Document:

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                                                                     EXHIBIT 4.2

                              WOLFPACK CORPORATION

                 SENIOR SUBORDINATED CONVERTIBLE PROMISSORY NOTE

                                   PAYABLE TO

                              LANCER OFFSHORE, INC.

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                                TABLE OF CONTENTS

1.       Definitions ....................................................   1
--       -----------

2.       Terms of Note ..................................................   8
--       -------------

         2.1      Interest and Maturity .................................   8
                  ---------------------
         2.2      Manner and Place of Payment ...........................   8
                  ---------------------------
         2.3      Optional Prepayment; Non-Transferability ..............   8
                  ----------------------------------------
         2.4      Events of Default .....................................   9
                  -----------------
         2.5      Equity Kicker .........................................  10
                  -------------

3.       Negative Covenants .............................................  10
--       ------------------
         3.1      Limitation on Other Senior Subordinated Indebtedness ..  10
                  ----------------------------------------------------
         3.2      Limitations on Liens ..................................  11
                  --------------------

4.       Subordination ..................................................  11
--       -------------

         4.1      Agreement to Subordinate ..............................  11
                  ------------------------
         4.2      No Demand for Payment; Limitations on Payments ........  11
                  ----------------------------------------------
         4.3      Limitations on Payments; Defaults .....................  11
                  ---------------------------------
         4.4      Rights Upon Distribution of Assets ....................  12
                  ----------------------------------
         4.5      Payments Received in Trust ............................  13
                  --------------------------
         4.6      Execution of Intercreditor Agreements .................  13
                  -------------------------------------
         4.7      Subrogation ...........................................  14
                  -----------
         4.8      Reliance Upon Judicial Proceeding .....................  14
                  ---------------------------------
         4.9      Right to Payments .....................................  14
                  -----------------
         4.10     Enforcement of Subordination ..........................  14
                  ----------------------------
         4.11     No Impairment by Failure to Act .......................  15
                  -------------------------------
         4.12     Delivery of Documentation to Holders of Senior
                  ----------------------------------------------
                   Indebtedness .........................................  15
                   ------------
         4.13     No Limitation of Bankruptcy Proceedings ...............  15
                  ---------------------------------------

5.       Conversion .....................................................  15
--       ----------

         5.1      Conversion by the Holder ..............................  15
                  ------------------------
         5.2      Stock Splits; Reverse Stock-Splits ....................  15
                  ----------------------------------

                                       i

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         5.3      Provisions in Case of Consolidation or Merger .........  16
                  ---------------------------------------------
         5.4      Adjustment in Number of Securities ....................  16
                  ----------------------------------
         5.5      Validity of Note ......................................  16
                  ----------------
         5.6      Elimination of Fractional Interests ...................  16
                  -----------------------------------
         5.7      Unit Offerings ........................................  17
                  --------------
         5.8      Issuance of Stock on Conversion .......................  17
                  -------------------------------

6.       Restriction on Transfer ........................................  17
--       -----------------------

7.       Additional Restrictions on Transfer ............................  17
--       -----------------------------------
         7.1      General Prohibition Against Transfer ..................  17
                  ------------------------------------
         7.2      Effect of Non-complying Transfers .....................  18
                  ---------------------------------
         7.3      Permitted Transfers ...................................  18
                  -------------------
         7.4      Permitted Transfers Subject to Continuing Restrictions.  18
                  ------------------------------------------------------

8.       Miscellaneous ..................................................  19
--       -------------

         8.1      Notices ...............................................  19
                  -------
         8.2      Entire Agreement ......................................  20
                  ----------------
         8.3      No Oral Modifications .................................  20
                  ---------------------
         8.4      Extension; Waiver .....................................  20
                  -----------------
         8.5      Binding Effect ........................................  20
                  --------------
         8.6      Interpretation; Construction; Section Headings ........  20
                  ----------------------------------------------
         8.7      Governing Law .........................................  21
                  -------------
         8.8      Severability ..........................................  21
                  ------------
         8.9      Waiver of Notice ......................................  21
                  ----------------
         8.10     Attorney's Fees .......................................  21
                  ---------------
         8.11     Time ..................................................  21
                  ----
         8.12     Maximum Limit On Interest .............................  21
                  -------------------------
         8.13     Mutilated, Destroyed, Lost and Stolen Notes ...........  22
                  -------------------------------------------
         8.14     No Recourse Against Others ............................  22
                  --------------------------
         8.15     Authentication ........................................  23
                  --------------
         8.16     Exclusive Jurisdiction and Venue ......................  23
                  --------------------------------

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The securities evidenced by this Note have been issued and sold without
registration under the Securities Act of 1933 ("Securities Act") or the
securities laws of any state, in reliance upon certain exemptive provisions of
such laws, including paragraph (8) of Code Section 78A-17 of the North Carolina
Act. Said securities cannot be sold or transferred except if, in the opinion of
counsel to the issuer, such sale or transfer would be: (1) pursuant to an
effective registration statement under the Securities Act or pursuant to an
exemption from such registration; and (2) in a transaction which is exempt under
applicable state securities laws, or pursuant to effective registration
statements under such laws, or in a transaction which is otherwise in compliance
with such laws.

In making an investment, decision investors must rely on their own examination
of the issuer and the terms of the Note, including the merits and risks
involved. The securities offered hereby have not been recommended by any federal
or state securities commission or regulatory authority. Furthermore, the
foregoing authorities have not confirmed the accuracy or determined the adequacy
of this document. Any representation to the contrary is a criminal offense.
Investors should be aware that they will be required to bear the financial risks
of this investment for an indefinite period of time.

                              WOLFPACK CORPORATION

                 SENIOR SUBORDINATED CONVERTIBLE PROMISSORY NOTE

No. 3
$700,000                                                       February 25, 2002

         FOR VALUE RECEIVED, the undersigned, WOLFPACK CORPORATION, a Delaware
corporation (the "Company"), promises to pay to the order of LANCER OFFSHORE,
INC., a British Virgin Islands corporation ("Lancer"), the principal sum of
SEVEN HUNDRED THOUSAND AND ZERO DOLLARS (U.S.$700,000), plus interest thereon at
the rate set forth below, subject to the provisions hereof limiting interest to
the maximum permitted by applicable law. All amounts paid shall first be applied
to the payment of interest, and then to the reduction of principal.

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

1.       Definitions.  As used in this Note, the following terms, unless the
         -----------
context otherwise requires, have the following meanings.

         1.1 "Affiliate" means, with respect to any Person, any other Person
that directly or indirectly controls or is controlled by or under common control
with such Person. For the purposes of this definition, "control" when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the

<PAGE>

direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise and the terms of
"affiliated," "controlling" and "controlled" have meanings correlative to the
foregoing.

         1.2 "Applicable Law" means all applicable provisions of constitutions,
laws, statutes, treaties, rules, regulations and orders of all governmental
authorities and all orders and decrees of all courts and arbitrators.

         1.3 "Bankruptcy Code" means the United States Bankruptcy Code (11
U.S.C.ss.101 et seq.), as amended, and any successor statute or any
             ------
similar state law for the relief of debtors.

         1.4 "Bankruptcy Proceeding" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or any other
proceeding under any other bankruptcy or insolvency law of any jurisdiction,
assignments for the benefit of creditors, formal or informal moratoria,
compositions, extensions generally with creditors, or proceedings seeking
reorganization, arrangement, or other similar relief.

         1.5 "Business Day" means any day of the year, excluding, Saturday,
Sunday, any day that is a legal holiday under the laws of the State of North
Carolina or Georgia, and any day on which commercial banks located in the State
of North Carolina or Georgia are required or authorized, by law or other
governmental action, to close.

         1.6 "Capitalized Leases" means, with respect to any Person, any lease
of property (whether real, personal or mixed) the discounted present value of
the rental obligations of such Person as lessee of which have been or are
required to be, in accordance with generally accepted accounting principles,
("GAAP") capitalized on the balance sheet of such Person.

         1.7 "Carrier Agreements" means agreements with one or more Persons in
the business of transmitting telecommunications signals, whether voice, data or
otherwise and whether for local, long distance, domestic, international, roaming
or directory assistance service and whether a toll or non-toll transmission and
whether by wire or wireless transmission.

