Document:

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                                                                     EXHIBIT 4.1

                          SECURITIES PURCHASE AGREEMENT

         SECURITIES PURCHASE AGREEMENT (the "AGREEMENT"), dated as of May 29,
2002, by and among InterVoice-Brite, Inc., a Texas corporation, with
headquarters located at 17811 Waterview Parkway, Dallas, Texas 75252 (the
"COMPANY"), and the investors listed on the Schedule of Buyers attached hereto
(individually, a "BUYER" and collectively, the "BUYERS").

         WHEREAS:

         A. The Company and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 of Regulation D ("REGULATION D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 ACT");

         B. The Company has authorized convertible notes of the Company in the
form attached as Exhibit A (together with any convertible notes issued in
exchange therefor or replacement thereof in accordance with the terms thereof,
the "CONVERTIBLE NOTES"), which shall be convertible into shares of the
Company's common stock, no par value (the "COMMON STOCK") (as converted, the
"CONVERSION SHARES") in accordance with the terms of the Convertible Notes.

         C. The Buyers wish to purchase, upon the terms and conditions stated in
this Agreement, (I) Convertible Notes in an aggregate principal amount of
$10,000,000 in the respective amounts set forth opposite each Buyer's name on
the Schedule of Buyers (the "NOTES") and (II) warrants, substantially in the
form attached hereto as Exhibit B (the "WARRANTS"), to acquire that number of
shares of Common Stock for each $1,000 principal amount of the Notes purchased
equal to the quotient of (i) $250, divided by (ii) the Warrant Exercise Price
(as defined in the Warrant)(as exercised, collectively, the "WARRANT SHARES");
and

         D. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
substantially in the form attached hereto as Exhibit C (the "REGISTRATION RIGHTS
AGREEMENT") pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.

         NOW THEREFORE, the Company and the Buyers hereby agree as follows:

         1. PURCHASE AND SALE OF NOTES AND WARRANTS.

                  a. Purchase of Notes and Warrants. Subject to the satisfaction
(or waiver) of the conditions set forth in Sections 6 and 7 below, the Company
shall issue and sell to each Buyer and each Buyer severally agrees to purchase
from the Company the Notes in the principal amount set forth opposite such
Buyer's name on the Schedule of Buyers, along with the related Warrants to
acquire that number of Warrant Shares for each $1,000 principal amount of Notes
purchased equal

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to the quotient of (i) $250, divided by (ii) the Warrant Exercise Price (the
"CLOSING"). The purchase price (the "PURCHASE PRICE") of the Notes and the
related Warrants at the Closing shall be equal to $1.00 for each $1.00 of
principal amount of the Notes purchased (representing an aggregate Purchase
Price of $10,000,000 for the aggregate principal amount of $10,000,000 of Notes,
along with the related Warrants, to be purchased at the Closing). "BUSINESS
DAYS" means any day other than Saturday, Sunday or other day on which commercial
banks in the City of New York are authorized or required by law to remain
closed.

                  b. The Closing Date. The date and time of the Closing (the
"CLOSING DATE") shall be 10:00 a.m. Central Time, on May 30, 2002, subject to
the satisfaction (or waiver) of all of the conditions to the Closing set forth
in Sections 6 and 7 (or such later date as is mutually agreed to by the Company
and the Buyers). The Closing shall occur on the Closing Date at the offices of
Katten Muchin Zavis Rosenman, 525 West Monroe Street, Suite 1600, Chicago,
Illinois 60661-3693 or at such other time, date and place as the Company and the
Buyers may collectively designate in writing.

                  c. Form of Payment. On the Closing Date, (i) each Buyer shall
pay the Purchase Price to the Company for the Notes and the related Warrants to
be issued and sold to such Buyer at such Closing, by wire transfer of
immediately available funds in accordance with the Company's written wire
instructions, less any amount withheld for expenses pursuant to Section 4(h),
and (ii) the Company shall deliver to each Buyer, Notes (in the principal
amounts as such Buyer shall request) (the "NOTE CERTIFICATES") representing such
principal amount of the Notes which such Buyer is then purchasing hereunder
along with warrants representing the related Warrants, duly executed on behalf
of the Company and registered in the name of such Buyer.

         2. BUYER'S REPRESENTATIONS AND WARRANTIES.

                  Each Buyer represents and warrants with respect to only itself
that:

                  a. Investment Purpose. Such Buyer (i) is acquiring the Notes
and the Warrants, (ii) upon conversion of the Notes, will acquire the Conversion
Shares then issuable and (iii) upon exercise of the Warrants, will acquire the
Warrant Shares issuable upon exercise thereof (the Notes, the Conversion Shares,
the Warrants and the Warrant Shares collectively are referred to herein as the
"SECURITIES"), for its own account and not with a view towards, or for resale in
connection with, the sale or distribution thereof, except pursuant to sales
registered or exempted under the 1933 Act; provided, however, that by making the
representations herein, such Buyer does not agree to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the 1933 Act.

                  b. Accredited Investor Status. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D.

                  c. Reliance on Exemptions. Such Buyer understands that the
Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of the United States federal and state
securities laws and that the Company is relying in part upon the

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truth and accuracy of, and such Buyer's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such Buyer set
forth herein in order to determine the availability of such exemptions and the
eligibility of such Buyer to acquire the Securities.

                  d. Information. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
which have been requested by such Buyer, including (i) a "preliminary
Descriptive Memorandum dated May __, 2002" (the "DESCRIPTIVE MEMO") and (ii)
certain confidential information, including the information set forth in
Schedule 2(d) and certain other information set forth in the Disclosure
Schedules to this Agreement, provided to the Buyers between May 24, 2002 and May
29, 2002 (but prior to each such Buyer's execution of this Agreement) pursuant
to confidentiality agreements dated either May 24, 2002 or May 25, 2002 (the
"DISCLOSED INFORMATION"). Such Buyer and its advisors, if any, have been
afforded the opportunity to ask questions of the Company. Neither such inquiries
nor any other due diligence investigations conducted by such Buyer or its
advisors, if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's representations and warranties contained
in Sections 3 and 9(l) below. Such Buyer understands that its investment in the
Securities involves a high degree of risk. Such Buyer has sought such
accounting, legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the Securities.

                  e. No Governmental Review. Such Buyer understands that no
United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Securities
or the fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

                  f. Transfer or Resale. Such Buyer understands that except as
provided in the Registration Rights Agreement: (i) the Securities have not been
and are not being registered under the 1933 Act or any state securities laws,
and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, (B) such Buyer shall have delivered to the
Company an opinion of independent counsel, in a form reasonably acceptable to
the Company, to the effect that such Securities to be sold, assigned or
transferred may be sold, assigned or transferred pursuant to an exemption from
such registration, or (C) such Buyer provides the Company with reasonable
assurance that such Securities can be sold, assigned or transferred pursuant to
Rule 144 promulgated under the 1933 Act, as amended, (or a successor rule
thereto) ("RULE 144"); (ii) any sale of the Securities made in reliance on Rule
144 may be made only in accordance with the terms of Rule 144 and further, if
Rule 144 is not applicable, any resale of the Securities under circumstances in
which the seller (or the person through whom the sale is made) may be deemed to
be an underwriter (as that term is defined in the 1933 Act) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register the Securities under the 1933 Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder. Notwithstanding the foregoing, the Securities may be
pledged in connection with a bona fide margin account or other loan or financing
arrangement secured by the Securities.

