stock, securities
convertible into or exchangeable for shares of Common Stock, or options, rights
or warrants to purchase or subscribe for any such convertible or exchangeable
securities, the following provisions shall apply:

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

                                      -13-
<PAGE>

                  (B) The aggregate maximum number of shares of Common Stock
issuable upon conversion or exchange of any convertible or exchangeable
securities shall be deemed to be issued and outstanding at the time of issuance
of such securities, and shall be deemed to be issued for a consideration equal
to the consideration received by the Company in connection with the sale of such
securities plus the consideration, if any, receivable by the Company upon the
conversion or exchange thereof; provided, however, that upon the termination of
the right to convert or exchange such convertible or exchangeable securities
(whether by reason of redemption or otherwise), the number of shares deemed to
be issued and outstanding pursuant to this subsection (B) shall be reduced by
such number of shares as to which the conversion or exchange rights shall have
expired or terminated unexercised, and such number of shares shall no longer be
deemed to be issued and outstanding and the Conversion Price then in effect
shall forthwith be readjusted and thereafter be the price which it would have
been had such adjustment been made on the basis of the issuance only of shares
actually issued or issuable upon the conversion or exchange of those convertible
or exchangeable securities as to which the conversion or exchange rights shall
not have expired or terminated unexercised.

                  (C) If any change shall occur in the price per share provided
for in any of the options, rights or warrants referred to in Section
4.6(b)(iv)(A), or in the price per share at which the securities referred to in
Section 4.6(b)(iv)(B) are convertible or exchangeable, such options, rights or
warrants or conversion or exchange rights, as the case may be, shall be deemed
to have expired or terminated on the date when such price change became
effective in respect of shares not theretofore issued pursuant to the exercise
or conversion or exchange thereof, and the Company shall be deemed to have
issued upon such date new options, rights or warrants or convertible or
exchangeable securities at the new price in respect of the number of shares
issuable upon the exercise of such options, rights or warrants or the conversion
or exchange of such convertible or exchangeable securities.

                  (D) Except as otherwise provided in this Section 4.6(b), no
adjustment of the Conversion Price shall be made upon the actual issuance of
such Common Stock upon exercise of options, rights or warrants or upon the
actual issuance of such Common Stock upon conversion or exchange of any
convertible or exchangeable securities.

     (c) In case the Company shall pay or make a dividend or other distribution
to all holders of its Common Stock in shares of Common Stock, the Conversion
Price in effect at the opening of business on the day next following the date
fixed for the determination of shareholders entitled to receive such dividend or
other distribution shall be reduced by multiplying such Conversion Price by a
fraction, of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination,
and the denominator shall be the sum of the numerator and the total number of
shares constituting such dividend or other distribution, such reduction to
become effective immediately after the opening of business on the day next
following the date fixed for such determination. For the purposes of this
Section 4.6(c), the number of shares of Common Stock at any time outstanding
shall not include shares of Common Stock held in the treasury of the Company.
The Company will not pay any dividend or make any distribution on shares of
Common Stock held in the treasury of the Company.

     (d) In the event that the Company shall at any time prior to the conversion
in full of the Note declare a dividend (other than a dividend consisting solely
of shares of Common Stock or a cash dividend or distribution payable out of
current or retained earnings) or otherwise distribute to its shareholders any
monies, assets, property, rights, evidences of indebtedness, securities (other
than shares of Common Stock), whether issued by the Company or by another person
or entity, or any other thing of value, the Holder or Holders of the Note to the
extent of the unconverted portion thereof shall thereafter be entitled, in
addition to the shares of Common Stock or other securities receivable upon the
conversion thereof, to receive, upon conversion of such unconverted portion of
the Note, the same monies, property, assets, rights, evidences of indebtedness,
securities or any other thing of value that they would have been entitled to
receive at the time of such dividend or distribution. At the time of any such
dividend or distribution, the Company shall make appropriate reserves to ensure
the timely performance of the provisions of this Subsection.

                                      -14-
<PAGE>

     (e) In case the outstanding shares of Common Stock shall be subdivided into
a greater number of shares of Common Stock, the Conversion Price in effect at
the opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately reduced, and, conversely, in case the
outstanding shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, the Conversion Price in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.

     (f) In case the Company shall fail to take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a dividend
or other distribution payable in shares of Common Stock, then such record date
shall be deemed to be the date of the issue of the shares of Common Stock deemed
to have been issued as a result of the declaration of such dividend or other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.

     4.7 No adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least one cent ($.01) in
the Conversion Price; provided, however, that any adjustments which by reason of
this Section 4.7 are not required to be made shall be carried forward and taken
into account in any subsequent adjustment.

     4.8 Notice of Certain Events.

     (a) In the event that: (i) the Company takes any action which would require
an adjustment in the Conversion Price; (ii) the Company takes any action
described in Section 4.9(a), (b) or (c); or (iii) there is a dissolution or
liquidation of the Company; the Holder may wish to convert this Note into shares
of Conversion Shares prior to the record date for or the effective date of the
transaction so that such Holder may receive the securities or assets which a
holder of shares of Common Stock on that date may receive. Therefore, the
Company shall give notice to the Holder in accordance with the provisions of
this Section 4.8 stating the proposed record or effective date, as the case may
be, which notice shall be given prior to the proposed record or effective date
and, in any case, no later than notice of such transaction is given to holders
of Common Stock. Failure to give such notice or any defect therein shall not
affect the validity of any transaction referred to in clause (i), (ii) or (iii)
of this Section.

     (b) Upon the occurrence of each adjustment or readjustment of the
Conversion Price pursuant to this Section 4, the Company, at its expense, shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and prepare and furnish to each Holder a statement, signed by its chief
financial officer, setting forth such adjustment or readjustment and showing in
reasonable detail the facts upon which such adjustment or readjustment is based.
The Company shall, upon the written request at any time of any Holder, furnish
or cause to be furnished to such Holder a like certificate setting forth (i)
such adjustment and readjustment, (ii) the Conversion Price at the time in
effect, and (iii) the number of shares of Common Stock and the amount, if any,
of other property which at the time would be received upon the Conversion of the
portion of this Note specified in such request.

                                      -15-
<PAGE>

     4.9 If any of the following shall occur, namely:

     (a) any reclassification or change of outstanding shares of Common Stock
issuable upon conversion of this Note (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result of
a subdivision or combination);

     (b) any consolidation or merger to which the Company is a party, other than
a merger in which the Company is the continuing corporation and which does not
result in any reclassification of, or change (other than a change in name, or
par value, or from par value to no par value, or from no par value to par value
or as a result of a subdivision or combination) in, outstanding shares of Common
Stock; or

     (c) any sale or conveyance of all or substantially all of the property or
business of the Company and its subsidiaries as an entirety;

then the Company, or such successor or purchasing corporation, as the case may
be, shall, as a condition precedent to such reclassification, change,
consolidation, merger, sale or conveyance, execute and deliver to the Holder, an
agreement in form satisfactory to the Holder providing that the Holder shall
have the right to convert this Note into the kind and amount of shares of stock
and other securities and property (including cash) receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of shares of Common Stock deliverable upon conversion of this Note
immediately prior to such reclassification, change, consolidation, merger, sale
or conveyance. Such agreement shall provide for adjustments of the Conversion
Price which shall be as nearly equivalent as may be practicable to the
adjustments of the Conversion Price provided for in this Section 4. If, in the
case of any such consolidation, merger, sale or conveyance, the stock or other
securities and property (including cash) receivable thereupon by a holder of
Common Stock includes shares of stock or other securities and property of a
corporation other than the successor or purchasing corporation, as the case may
be, in such consolidation, merger, sale or conveyance, then such agreement shall
also be executed by such other corporation and shall contain such additional
provisions to protect the interests of the Holder as the Board of Directors
shall reasonably consider necessary by reason of the foregoing. The provisions
of this Section 4.9 shall similarly apply to successive reclassifications,
changes, consolidations, mergers, sales or conveyances.