         1.8 "Closing Price" on any trading day with respect to the per share
price of Common Stock means the last reported sales price regular way or, in
case no such reported sale takes place on such day, the average of the reported
closing bid and asked prices regular way, in either case on the New York Stock
Exchange, or if the Common Stock is not listed or admitted to trading on such
exchange, on the principal national securities exchange on which the Common
Stock is listed or admitted to trading or, if not listed or admitted to trading
on any national securities exchange, on the National Association of Securities
Dealers Automated Quotations National Market System or, if the Common Stock is
not listed or admitted to trading on any national securities exchange or quoted
on such National Market System, the average of the closing bid and asked

                                       2

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prices in the over-the-counter market as furnished by any New York Stock
Exchange member firm that is selected from time to time by the Company for
the purpose.

         1.9 "Common Stock" means the common stock of the Company, par value
$0.001 per share or any unit containing Common Stock of the Company.

         1.10 "Conversion Date" means any date at which the Holder of this Note
shall have the right to convert all or a portion of the then outstanding
principal amount of this Note, or any accrued interest thereon, to Common Stock.

         1.11 "Conversion Price" means the conversion price set forth in Section
                                                                         -------
5.1, subject to adjustment as provided in Section 5.2, Section 5.3 and Section
---                                       -----------  -----------     -------
5.4.
---

         1.12 "Debt" means, as to any Person, all liabilities, obligations and
indebtedness of such Person to any other Person, of any kind or nature, now or
hereafter owing, arising, due or payable, howsoever evidenced, created,
incurred, acquired or owing, whether primary, secondary direct, contingent,
fixed or otherwise.

         1.13 "Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.

         1.14 "Holder" or "Noteholder" or similar terms, when the context refers
to a holder of this Note, means Lancer, or any other Person who shall at the
time be the holder of this Note (but only as permitted by Section 7.3 hereof).
                                                          -----------
Such terms used in the plural shall mean any persons who shall at the time be
the holders of this Note.

         1.15 "Indebtedness" means, with respect to any Person:

              (a)      all liabilities, contingent or otherwise, of such Person

                       (i)      for borrowed money (whether or not the recourse
              of the lender is to the whole of the assets of such Person or
              only to a portion thereof),

                       (ii)     evidenced by bonds, notes, debentures or similar
              instruments or letters of credit or representing the balance
              deferred and unpaid of the purchase price of any property.

                       (iii)    evidenced by bankers' acceptances or similar
              instruments issued or accepted by banks or interest swap
              obligations, or

                       (iv)     for the payment of money relating to Capitalized
              Leases;

                                       3

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              (b)     reimbursement obligations of such Person with respect to
letters of credit (other than obligations with respect to letters of credit
securing obligations (other than obligations described in (a) above) entered
into in the ordinary course of business of such Person, to the extent such
letters of credit are not drawn upon or, if and to the extent drawn upon, such
drawing is reimbursed no later than the tenth (10th) Business Day following
receipt by such Person of a demand for reimbursement following payment on the
letter of credit);

              (c)     all liabilities of others of the kind described in the
preceding clause (a) or (b) that such Person has guaranteed or that is otherwise
its legal liability (provided that the amount of liability attributable to such
                     --------
guarantee or other legal liability shall be deemed to be the maximum amount for
which such Person could be liable under such guarantee or otherwise);

              (d)     any and all deferrals, renewals, extensions, refinancings
and refundings (whether direct or indirect) of, or amendments, modifications or
supplements to, any liability of the kind described in any of the preceding
clauses (a) through (d), whether or not between the same parties.

              1.16 "Issue Date" means February 25, 2001.

              1.17 "Lien" means any mortgage, lien, pledge, charge, security
interest, or other encumbrance of any kind, whether or not filed, recorded or
otherwise perfected under applicable law (including any conditional sale or
other title retention agreement and any lease deemed to constitute a security
interest and any option or other agreement to give any security interest).

              1.18 "Note" means this Note issued by the Company in the aggregate
principal amount of U.S.$700,000.

              1.19 "Notice" means written notice given in accordance with
Section 8.1 of this Note.
-----------

              1.20 "Permitted Liens" means:

              (a)      Liens on the assets of the Company and any securing
Indebtedness that is or was permitted by the terms hereof to be incurred;

              (b)      Liens in favor of the Company or any wholly owned
subsidiary of the Company;

              (c)      Liens on property of a Person existing at the time such
Person is merged with or into or consolidated with the Company or any wholly
owned subsidiary of the Company; provided that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not extend to
any

                                       4

<PAGE>

property other than those of the Person merged into or consolidated with the
Company or the wholly owned subsidiary;

              (d)     Liens on property existing at the time of acquisition
thereof by the Company or any wholly owned subsidiary of the Company, provided
that such Liens were in existence prior to the contemplation of such acquisition
and do not extend to any property other than the property so acquired by the
Company or any such wholly owned subsidiary;

              (e)     Liens to secure Debt (including Capital Lease Obligations)
incurred in connection with the acquisition of assets, provided the Debt
incurred to finance each such acquisition attaches only to the asset acquired
with the proceeds from the Debt secured thereby and the principal amount of any
Debt secured by any asset shall not exceed one hundred percent (100%) of the
actual cost of the asset (including transportation, installation or other
incidental costs) and covering only the assets acquired with such Indebtedness;

              (f)     Liens on Indebtedness or other agreements in effect on the
Issue Date;

              (g)     Liens for taxes, assessments or government charges or
claims which are not yet delinquent or which are being contested in good faith
by appropriate proceedings or procedures promptly instituted and diligently
conducted and if a reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made therefor;

              (h)     Statutory Liens or Liens of landlords, carriers,
materialmen, mechanics, suppliers, processors, repairmen, warehousemen, or other
like Liens for labor, materials, supplies or rentals incurred in the ordinary
course of business and with respect to amounts not delinquent for more than one
hundred eighty (180) days or being contested in good faith by appropriate
proceedings or procedures, if a reserve or other appropriate provision, if any,
as required in conformity with GAAP shall have been made therefor;

              (i)     Liens incurred or deposits made to secure the performance
of tenders, bids, leases, statutory obligations, surety and appeal bonds,
contracts, performance and return-of-money bonds and other obligations of like
nature incurred in the ordinary course of business (including, without
limitation, Carrier Agreements, but otherwise exclusive of obligations for the
payment of borrowed money);

              (j)     Liens on goods (and the proceeds thereof) and documents of
title and the property covered thereby securing indebtedness in respect of
commercial letters of credit;

                                       5

<PAGE>

              (k)     Liens incurred in the ordinary course of business of the
Company or any wholly owned subsidiary of the Company with respect to
obligations that do not exceed twenty five thousand dollars ($25,000) at any one
time outstanding;

              (l)     Liens securing Senior Indebtedness;

              (m)     Liens consisting of deposits or pledges made in the
ordinary course of business in connection with, or to secure payment of,
obligations under workers' compensation, unemployment insurance, social
security or similar legislation or obligations under customer service contracts;

              (n)     Liens constituting covenants, conditions, encumbrances in
the nature of zoning restrictions and other applicable laws restricting the
right, use or enjoyment of real property, easements and rights or restrictions
of record on the use of real property, facilities or Equipment which, in the
aggregate, do not materially detract from the value of such property, facilities
or Equipment or materially impair the use thereof in the ordinary conduct of
business, including, without limitation:

                      (i) easements, exceptions, reservations, or other
              agreements for the purpose of pipelines, conduits, cables, wire
              communication lines, power lines and substations, streets, trails,
              walkways, drainage, irrigation, water and sewerage purposes,
              dikes, canals, ditches, the removal of oil, gas, other minerals,
              and other like purposes affecting real property, facilities, or
              Equipment which, in the aggregate, do not materially burden or
              impair the value or use of such property for the purposes for
              which it is or may reasonably be expected to be held;

                      (ii) easements, exceptions, reservations, or other
              agreements for the purpose of facilitating the joint or common use
              of property in a development or similar real property project
              affecting real property which, in the aggregate, do not materially
              burden or impair the value or use of such property for the
              purposes for which it is or may reasonably be expected to be held;
              and

                      (iii) rights reserved to or vested in any Governmental
              Authority by Applicable Law to control or regulate, or obligations
              or duties under Applicable Law to any Governmental Authority with
              respect to, the use of any real property;

              (o) inchoate Liens incident to construction or maintenance of real
property or Liens incident to construction or maintenance of real property now
or hereafter filed of record for which adequate reserves have been established
(to the extent required by GAAP) and which are being contested in good faith by
appropriate proceedings or procedures and have not proceeded to judgment;

                                       6

<PAGE>

              (p) rights reserved to or vested in any Governmental Authority by
Applicable Law to control or regulate or obligations or duties under Applicable
Law to any Governmental Authority with respect to any right, power, franchise,
grant, license or permit; (xvii) statutory Liens or other Liens which arise by
operation of Applicable Law, other than those described in clauses (h), (n) and
(p) of this Section 1.20, arising in the ordinary course of business with
            ------------
respect to:

              (i) obligations which are not delinquent or are being contested in
good faith by appropriate proceedings or procedures; provided that adequate
reserves have been established (to the extent required by GAAP) with respect
thereto and, by reason of nonpayment, no property is subject to a material risk
of loss or forfeiture, or

                      (ii) in favor of unpaid sellers of goods or prepaying
              buyers of goods, or Liens in items of any accompanying documents
              or proceeds of either arising in favor of a collecting bank;

              (q) other Liens existing as of the date of this Agreement.