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                  g. Legends. Such Buyer understands that the certificates or
other instruments representing the Notes and the Warrants and, until such time
as the sale of the Conversion Shares and the Warrant Shares have been registered
under the 1933 Act as contemplated by the Registration Rights Agreement, the
stock certificates representing the Conversion Shares and the Warrant Shares,
except as set forth below, shall bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of such
stock certificates):

         THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
         SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
         TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
         REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
         1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR (B) AN OPINION
         OF INDEPENDENT COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY,
         THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
         SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
         ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
         CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
         ARRANGEMENT SECURED BY THE SECURITIES.

The legend set forth above shall be removed and the Company shall issue a
certificate, or the Transfer and Depositary Agent shall issue a stock
certificate, without such legend to the holder of the Securities upon which it
is stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for resale under the 1933 Act, (ii) in connection with
a sale transaction, such holder provides the Company with an opinion of
independent counsel, in a form reasonably acceptable to the Company, to the
effect that a public sale, assignment or transfer of the Securities may be made
without registration under the 1933 Act, (iii) such holder provides the Company
with reasonable assurances that the Securities can be sold pursuant to Rule
144(k), or (iv) such holder provides the Company reasonable assurances that the
Securities have been or are being sold pursuant to Rule 144.

                  h. Authorization; Enforcement; Validity. This Agreement and
the Registration Rights Agreement have been duly and validly authorized,
executed and delivered on behalf of such Buyer and are valid and binding
agreements of such Buyer enforceable against such Buyer in accordance with their
respective terms, subject as to enforceability to applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws
relating to, or affecting generally, the enforcement of applicable creditors'
rights and remedies.

                  i. Residency. Such Buyer is a resident of that jurisdiction
specified in its address on the Schedule of Buyers.

         3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

                  The Company represents and warrants to each of the Buyers
that:

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                  a. Organization and Qualification. The Company and its
"SUBSIDIARIES" (which for purposes of this Agreement means any entity in which
the Company, directly or indirectly, owns capital stock or holds an equity or
similar interest) are corporations duly organized and validly existing in good
standing under the laws of the jurisdiction in which they are incorporated
(other than with respect to Subsidiaries (other than InterVoice-Brite Limited)
which only have immaterial assets, in which case, such Subsidiaries are duly
organized and validly existing in good standing under the laws of the
jurisdiction in which they are incorporated, except to the extent that the
failure to be so organized or in good standing would not have a Material Adverse
Effect (as defined below)), and have the requisite corporate power and authority
to own their properties and to carry on their business as now being conducted.
Each of the Company and its Subsidiaries is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which its ownership of property or the nature of the business conducted by it
makes such qualification necessary, except to the extent that the failure to be
so qualified or be in good standing would not have a Material Adverse Effect. As
used in this Agreement, "MATERIAL ADVERSE EFFECT" means any material adverse
effect on the business, properties, assets, operations, results of operations or
financial condition of the Company and its Subsidiaries, if any, taken as a
whole, or on the transactions contemplated hereby or by the agreements and
instruments to be entered into in connection herewith, or on the authority or
ability of the Company to perform its obligations under the Transaction
Documents (as defined below). The Company has no Subsidiaries except as set
forth on Schedule 3(a).

                  b. Authorization; Enforcement; Validity. The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Registration Rights Agreement, the
Irrevocable Transfer Agent Instructions (as defined in Section 5), the Notes,
the Warrants and each of the other agreements entered into by the parties hereto
in connection with the transactions contemplated by this Agreement
(collectively, the "TRANSACTION DOCUMENTS"), and to issue the Securities in
accordance with the terms hereof and thereof. The execution and delivery of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including without limitation the
issuance of the Notes and the Warrants, the reservation for issuance and the
issuance of the Conversion Shares and Warrant Shares issuable upon conversion or
exercise thereof, have been duly authorized by the Company's Board of Directors
and no further consent or authorization is required by the Company, its Board of
Directors or its stockholders. This Agreement and the other Transaction
Documents dated of even date herewith have been duly executed and delivered by
the Company and constitute the valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies. As of
the Closing, the Transaction Documents dated after the date hereof shall have
been duly executed and delivered by the Company and shall constitute the valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of creditors'
rights and remedies.

                  c. Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (i) 62,000,000 shares of Common Stock,
of which as of the date hereof,

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34,047,216 shares are issued and outstanding, 7,009,974 shares are reserved for
issuance pursuant to the Company's stock option, restricted stock and stock
purchase plans and no shares are issuable and reserved for issuance pursuant to
securities (other than the Notes and the Warrants) exercisable or exchangeable
for, or convertible into, shares of Common Stock and (ii) 2,000,000 shares of
Preferred Stock, $100 par value, of which as of the date hereof, no shares are
issued and outstanding. All of such outstanding shares have been, or upon
issuance will be, validly issued and are fully paid and nonassessable. Except as
disclosed in Schedule 3(c), (A) no shares of the Company's capital stock are
subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company; (B) there are no outstanding
debt instruments issued by the Company; (C) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exercisable
for, any shares of capital stock of the Company or any of its Subsidiaries, or
contracts, commitments, understandings or arrangements by which the Company or
any of its Subsidiaries is or may become bound to issue additional shares of
capital stock of the Company or any of its Subsidiaries or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exercisable for, any
shares of capital stock of the Company or any of its Subsidiaries; (D) there are
no agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of their securities under the 1933 Act
(except the Registration Rights Agreement); (E) there are no outstanding
securities or instruments of the Company or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries; (F) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities as described in this Agreement; and (G) the Company does not have
any stock appreciation rights or "phantom stock" plans or agreements or any
similar plan or agreement. The Company has furnished to each Buyer true and
correct copies of the Company's Articles of Incorporation, as amended and as in
effect on the date hereof (the "ARTICLES OF INCORPORATION"), and the Company's
Bylaws, as amended and as in effect on the date hereof (the "BYLAWS"), and the
terms of all securities convertible into, or exercisable or exchangeable for
Common Stock and the material rights of the holders thereof in respect thereto.

                  d. Issuance of Securities. The Notes are duly authorized and,
upon issuance in accordance with the terms hereof, shall be (i) free from all
taxes, liens and charges with respect to the issuance thereof and (ii) entitled
to the rights set forth in the Notes. At least 5,400,000 shares of Common Stock
(subject to adjustment pursuant to the Company's covenant set forth in Section
4(f) below) have been duly authorized and reserved for issuance upon conversion
of the Notes and upon exercise of the Warrants. Upon conversion or exercise in
accordance with the Notes or the Warrants, as the case may be, the Conversion
Shares and the Warrant Shares will be validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, with the holders being entitled to all rights accorded to a
holder of Common Stock. The issuance by the Company of the Securities is exempt
from registration under the 1933 Act.