     4.10 The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized and unissued Common Stock, solely for
the purpose of effecting the conversion of this Note, the full number of
Conversion Shares then issuable upon the conversion in full of this Note.

     4.11 If the Company or an affiliate of the Company shall at any time after
the date hereof and prior to the conversion of the Note in full issue any rights
to subscribe for shares of Common Stock or any other securities of the Company
or of such affiliate to all the shareholders of the Company, the Holder of the
unconverted portion of the Note shall be entitled, in addition to the shares of
Common Stock or other securities receivable upon the Conversion thereof, to
receive such rights at the time such rights are distributed to the other
shareholders of the Company.

                                      -16-
<PAGE>

5. Affirmative Covenants

     The Company covenants that on and after the Issue Date and so long as any
portion of the Note shall be outstanding:

     5.1 The Company will, and will cause each of its Subsidiaries to, pay
before they become delinquent: (a) all taxes, assessments and governmental
charges or levies imposed upon it or its property; and (b) all claims or demands
of materialmen, mechanics, carriers, warehousemen, vendors, landlords and other
like persons that, if unpaid, might by law become a Lien upon its property;
provided, that items of the foregoing description need not be paid so long as
such items are being contested in good faith and by appropriate proceedings and
as to which appropriate reserves in accordance with GAAP have been established
and maintained with respect thereto, unless and until any Lien resulting
therefrom attaches to its property and becomes enforceable, unless such Lien is
effectively stayed or fully bonded pending the disposition of such proceedings.

     5.2 The Company will, and will cause each of its subsidiaries to:

               (a) maintain its property that is reasonably necessary in the
          conduct of its business in good working order and condition, ordinary
          wear and tear, obsolescence and insured casualty losses excepted;

               (b) maintain, with insurers reasonably believed to be financially
          sound and reputable, insurance with respect to its property and
          business against such casualties and contingencies, of such types and
          in such amounts as is customary in the case of corporations engaged in
          the same or a similar business and similarly situated;

               (c) keep proper books of record and account, in which full and
          correct entries shall be made of all dealings and transactions of or
          in relation to the properties and business thereof;

               (d) do or cause to be done all things reasonably necessary to
          preserve and keep in full force and effect its corporate existence,
          corporate rights (charter and statutory) and corporate franchises,
          except as permitted by Section 6.1;

               (e) comply, in all material respects, with all applicable laws,
          rules and regulations (including, without limitation, ERISA,
          Environmental Laws and Environmental Permits) and obtain all licenses,
          permits, franchises and other governmental authorizations necessary
          for the ownership of its properties and the conduct of its business,
          except where its obligation to so comply being contested in good faith
          and by appropriate proceedings and adequate resources have been
          established are being maintained in accordance with GAAP, and except
          where failure to comply could not reasonably be expected to have a
          Material Adverse Effect; and

               (f) conduct its business so as not to become subject to any
          liability under any Environmental Law that, individually or in the
          aggregate, could reasonably be expected to have a Material Adverse
          Effect and except where any such liability is being contested in good
          faith by appropriate proceedings and adequate reserves have been
          established and are being maintained in accordance with GAAP.

     5.3 The Company will conduct, and cause each of its subsidiaries to
conduct, all transactions otherwise permitted by this Note with any of their
Affiliates on terms that are fair and reasonable and no less favorable to the
Company or any such subsidiary than it could obtain in a comparable arms-length
transaction with a person not an Affiliate; provided, however, that this Section
5.3 shall not be deemed to prohibit any transactions solely between the Company
and its wholly-owned subsidiaries carried out in the ordinary course of
business, subject, however, to any applicable provisions of Section 6, the
transactions contemplated hereby, the provisions of any agreements or
instruments existing as of the date hereof or payments pursuant to the
Acquisition Documents and the Future Acquisition Puts (as those terms are
defined in the Senior Credit Agreement, collectively, the "Acquisition
Obligations" and, individually, an "Acquisition Obligation").

                                      -17-
<PAGE>

     5.4 The Company shall deliver to the Holder, except during any period in
which the Holder or an Affiliate thereof is serving as a director or executive
officer of the Company:

               (a) as soon as available and in any event within thirty (30) days
          after the end of each month which is not a fiscal quarter end, a
          consolidated balance sheet, statement of income and cash flows
          commencing April 1999, of the Company and its subsidiaries, as of the
          end of such month and for the period commencing at the end of the
          previous month and ending with the end of such month and consolidated
          statement of income and a consolidated statement of cash flows of the
          Company and its subsidiaries, for the period commencing at the end of
          the previous fiscal year of the Company and ending with the end of
          such month, setting forth in each case commencing April 2000 in
          comparative form the corresponding figures for the corresponding
          period of the prior fiscal year, all in reasonable detail and duly
          certified by the chief financial officer of the Company.

               (b) as soon as practicable after the end of each of the first
          three quarterly fiscal periods in each fiscal year of the Company, and
          in any event within 55 days thereafter: (i) a consolidated balance
          sheet as at the end of such quarter; and (ii) consolidated statements
          of income and cash flows for such quarter and (in the case of the
          second and third quarters) for the portion of the fiscal year ending
          with such quarter; for the Company and its subsidiaries, setting forth
          in each case, in comparative form, the financial statements for the
          corresponding periods in the previous fiscal year, all in reasonable
          detail, prepared in accordance with GAAP applicable to quarterly
          financial statements generally, and certified as complete and correct
          by the Chief Financial Officer of the Company, and accompanied by the
          certificate required by Section 5.5; provided, that timely delivery of
          copies of the Company's Quarterly Report on Form 10-QSB filed with the
          Securities and Exchange Commission ("SEC") shall be deemed to satisfy
          the requirements of this Section 5.4(b) so long as such Quarterly
          Report contains or is accompanied by the information specified in this
          Section 5.4(b);