              1.21 "Person" means an individual, partnership, corporation
(including a business trust), limited liability company, joint stock company,
trust, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.

              1.22 "Senior Indebtedness" means the principal of, premium, if
any, interest (including, without limitation, interest accruing after the filing
of a petition initiating any Bankruptcy Proceeding, whether or not such interest
accrues after the filing of such petition for purposes of the Bankruptcy Code or
similar provisions of state law or is an allowed claim in such proceeding),
fees, expenses and all other monetary obligations on or with respect to (a)
indebtedness of the Company for money borrowed from or owing to any bank, trust
company, insurance company, institutional lender or other entity in the business
(whether in whole or in part) of lending money or extending credit or their
assignees, whether outstanding on the date of this Note or thereafter created or
incurred; including, without limitation, money borrowed under revolving credit
loans, term loans, receivables financing (including the sale of receivables to
such lenders or to special purpose facilities formed to borrow from such lenders
against such receivables) or letters of credit, (b) evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) in each case for money borrowed or to secure the
performance by the Company or any Affiliate of the Company of its obligations
under any Carrier Agreement, and (c) any and all deferrals, renewals,
extensions, refinancings and refundings (whether direct or indirect) of, or
amendments, modifications, restatements or supplements to, any liability of the
kind described in the preceding clauses whether or not between the same parties
and whether or not in whole or in part, from time to time, unless it is provided
in the instrument creating or evidencing any of the above, or pursuant to which
any of the above is outstanding, that such Senior Indebtedness or such renewal,
extension, refinancing or refunding thereof is not superior

                                       7

<PAGE>

in right of payment to the Note; provided, however, that no indebtedness which
                                 --------  -------
shall be subordinated in substantially the same manner as the Note shall be
considered as Senior Indebtedness.

              1.23 "Trading Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday, other than any day on which securities are not traded on the
applicable securities exchange or in the applicable securities market.

2.       Terms of Note.
         -------------

              2.1 Interest and Maturity. This Note shall bear interest on the
                  ---------------------
outstanding principal amount prior to maturity at the rate of twelve percent
(12%) per annum, payable in arrears on the Maturity Date ($600,000 received by
the Company and outstanding on February 11, 2002 and an additional $100,000
received by the Company outstanding on February 25, 2002). All computations of
interest on this Note shall be made on the basis of a year of 360 days, in each
case for the actual number of days (including the first day, but excluding the
last day) occurring in the period for which such interest is payable. In
computing interest on this Note, the first day of an interest period shall be
included and the date of payment or the expiration of an interest period, as the
case may, shall be excluded.

         The entire principal amount of this Note, together with any accrued but
unpaid interest thereon and any other sums due and payable hereunder, shall be
due and payable on the latter of (i) the consummation of the sale of any class
of Company capital stock providing the Company with a minimum of $1,500,000.00
in proceeds or (ii) May 25, 2002 (the "Maturity Date"), unless such indebtedness
is, pursuant to Section 5.1 hereof, converted into Common Stock prior to such
                -----------
date.

         All past due principal and interest under this Note shall bear interest
from maturity, or from the date of acceleration, as the case may be, of such
principal at a variable default rate equal to twelve (12%) percent per annum.
The Company shall issue 61,765 shares ofCommon Stock on the first day of each
month during which an Event of Default is in existence and continuing with
respect to this Note.

         2.2 Manner and Place of Payment. All payments due under this Note,
             ---------------------------
whether of principal or interest, shall be made in lawful money of the United
States of America at the principal executive offices of the Company, specified
pursuant to Section 8.1; provided, however, at the option of the Company,
            -----------  --------  -------
payments may be made by check mailed to the Holder at Holder's address as
specified pursuant to Section 8.1, or by wire transfer of funds to an account at
                      -----------
such bank in the United States of America as Holder shall designate. Whenever
any payment under this Note shall be stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall, in such case, be included in the computation
of payment of interest.

         2.3 Optional Prepayment; Non-Transferability. The Company may, in its
             ----------------------------------------
discretion, pay the Note in whole or in part at any time, without premium or
penalty, and any partial prepayment shall be applied first to accrued but unpaid
interest and then to principal.

                                      8

<PAGE>

Except as permitted in accordance with Section 7, the Holder shall not sell,
                                       ---------
assign, transfer, pledge, give or otherwise dispose of all or any part of its
respective rights or obligations under this Note.

         2.4 Events of Default. The occurrence of any of the following events
             -----------------
shall constitute an Event of Default:

             (a) The Company shall fail to pay when due any payment or
         prepayment required under this Note, including, without limitation, any
         payment of principal or interest, and such failure continues for ten
         (10) days after the Holder notifies the Company in writing of such
         failure.

             (b) The Company shall (i) make an assignment for the benefit of
         creditors, (ii) petition or apply for the appointment of a liquidator,
         receiver or the like, (iii) commence, acquiesce in or consent to any
         proceeding relating to it under any bankruptcy, insolvency or similar
         law, or (iv) admit in writing its inability to pay its debts as they
         mature; or

             (c) The voluntary filing by the Company of, or consent by, the
         Company to any petition in bankruptcy or any reorganization,
         arrangement, composition, readjustment, liquidation, dissolution or
         similar relief with respect to the Company, or the admission in writing
         by the Company of its inability to pay its debts as they become due.

             (d) A decree, judgment, or order by a court of competent
         jurisdiction shall have been entered adjudging the Company, or ordering
         relief against the Company in response to the commencement of any
         involuntary bankruptcy case, or approving as properly filed a petition
         seeking reorganization or liquidation of the Company under any
         bankruptcy or similar law, and such decree or order shall have
         continued undischarged and unstayed for a period of sixty (60) days; or
         a decree or order of a court of competent jurisdiction over the
         appointment of a receiver, liquidator, trustee, or assignee in
         bankruptcy or insolvency of the Company, or of the property of the
         Company, or for the winding up or liquidation of the affairs of the
         Company, shall have been entered, and such decree, judgement, or order
         shall have remained in force undischarged and unstayed for a period of
         sixty (60) days;

             (e) A default in the payment of principal or interest or with
         respect to any Indebtedness in excess of $100,000 or any other default
         or an event of default by the Company shall occur with respect to any
         Indebtedness in excess of $100,000 which would entitle the holder of
         such Indebtedness to accelerate the maturity thereof or require any
         prepayment thereon;

             (f) One or more final judgments not covered by insurance for the
         payment of money, or the issuance of any warrant of attachment against
         any portion of the property or assets of the Company which, in the
         aggregate, equal to

                                       9

<PAGE>

         or exceed $100,000 at any one time, shall be entered against the
         Company by a court of competent jurisdiction and not be stayed, bonded
         or discharged for a period (during which execution shall not be
         effectively stayed) of thirty (30) days or more (or, in the case of any
         such final judgment which provides for payment over time, which shall
         so remain unstayed, unbonded or undischarged beyond any applicable
         payment date provided therein);

             (g) The failure by the Company to observe or perform any covenant,
         agreement or warranty contained in this Note or the Right of First
         Refusal Agreement (other than a default otherwise expressly enumerated
         above) and continuance of such default or event of default for thirty
         (30) days after notice to the Company thereof.

         Upon the occurrence of any of the foregoing Events of Default, the
entire unpaid balance hereof, together with unpaid interest thereon, shall at
the option of Holder, and upon written notice from Holder (except with respect
to defaults under clauses (b), (c) or (d) as to which the Event of Default shall
be automatic and no notice shall be required), become immediately due and
payable, and Holder may, subject to the provisions of Section 4, forthwith
                                                      ---------
exercise the remedies available to Holder at law and in equity as well as those
remedies set forth in this Note, and one or more executions may forthwith issue
on any judgment or judgments obtained by virtue thereof; and no failure on the
part of Holder to exercise any of Holder's rights hereunder shall be deemed a
waiver of any such rights or of any default.