                  e. No Conflicts. Except as disclosed in Schedule 3(e), the
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the

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reservation for issuance and issuance of the Conversion Shares and the Warrant
Shares) will not (i) result in a violation of the Articles of Incorporation of
the Company or the Bylaws; (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture or instrument to which the
Company or any of its Subsidiaries is a party; (iii) result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of the
Principal Market (as defined below)) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected. Except as disclosed in Schedule 3(e), neither
the Company nor its Subsidiaries is in violation of any term of its Articles of
Incorporation of the Company or Bylaws or their organizational charter or
bylaws, respectively (other than with respects to Subsidiaries (other than
InterVoice-Brite Limited) which only have immaterial assets, in which case, no
such Subsidiary is in violation of any term of its organizational charter or
bylaws, except for such violations as would not have a Material Adverse Effect).
Subsidiaries is in violation of any term of or in default under any contract,
agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or
order or any statute, rule or regulation applicable to the Company or its
Subsidiaries, except where such violations and defaults would not have, either
individually or in the aggregate, a Material Adverse Effect. The business of the
Company and its Subsidiaries is not being conducted, and shall not be conducted,
in violation of any law, ordinance or regulation of any governmental entity,
except where such violations and defaults would not have, either individually or
in the aggregate, a Material Adverse Effect. Except as specifically contemplated
by this Agreement and as required under the 1933 Act and any listing application
with the Nasdaq Stock Market or any exchange on which the Common Stock trades,
the Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency or any
regulatory or self-regulatory agency in order for it to execute, deliver or
perform any of its obligations under or contemplated by the Transaction
Documents in accordance with the terms hereof or thereof. Except as disclosed in
Schedule 3(e), all consents, authorizations, orders, filings and registrations
which the Company is required to obtain as described in the preceding sentence
have been obtained or effected on or prior to the date hereof. The Company and
its Subsidiaries are unaware of any facts or circumstances which might give rise
to any of the foregoing. The Company is not in violation of the listing
requirements of the Principal Market (as defined in Section 4(g)) and has no
actual knowledge of any facts which would lead to delisting or suspension of the
Common Stock by the Principal Market in the foreseeable future.

                  f. SEC Documents; Financial Statements. Since February 28,
2000, the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934 ACT")
(all of the foregoing filed prior to the date hereof (including all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein) being hereinafter referred to as the "SEC
DOCUMENTS"). A complete and accurate list of the SEC Documents is set forth on
EDGAR. As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and regulations of
the SEC promulgated thereunder applicable to the SEC Documents. None of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the

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statements therein, in light of the circumstances under which they were made,
not misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of the Company to
the Buyers which is not included in the SEC Documents or the Descriptive Memo,
including, without limitation, information referred to in Section 2(d)),
contains any untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they are or were made, not misleading. Other than the
Disclosed Information, neither the Company nor any of its Subsidiaries or any of
their officers, directors, employees or agents have provided the Buyers with any
material, nonpublic information. The Company meets the requirements for use of
Form S-3 for registration of the resale of Registrable Securities (as defined in
the Registration Rights Agreement). Except as set forth on Schedule 3(f), the
Company is not required to file and will not be required to file any agreement,
note, lease, mortgage, deed or other instrument entered into prior to the date
hereof or the Closing and to which the Company or any Subsidiary is a party or
by which the Company or any Subsidiary is bound which has not been previously
filed as an exhibit (including by way of incorporation by reference) to its
reports filed or made with the SEC under the 1934 Act at least 10 days prior to
the date hereof, other than those included in the list of agreements set forth
in Schedule A to the opinion set forth in Exhibit E-1 or in the list of
agreements set forth in Schedule A to the opinion set forth in Exhibit E-2., as
each such Schedule appears as of the Closing and which opinions are being
delivered at such Closing pursuant to Section 7(iv).

                  g. Absence of Certain Changes. Except as disclosed in Schedule
3(g) or as set forth with reasonable specificity in the Descriptive Memo, the
Disclosed Information or the SEC Documents filed with the SEC at least 10 days
prior to the date of this Agreement, since February 28, 2001 there has been no
material adverse change and no material adverse development in the business,
properties, assets, operations, results of operations or financial conditions of
the Company and its Subsidiaries, taken as a whole. The Company has not taken
any steps, and does not currently expect to take any steps, to seek protection
pursuant to any bankruptcy law nor does the Company or any of its Subsidiaries
have any knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy proceedings or any actual knowledge of any fact which
would reasonably lead a creditor to do so. The Company is not as of the date
hereof, and after giving effect to the transactions contemplated hereby, will
not be Insolvent (as defined below). For purposes of this Section 3(g),
"INSOLVENT" means (i) the present fair saleable value of the Company's assets is
less than the amount required to pay the Company's total indebtedness,
contingent or otherwise, (ii) the Company is unable to pay its debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured, (iii) the Company intends to incur or
believes that it will incur debts that would be beyond its ability to pay as
such debts mature or (iv) the Company has unreasonably small capital with which
to conduct the business in which it is engaged as such

                                      -8-
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business is now conducted and is proposed to be conducted. Except as disclosed
in Schedule 3(g), since February 28, 2001 the Company has not declared or paid
any dividends, sold any assets, individually or in the aggregate, in excess of
$1,000,000 outside of the ordinary course of business or had capital
expenditures, individually or in the aggregate, in excess of $1,000,000.

                  h. Absence of Litigation. Except as expressly set forth in
Schedule 3(h), (i) there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending against or affecting the Company,
the Common Stock or any of the Subsidiaries or any of the Company's or the
Subsidiaries' officers or directors in their capacities as such, (ii) to the
knowledge of the Company there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency, self-
regulatory organization or body threatened against or affecting the Company, the
Common Stock or any of the Subsidiaries or any of the Company's or the
Subsidiaries' officers or directors in their capacities as such which could
have, individually or in the aggregate, a Material Adverse Effect, and (iii) to
the knowledge of the Company none of the directors or officers of the Company
have been involved in securities related litigation during the past five years.

                  i. Acknowledgment Regarding Buyer's Purchase of Notes and
Warrants. The Company acknowledges and agrees that each of the Buyers is acting
solely in the capacity of an arm's length purchaser with respect to the Company
in connection with the Transaction Documents and the transactions contemplated
hereby and thereby. The Company further acknowledges that each Buyer is not
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby and any advice given by any of the Buyers or any
of their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated hereby and thereby is merely
incidental to such Buyer's purchase of the Securities. The Company further
represents to each Buyer that the Company's decision to enter into the
Transaction Documents has been based solely on the independent evaluation by the
Company and its representatives.