               (c) as soon as practicable after the end of each fiscal year of
          the Company, and in any event within 110 days thereafter: (i) a
          consolidated balance sheet as at the end of such year; and (ii)
          consolidated statements of income, stockholders' equity and cash flows
          for such year; for the Company and its subsidiaries, setting forth, in
          comparative form, the financial statement for the previous fiscal
          year, all in reasonable detail, prepared in accordance with GAAP, and
          accompanied by: (A) an audit report thereon of independent certified
          public accountants of recognized national standing, which report shall
          state without qualifications related to the scope of the audit, the
          compliance of the audit with generally accepted auditing standards or
          the ability of the Company or a material subsidiary thereof to
          continue as a going concern, that such financial statements have been
          prepared and are in conformity with GAAP; and (B) the certificates
          required by Section 5.5 and Section 5.6; provided, that timely
          delivery of the Company's Annual Report on Form 10-KSB for such fiscal
          year filed with the SEC shall be deemed to satisfy the requirements of
          this Section 5.4(c) so long as such Annual Report contains or is
          accompanied by the reports and other information otherwise specified
          in this Section 5.4(c);

                                      -18-
<PAGE>

               (d) promptly upon their becoming available, and in any event
          within 15 days thereafter: (i) each financial statement, report,
          notice or proxy statement sent by the Company to stockholders
          generally; (ii) each regular or periodic report (including, without
          limitation, each Form 10-KSB, Form 10-QSB and Form 8-K), any
          registration statement which shall have become effective with respect
          to a public offering of securities of the Company for its own account,
          and all amendments thereto filed by the Company or any subsidiary
          thereof with the SEC;

               (e) within 15 business days after any executive officer of the
          Company becoming aware (i) of the existence of any condition or event
          which constitutes a Default or an Event of Default; or (ii) that the
          holder of any Debt in a principal amount of $400,000 or more (other
          than this Note) shall have given notice or taken any other action with
          respect to a claimed or default or event of default; a notice
          specifying the nature of the claimed Default, Event of Default or
          default or event of default and the notice given or action taken (if
          any) by such holder of Debt (other than this Note) and what action the
          Company is taking or proposes to take with respect thereto;

               (f) promptly upon receipt thereof, a copy of each report or
          management letter submitted to the Company or any subsidiary thereof
          by independent accountants in connection with any annual, interim or
          special audit made of the books of the Company or such subsidiary;

               (g) promptly after the commencement of any action or proceeding
          relating to the Company or any subsidiary thereof in any court or
          before any court, other governmental authority or arbitration tribunal
          as to which there is a reasonable possibility of an adverse
          determination and that, if adversely determined, would have a Material
          Adverse Effect, a notice specifying the nature and period of existence
          thereof and what action the Company or such subsidiary is taking or
          proposes to take with respect thereto; and

               (h) with reasonable promptness, such other data and information
          as from time to time may be reasonably requested by the Holder.

     5.5 Each set of financial statements delivered to the Holder pursuant to
Section 5.4(a), Section 5.4(b), or Section 5.4(c) shall be accompanied by a
certificate of the Chief Financial Officer, setting forth a statement that the
signer has reviewed the relevant terms hereof and has made, or caused to be
made, under his supervision or authority, a review of the transactions and
conditions of the Company and its subsidiaries from the beginning of the
accounting period covered by the income statements being delivered therewith to
the date of the certificate and that such review shall not have disclosed the
existence during such period of any condition or event that constitutes a
Default or an Event of Default or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what action
the Company shall have taken or proposes to take with respect thereto.

     5.6 Each set of annual financial statements delivered pursuant to Section
5.4(c) shall be accompanied by a certificate of the accountants that audited
such financial statements, stating that they have reviewed this Note and stating
further, whether, in making their audit, such accountants have become aware of
any condition or event that then constitutes a Default or an Event of Default,
and, if such accountants are aware that any such condition or event then exists,
specifying the nature and period of existence thereof.

                                      -19-
<PAGE>

     5.7 The Company will, except during any period in which the Holder or any
Affiliate thereof is serving as a director or executive officer of the Company,
permit the representatives of the Holder to visit and inspect any of the
properties of the Company or any of its Subsidiaries, to examine all their
respective books of account, records, reports and other papers, to make copies
and extracts therefrom, and to discuss their respective affairs, finances and
accounts with their respective executive officers and independent public
accountants (and by this provision the Company authorizes said accountants to
discuss the finances and affairs of the Company and its Subsidiaries) all at
such reasonable times and as often as may be reasonably requested. At all times
during which there exists a Default or Event of Default, except during any
period in which the Holder or any Affiliate thereof is serving as a director or
executive officer of the Company, expenses incurred by the Holder of this Note
in connection with this Section 5.7 shall be reimbursed by the Company to the
Holder.

     5.8 The Company will make all payments and otherwise perform, or cause the
relevant subsidiary of the Company to pay or otherwise perform, all obligations
in respect of all leases of real property to which the Company or any of its
subsidiaries is a party, keep such leases in full force and effect and not allow
such leases to lapse or be terminated or any rights to renew such leases to be
forfeited or canceled, notify the Holder of any default by any party with
respect to such leases (except during any period in which the Holder or any
Affiliate thereof is serving as a director or executive officer of the Company)
and cooperate with the Holder in all respects to cure any such default, and
cause each of its subsidiaries to do so except, in any case, where the failure
to do so, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect and except where its failure to do so
is being contested in good faith and by proper proceedings.

     5.9 The Company will perform and observe, and cause each of its
subsidiaries to perform and observe, all of the material terms and provisions of
each Material Contract (as that term is defined in the Senior Credit Agreement)
to which it is a party to be performed or observed by it, maintain, and cause
each of its subsidiaries to maintain, each such Material Contract to which it is
a party in full force and effect, and enforce, and cause each of its
subsidiaries to enforce, each such Material Contract to which it is a party in
accordance with its terms, except where the failure to do so would not be
reasonably likely to have a Material Adverse Effect and except where its failure
to do so is being contested in good faith and by proper proceedings.

     5.10 The Company will perform and observe, or cause the relevant subsidiary
of the Company to perform and observe, all of the material terms and provisions
of each Acquisition Obligation to be performed or observed by it or such
subsidiary, maintain each such Acquisition Obligation in full force and effect,
enforce each such Acquisition Obligation in accordance with its terms, take all
such action to such end as may be from time to time requested by the Holder
required in order to enforce its material rights under the Acquisition
Obligations and, upon request of the Holder, make to each other party to each
such Acquisition Obligation such demands and requests for action or for
information and reports as the Company or any subsidiary of the Company is
entitled to make under such Acquisition Obligation required in order to enforce
its material rights under the Acquisition Obligations.

     5.11 The Company shall promptly, and in any case within 30 days after the
date hereof, cause each of its existing direct and indirect wholly-owned
subsidiaries and any such subsidiaries of the Company hereafter formed and/or
acquired by the Company (or any subsidiary of the Company) to issue to the
Holder a guaranty of the Company's obligations under this Note, which guaranties
shall be substantially similar to the Subsidiary Guaranties issued pursuant to
the Senior Credit Agreement, except that such guaranties will be subordinated to
the obligations of such subsidiaries under the Subsidiary Guaranties issued or
to be issued by such subsidiaries under the Senior Credit Agreement consistent
with the subordination provisions set forth in Section 3 of this Note, will
guaranty the obligations of the Company under this Note and will otherwise be in
form and substance reasonably satisfactory to the Holder and the Senior Agent.