         Such acceleration of the maturity of amounts due under this Note shall
not affect, and shall be cumulative of, any other rights and remedies which the
Holder may have at law, in equity or otherwise. All rights and remedies
hereunder shall be cumulative and in addition to those provided by law, and may
be exercised separately, concurrently or successively. Notwithstanding the fact
that a failure by the Company to pay any payment of principal or interest on its
stated due date under this Note may occur by reason of the subordination
provisions under Section 4 of this Note, such failure to pay shall nevertheless
                 ---------
for all purposes under this Note constitute an Event of Default entitling Holder
to accelerate the maturity of this Note and/or to pursue all of Holder's other
rights and remedies under this Note and other rights and remedies Holder may
have at law with respect to such Event of Default, subject to the limitations
and other provisions of Section 4 of this Note.
                        ---------

               2.5      Equity Kicker.  In connection  with, and as additional
                        -------------
consideration  for, the issuance of this Note,  Holder shall be issued
206,000 shares of Common Stock.

         3.    Negative Covenants. The Company covenants and agrees that,
               ------------------
until payment in full of all of this Note, the Company will not,
at any time:

               3.1      Limitation on Other Senior Subordinated Indebtedness.
                        ----------------------------------------------------
Create, incur, issue, assume, guarantee or otherwise become liable for any
Indebtedness that is subordinate or junior in right of payment to any Senior
Indebtedness of the Company and senior in any respect in right of payment to
this Note.

                                       10

<PAGE>

               3.2      Limitations on Liens. Create, incur, assume or suffer
                        --------------------
to exist, any Lien on or with respect to its assets or properties (including
shares of Capital Stock), real or personal, whether now owned or hereafter
acquired, except Permitted Liens.

         4.       Subordination.
                  -------------

               4.1      Agreement to Subordinate. The Company, for itself, its
                        ------------------------
successors and assigns, covenants and agrees and Holder by its acceptance hereof
likewise covenants and agrees that (a) the payment of the principal of and
interest on the Note, and (b) any payment on account of the acquisition or
redemption of the Note is hereby expressly subordinated, to the extent and in
the manner hereinafter set forth, in right of payment to the prior payment in
full of all Senior Indebtedness and that these provisions are for the benefit of
the holders of Senior Indebtedness.

               4.2      No Demand for Payment; Limitations on Payments. Unless
                        ----------------------------------------------
the authorized agent with authority to act for holders of Senior Indebtedness or
requisite holders of Senior Indebtedness shall have given prior written consent
otherwise, the Holder will not ask, demand, sue for, take or receive from any
Person or party, whether a direct or indirect obligor on the Note, by set-off or
any manner, the whole or any part of the principal of and/or the interest on the
Note, or any payment or distribution of any kind (whether in cash, property or
securities), including any payment that may be payable by reason of any other
indebtedness of the Company being subordinated to payment of this Note, unless
and until all of the Senior Indebtedness shall have been irrevocably paid in
full, and the Company's obligations under any applicable agreement with respect
to Senior Indebtedness (including, without limitation, any applicable loan
agreement or purchase agreement), shall have terminated; provided, however,
                                                         --------  -------
that:

                       (a) the Company may make regularly scheduled
               (unaccelerated) interest payments on the Note in accordance with
               the terms hereof as in effect on the date hereof, so long as no
               Default or Event of Default (in each case, as defined in any
               loan, purchase or other agreement with respect to Senior
               Indebtedness) is in existence at the time of such payment or
               would result from the making of such payment,

                       (b) may make payments following the expiration of a
               payment blockage period under Section 4.3, but only as provided
                                             -----------
               in Section 4.3 of this Agreement;
                  -----------

                       (c) this Note may be converted to Common Stock or any
               other equity security of the Company as provided in Section 5 of
                                                                   ---------
               this Agreement; and

                       (d) the Company may, make such other payments as may be
               permitted (i) by the terms of its Senior Indebtedness, or (ii)
               pursuant to consents from the necessary holders of Senior
               Indebtedness or a combination thereof.

               4.3 Limitations on Payments; Defaults. In the event that any
                   ---------------------------------
default or event of default (as defined in any loan agreement, purchase
agreement or any other agreement with

                                       11

<PAGE>

respect to any Senior Indebtedness) in the observance of any term of any Senior
Indebtedness shall occur and be continuing, then:

                       (a) if such default is other than a payment default or a
               default which results in the acceleration of the maturity date of
               such Senior Indebtedness, no payment (including any payment that
               may be payable by reason of any other indebtedness of the Company
               being subordinated to payment of this Note) shall be made by or
               on behalf of the Company for or on account of this Note, and the
               Holder shall not take or receive from the Company, directly or
               indirectly, in cash or other property or by set-off or in any
               other manner, including, without limitation, from or by way of
               collateral, payment of all or any of this Note during any payment
               blockage period that may be provided for in any Designated Senior
               Indebtedness with respect to this Note; provided, however, that
                                                       --------  -------
               no such payment blockage period shall exist more than once in any
               365 consecutive day period, nor shall any such payment blockage
               period exceed 179 consecutive days in any 365 consecutive day
               period and, upon the maturity of any Senior Indebtedness then due
               by lapse of time, acceleration, default by the Company or
               otherwise, then all such matured Senior Indebtedness then due
               shall first be paid in full before any additional payment on
               account of principal or interest is made on the Note, and

                       (b) if such default is a payment default or a default
               which results in the acceleration of the maturity date of such
               Senior Indebtedness, no payment (including any payment that may
               be payable by reason of any other indebtedness of the Company
               being subordinated to payment of this Note) shall be made by or
               on behalf of the Company for or on account of this Note, and the
               Holder shall not take or receive from the Company, directly or
               indirectly, in cash or other property or by set-off or in any
               other manner, including, without limitation, from or by way of
               collateral, payment of all or any of this Note and, upon the
               maturity of any Senior Indebtedness then due by lapse of time,
               acceleration, default by the Company or otherwise, then all such
               matured Senior Indebtedness then due shall first be paid in full
               before any additional payment on account of principal or interest
               is made on the Note

               4.4 Rights Upon Distribution of Assets. Upon any distribution of
                   ----------------------------------
assets of the Company upon any dissolution, winding-up, liquidation,
arrangement, reorganization, protect, relief or composition of the Company or
its debts (whether voluntary or involuntary in bankruptcy, insolvency or
receivership or other similar case or proceeding, under any Federal or State
bankruptcy or similar law or upon an assignment for the benefit of creditors or
any other dissolution, winding-up, liquidation or reorganization of the Company
or any other marshalling of the assets and liabilities of the Company),

                       (a) The holders of all Senior Indebtedness shall first be
               entitled to receive payment in full before the Holder of this
               Note is entitled to receive any additional payment on account of
               the principal of, or interest on the Note (other than payment in
               shares of stock of the Company as reorganized or readjusted, or
               securities of the Company or any other corporation provided for
               by a plan of

                                       12

<PAGE>

               reorganization or readjustment, the payment of which is
               subordinated to the payment of all Senior Indebtedness which may
               at the time be outstanding);

                       (b) Any payment or distribution of assets of the Company
               of any kind or character, whether in cash, property or securities
               (other than shares of stock of the Company as reorganized or
               readjusted, or securities of the Company or any other corporation
               provided for by a plan of reorganization or readjustment, the
               payment of which is subordinated to the payment of all Senior
               Indebtedness which may at the time be outstanding), to which the
               Holder of the Note would be entitled, except for the provisions
               of this Section 4, shall be paid by the liquidating trustee or
                       ---------
               agent or other person making such payment or distribution,
               whether a trustee in bankruptcy, a receiver or liquidating
               trustee or other trustee or agent, directly to the holders of
               Senior Indebtedness, to their representative or representatives,
               or to the trustee or trustees under any indenture under which any
               instruments evidencing any such Senior Indebtedness may have been
               issued, ratably according to the aggregate amounts remaining
               unpaid on account of the principal of the Senior Indebtedness
               held or represented by each for application in the case of cash
               or as collateral (in the case of non cash assets) for the payment
               or prepayment of Senior Indebtedness, in each case, to the extent
               necessary to make payment in full of all Senior Indebtedness
               remaining unpaid, after giving effect to any concurrent payment
               or distribution or provision therefor to the holders of such
               Senior Indebtedness; and

               4.5 Payments Received in Trust. In the event that,
                   --------------------------
notwithstanding the foregoing, any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or securities (other
than shares of stock of the Company as reorganized or readjusted, or securities
of the Company or any other corporation provided for by a plan of reorganization
or readjustment, the payment of which is subordinated to the payment of all
Senior Indebtedness which may at the time be outstanding), shall be received by
the Holder on account of interest or principal on the Note not due or payable
prior to the happening of any of the events described in Section 4.3 or Section
                                                         -----------    -------
4.4 before all Senior Indebtedness is paid in full, such payment or distribution
---
shall be received in trust for the benefit of the holders of Senior Indebtedness
and shall be paid over to the holders of Senior Indebtedness remaining unpaid or
to their representative or representatives, or to the trustee or trustees under
any indenture under which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably as aforesaid, in the same form as
received (with any necessary endorsement) for application in the case of cash or
as collateral (in the case of non cash assets) for the payment or prepayment of
Senior Indebtedness, as the case may be, to the payment of such Senior
Indebtedness until all such Senior Indebtedness shall have been paid in full,
after giving effect to any concurrent payment or distribution or provision
therefor to the holders of such Senior Indebtedness.