                  j. No Undisclosed Events, Liabilities, Developments or
Circumstances. Except for the issuance of the Notes and Warrants contemplated by
this Agreement and except as set forth in the Descriptive Memo or the Disclosed
Information, no event, liability, development or circumstance has occurred or
exists, or is contemplated to occur, with respect to the Company or its
Subsidiaries or their respective business, properties, prospects, operations or
financial condition, that would be required to be disclosed by the Company under
applicable securities laws on a registration statement on Form S-1 filed with
the SEC relating to an issuance and sale by the Company of its Common Stock and
which has not been publicly disclosed.

                  k. No General Solicitation. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the 1933 Act) in connection with the offer or sale of the
Securities.

                  l. No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require

                                      -9-
<PAGE>

registration of any of the Securities under the 1933 Act or cause this offering
of the Securities to be integrated with prior offerings by the Company for
purposes of the 1933 Act or any applicable stockholder approval provisions,
including, without limitation, under the rules and regulations of any exchange
or automated quotation system on which any of the securities of the Company are
listed or designated, nor will the Company or any of its Subsidiaries take any
action or steps that would require registration of any of the Securities under
the 1933 Act or cause the offering of the Securities to be integrated with other
offerings.

                  m. Dilutive Effect. The Company understands and acknowledges
that the number of Conversion Shares issuable upon conversion of the Notes and
the Warrant Shares issuable upon exercise of the Warrants will increase in
certain circumstances. The Company further acknowledges that its obligation to
issue Conversion Shares upon conversion of the Notes in accordance with this
Agreement and the Notes and its obligation to issue the Warrant Shares upon
exercise of the Warrants in accordance with this Agreement and the Warrants, is
in each case, absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interests of other stockholders of the
Company.

                  n. Employee Relations. Neither the Company nor any of its
Subsidiaries is involved in any union labor dispute nor, to the knowledge of the
Company or any of its Subsidiaries, is any such dispute threatened. None of the
Company's or its Subsidiaries' employees is a member of a union which relates to
such employee's relationship with the Company, neither the Company nor any of
its Subsidiaries is a party to a collective bargaining agreement, and the
Company and its Subsidiaries believe that their relations with their employees
are good. Except for the resignation of Ray S. Naeini during the first quarter
of the Company's fiscal year 2003, no executive officer (as defined in Rule
501(f) of the 1933 Act) has notified the Company that such officer intends to
leave the Company or otherwise terminate such officer's employment with the
Company. No executive officer, to the best knowledge of the Company and its
Subsidiaries, is, or is now expected to be, in violation of any material term of
any employment contract, confidentiality, disclosure or proprietary information
agreement, non-competition agreement, or any other contract or agreement or any
restrictive covenant, and the continued employment of each such executive
officer does not subject the Company or any of its Subsidiaries to any liability
with respect to any of the foregoing matters.

                  o. Intellectual Property Rights. The Company and its
Subsidiaries own or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service mark registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and other intellectual property rights necessary
to conduct their respective businesses as now conducted, except where the
failure to own or possess such rights would not have, either individually or in
the aggregate, a Material Adverse Effect. Except as set forth on Schedule 3(o),
none of the Company's trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets or other
intellectual property rights have expired or terminated, or are expected to
expire or terminate within two years from the date of this Agreement, except
where such expiration or termination would not have, either individually or in
the aggregate, a Material Adverse Effect. The Company and its Subsidiaries do
not have any knowledge of any infringement by the Company or its Subsidiaries of
trademarks, trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, inventions, licenses, trade

                                      -10-
<PAGE>

secrets or other intellectual property rights of others, or of any development
of similar or identical trade secrets or technical information by others. Except
as set forth on Schedule 3(o), there is no claim, action or proceeding being
made or brought against, or to the Company's knowledge, being threatened
against, the Company or its Subsidiaries regarding its trademarks, trade names,
service marks, service mark registrations, service names, patents, patent
rights, copyrights, inventions, licenses, trade secrets, or infringement of
other intellectual property rights, except where such claim, action, proceeding
or infringement would not have, either individually or in the aggregate, a
Material Adverse Effect. The Company and its Subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing. The
Company and its Subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of all of their intellectual properties.

                  p. Environmental Laws. The Company and its Subsidiaries (i)
are in compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where, in each of the
three foregoing cases, the failure to so comply would not have, either
individually or in the aggregate, a Material Adverse Effect.

                  q. Title. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in Schedule 3(q) or such
as do not materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company and any of
its Subsidiaries. Any real property and facilities held under lease by the
Company and any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and facilities by the
Company and its Subsidiaries.

                  r. Insurance. The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been
refused any insurance coverage sought or applied for and neither the Company nor
any such Subsidiary has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect, taken as a
whole.

                  s. Regulatory Permits. Except for certificates, authorizations
or permits, the absence of which would not have, either individually or in the
aggregate, a Material Adverse Effect, the Company and its Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective

                                      -11-
<PAGE>

businesses, and neither the Company nor any such Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.

                  t. Internal Accounting Controls. The Company and each of its
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
and liability accountability, (iii) access to assets or incurrence of liability
is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets and liabilities is
compared with the existing assets and liabilities at reasonable intervals and
appropriate action is taken with respect to any differences.

                  u. No Materially Adverse Contracts, Etc. Neither the Company
nor any of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company's officers has or is expected in the future to have a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a
party to any contract or agreement which in the judgment of the Company's
officers has or is expected to have a Material Adverse Effect.

                  v. Tax Status. The Company and each of its Subsidiaries (i)
has made or filed all foreign, federal and state income and all other tax
returns, reports and declarations required by any jurisdiction to which it is
subject (unless and only to the extent that the Company and each of its
Subsidiaries has set aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported taxes), (ii) has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and for which the Company has made appropriate
reserves for on its books, and (iii) has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations (referred to in clause
(i) above) apply. There are no unpaid taxes in any material amount claimed to be
due by the taxing authority of any jurisdiction, and the officers of the Company
know of no basis for any such claim.

                  w. Transactions With Affiliates. Except as set forth on
Schedule 3(w), in the Descriptive Memo and in the SEC Documents filed at least
ten (10) days prior to the date hereof, and other than the grant of stock
options disclosed on Schedule 3(c), none of the officers, directors, or
employees of the Company is presently a party to any transaction with the
Company or any of its Subsidiaries (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
such officer, director or employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer, director,
trustee or partner.

                  x. Application of Takeover Protections. The Company and its
board of directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition,

                                      -12-
<PAGE>

business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Articles of
Incorporation or the laws of Texas which is or could become applicable to the
Buyers as a result of the transactions contemplated by this Agreement,
including, without limitation, the Company's issuance of the Securities and the
Buyers' ownership of the Securities.