                                      -20-
<PAGE>

6. Negative Covenants

     6.1 The Company will not, and will not permit any subsidiary thereof to,
(a) merge with or into or consolidate with any other person, permit any other
person to merge or consolidate with or into it, or (b) sell all or substantially
all of its property to any other person; provided, however, that the foregoing
restriction does not apply to the merger or consolidation of the Company with
another corporation or transfer of all or substantially all of the property of
the Company to any other person if: (i) the corporation that results from such
merger or consolidation or to which all or substantially all of the property of
the Company is transferred (the "Surviving Corporation") (a) is organized under
the laws of, and conducts substantially all of its business and has
substantially all of its properties within, the United States of America or any
jurisdiction or jurisdictions thereof and (b) has shareholders' equity
immediately after such transaction that is equal to or greater than the
shareholders' equity of the Company immediately prior to such transaction; (ii)
the due and punctual payment of the principal of, and interest on this Note,
according to their tenor, and the due and punctual performance and observance of
all the covenants in this Note, to be performed or observed by the Company, are
expressly assumed pursuant to such assumption agreements and instruments in such
forms as shall be approved reasonably by the Holder, or assumed by operation of
law, by the Surviving Corporation; and (iii) immediately prior to, and
immediately after the consummation of the transaction, and after giving effect
thereto, no Default or Event of Default exists or would exist. Notwithstanding
the foregoing, a subsidiary of the Company may merge into the Company so long as
the Company is the Surviving Corporation, and a subsidiary of the Company, may
merge with or into a wholly-owned subsidiary of the Company, so long as such
wholly-owned subsidiary is the Surviving Corporation. Notwithstanding anything
contained herein to the contrary, the Company may (i) sell all or substantially
all of its property to, or enter into a merger transaction with, any other
person if such sale or merger follows and is the result of an acceleration of
the Senior Debt and the transaction has been approved by the Senior Agent and
the banks which are parties to the Senior Credit Agreement and (ii) in
compliance with Section 6.19 of the Senior Credit Agreement, transfer its assets
to a wholly-owned subsidiary so long as such subsidiary executes and delivers a
guaranty in favor of the Holder that is reasonably acceptable to the Holder,
subordinated on terms and conditions acceptable to the Senior Agent consistent
with the terms of subordination set forth in Section 3 hereof.

                                      -21-
<PAGE>

     6.2 The Company will not, and will not permit any subsidiary of the Company
to, sell, lease as lessor, transfer or otherwise dispose of its property
(collectively, "Transfers"), except:

               (A) Transfers of inventory and of unnecessary, obsolete or
          worn-out assets, in each case in the ordinary course of business of
          the Company or such subsidiary;

               (B) Transfers from a subsidiary of the Company to the Company or
          a wholly-owned subsidiary of the Company, or from the Company to a
          wholly-owned subsidiary of the Company provided such subsidiary issues
          a guaranty of the Company's obligations under this Note consistent
          with the provisions of Section 5.11;

               (C) any other Transfer at any time of any property to a person
          for such consideration as determined, in each case by the Board of
          Directors, in its good faith opinion, to be in the best interest of
          the Company and to reflect the fair market value of such property if
          the conditions specified in each of the following clauses (A) and (B)
          would be satisfied with respect to such Transfer: (A) the sum of: (1)
          the book value of such property at the time of Transfer; plus (2) the
          aggregate book value of all other property Transferred (other than in
          transactions described in clauses (A) and (B) above), after the Issue
          Date, would not exceed 25% of consolidated total assets of the Company
          and its subsidiaries (determined in accordance with GAAP) measured as
          of the last day of the immediately preceding fiscal quarter of the
          Company; and (B) immediately before and after the consummation of the
          Transfer, and after giving effect thereto, no Default or Event of
          Default would exist;

               (D) any other Transfer of property to the extent that the
          proceeds of such Transfer, net of transaction costs and expenses
          incurred and actually paid in connection with such Transfer (including
          sales, transfer or gains taxes), within 365 days after such Transfer
          are applied by the Company or such subsidiary (A) to fund its working
          capital and capital expenditure or acquisitions requirements, and/or
          (B) to pay or prepay a principal amount of Debt of the Company or any
          subsidiary thereof (other than Junior Subordinated Debt) equal to the
          amount of such net proceeds; and, in connection with any such payment,
          the Company shall pay all accrued interest thereon and any premium or
          make-whole amount required to be paid in connection therewith;
          provided, however, that in the event that any Debt so prepaid is not
          Senior Debt, then the Company shall prepay, together with such
          prepayment of such other Debt, a proportional and ratable principal
          amount of this Note pursuant to Section 1.6.;

               (E) any Transfers pursuant to the Acquisition Obligations; and

               (F) any other Transfer permitted to be made by the Company or any
          of its subsidiaries consistent with the terms of the Senior Credit
          Agreement as in effect on the Issue Date.

     6.3 The Company will not, and will not permit any subsidiary to, directly
or indirectly, create, incur, assume, guarantee, or otherwise become directly or
indirectly liable with respect to, any Debt, other than:

               (A) this Note and any guaranties thereof;

               (B) Debt owing by the Company to any wholly-owned subsidiary of
          the Company and Debt of a subsidiary of the Company owing to the
          Company or a wholly-owned subsidiary of the Company;

               (C) Debt existing on the Issue Date and listed on Schedule 6.3
          (including Debt under the Senior Credit Agreement, provided that loans
          thereunder shall not exceed an aggregate of $34 million plus an
          additional $6 million to be used solely for working capital and
          general corporate purposes of the Company, including, but not limited
          to, acquisitions);

                                      -22-
<PAGE>

               (D) Debt incurred under the Senior Credit Facility from time to
          time following the Issue Date, provided that loans thereunder shall
          not exceed an aggregate of $34 million plus an additional $6 million
          to be used solely for working capital and general corporate purposes
          of the Company, including, but not limited to, acquisitions;

               (E) Debt incurred or created to refinance any of the Debt
          permitted by clauses (C) and (D) of this Section 6.3, provided that in
          the case of Debt listed on Schedule 6.3 (other than Senior Debt and
          refinancing thereof), the principal amount does not exceed the
          principal amount of Debt being refinanced;

               (F) Debt (other than Debt incurred under the Senior Credit
          Facility) incurred or assumed in connection with "Permitted
          Acquisitions" and "Permitted Club Acquisitions" (as those terms are
          defined in the Senior Credit Agreement);

               (G) Debt incurred in connection with conversion of the
          obligations of the Company or any subsidiary thereof under the
          Acquisition Puts (as defined in the Senior Credit Agreement) pursuant
          to the terms of the Acquisition Documents (as defined in the Senior
          Credit Agreement) or the conversion of obligations under Future
          Acquisition Puts (as defined in the Senior Credit Agreement) into Debt
          of the Company or its subsidiaries under the terms of the agreements
          governing such Future Acquisition Puts;

               (H) Debt (other than this Note) owing by the Company or a
          subsidiary thereof to Norton Herrick, Michael Herrick and/or Howard
          Herrick (together, the "Herricks") and/or any of their respective
          Affiliates;

               (I) Debt incurred by the Company or a subsidiary thereof to
          finance the payment of the Change in Control Purchase Price of this
          Note;

               (J) Debt, in addition to the Debt permitted to be incurred by the
          clauses (A) through (I) of this Section 6.3, in the principal amount
          at any time outstanding not to exceed $1,000,000;

               (K) Any Guaranties made or issued by the Company of Debt
          permitted to be incurred by any of its subsidiaries pursuant to
          clauses (E), (F), (G), (H), (I), (J) and (L) above and Guaranties made
          or issued by subsidiaries of the Company of Debt permitted to be
          incurred by the Company pursuant to clauses (C), (D), (E), (F), (G),
          (H), (I), (J) and (L) above; and

               (L) Any other Debt permitted to be incurred by the Company or any
          of its subsidiaries consistent with the terms of the Senior Credit
          Agreement as in effect on the Issue Date.