               4.6 Execution of Intercreditor Agreements. The Holder agrees that
                   -------------------------------------
if the Company creates, incurs, or refinances any Senior Indebtedness, Holder,
upon request, will execute an intercreditor agreement with regard to the
subordination of this Note to such Senior Indebtedness in such form as may be
reasonably requested by any holder of such Senior

                                       13

<PAGE>

Indebtedness who is authorized to act on behalf of all of the holders of the
particular Senior Indebtedness at issue.

          4.7 Subrogation. Subject to the payment in full of all Senior
              -----------
Indebtedness, the Holder of the Note shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of assets of
the Company applicable to the Senior Indebtedness on the Note once the Senior
Indebtedness shall be paid in full, and no such payments or distributions
applicable to the Senior Indebtedness shall, as between the Company, its
creditors other than the holders of Senior Indebtedness and the Holder of the
Note be deemed to be a payment by the Company to or on account of the Note, it
being understood that the provisions of Section 4 of this Note are and are
                                        ---------
intended solely for the purpose of defining the relative rights of the Holder of
the Note, on the one hand, and the holders of the Senior Indebtedness, on the
other hand. Nothing contained in Section 4 of this Note or elsewhere in this
                                 ---------
Note is intended to or shall impair, as between the Company, its creditors other
than the holders of Senior Indebtedness, and the Holder of the Note, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holder of the Note the principal of and interest on the Note as and when the
same shall become due and payable in accordance with its terms, or is intended
to or shall affect the relative rights of the Holder of the Note and creditors
of the Company other than the holders of the Senior Indebtedness, nor shall
anything herein or therein prevent the Holder of the Note from exercising all
remedies otherwise permitted by applicable law upon an Event of Default under
the Note, subject to the rights, if any, under this Section 4 of the holders of
                                                    ---------
Senior indebtedness in respect to cash, property or securities of the Company
received upon the exercise of any such remedy.

          4.8 Reliance Upon Judicial Proceeding. Upon any distribution of assets
              ---------------------------------
of the Company referred to in Section 4 of this Note, the Holder of the Note
                              ---------
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which such dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other person making any distribution to the Holder of the
Note, for the purpose of ascertaining the persons entitled to participate in
such distribution, the holders of the Senior Indebtedness and other indebtedness
of the Company, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to Section
4 of this Note.                                                         -------
-

          4.9 Right to Payments. Except as provided in Section 4.3 with respect
              -----------------                        -----------
to certain payment blockage periods, nothing else contained in Section 4 of this
                                                               ---------
Note or elsewhere in this Note shall affect the obligation of the Company to
make, or prevent the Company from making at any time, except during the pendency
of any such dissolution, winding-up, liquidation or reorganization proceedings
or upon the maturity of the Senior Indebtedness, payments of principal of or
interest on the Note and nothing herein shall prevent the Company from making
any payments to the Holder of this Note upon subordination with respect to the
Holder's right to accelerate any or all of the principal amount of this Note
pursuant to Section 2.4 hereof.
            -----------

          4.10 Enforcement of Subordination. The Holder of this Note, by
               ----------------------------
acceptance hereof, (a) agrees that any rights against such Holder which any
holder of Senior Indebtedness may have, directly or through the Company by
virtue of the provisions of Section 3 of this Note,
                            ---------

                                       14

<PAGE>

may be enforced by such holder of Senior Indebtedness directly against the
Holder of this Note without the necessity of joining the Company as a party, and
(b) every holder of Senior Indebtedness and every person hereafter making any
advance constituting Senior Indebtedness shall be entitled to rely upon the
provisions of Section 4 of this Note, and (c) agrees that it will join in
              ---------
executing such assignments, agreements and other instruments as may be requested
by any holder of Senior Indebtedness to carry out the intent and purpose of this
subordination.

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

          4.12 Delivery of Documentation to Holders of Senior Indebtedness. The
               -----------------------------------------------------------
Holder of this Note, by acceptance hereof, authorizes and directs that a copy
hereof be delivered by the Company to each authorized representative or agent
for any holder of Senior Indebtedness, or if there is no such currently
authorized representative or agent then to at least one holder of Senior
Indebtedness as representative of itself and all other such holders of the
Senior Indebtedness, and to any other holder of Senior Indebtedness requesting
the same. Holder of this Note, by acceptance hereof, expressly waives reliance
by any present or future holder of Senior Indebtedness upon the subordination
provisions contained herein.

          4.13 No Limitation of Bankruptcy Proceedings. The Holder agrees that,
               ---------------------------------------
so long as payments or distributions for or on account of this Note are not
permitted pursuant to Section 4, the Holder will not take any action to, or
                      ---------
commence, or join with any other creditor in commencing any Bankruptcy
Proceeding with respect to the Company, or, directly or indirectly, cause the
Company to commence, or assist the Company in commencing any Bankruptcy
Proceeding.

     5.   Conversion.
          ----------

          5.1 Conversion by the Holder. The Holder may, at any time, convert all
              ------------------------
or any portion of the then outstanding principal amount of this Note and any
accrued but unpaid interest hereon into shares of Common Stock at a Conversion
Price equal to Fifty Cents ($.50) per share of Common Stock (or at the current
adjusted Conversion Price if an adjustment has been made as provided herein).

          5.2 Stock Splits; Reverse Stock-Splits. In case 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 outstanding shares of Common
Stock shall 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

                                       15

<PAGE>

business on the day following the day upon which such subdivision or combination
becomes effective.

          5.3 Provisions in Case of Consolidation or Merger. In case of any
              ---------------------------------------------
consolidation of the Company with, or merger of the Company into, any other
Person, any merger of another Person into the Company (other than a merger which
does not result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock of the Company) the Holder shall have the
right thereafter during the period in which this Note shall be convertible as
specified, to convert this Note only into the kind and amount of securities,
cash and other property receivable, if any, upon such consolidation, merger,
sale or transfer by a holder of the number of shares of Common Stock of the
Company into which this Note might have been converted immediately prior to such
consolidation, merger, sale or transfer, assuming such holder of Common Stock of
the Company (i) is not a Person with which the Company consolidated or into
which the Company merged or which merged into the Company or to which such sale
or transfer was made, as the case may be ("Constituent Person"), or an Affiliate
of a Constituent Person and (ii) failed to exercise his rights of election, if
any, as to the kind or amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer (provided that if the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger sale or transfer is not the same for each share of Common
Stock of the Company held immediately prior to such consolidation, merger, sale
or transfer by other than a Constituent Person or an Affiliate thereof and in
respect of which such rights of election shall not have been exercised
("non-electing share"), then, for the purpose of this Section 5.3, the kind and
                                                      -----------
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by each non-electing share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
non-electing shares). The above provisions of this Section 5.3 shall similarly
                                                   -----------
apply to successive consolidations, mergers, sales or transfers.

          5.4 Adjustment in Number of Securities. Upon each adjustment of the
              ----------------------------------
Conversion Price pursuant to the provisions of Section 5 of this Note, the
                                               ---------
number of shares of Common Stock issuable upon exercise at the adjusted
Conversion Price shall be adjusted to the nearest full amount by multiplying a
number equal to the Conversion Price in effect immediately prior to such
adjustment by the number of shares of Common Stock issuable upon exercise of the
conversion right immediately prior to such adjustment and dividing the product
so obtained by the adjusted Conversion Price.

          5.5 Validity of Note. Irrespective of any adjustments or changes in
              ----------------
the Conversion Price or the amount of securities issuable upon exercise of the
conversion right, this Note shall continue to express the Conversion Price per
share and the amount of securities issuable thereunder as of the date this Note
was originally issued; provided, the Holder shall be entitled to exercise the
right represented by this Note after giving effect to each such adjustment and
change, and this Note shall be deemed to incorporate each such adjustment and
change as if a new Note reflecting each such adjustment and change had been
issued to the Holder.