                  y. Rights Agreement. The Company specifically represents,
warrants and agrees that, in accordance with certain provisions of the Third
Amended and Restated Rights Agreement, dated May 1, 2001 (the "RIGHTS PLAN"),
regardless of the number of Conversion Shares and Warrant Shares of which each
Buyer is deemed the Beneficial Owner (as defined in the Rights Plan), none of
the Buyers is intended to be or will be deemed to be an Acquiring Person within
the meaning of the Rights Plan because of the acquisition of the Securities
(including the Conversion Shares and the Warrant Shares) pursuant to this
Agreement, and the acquisition of the Securities (including the Conversion
Shares and the Warrant Shares) pursuant to this Agreement, shall not, under any
circumstances, trigger a Distribution Date within the meaning of the Rights
Plan; provided, however, that only Securities (including the Conversion Shares
and the Warrant Shares) acquired pursuant to this Agreement shall be deemed
excluded from the number of shares of Common Stock deemed beneficially owned by
each Buyer in determining whether such Buyer is an Acquiring Person within the
meaning of the Rights Plan.

                  z. Foreign Corrupt Practices. Neither the Company, nor any of
its Subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any of its Subsidiaries has, in the course of
its actions for, or on behalf of, the Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or made any unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.

                  aa.. No Other Agreements. The Company has not, directly or
indirectly, made any agreements with any Buyers relating to the terms or
conditions of the transactions contemplated by the Transaction Documents except
as set forth in the Transaction Documents.

         4. COVENANTS.

                  a. Best Efforts. Each party shall use its best efforts to
timely satisfy each of the conditions to be satisfied by it as provided in
Sections 6 and 7 of this Agreement.

                  b. Form D and Blue Sky. The Company agrees to file a Form D
with respect to the Securities as required under Regulation D and to provide a
copy thereof to each Buyer promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for or to qualify the
Securities for sale to the Buyers at the Closing pursuant to this Agreement
under applicable securities or "Blue Sky" laws of the states of the United
States, and shall provide evidence of any such action so taken to the Buyers on
or prior to the Closing Date. The Company shall make all

                                      -13-
<PAGE>

filings and reports relating to the offer and sale of the Securities required
under applicable securities or "Blue Sky" laws of the states of the United
States following the Closing Date.

                  c. Reporting Status. Until the later of (i) the date which is
one year after the date as of which the Investors (as that term is defined in
the Registration Rights Agreement) may sell all of the Conversion Shares and the
Warrant Shares without restriction pursuant to Rule 144(k) promulgated under the
1933 Act (or successor thereto) and (ii) the date on which no Notes or Warrants
remain outstanding (the "REPORTING PERIOD"), the Company shall file all reports
required to be filed with the SEC pursuant to the 1934 Act, and the Company
shall not terminate its status as an issuer required to file reports under the
1934 Act even if the 1934 Act or the rules and regulations thereunder would
otherwise permit such termination.

                  d. Use of Proceeds. The Company will use the proceeds from the
sale of the Notes and the Warrants for substantially the same purposes and in
substantially the same amounts as indicated in Schedule 4(d). The Company shall
not use the proceeds from the sale of the Notes and Warrants in violation of any
applicable law.

                  e. Financial Information. The Company agrees to send the
following to each Investor (as that term is defined in the Registration Rights
Agreement) during the Reporting Period: (i) unless the following are filed with
the SEC through EDGAR and are available to the public through EDGAR, within one
(1) day after the filing thereof with the SEC, a copy of its Annual Reports on
Form 10-K, its Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K
and any registration statements (other than on Form S-8) or amendments filed
pursuant to the 1933 Act; (ii) on the same day as the release thereof, facsimile
copies of all press releases issued by the Company or any of its Subsidiaries;
and (iii) copies of any notices and other information made available or given to
the stockholders of the Company generally, contemporaneously with the making
available or giving thereof to the stockholders.

                  f. Reservation of Shares. The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than 150% of the number of shares of Common Stock needed to
provide for the issuance of the Conversion Shares upon conversion of all
outstanding Notes (without regard to any limitations on conversions) and 100% of
the number of shares of Common Stock needed to provide for the issuance of the
Warrant Shares upon exercise of all outstanding Warrants (without regard to any
limitations on exercises).

                  g. Listing. The Company shall promptly secure the listing of
all of the Registrable Securities (as defined in the Registration Rights
Agreement) upon each national securities exchange and automated quotation
system, if any, upon which shares of Common Stock are then listed (subject to
official notice of issuance) and shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all Registrable Securities from
time to time issuable under the terms of the Transaction Documents. The Company
shall maintain the Common Stock's authorization for quotation on the Nasdaq
National Market ("NASDAQ") or listed on The New York Stock Exchange, Inc.
("NYSE") or The American Stock Exchange, Inc. ("AMEX") (as applicable, the
"PRINCIPAL MARKET"). Neither the Company nor any of its Subsidiaries shall take
any action which would be reasonably expected to result in the delisting or
suspension of the Common

                                      -14-
<PAGE>

Stock from the Principal Market. The Company shall pay all fees and expenses in
connection with satisfying its obligations under this Section 4(g).

                  h. Expenses. Subject to Section 9(k) below, at the Closing,
the Company shall pay an expense allowance of $75,000 (which amount is in
addition to any amounts paid by the Company prior to the date of this Agreement)
to HFTP Investment L.L.C. (a Buyer) or their designee(s) which amount shall be
withheld by such Buyer from its Purchase Price to be paid at the Closing.

                  i. Disclosure of Transactions and Other Material Information.
Before the earlier of (A) the Company's first public announcement of the
transactions contemplated by this Agreement and (B) 8:20 a.m. (New York Time) on
May 30, 2002, the Company shall file a Form 8-K with the SEC (i) describing the
terms of the transactions contemplated by the Transaction Documents and the
occurrence of the Closing, (ii) including as exhibits to such Form 8-K this
Agreement (including the schedules hereto), the Form of Note, the Registration
Rights Agreement and the Form of Warrant, (iii) disclosing all of the Disclosed
Information and (iv) including as exhibits to such Form 8-K the various
financing documents included in the Disclosed Information, in the form required
by the 1934 Act (the "ANNOUNCING FORM 8-K"). By 11:59 p.m. (New York Time) on
the Closing Date, the Company shall issue a press release publicly disclosing
the occurrence of the Closing. From and after the filing of the Announcing Form
8-K with the SEC, no Buyer shall be in possession of any material nonpublic
information received from the Company, any of its Subsidiaries or any of its
respective officers, directors, employees or agents that is not disclosed in the
Announcing Form 8-K. The Company shall not, and shall cause each of its
Subsidiaries and its and each of their respective officers, directors, employees
and agents not to, provide any Buyer with any material nonpublic information
regarding the Company or any of its Subsidiaries from and after the filing of
the Announcing Form 8-K with the SEC without the express written consent of such
Buyer and subject to a confidentiality agreement relating thereto. In the event
of a breach of the foregoing covenant by the Company, any of its Subsidiaries,
or any of its or their respective officers, directors, employees and agents, in
addition to any other remedy provided herein or in the Transaction Documents, a
Buyer shall have the right to make a public disclosure, in the form of a press
release, public advertisement or otherwise, of such material nonpublic
information without the prior approval by the Company, its Subsidiaries, or any
of its or their respective officers, directors, employees or agents. No Buyer
shall have any liability to the Company, its Subsidiaries, or any of its or
their respective officers, directors, employees, shareholders or agents for any
such disclosure. Subject to the foregoing, neither the Company nor any Buyer
shall issue any press releases or any other public statements with respect to
the transactions contemplated hereby or disclosing the name of any Buyer;
provided, however, that the Company shall be entitled, without the prior
approval of any Buyer, to make any press release or other public disclosure with
respect to such transactions (i) in substantial conformity with the Announcing
Form 8-K and contemporaneously therewith and (ii) as is required by applicable
law and regulations (provided that in the case of clause (i) each Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release).