                                      -23-
<PAGE>

     6.4 The Company will not, and will not permit any subsidiary thereof to,
incur, assume or Guaranty any Debt which is subordinated in right of payment to
any other Debt of the Company or any subsidiary thereof, unless such Debt is
also subordinated in right of payment to the obligations of the Company in
respect of this Note on terms reasonably acceptable to the Holder. The Company
will not, and will not permit any subsidiary thereof to, incur or create any
Debt in favor of an Affiliate or another subsidiary (other than Debt in favor of
the Company or a wholly-owned subsidiary thereof which is a guarantor of Debt
under the Senior Credit Facility) unless such Debt is also subordinated in right
of payment to the obligations of the Company in respect of this Note on terms
reasonably acceptable to the Holders.

     6.5 The Company will not, and will not permit any subsidiary thereof to,
engage in any business if, as a result, the general nature of the business in
which the Company and its subsidiaries, taken as a whole, would then be engaged
would be substantially changed from the general nature of the business in which
the Company and the Subsidiaries, taken as a whole, are engaged on the Issue
Date.

7. Events of Default

     7.1 An "Event of Default" exists at any time if any of the following occurs
(whether such occurrence shall be voluntary or come about or be effected by
operation of law or otherwise):

          (a) The Company defaults in the payment of the principal of this Note
     when due (whether at the Maturity Date or any Prepayment Date) or in the
     payment of the Change in Control Purchase Price when due or defaults in the
     payment of any accrued interest on this Note when due and such default
     continues for a period of 30 business days after the date such interest
     became due;

          (b) The Company or any subsidiary thereof defaults in the performance
     or observance of any of the covenants contained in Section 5.2(d) or
     Section 6 hereof or defaults in the performance or observance of any of the
     covenants contained in Sections 5.2(e), 5.3, 5.4 (e) or 5.10 hereof and
     such default remains uncured for more than 30 days;

          (c) The Company or any subsidiary thereof defaults in the performance
     of any covenants contained in this Note, and such default remains uncured,
     after notice and an opportunity to cure, for more than 60 days;

          (d) Any warranty, representation or other statement by or on behalf of
     the Company contained in this Note or in any certificate, financial
     statement, report or notice furnished after the date hereof to Holder
     pursuant to the terms of this Note, or in any written amendment,
     supplement, modification or waiver with respect to any such document shall
     be false or misleading in any material respect when made;

          (e) Either (i) the Company or any subsidiary thereof fails to pay when
     due and within any applicable period of grace, any principal of, premium,
     if any, or interest in respect of any Debt for borrowed money of the
     Company or such subsidiary in the aggregate principal amount of $2 million;
     or (ii) any event shall occur or any condition shall exist in respect of
     such Debt, or under any agreement securing or relating to such Debt, and in
     either case, as a result thereof: (A) the maturity of such Debt, or a
     material portion thereof, is accelerated, or (B) any one or more of the
     holders thereof or a trustee therefor is permitted to require the Company
     or such subsidiary to repurchase such Debt from the holders thereof, and
     any such trustee or holder exercises such option; or (C) any such one or
     more of such holders or such trustee declares an acceleration of the
     maturity of such Debt;

                                      -24-
<PAGE>

          (f) a receiver, liquidator, custodian or trustee of the Company or any
     subsidiary thereof or of all or any substantial part of the property of
     either is appointed by court order and such order remains in effect for
     more than 60 days; or an order for relief is entered with respect to the
     Company or any such subsidiary, or the Company or any subsidiary thereof is
     adjudicated a bankrupt or insolvent; or all or any substantial part of the
     property of the Company or any subsidiary thereof is sequestered by court
     order and such order remains in effect for more than 60 days; or an
     involuntary case or proceeding is commenced against the Company or any
     subsidiary thereof under the Federal Bankruptcy Code or any other
     bankruptcy reorganization, arrangement, insolvency, readjustment of debt,
     dissolution or liquidation law of any jurisdiction, whether now or
     hereafter in effect, and is not dismissed within 60 days after such filing;

          (g) The Company or any subsidiary thereof: (i) commences a voluntary
     case or proceeding or seeks relief under any provision of the Federal
     Bankruptcy Code or any other bankruptcy, reorganization, arrangement,
     insolvency, readjustment of debt, dissolution or liquidation law of any
     jurisdiction, whether now or hereafter in effect, or consents to the filing
     of any petition against it under any such law; or (ii) makes an assignment
     for the benefit of creditors, or admits in writing its inability or fails,
     to pay its debts generally as they become due, or consents to the
     appointment of a receiver, liquidator or trustee of the Company or a
     subsidiary thereof or of all or a substantial part of its property; or

          (h) A final, non-appealable judgment or final, non-appealable
     judgments for the payment of money aggregating in excess of $2.0 million
     (in excess of any insurance relating to such judgments or judgments or any
     claim or claims underlying such judgment or judgments and the relevant
     insurer or insurers shall not have denied liability under such insurance or
     rejected any claims made with respect thereto) is or are outstanding
     against one or more of the Company and its subsidiaries and any one of such
     judgments shall have been outstanding for more than 60 days from the date
     of its entry and shall not have been discharged in full or stayed; or

          (i) The Note shall cease to be in full force and effect or shall be
     declared by a court of competent jurisdiction to be void, voidable or
     unenforceable, or the validity or enforceability of the Note shall be
     contested by the Company or any Affiliate, or the Company or any Affiliate
     shall deny that the Company has any further liability or obligation under
     the Note.

                                      -25-
<PAGE>

     7.2 Default Remedies

     (a) If any Event of Default specified in Section 7.1(f) or (g) shall exist,
the principal amount of this Note at the time outstanding, together with
interest accrued and unpaid thereon, shall automatically immediately become due
and payable, without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived.

     (b) Subject to Section 3.6 and Section 3.7, if any Event of Default, other
than those specified in Section 7.1(a), shall exist, the Holder may exercise any
right, power or Remedy permitted to such Holder by law, and shall have in
particular, without limiting the generality of the foregoing, the right to
declare the entire principal of, and all interest accrued and unpaid on, this
Note then outstanding to be, and this Note shall thereupon become, forthwith due
and payable, without any presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived, and the Company shall forthwith
pay to the Holder such principal and interest.