          5.6 Elimination of Fractional Interests. The Company shall not be
              -----------------------------------
required to issue certificates representing fractions of shares of Common Stock
upon the exercise of the conversion rights set forth in this Section 5, nor
                                                             ---------
shall it be required to issue scrip or pay cash in

                                       16

<PAGE>

lieu of such fractional interests, it being the intent of the parties that all
fractional interests shall be eliminated by rounding any fraction up or down to
the nearest whole number of shares of Common Stock or other securities,
properties or rights. If a fraction of a share would otherwise be issuable on
conversion of this Note, the Company will in lieu of such issuance pay the cash
value of that fractional share.

          5.7 Unit Offerings. In case the Company shall offer its Common Stock
              --------------
as part of an offering of units of equity securities, the per share or per share
equivalent stock price and per share or per share equivalent Conversion Price
shall be determined by dividing the number of shares in the Unit by the Closing
Price of the Unit on the applicable date or dates. In case the Company shall
offer its Common Stock as part of a unit of equity and debt securities, the per
share price or per share equivalent stock price shall be determined by dividing
the number of shares in the unit by the remainder of the closing price of the
Unit on the applicable date or dates, minus the principal face amount of the
debt security component of the Unit.  -----

          5.8 Issuance of Stock on Conversion. As soon as reasonably practicable
              -------------------------------
after a conversion of this Note, in whole or in part, pursuant to Section 5, the
                                                                  ---------
Company at its expense will cause to be issued in the name of and delivered to
the Holder of this Note, a certificate or certificates for the number of shares
of Common Stock to which that Holder shall be entitled on such conversion
(bearing such legends as may be required under applicable state and federal
securities laws in the opinion of the Company, after consultation with counsel).
Such conversion shall be deemed to have been made immediately prior to the close
of business on the Forced Conversion Date or the Voluntary Conversion Date. No
fractional shares will be issued on conversion of this Note.

     6.   Restriction on Transfer.
          -----------------------

          THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION THEREOF HAVE
     NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
     "SECURITIES ACT"), OR UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE
     OFFERED, SOLD, ASSIGNED OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
     EXCEPT: (i) PURSUANT TO AN EFFECTIVE REGISTRATION THEREOF UNDER THE
     SECURITIES ACT; OR (ii) IF IN THE OPINION OF COUNSEL FOR THE REGISTERED
     OWNER HEREOF, WHICH OPINION IS REASONABLY SATISFACTORY TO THE COMPANY, AND
     ITS COUNSEL, THE PROPOSED OFFER, SALE, ASSIGNMENT, TRANSFER, PLEDGE OR
     HYPOTHECATION MAY BE EFFECTED WITHOUT SUCH REGISTRATION AND WILL NOT BE IN
     VIOLATION OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS.

     7.   Additional Restrictions on Transfer.
          -----------------------------------

          7.1 General Prohibition Against Transfer. No party hereto, or any
              ------------------------------------
Permitted Transferee shall (i) sell, assign, pledge, encumber, or otherwise
transfer this Note or any portion thereof to any person or entity whatsoever,
except in a Permitted Transfer.

                                       17

<PAGE>

          7.2 Effect of Non-complying Transfers. Any purported transfer of this
              ---------------------------------
Note or any portion thereof without full compliance with this Section 7 shall be
                                                              ---------
void and of no effect, and the purported transferee shall be entitled to no
rights as a security holder of the Company. In addition to any other legal or
equitable remedy which may be available, the Company shall be entitled to
injunctive relief against any such noncomplying transfer by the initial Holder
or any subsequent holder. The Company shall not transfer this Note or any
portion thereof on its transfer records or recognize the purported transferee as
a holder for any purpose, including, without limitation, for purposes of payment
of principal or interest, or exercise of conversion or other rights hereunder,
unless the provisions of this Section have been complied with in full.

          7.3 Permitted Transfers. Provided that the Holder gives the Company
              -------------------
advance written notice describing the terms and conditions of the proposed
transfer and the Holder notifies the Company in writing that such a transfer
would comply with the requirements of all applicable securities laws
(accompanied by an opinion of counsel reasonably acceptable to the Company and
its counsel) and this Note, such transfer can be effected at no out-of-pocket
cost to the Company, and such transfer will not result in a material adverse
effect on the Company, the transfer restrictions of Section 7.1 and Section 7.2
                                                    -----------     -----------
shall not apply to any of the following transfers of this Note or any portion
thereof (each a "Permitted Transfer" and each recipient of said Note, a
"Permitted Transferee") by the initial Holder or by any other subsequent Holder
who has acquired this Note or any portion thereof as a Permitted Transferee (in
either case, a "Permitted Transferor"):

              (a) To an Affiliate of the Holder; or

              (b) a trust or trusts solely for the benefit of the Holder and/or
          his or her Immediate Family; or

              (c) a partnership or limited liability company, the partners or
          members of Holder; or

              (d) If the Permitted Transferor is an individual, transfers by
          gift by the Permitted Transferor, or by will or intestacy upon the
          death of the Permitted Transferor, to the spouse, children, parents or
          siblings of the Permitted Transferor or to a trust for the benefit of
          such spouse, children, parents or siblings; and

              (e) Transfers of the Note between the Permitted Transferor and
          the Permitted Transferor's guardian or conservator.

(each transferee described in clauses (a) through (e) of this Section 7.3 is
                                                              -----------
hereinafter referred to as a "Permitted Transferee.")

          7.4 Permitted Transfers Subject to Continuing Restrictions. The Note
              ------------------------------------------------------
or any portion thereof transferred in any transaction described in clauses (a)
through (e) of Section 7.3 shall remain subject to the transfer restrictions of
               -----------
Section 7.1 and Section 7.2. As a condition to a proposed Permitted Transfer,
-----------     -----------
each Permitted Transferee shall, at the option of the Company, be required to
execute and deliver to the Company an agreement with respect to the transferred
the

                                       18

<PAGE>

Note or any portion thereof, containing all the same terms and conditions of
this Note, reflecting such Permitted Transferee's ownership of the Note or any
portion thereof so transferred, which execution and delivery shall evidence the
agreement of such Permitted Transferee that the Note or any portion thereof
intended to be transferred shall continue to be subject to the same terms and
restrictions on transfer as contained in this Note and that, as to the Note or
any portion thereof, such Permitted Transferee shall be bound by such terms and
conditions.

          8.  Miscellaneous.
              -------------

              8.1 Notices. Any notices or other communications required or
                  -------
permitted hereunder shall be in writing and will be deemed to have been duly
given only if personally delivered at the addresses designated below, sent by
overnight courier, or mailed by certified mail, return receipt requested,
postage prepaid, addressed as follows, or to such other addresses or numbers as
may hereafter be furnished by one party to the other party in compliance with
the terms hereof:

                  If to Company:
                  -------------

                  Wolfpack Corporation
                  4021 Stirrup Creek Drive
                  Suite 400, Research Triangle Park
                  Durham, NC  27703
                  Telefax:  919-861-6505
                  Attn:  Anthony W. Cullen

                  With a Copy to:
                  --------------

                  Smith, Gambrell & Russell, LLP
                  1230  Peachtree Street, NW
                  Suite 3100, Promenade II
                  Atlanta, Georgia 30309-3592
                  Telefax:  404.685.6832
                  Attention: M. Timothy Elder, Esq.

                  If to Holder:
                  ------------

                  Lancer Offshore, Inc.
                  Suite 2006
                  375 Park Avenue
                  New York, New York 10152
                  Telefax:  212.521.8401
                  Attention: Martin Garvey

          All such notices, requests and other communications will (a) if
          delivered personally or by a nationally recognized overnight delivery
          service to the address as provided in this Section 8.1, be deemed
                                                     -----------
          given upon delivery, and (b) if delivered by mail in the manner

                                       19

<PAGE>

          described above to the address as provided in this Section, be deemed
          given three (3) days after being mailed, (in each case regardless of
          whether such notice, request or other communication is received by any
          other Person to whom a copy of such notice, request or other
          communication is to be delivered pursuant to this Section). Any party
          from time to time may change its address, facsimile number or other
          information for the purpose of notices to that party by giving notice
          specifying such change to the other party hereto.

              8.2 Entire Agreement. This Note supercedes all prior discussions
                  ----------------
and agreements, between the parties with respect to the subject matter hereof
and contains the entire agreement between the parties with respect to the
subject matter hereof.