                  j. Transactions With Affiliates. So long as any Note or
Warrants are outstanding the Company shall not, and shall cause each of its
Subsidiaries not to, enter into, amend, modify or supplement any agreement,
transaction, commitment or arrangement with any of its or any Subsidiary's
officers, directors, persons who were officers or directors at any time during
the

                                      -15-
<PAGE>

previous two years, stockholders who beneficially own 5% or more of the Common
Stock, or affiliates of the Company or its Subsidiaries or with any individual
related by blood, marriage or adoption to any such individual or with any entity
in which any such entity or individual owns a 5% or more beneficial interest
(each a "RELATED PARTY"), except for (a) customary employment arrangements and
benefit programs on reasonable terms, (b) any agreement, transaction, commitment
or arrangement on an arms-length basis on terms no less favorable than terms
which would have been obtainable from a person other than such Related Party, or
(c) any agreement, transaction, commitment or arrangement which is approved by a
majority of the disinterested directors of the Company. For purposes hereof, any
director who is also an officer of the Company or any Subsidiary shall not be a
disinterested director with respect to any such agreement, transaction,
commitment or arrangement. "AFFILIATE" for purposes hereof means, with respect
to any person or entity, another person or entity that, directly or indirectly,
(i) has a 5% or more equity interest in that person or entity, (ii) has 5% or
more common ownership with that person or entity, (iii) controls that person or
entity, (iv) is controlled by that person or entity or (v) shares common control
with that person or entity. "CONTROL" or "CONTROLS" for purposes hereof means
that a person or entity has the power, direct or indirect, to conduct or govern
the policies of another person or entity.

                  k. Corporate Existence. So long as any Buyer beneficially owns
any Notes or Warrants, the Company shall maintain its corporate existence and
shall not sell all or substantially all of the Company's assets, except in the
event of a merger or consolidation or sale or transfer of all or substantially
all of the Company's assets, where the surviving or successor entity in such
transaction (i) assumes the Company's obligations hereunder and under the
agreements and instruments entered into in connection herewith and (ii) is a
publicly traded corporation whose common stock is quoted on or listed for
trading on Nasdaq, AMEX or NYSE.

                  l. Pledge of Securities. The Company acknowledges and agrees
that the Securities may be pledged by an Investor (as defined in the
Registration Rights Agreement) in connection with a bona fide margin agreement
or other loan secured by the Securities. The pledge of Securities shall not be
deemed to be a transfer, sale or assignment of the Securities hereunder, and no
Investor effecting any such pledge of Securities shall be required to provide
the Company with any notice thereof or otherwise make any delivery to the
Company pursuant to this Agreement or any other Transaction Document, including
without limitation, Section 2(f) of this Agreement; provided that an Investor
and its pledgee shall be required to comply with the provisions of Section 2(f)
in order to effect a sale, transfer or assignment of Securities to such pledgee.
The Company hereby agrees to execute and deliver such documentation as a pledgee
of the Securities may reasonably request in connection with a pledge of the
Securities to such pledgee by an Investor.

                  m. Conversion Notice Information. At or prior to the Closing,
each Buyer shall deliver to the Company a form of Conversion Notice (as defined
in the Notes) initially to be used to provide the information (other than the
date of conversion, principal amount to be converted, conversion price and
number of shares of Common Stock to be issued) in connection with a Company
Conversion pursuant to Section 6 of the Notes (as such information may be
amended, modified or replaced from time to time as provided below, the
"CONVERSION NOTICE INFORMATION"). At any time following the Closing, such Buyer
may amend, modify or replace its Conversion Notice Information then in effect,
by delivering to the Company a new form of Conversion Notice setting forth the
new Conversion Notice Information to be used for Company Conversions on or prior
to the

                                      -16-
<PAGE>

first Settlement Date (as defined in the Notes) on which such new information is
to be used for Company Conversions. Upon a Buyer's assignment or transfer of any
of its Notes, such Buyer shall cause the transferee thereof to deliver to the
Company such transferee's Conversion Notice Information and agreement to
thereafter be bound by this Section 4(m) as if such transferee were a Buyer.

                  n. Wichita Property Sale. The Company shall use its
commercially reasonable efforts to close on or before June 8, 2002 the sale of
the property at 7309 East 21st Street, in Wichita, Kansas pursuant to the letter
agreement dated April 2, 2002 filed as an exhibit to the Company's Form 8-K
dated March 31, 2002. The Company will use the proceeds of such sale to pay down
amounts outstanding under the Amended Credit Facility (as defined in Section
4(p)).

                  o. Proxy Statement. The Company shall provide each stockholder
entitled to vote at the next meeting of stockholders of the Company, which shall
be not later than 90 days after the Closing Date (the "STOCKHOLDER MEETING
DEADLINE"), a proxy statement, which has been previously reviewed by the Buyers
and a counsel of their choice, soliciting each such stockholder's affirmative
vote at such annual stockholder meeting for approval of the Company's issuance
of all of the Securities as described in this Agreement in accordance with
applicable law and the rules and regulations of the Principal Market (such
affirmative approval being referred to herein as the "STOCKHOLDER APPROVAL"),
and the Company shall use its best efforts to solicit its stockholders' approval
of such issuance of the Securities and to cause the Board of Directors of the
Company to recommend to the stockholders that they approve such proposal. If the
Company fails to hold a meeting of its stockholders by the Stockholder Meeting
Deadline, then, as partial relief (which remedy shall not be exclusive of any
other remedies available at law or in equity), the Company shall pay to each
Buyer an amount in cash equal to the product of (i) the principal amount of the
Notes held by such Buyer multiplied by (ii) .02 multiplied by (iii) the quotient
of (x) the number of days after the Stockholder Meeting Deadline and prior to
the date that a meeting of the Company's stockholders is held, divided by (y)
30. The Company shall make the payments referred to in the immediately preceding
sentence within five days of the earlier of (I) the holding of the meeting of
the Company's stockholders, the failure of which resulted in the requirement to
make such payments, and (II) the last day of each 30-day period beginning on the
Stockholder Meeting Deadline. In the event the Company fails to make such
payments in a timely manner, such payments shall bear interest at the rate of
2.0% per month (pro rated for partial months) until paid in full.