     (c) Subject to Sections 3.6 and 3.7, during the continuance of an Event of
Default described in Section 7.1(a) and irrespective of whether the Note shall
have become due and payable pursuant to Section 7.2(b), the Holder may, at the
Holder's option, by notice in writing to the Company, declare the principal
amount of this Note at the time outstanding, and accrued and unpaid interest
thereon, to be, and the same shall thereupon become, forthwith due and payable,
without any presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived, and the Company shall forthwith pay to the
Holder such principal and interest.

     (d) During the continuance of an Event or Default and irrespective of
whether this Note shall become due and payable pursuant to Section 7.2(a), (b)
or (c) and irrespective of whether the Holder shall otherwise have pursued or be
pursuing any other rights or Remedies, subject to Section 3.6 and Section 3.7,
the Holder may proceed to protect and enforce its rights under this Note by
exercising such Remedies as are available to such holder in respect thereof
under applicable law, either by suit in equity or by action at law, or both,
whether for specific performance of any agreement contained herein or in aid of
the exercise of any power granted herein.

     (e) No course of dealing on the part of the Holder nor any delay or failure
on the part of the Holder to exercise any right shall operate as a waiver of
such right or otherwise prejudice the Holder's rights, powers and Remedies. All
rights and Remedies of the Holder hereunder and under applicable law are
cumulative to, and not exclusive of, any other rights or Remedies the Holder
would otherwise have.

     (f) The rights of the Holder to receive payments in respect of this Note,
and to exercise any Remedies, solely as between the Holder and the holders of
the Senior Debt, shall be subject in all respects to the provisions of Section
3; provided, however, that all such rights shall remain unconditional and
absolute as between the Holder and the Company.

     7.3 If a declaration is made pursuant to Section 7.2(b) arising solely out
of an Event of Default described in Section 7.1(e) regarding the Senior Debt,
then and in every such case, if the holders of the Senior Debt waive such
default in respect of the Senior Debt or such default is cured, and the holders
of the Senior Debt rescind or annul any and all accelerations of the maturity of
all or any portion of the Senior Debt and any required or demanded repurchase of
all or any portion thereof, then, upon written notice to the Holder of such
events with respect to the Senior Debt, any declaration made pursuant to Section
7.2(b) and the consequences thereof, shall automatically and without any further
action on the part of the Holder, be annulled and rescinded; provided, however,
that at the time such declaration is deemed annulled and rescinded: (i) no
judgment or decree shall have been entered for the payment of any moneys due on
or pursuant to this Note; and (ii) no other Default or Event of Default shall be
continuing; provided further that no such rescission and annulment shall extend
to or affect any subsequent Default or Event of Default or impair any right
consequent thereon.

                                      -26-
<PAGE>

8. Interpretation of this Note

     8.1. As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:

                  "Affiliate" means and includes with respect to any person, at
any time, each other person (other than, with respect to the Company, a
subsidiary of the Company): (a) that directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
such person; (b) that beneficially owns or holds five percent or more of any
class of the Voting Stock of such person; (c) five percent or more of the Voting
Stock (or if such other person is not a corporation, five percent or more of the
equity interest) of which is beneficially owned or held by such person; or (d)
that is an officer or director of or holds a position of comparable authority
with such person; at such time; provided, however, that no person holding this
Note shall be deemed to be an "Affiliate" of the Company solely by virtue of the
ownership of such securities. As used in this definition: "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 securities, by contract or otherwise.

     "Applicable Interest Law" means any present or future law (including,
without limitation, the laws of the State of New York and the United States of
America) which has application to the interest and other charges pursuant to
this Note.

     "Board of Directors" means, at any time, the board of directors of the
Company or any committee thereof that, in the instance, shall have the lawful
power to exercise the power and authority of such board of directors.

     "Capital Lease" means, at any time, a lease of any property with respect to
which the lessee is required to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

     "Cash Equivalents" means, for all purposes of Section 3 hereof, equivalents
of cash that are acceptable to the Senior Agent in its reasonable business
judgment.

     "Change in Control" means, at any time, an occurrence or event or failure
of an event to occur, as a result of which a person or group of related persons
(other than the Herricks, an Affiliate of any of the Herricks, or any trust for
the benefit of any of the Herricks) acquires more than 50% of the Voting Stock
of the Company.

     "Debt" with respect to any person, means, without duplication, the
liabilities of such person with respect to: (a) borrowed money; (b) the deferred
purchase price of property acquired by such person (excluding accounts payable
and accrued expenses arising in the ordinary course of business, but including
all liabilities created or arising under any conditional sale or other title
retention agreement with respect to any such property); (c) borrowed money
secured by any Lien existing on property owned by such person (whether or not
such liabilities have been assumed); (d) Capital Leases of such person; (e)
letters of credit, bankers acceptances or similar instruments serving a similar
function issued or accepted by banks and other financial institutions for the
account of such person (whether or not representing obligations for borrowed
money), other than undrawn trade letters of credit in the ordinary course of
business; (f) Swaps of such person; and (g) any Guaranty of such person of any
obligation or liability of another person of obligations of the type listed in
clause (a) through clause (f) of this definition of Debt; provided that, with
respect to the Company, Debt shall not include any unfunded obligations which
may now or hereafter exist with respect to Company's Plans. As used in this
definition, "Swaps" means, with respect to any person, obligations with respect
to interest rate swaps and currency swaps and similar obligations obligating
such person to make payments, whether periodically or upon the happening of a
contingency, except that if any agreement relating to such obligation provides
for the netting of amounts payable by and to such person thereunder or if any
such agreement provides for the simultaneous payment of amounts by and to such
person, then in each such case, the amount of such obligations shall be the net
amount thereof. The aggregate net obligation of Swaps at any time shall be the
aggregate amount of the obligations of such person under all Swaps assuming all
such Swaps had been terminated by such person as of the end of the then most
recently ended fiscal quarter of such person. If such net aggregate obligation
shall be an amount owing to such person, then the amount shall be deemed to be
zero. Unless the context otherwise requires, "Debt" means Debt of the Company or
of a subsidiary of the Company.

                                      -27-
<PAGE>

     "Default" means any event which, with the giving of notice or the passage
of time, or both, would become an Event of Default.

     "Environmental Law" means any law, statute or regulation enacted by any
governmental authority in connection with or relating to the protection or
regulation of the environment, including, without limitation, those laws,
statutes and regulations regulating the disposal, removal, production, storing,
refining, handling, transferring, processing or transporting of Hazardous
Materials and any applicable orders, decrees or judgments issued by any court of
competent jurisdiction in connection with any of the foregoing.

     "Environmental Permit" means any permit, approval, identification number or
other authorization required by any Environmental Law.

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

     "ERISA Affiliate" means any trade or business (whether or not incorporated)
that is treated as a single employer together with the Company under Section 414
of the IRC.

     "GAAP" means accounting principles as promulgated from time to time in
statements, opinions and pronouncements by the American Institute of Certified
Public Accountants and the Financial Accounting Standards Board and in such
statements, opinions and pronouncements of such other entities with respect to
financial accounting of for-profit entities as shall be accepted by a
substantial segment of the accounting profession in the United States.