              8.3 No Oral Modifications. No extension, modification, amendment
                  ---------------------
or waiver of any term or condition of this Note shall be valid or binding upon
the Holder, unless in writing and signed by an officer of the Holder having the
authority to consent to the extension, modification or waiver.

              8.4 Extension; Waiver. Delay or omission by the Holder of this
                  -----------------
Note to exercise any right or power hereunder or failure by such Holder to
insist upon the strict performance of any of the covenants and agreements herein
set forth or to exercise any rights or remedies hereunder shall not impair any
such right or power or be considered or taken as a waiver or relinquishment for
the future of the right to insist upon and to enforce strict compliance by the
Company with all of the covenants and agreements herein. Delay, omission or
waiver on any one occasion shall not be deemed a bar to, or waiver of, the same
or any other right on any future occasion. No waiver by Holder may be made under
this Note except in written notice signed by Holder and given to the Company in
accordance with Section 8.1. No notice to or demand on the Company, in any case,
                -----------
shall entitle it to any other or further notice of demand in other similar
circumstances.

              8.5 Binding Effect. This Note shall be binding upon the Company
                  --------------
and its successors and assigns and shall inure to the benefit of the Holder and
his heirs, executors, administrators, legal representatives and assigns. Company
may assign this Note so long as it remains liable for the obligations hereunder.

              8.6 Interpretation; Construction; Section Headings. Except as may
                  ----------------------------------------------
be otherwise noted in context, all references to "Sections" shall be deemed to
refer to the sections or subsections, as appropriate, of this Note.

                  (a) Where the context requires: (i) use of the singular or
              plural incorporates the other, and (ii) pronouns and modifiers in
              the masculine, feminine or neuter gender shall be deemed to refer
              to or include the other genders.

                  (b) As used in this Note, the terms "include[s]" and
              "including" mean "including but not limited to"; that is, in each
              case the example or enumeration which follows the use of either
              term is illustrative, but not exclusive or exhaustive.

                                       20

<PAGE>

                   (c) Section headings appearing in this Note are inserted
              solely as reference aids for the ease and convenience of the
              reader; they shall not be deemed to modify, limit or define the
              scope or substance of the provisions they introduce, nor shall
              they be used in construing the intent or effect of such
              provisions.

              8.7  Governing Law. This Agreement, including all matters related
                   -------------
to validity, construction, performance and enforcement hereof, shall be governed
by and construed in accordance with the internal laws of the State of Delaware,
without regard to choice of law or conflicts or law principles except to the
extent the Communications Act of 1934, as amended and as interpreted and applied
by judicial and regulatory authorities, including the Federal Communications
Commission, supercedes such state law and except that the arbitration provisions
shall be governed by the federal laws of the United States of America.

              8.8  Severability. If any provision of this Note is held to be
                   ------------
invalid or unenforceable by a court of competent jurisdiction, the other
provisions of this Note shall remain in full force and effect and shall be
liberally construed in favor of Holder.

              8.9  Waiver of Notice. The Company waives notice under this Note
                   ----------------
(except as expressly provided for this Note), demand for payment, presentment
for payment, protest, or notice of protest and non-payment with respect to this
Note, and the Company consents to any extension or postponement of time of
payment of this Note and to any other indulgence with respect to this Note
without notice thereby to the Company.

              8.10 Attorney's Fees. In addition to all principal and accrued
                   ---------------
interest on this Note, the Company agrees to pay to Holder or other permitted
assignee or transferee without duplication of amounts payable hereunder all
reasonable court costs incurred by Holder or other permitted assignee or
transferee in collecting this Note through any legal proceedings, and reasonable
attorneys' fees not to exceed ten percent (10%) of the unpaid principal and
accrued interest owing on this Note when and if this Note is placed in the hands
of an attorney for collection after an Event of Default, as herein defined.

              8.11 Time. Time is of the essence under this Note.
                   ----

              8.12 Maximum Limit On Interest. The provisions of this Note and
                   -------------------------
of all agreements between the Company and Holder, whether now existing or
hereafter arising and whether written or oral, are hereby expressly limited so
that, in no contingency or event whatsoever, whether by reason of acceleration
of the maturity of this Note or otherwise, shall the amount contracted for,
charged, taken, received, paid or agreed to be paid to Holder for the use,
forbearance, or detention of the money loaned under this Note or otherwise,
exceed the Highest Lawful Rate, as herein defined. If, from any circumstance
whatsoever, performance or fulfillment of any provision hereof or of any
agreement between the Company and Holder shall, at the time performance or
fulfillment of such provision shall be due, exceed the Highest Lawful Rate or
otherwise transcend the limit of validity prescribed by applicable law, then,
ipso facto, the obligation to be performed or fulfilled shall be reduced to the
Highest Lawful Rate, and if, from any circumstance whatsoever, Holder shall ever
receive anything of value deemed interest

                                       21

<PAGE>

under applicable law in excess of interest at the Highest Lawful Rate, an amount
equal to any excessive interest shall be applied to the reduction of the
principal balance owing hereunder, and not to the payment of interest, or if
such excessive interest exceeds the unpaid balance of principal hereof, then
such excess shall be refunded to the Company. It is the intent of the parties
hereto that the Company shall not, under any circumstances, be required to pay,
nor shall Holder be entitled to collect, any interest which is in excess of the
maximum legal rate permitted under the laws of the applicable jurisdiction. All
sums paid or agreed to be paid to Holder for the use, forbearance, or detention
of the indebtedness of the Company to Holder, shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread through the full
term of this Note until payment in full, so that the rate of interest on account
of such indebtedness will not at any time exceed the Highest Lawful Rate. The
Provisions of this paragraph shall control all agreements between the Company
and Holder. The term "Highest Lawful Rate" as used herein shall mean the maximum
non-usurious rate of interest permitted by whichever of applicable federal or
Georgia law from time to time permits the highest maximum non-usurious interest
at rate with respect to this Note.

              8.13 Mutilated, Destroyed, Lost and Stolen Notes. Subject to
                   -------------------------------------------
compliance with the other terms of this Section, if any mutilated Note is
surrendered to the Company, the Company shall execute, authenticate and deliver
in exchange therefor a new Note of like tenor and principal amount and bearing a
number not contemporaneously outstanding. If there shall be delivered to the
Company (a) evidence to its satisfaction of the destruction, loss or theft of
any such Note, and (b) such note or indemnity as may be required by the Company
to save the Company and all of its agents harmless, then, in the absence of
notice to the Company that such Note has been acquired by a bona fide purchaser,
the Company shall execute, authenticate and deliver, in lieu of any such
destroyed, lost or stolen Note, a new Note of like tenor and principal amount
and bearing a number not contemporaneously outstanding.

              In case any such mutilated, destroyed, lost or stolen Note has
          become or is about to become due and payable, the Company in its
          discretion may, instead of issuing a new Note, pay such Note. Upon the
          issuance of any new Note under this Section, the Company may require
          the payment of a sum sufficient to cover any tax or other governmental
          charge that may be imposed in relation thereto and any other expenses
          (including the fees and expenses of its counsel) connected therewith.
          Every new Note issued pursuant to this Section in lieu of any
          destroyed, lost or stolen Note shall constitute an original additional
          contractual obligation of the Company, whether or not the destroyed,
          lost or stolen Note shall be at any time enforceable by anyone, and
          shall be entitled to all the benefits of this Note equally and
          proportionately with any and all other Notes of the series (if any) of
          which this Note is a part. The provisions of this Section are
          exclusive and shall preclude (to the extent lawful) all other rights
          and remedies with respect to the replacement or payment of mutilated,
          destroyed, lost or stolen Notes.

              8.14 No Recourse Against Others. A director, officer, employee or
                   --------------------------
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under this Note for any claim based on, in respect of
or by reason of such obligations or their creation. Each Holder by accepting a
Note waives and releases all such liability. The waiver and release are part of
the consideration for the issuance of this Note.

                                       22

<PAGE>

              8.15 Authentication. This Note shall not be valid until
                   --------------
authenticated by the manual signatures of the President of the Company and its
Secretary or an Assistant Secretary or an authenticating agent.