                  p. Amended Credited Facility. So long as any Notes remain
outstanding, (i) the Company shall not draw down any amounts under the Credit
Facility (as defined in Section 7(xiv)(A)), as amended by the Amendment (as
defined in Section 7(xiv)(A)) (the "AMENDED CREDIT FACILITY") (or any
replacements or amendments thereof) until the earlier of (A) such time as the
Registration Statement has been declared effective by the SEC and (B) the
Amended Credit Facility (or any replacements or amendments thereof) shall have
been amended or the Company shall have received a permanent waiver in under the
Amended Credit Facility (or any replacements or amendments thereof), in each
case permitting the Company to make payments, without limitation, in accordance
with the terms of the Notes without violating the terms of the Amended Credit
Facility (or any replacements or amendments thereof), and (ii) after the
Registration Statement has been declared effective by the SEC, the Company shall
not draw down any amounts under the Amended Credit Facility (or any replacements
or amendments thereof) unless (x) at the time of such draw down a Registration
Statement is effective and available for the resale of at least all the
Registrable Securities (as defined in the Registration Rights Agreement) or (y)
the Amended Credit Facility (or any replacements or amendments thereof) shall
have been amended or the Company shall have received a permanent waiver under
the Amended Credit Facility (or any replacements or amendments thereof), in each
case permitting the

                                      -17-
<PAGE>
Company to make payments, without limitation, in accordance with the terms of
the Notes without violating the terms of the Amended Credit Facility (or any
replacements or amendments thereof).

         5. TRANSFER AND DEPOSITARY AGENT INSTRUCTIONS.

                  The Company shall issue irrevocable instructions to its
transfer agent in the form attached hereto as Exhibit D (the "IRREVOCABLE
TRANSFER AGENT INSTRUCTIONS"), and any subsequent transfer agent, to issue
certificates, registered in the name of each Buyer or its respective nominee(s),
for the Conversion Shares and the Warrant Shares in such amounts as specified
from time to time by each Buyer to the Company upon conversion of the Notes or
exercise of the Warrants. Prior to registration of the Conversion Shares and the
Warrant Shares under the 1933 Act, all such certificates shall bear the
restrictive legend specified in Section 2(g). The Company warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 5 and stop transfer instructions to give effect to Section 2(f)
(in the case of the Conversion Shares and the Warrant Shares, prior to
registration of the Conversion Shares and the Warrant Shares under the 1933 Act)
will be given by the Company to its transfer agent and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement and the Registration Rights Agreement.
If a Buyer provides the Company with an opinion of independent counsel, in a
form reasonably acceptable to the Company, to the effect that a public sale,
assignment or transfer of the Securities may be made without registration under
the 1933 Act or the Buyer provides the Company with reasonable assurances that
the Securities can be sold pursuant to Rule 144 without any restriction as to
the number of securities acquired as of a particular date that can then be
immediately sold, the Company shall permit the transfer, and, in the case of the
Conversion Shares and the Warrant Shares, promptly instruct its transfer agent
to issue one or more certificates in such name and in such denominations as
specified by such Buyer and without any restrictive legend. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Buyers by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Section 5 will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 5, that the Buyers shall be entitled,
in addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.

         6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

                  The obligation of the Company to issue and sell the Notes and
the Warrants to each Buyer at the Closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion by providing each Buyer with prior
written notice thereof:

                           (i) Such Buyer shall have executed each of the
         Transaction Documents to which it is a party and delivered the same to
         the Company.

                                      -18-
<PAGE>

                           (ii) Such Buyer shall have delivered to the Company
         the Purchase Price (less in the case of HFTP Investment L.L.C., the
         amounts withheld pursuant to Section 4(h)) for the Notes and the
         Warrants being purchased by such Buyer at the Closing by wire transfer
         of immediately available funds pursuant to the wire instructions
         provided by the Company.

                           (iii) The representations and warranties of such
         Buyer shall be true and correct as of the date when made and as of the
         Closing Date as though made at that time (except for representations
         and warranties that speak as of a specific date), and such Buyer shall
         have performed, satisfied and complied with the covenants, agreements
         and conditions required by the Transaction Documents to be performed,
         satisfied or complied with by such Buyer at or prior to the Closing
         Date.

                           (iv) Such Buyer shall have delivered to the Company
         such Buyer's initial Conversion Notice Information.

                           (v) Such Buyer shall have executed and delivered to
         the Company a receipt acknowledging such Buyer's receipt of a Note, in
         the original principal amount set forth opposite such Buyer's name on
         the Schedule of Buyers, and the related Warrant for the number of
         Warrant Shares determined in accordance with Section 1(a).

         7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.

                  The obligation of each Buyer hereunder to purchase the Notes
and the Warrants from the Company at the Closing is subject to the satisfaction,
at or before the Closing Date, of each of the following conditions, provided
that these conditions are for each Buyer's sole benefit and may be waived by
such Buyer at any time in its sole discretion by providing the Company with
prior written notice thereof:

                           (i) The Company shall have executed each of the
         Transaction Documents and delivered the same to such Buyer.

                           (ii) The Common Stock (x) shall be designated for
         quotation or listed on the Principal Market and (y) shall not have been
         suspended by the SEC or the Principal Market from trading on the
         Principal Market nor shall suspension by the SEC or the Principal
         Market have been threatened either (A) in writing by the SEC or the
         Principal Market or (B) by falling below the minimum listing
         maintenance requirements of the Principal Market.

                           (iii) The representations and warranties of the
         Company shall be true and correct as of the date when made and as of
         the Closing Date as though made at that time (except for
         representations and warranties that speak as of a specific date) and
         the Company shall have performed, satisfied and complied with the
         covenants, agreements and conditions required by the Transaction
         Documents to be performed, satisfied or complied with by the Company at
         or prior to the Closing Date. Such Buyer shall have received a
         certificate, executed by either the Chief Executive Officer or the
         Chief Financial Officer of the Company, dated as of the Closing Date,
         to the foregoing effect and as to such other matters

                                      -19-
<PAGE>

         as may be reasonably requested by such Buyer, including, without
         limitation, an update as of the Closing Date of the representation
         contained in Section 3(c) above.

                           (iv) Such Buyer shall have received the opinion of
         Fulbright & Jaworski L.L.P. and the opinion of Thompson & Knight LLP,
         dated as of the Closing Date, in form, scope and substance reasonably
         satisfactory to such Buyer and in substantially the form of Exhibit E-1
         and Exhibit E-2 attached hereto, respectively.

                           (v) The Company shall have executed and delivered to
         such Buyer the Notes Certificates and the Warrants (in such
         denominations as such Buyer shall request) for the Notes and the
         Warrants being purchased by such Buyer at the Closing.

                           (vi) The Board of Directors of the Company shall have
         adopted resolutions consistent with Section 3(b) above and in a form
         reasonably acceptable to such Buyer (the "RESOLUTIONS").