     "Guaranty" means with respect to any person (for the purposes of this
definition, the "Guarantor") any obligation (except the endorsement in the
ordinary course of business of negotiable instruments for deposit or collection)
of such person guaranteeing or in effect guaranteeing any indebtedness, dividend
or other obligation of any other person (the "Primary Obligor") in any manner,
whether directly or indirectly, including, without limitation, obligations
incurred through an agreement, contingent or otherwise, by the Guarantor: (a) to
purchase such indebtedness or obligation or any property constituting security
therefor; (b) to advance or supply funds (i) for the purchase or payment of such
indebtedness, dividend or obligation; or (ii) to maintain working capital or
other balance sheet condition or any income statement condition of the Primary
Obligor or otherwise to advance or make available funds for the purchase or
payment of such indebtedness, dividend or obligation; (c) to lease property or
to purchase securities or other property or services primarily for the purpose
of assuring the owner of such indebtedness or obligation of the ability of the
Primary Obligor to make payment of the indebtedness or obligation; or (d)
otherwise to assure the owner of the indebtedness or obligation of the Primary
Obligor against loss in respect thereof.

     "Hazardous Material" means all or any of the following: (a) substances that
are defined or listed in, or otherwise classified pursuant to, any applicable
Environmental Laws as "hazardous substances", "hazardous materials", "hazardous
wastes", "toxic substances" or any other formulation intended to define, list or
classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, "TLCP toxicity"
or "EP toxicity"; (b) oil, petroleum or petroleum derived substances, natural
gas, natural gas liquids or synthetic gas and drilling fluids, produced waters
and other wastes associated with the exploration, development or production of
crude oil, natural gas or geothermal resources; (c) any flammable substances or
explosives or any radioactive materials; (d) asbestos or urea formaldehyde in
any form; and (e) dielectric fluid containing levels of polychlorinated
biphenyls in excess of fifty parts per million.

     "IRC" means the Internal Revenue Code of 1986, together with all rules and
regulations promulgated pursuant thereto, as amended from time to time.

     "Issue Date" means December 31, 1998

                                      -28-
<PAGE>

     "Lien" means any interest in property securing an obligation owed to, or a
claim by, a person other than the owner of such property (for purposes of this
definition, the "Owner"), whether such interest is based on the common law,
statute or contract, and includes but is not limited to: (a) the security
interest lien arising from a mortgage, encumbrance, pledge, conditional sale or
trust receipt or a lease, consignment or bailment for security purposes, and the
filing of any financing statement under the Uniform Commercial Code of any
jurisdiction, or an agreement to give any of the foregoing; (b) reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances affecting real
property; and (c) any interest in any property held by the owner evidenced by a
conditional sale agreement, Capital Lease or other arrangement pursuant to which
title to such property has been retained by or vested in some other person for
security purposes. The term "Lien" does not include negative pledge clauses in
loan agreements and equal and ratable security clauses in loan agreements.

     "Material Adverse Effect" means, with respect to any event or circumstance
(either individually or in the aggregate with all other events and
circumstances), an effect caused thereby or resulting therefrom that would be
materially adverse as to, or in respect of: (a) the business, operations,
profits, financial condition or properties of the Company and its subsidiaries,
taken as a whole; (b) the ability of the Company to perform its obligations
under this Note; or (c) the validity or enforceability of this Note.

     "Note" means and includes each 9% Convertible Senior Subordinated Note due
December 31, 2004 issued by the Company, as the same may be amended, modified,
supplemented, refunded, refinanced or extended from time to time.

     "Plan" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.

     "Voting Stock" means with respect to any corporation, any shares of stock
of such corporation whose holders are entitled under ordinary circumstances to
vote for the election of directors of such corporation (irrespective of whether
at the time any stock of any other class or classes shall have or might have
voting power by reason of the happening of any contingency), and, in the case of
the Company, shall include the Common Stock. Except as otherwise provided,
references herein to "Voting Stock" shall mean Voting Stock of the Company.

     8.2. (a) Unless otherwise provided herein, all financial statements
delivered in connection herewith will be prepared in accordance with GAAP. Where
the character or amount of any asset or liability or item of income or expense,
or any consolidation or other accounting computation is required to be made for
any purpose hereunder, it shall be done in accordance with GAAP; provided,
however, that if any term defined herein includes or excludes amounts, items or
concepts that would not be included in or excluded from such term if such term
were defined with reference solely to GAAP, such term will be deemed to include
or exclude such amounts, items or concepts as set forth herein.

     (b) Whenever accounting amounts of a group of persons are to be determined
"on a consolidated basis" it shall mean that, as to balance sheet amounts to be
determined as of a specific time, the amount that would appear on a consolidated
balance sheet of such persons prepared as of such time, and as to income
statement amounts to be determined for a specific period, the amount that would
appear on a consolidated income statement of such persons prepared in respect of
such period, in each case with all transactions among such persons eliminated,
and prepared in accordance with GAAP except as otherwise required hereby.

     8.3. Where any provision herein refers to action to be taken by any person,
or which such person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such person,
including actions taken by or on behalf of any partnership in which such person
is a general partner.

                                      -29-
<PAGE>

     8.4. (a) The titles of the Sections of this Note appear as a matter of
convenience only, do not constitute a part hereof and shall not affect the
construction hereof. The words "herein," "hereof," "hereunder" and "hereto"
refer to this Note as a whole and not to any particular Section or other
subdivision. References to Annexes and Sections are, unless otherwise specified,
references to Sections of this Note. References to Annexes and Schedules are,
unless otherwise specified, references to Schedules attached to this Note.

     (b) Each covenant contained herein shall be construed (absent an express
contrary provision herein) as being independent of each other covenant contained
herein, and compliance with any one covenant shall not (absent such an express
contrary provision) be deemed to excuse compliance with one or more other
covenants.

     8.5. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA, WITHOUT REGARD TO ANY CHOICE
OF LAW RULES WHICH WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER
JURISDICTION. IN ADDITION, THE PARTIES HERETO SELECT, TO THE EXTENT THEY MAY
LAWFULLY DO SO, THE INTERNAL LAWS OF THE STATE OF FLORIDA AS THE APPLICABLE
INTEREST LAW.

9. Miscellaneous

     9.1. All communications under this Note shall be in writing and shall be
delivered either by nationwide overnight courier or by facsimile transmission
(confirmed by delivery by nationwide overnight courier sent on the day of the
sending of such facsimile transmission). Communications to the Company shall be
addressed as set forth on Annex 1, or at such other address of which the Company
shall have notified the Holder. Communications to the Holder shall be addressed
as set forth on Annex 1, or at such other address of which such Holder shall
have notified the Company (and the Company shall record such address in the
register for the registration and transfer of this Note). Any communication
addressed and delivered as herein provided shall be deemed to be received when
actually delivered to the address of the addressee (whether or not delivery is
accepted) or received by the telecopy machine of the recipient. Any
communication not so addressed and delivered shall be ineffective.
Notwithstanding the foregoing provisions of this Section 9.1, service of process
in any suit, action or proceeding arising out of or relating to this Note or any
transaction contemplated hereby, or any action or proceeding to execute or
otherwise enforce any judgment in respect of any breach hereunder or under any
document hereby, shall be delivered in the manner provided in Section 9.6(c).