              8.16 Exclusive Jurisdiction and Venue. Any suit, action or
                   --------------------------------
proceeding with respect to this Note shall be brought exclusively in the state
courts located in either Cobb County, Georgia or Fulton County, Georgia or in
the United States District Court for the Northern District of Georgia, Atlanta
Division. By execution and delivery of this Note, Holder accepts for itself the
exclusive venue in the State of Georgia and the exclusive jurisdiction of the
aforesaid courts, and irrevocably agrees to be bound by any judgment, subject to
all rights of appeal, rehearing and the like, rendered thereby in connection
with this Note. ALL PARTIES HEREBY IRREVOCABLY WAIVE ANY OBJECTION WHICH THEY
MAY NOW OR HEREAFTER HAVE TO THE PERSONAL JURISDICTION OR VENUE OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE BROUGHT IN SUCH
COURTS AND HEREBY FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT SUCH SUIT, ACTION, OR
PROCEEDING BROUGHT IN ANY SUCH COURTS HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

          IN WITNESS WHEREOF, the Company has caused this Note to be signed in
its name and executed as a sealed instrument on the day and year first written
above.

                                            COMPANY

                                            WOLFPACK CORPORATION

                                            By: /s/ Mary Walker
                                                --------------------------
                                                Mary Walker
                                                President

                                       23<PAGE>
                                                                    EXHIBIT 10.1
                                 FIRST AMENDMENT
                                       TO
               AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

      This First Amendment to Amended and Restated Registration Rights Agreement
(this "Amendment"), dated as of May 17, 2002, is made by and among Oil States
International, Inc., a Delaware corporation ("OSI") and the Holders of
Registrable Securities set forth on the signature page hereto (the "Amending
Holders").

      WHEREAS, reference is made to that certain Amended and Restated
Registration Rights Agreement by and among OSI, HWC, Sooner and each of the
holders of OSI Common Stock, HWC Common Stock and Sooner Common Stock listed on
the signature pages thereto (the "Amended and Restated Registration Rights
Agreement"); and

      WHEREAS, OSI and the Amending Holders desire to amend the Amended and
Restated Registration Rights Agreement in accordance with the provisions of
Section 9.3 thereof; and

      WHEREAS, the Amending Holders hold in the aggregate greater than 50% of
the Registrable Securities; and

      WHEREAS, capitalized terms that are used but not defined herein shall have
the meanings set forth in the Amended and Restated Registration Rights
Agreement;

      NOW, THEREFORE, for and in consideration of the mutual benefits to be
derived from this Amendment, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:

      Section 1. AMENDMENTS TO AMENDED AND RESTATED REGISTRATION RIGHTS
AGREEMENT. The Amended and Restated Registration Rights Agreement is hereby
amended as follows:

            (a) Section 3(a) is amended by deleting it in its entirety and
      inserting the following in replacement therefor:

            "If OSI proposes to file, or has filed, a registration statement
            under the Securities Act, including a Demand Registration, with
            respect to an offering of OSI Common Stock for cash by OSI for its
            own account or for the account of any of its equity holders (other
            than (i) a registration statement on Form S-4 or S-8 or any
            substitute form that may be adopted by the SEC, (ii) any
            registration statement filed in connection with an exchange offer or
            offering of securities solely to OSI's existing security holders,
            (iii) any registration statement filed in connection with an
            exchange offer or offering of securities to holders of Exchangeable
            Shares (the "PTI Registration Statement"), or (iv) any "universal
            shelf" registration statement on Form S-3 or any substitute form
            that may be adopted by the SEC that contemplates the offering and
            sale by OSI of more than one type of security on a delayed or
            continuous basis pursuant to Rule 415 (or any successor rule) under
            the Securities Act, but only if each of the Amending Holders has
            waived its right to participate in any offering of Registrable
            Securities pursuant to such registration statement), then OSI shall,
            at its option, either (i) give written notice of such proposed
            filing to the Holders of the Registrable Securities no later than 7
            days before the anticipated
<PAGE>

            initial filing date or (ii) give written notice of the filing of
            such registration statement to the Holders of the Registrable
            Securities no later than 7 days before the anticipated
            effectiveness date of such registration statement, and such notice
            shall offer such Holders the opportunity to register such number of
            Registrable Securities as each such Holder may request (a "Piggyback
            Registration"). On or before the 7th day following the receipt of
            such notice by the Holders, any Holder wishing to include any or all
            of its Registrable Securities in such registration statement shall
            give written notice to OSI stating the name of such Holder and the
            amount of such Holder's Registrable Securities to be included in
            such registration statement. Subject to Section 3(b), OSI shall
            include in each such Piggyback Registration all Registrable
            Securities requested to be included in the registration for such
            offering and shall, in the case of a filed registration statement,
            prepare and file a pre-effective amendment to such registration
            statement providing for the inclusion of such Registrable
            Securities; provided, however, that OSI may at any time withdraw or
            cease proceeding with such registration without the consent of any
            Holder of Registrable Securities, notwithstanding the request of any
            such Holder to participate therein in accordance with this
            provision, if OSI determines in its sole discretion that such action
            is in the best interests of OSI and its stockholders (for this
            purpose, the interests of the Holders shall not be considered). Each
            Holder of Registrable Securities shall be permitted to withdraw all
            or part of such Holder's Registrable Securities from a Piggyback
            Registration at any time prior to the effective date thereof."

            (b) The second sentence of Section 9.3 is amended by deleting it in
      its entirety and inserting the following in replacement therefor:

            "This Agreement may not be amended or supplemented at any time,
            except by an instrument in writing signed by OSI and on behalf of
            the Holders of 50% or more of the Registrable Securities."

            (c) The first paragraph of Section 9.5 is amended by deleting it in
      its entirety and inserting the following in replacement therefor:

            "All notices and other communications hereunder shall be in writing
            and (i) if to be delivered to OSI, HWC or Sooner, shall be delivered
            in person, by overnight courier, by facsimile (with confirmation of
            receipt) or by registered or certified mail (postage prepaid, return
            receipt requested) and shall be deemed effective and received only
            upon and as of the date of actual receipt by OSI, HWC or Sooner, as
            the case may be (except that receipt on any date after 5:00 p.m.
            Central Standard Time shall be deemed received on the next Business
            Day), and (ii) if to be delivered to a Holder, shall be delivered in
            person, by overnight courier, by registered or certified mail
            (postage prepaid, return receipt requested) or by any other means of
            delivery and shall be deemed effective and received (A) if given in
            person, on the date of actual receipt by such Holder, (B) if given
            by overnight courier, on the next Business Day immediately following
            the day on which such notice is delivered to a reputable overnight
            courier service, (C) if given by registered or certified mail, on
            the third Business Day immediately following the day on which such
            notice is deposited with a United States post office or (D) if given
            by any other means, on the date on which such Holder acknowledges in
            writing the receipt of such notice by such other means, in each case
            to the respective parties as follows:"

      Section 2. Miscellaneous.

            (a) Counterparts. This Amendment may be executed in one or more
      counterparts, all of which shall be considered one and the same agreement,
      and shall become

                                       2
<PAGE>
      effective when one or more counterparts have been signed by each of the
      parties hereto and delivered (including by facsimile) to the other parties
      hereto.

            (b) Incorporation. The provisions of Sections 9.3, 9.4, 9.5, 9.6,
      9.7, 9.9, 9.10 and 9.11 of the Amended and Restated Registration Rights
      Agreement are hereby incorporated herein and shall be deemed to include
      and/or apply to this Amendment, as appropriate.

            (c) Ratification. Except as amended hereby, the Amended and Restated
      Registration Rights Agreement shall remain in full force and effect as
      previously executed by the parties, and the parties hereby ratify the
      Amended and Restated Registration Rights Agreement as amended hereby.

                                       3
<PAGE>
      IN WITNESS WHEREOF, each of the undersigned, intending to be legally
bound, has caused this Amendment to be duly executed and delivered on the date
first set forth above.

                                OIL STATES INTERNATIONAL, INC.

                                By:      /s/ ROBERT W. HAMPTON
                                         ---------------------------------
                                Name:    Robert W. Hampton
                                Title:   Vice President - Finance and
                                         Accounting and Secretary

                               SCF III, L.P.

                               By:  SCF II, L.P.,
                                    its General Partner

                                    By: L.E. Simmons & Associates, Incorporated,
                                        its General Partner

                                        By:    /s/ ANTHONY DeLUCA
                                               -------------------------
                                        Name:  Anthony DeLuca
                                        Title: Managing Director

                               SCF IV, L.P.

                               By:  SCF-IV, G.P., Limited Partnership,
                                    its General Partner

                                    By: L.E. Simmons & Associates,
                               Incorporated,
                                        its General Partner

                                        By:    /s/ ANTHONY DeLUCA
                                               -------------------------
                                        Name:  Anthony DeLuca
                                        Title: Managing Director

                                       4

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