     9.2. All warranties, representations, statements of fact, certifications
and covenants contained in this Note or in any certificate, financial statement,
report or notice delivered or provided hereunder shall be considered to have
been relied upon by the other party hereto and shall survive the delivery to
such party regardless of any investigation made by or on behalf of any party
hereto. All statements in any certificate, delivered pursuant to the terms
hereof shall constitute warranties and representations hereunder. All
obligations hereunder (other than payment of this Note, but including, without
limitation, reimbursement obligations in respect of costs, expenses and fees)
shall survive the payment of this Note and the termination hereof. Subject to
the preceding, this Note embodies the entire agreement and understanding between
the Company and the Holder, and supersedes all prior agreements and
understandings, relating to the subject matter hereof.

     9.3. The provisions hereof are intended to be for the benefit of the
Holder, from time to time, of this Note, and shall be enforceable by any such
Holder whether or not an express assignment to such Holder of rights hereunder
shall have been made by the payee or his successors or assigns. In the event
that the payee named herein transfers or assigns less than all of this Note, the
term "Holder" as used herein shall be deemed to refer to the assignor and
assignee or assignees hereof, collectively, and any action permitted to be taken
by the Holder hereunder shall be taken only upon the consent or approval of
persons comprising the Holder that own that percentage interest in the principal
amount of this Note as shall be designated by the payee named herein at the time
of such assignment. Anything contained in this Section 9.3 notwithstanding, the
Company may not assign any of its respective rights, duties or obligations
hereunder other without the prior written consent of the Holder. For purposes of
the avoidance of doubt, the Holder of this Note shall be permitted to pledge or
otherwise grant a lien in and to this Note; provided, however, that any such
pledgee or holder of a Lien shall not be considered a Holder hereunder until it
shall have foreclosed upon this Note in accordance with applicable law and
informed the Company, in writing, of the same.

                                      -30-
<PAGE>

     9.4. (a) This Note may be amended, and the observance of any term hereof
may be waived, with (and only with) the written consent of the Company and the
Holder, provided, however, that without the written consent of the holders of
Senior Debt, no amendment, supplement or modification of the provisions of
Section 3, or any defined term to the extent used therein, shall be effective as
to any holder of Senior Debt who has not consented to such amendment, supplement
or modification.

     Any amendment or waiver consented to as provided in this Section 9.4 shall
be binding upon the then current Holder and upon each future holder of this Note
and upon the Company whether or not this Note shall have been marked to indicate
such amendment or waiver. No such amendment or waiver shall extend to or affect
any obligation, covenant, agreement, Default or Event of Default not expressly
amended or waived or impair any right consequent thereon.

     9.5. (a) The Company shall pay when billed the reasonable costs and
expenses (including reasonable attorneys' fees) incurred by the Holder in
connection with the consideration, negotiation, preparation or execution of any
amendments, waivers, consents, standstill agreements and other similar
agreements with respect to this Note (whether or not any such amendments,
waivers, consents, standstill agreements or other similar agreements are
executed).

     (b) At any time when the Company and the Holder are conducting
restructuring or workout negotiations in respect hereof, or a Default or Event
of Default exists, the Company shall pay when billed the reasonable costs and
expenses (including reasonable attorneys' fees and the fees of professional
advisors) incurred by the Holder in connection with the assessment, analysis or
enforcement of any rights or remedies that are or may be available to the
Holder.

     (c) If the Company shall fail to pay when due any principal of, or interest
on, this Note, the Company shall pay to the Holder, to the extent permitted by
law, such amounts as shall be sufficient to cover the costs and expenses,
including but not limited to reasonable attorneys' fees, incurred by the Holder
in collecting any sums due on this Note.

     9.6. (a) THE PARTIES HERETO VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT
ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS NOTE OR TRANSACTIONS CONTEMPLATED HEREBY.

     (b) ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE
OR TRANSACTIONS CONTEMPLATED HEREBY OR ANY ACTION OR PROCEEDING TO EXECUTE OR
OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF ANY BREACH UNDER THIS NOTE MAY BE
BROUGHT BY SUCH PARTY IN ANY FEDERAL DISTRICT COURT LOCATED IN NEW YORK COUNTY,
NEW YORK, OR ANY NEW YORK STATE COURT LOCATED IN NEW YORK COUNTY, NEW YORK AS
SUCH PARTY MAY IN ITS SOLE DISCRETION ELECT, AND BY THE EXECUTION AND DELIVERY
OF THIS NOTE, THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMIT TO THE
NON-EXCLUSIVE IN PERSONAM JURISDICTION OF EACH SUCH COURT, AND EACH OF THE
PARTIES HERETO IRREVOCABLY WAIVES AND AGREES NOT TO ASSERT IN ANY PROCEEDING
BEFORE ANY TRIBUNAL, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, ANY CLAIM THAT
IT IS NOT SUBJECT TO THE IN PERSONAM JURISDICTION OF ANY SUCH COURT. IN
ADDITION, EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
NOTE OR TRANSACTION CONTEMPLATED HEREBY BROUGHT IN ANY SUCH COURT, AND HEREBY
IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

     (c) EACH PARTY HERETO IRREVOCABLY AGREES THAT PROCESS PERSONALLY SERVED OR
SERVED BY U.S. EXPRESS, REGISTERED OR CERTIFIED MAIL OR BY NATIONWIDE OVERNIGHT
COMMERCIAL COURIER OR DELIVERY SERVICE AT THE ADDRESSES PROVIDED HEREIN FOR
NOTICES SHALL CONSTITUTE, TO THE EXTENT PERMITTED BY LAW, ADEQUATE SERVICE OF
PROCESS IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
NOTE OR TRANSACTION CONTEMPLATED HEREBY, OR ANY ACTION OR PROCEEDING TO EXECUTE
OR OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF ANY BREACH HEREUNDER. RECEIPT OF
PROCESS SO SERVED SHALL BE CONCLUSIVELY PRESUMED AS EVIDENCED BY A DELIVERY
RECEIPT FURNISHED BY THE UNITED STATES POSTAL SERVICE OR ANY COMMERCIAL DELIVERY
SERVICE.

     (d) NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF ANY
HOLDER OF THIS NOTE TO SERVE ANY WRITS, PROCESS OR SUMMONSES IN ANY MANNER
PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER THE COMPANY IN SUCH
OTHER JURISDICTION, AND IN SUCH OTHER MANNER, AS MAY BE PERMITTED BY APPLICABLE
LAW.

                                      -31-

<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Promissory Note to be
duly executed and delivered by one of its duly authorized officers or
representatives.

                                  AUDIO BOOK CLUB, INC.

                                  By: /s/ John Levy
                                     -----------------------------------------
                                           Name:  John Levy
                                           Title: Executive Vice President and
                                                  Chief Financial Officer

                                      -32-

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