                           (vii) As of the Closing Date, the Company shall have
         reserved out of its authorized and unissued Common Stock, solely for
         the purpose of effecting the conversion of the Notes and the exercise
         of the Warrants, at least 5,400,000 shares of Common Stock.

                           (viii) The Irrevocable Transfer Agent Instructions
         shall have been delivered to and acknowledged in writing by the
         Company's transfer agent and the Company shall deliver a copy thereof
         to such Buyer.

                           (ix) The Company shall have delivered to such Buyer a
         certificate evidencing the incorporation and good standing of the
         Company in the State of Texas issued by the Secretary of State of the
         State of Texas as of a date within ten (10) days of the Closing Date.

                           (x) The Company shall have delivered to such Buyer a
         secretary's certificate, dated as of the Closing Date, certifying as to
         (A) the Resolutions, (B) the Articles of Incorporation, certified as of
         December 5, 2001, by the Secretary of State of the State of Texas and
         (C) the Bylaws, each as in effect at the Closing.

                           (xi) The Company shall have made all filings under
         all applicable federal and state securities laws necessary to
         consummate the issuance of the Securities pursuant to this Agreement in
         compliance with such laws.

                           (xii) The Company shall have delivered to such Buyer
         such other documents relating to the transactions contemplated by this
         Agreement as such Buyer or its counsel may reasonably request.

                           (xiii) The Company shall have executed and delivered
         to such Buyer a cross-receipt acknowledging the Company's receipt of
         the full Purchase Price for the Notes and the Warrants purchased by
         such Buyer at the Closing as determined in accordance with Section
         1(a).

                                      -20-
<PAGE>

                           (xiv) Prior to the Closing, the Company shall have
                  both:

                                    (A) received the Consent, Waiver and Third
                  Amendment to Credit Agreement executed, in substantially the
                  form provided to such Buyer prior to the Closing, (the
                  "AMENDMENT") by sufficient lenders to be effective under the
                  Company's Credit Agreement dated as of June 1, 1999, as
                  amended (the "CREDIT FACILITY");

                                    (B) closed the loan to the Company by Beal
                  Bank, S.S.B. to be secured by a deed of trust on the Company's
                  headquarters at 17811 Waterview Parkway in Dallas, Texas as
                  described in the Commitment Letter dated April 10, 2002 filed
                  as an exhibit to the Company's Form 8-K dated March 31, 2002
                  (the "MORTGAGE");

                                    (C) paid at least $14,000,000 of the
                  proceeds of the Mortgage to the lenders under the Credit
                  Facility to pay down that amount of the outstanding borrowings
                  under the Credit Facility.

                           (xv) The Company shall have delivered to such Buyer a
         copy of the Amendment.

                           (xvi) The Company shall have delivered to such Buyer
         a copy of an acknowledgment or receipt from the lenders under the
         Credit Facility of at least $14,000,000.

                           (xvii) The Company shall have delivered to such Buyer
         a letter from the Company's transfer agent certifying the number of
         shares of Common Stock outstanding as of a date within five (5) days of
         the applicable Additional Closing Date.

                           (xviii) The Company shall have delivered wire
         transfer instructions to such Buyer, which instructions are consistent
         with Section 4(d).

                           (xix) Before 8:20 a.m. (New York Time) on May 30,
         2002, the Company

                                    (A) shall have filed with the SEC through
               EDGAR (I) the Announcing Form 8-K, and (B) the Company's Annual
               Report on Form 10-K for the year ended February 28, 2002 with a
               report of independent auditors letter to the audited financial
               statements therein which does not include any "going concern"
               statement; and

                                    (B) shall have issued a press release,
               previously reviewed by or on behalf of such Buyer disclosing the
               transactions contemplated by this Agreement.

         8. INDEMNIFICATION. In consideration of each Buyer's execution and
delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company's other obligations under the Transaction
Documents, the Company shall defend, protect, indemnify and hold harmless each
Buyer and each other holder of the Securities and all of their stockholders,
officers, directors, employees and direct or indirect investors and any of the
foregoing persons' agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the "INDEMNITEES") from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of
whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and disbursements
(the "INDEMNIFIED LIABILITIES"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby,
(b) any breach of any covenant, agreement or obligation of the Company contained
in the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (c) any cause of action, suit or claim brought
or made against such Indemnitee and arising out of or resulting from the
execution, delivery, performance or enforcement of the Transaction Documents in
accordance with the terms thereof or

                                      -21-
<PAGE>

any other certificate, instrument or document contemplated hereby or thereby in
accordance with the terms thereof or (d) any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds of the
issuance of the Securities. To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. Except as otherwise set
forth herein, the mechanics and procedures with respect to the rights and
obligations under this Section 8 shall be the same as those set forth in
Sections 6(a) and (d) of the Registration Rights Agreement, including, without
limitation, those procedures with respect to the settlement of claims and the
Company's rights to assume the defense of claims.

         9. GOVERNING LAW; MISCELLANEOUS.

                  a. Governing Law; Jurisdiction; Jury Trial. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York. Each party hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, borough of Manhattan,
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

                  b. Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.

                  c. Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.

                  d. Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or

                                      -22-
<PAGE>

enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.

                  e. Entire Agreement; Amendments. This Agreement supersedes all
other prior oral or written agreements between each Buyer, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and the Buyers which purchased a majority of the aggregate principal
amount of the Notes on the Closing Date, or if prior to the Closing, by the
Buyers listed on the Schedule of Buyers as being obligated to purchase a
majority of the aggregate principal amount of the Notes. Any such amendment
shall bind all holders of Notes. No such amendment shall be effective to the
extent that it applies to less than all of the holders of the Notes or Warrants
then outstanding. No consideration shall be offered or paid to any person to
amend or consent to a waiver or modification of any provision of any of the
Transaction Documents unless the same consideration also is offered to all of
the parties to the Transaction Documents or holders of Notes, as the case may
be.

                  f. Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one (1) Business Day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:

         If to the Company:

                  InterVoice-Brite, Inc.
                  17811 Waterview Parkway
                  Dallas, Texas 75252
                  Telephone:  972-454-8000
                  Facsimile:  972-454-8781
                  Attention:  Chief Financial Officer

         With a copy to:

                  Fulbright & Jaworski L.L.P.
                  2200 Ross Avenue, Suite 2800
                  Dallas, Texas 75201-2784
                  Telephone:  214-855-8000
                  Facsimile:  214-855-8200
                  Attention:  David E. Morrison, Esq.

                                      -23-
<PAGE>

         If to the Transfer Agent:

                  Computershare Trust Co., Inc.
                  12039 West Alameda Parkway
                  Suite Z-2
                  Lakewood, Colorado 80228
                  Telephone:  303-262-0600
                  Facsimile:  303-262-0604
                  Attention:  Theresa Henshaw

If to a Buyer, to it at the address and facsimile number set forth on the
Schedule of Buyers, with copies to such Buyer's representatives as set forth on
the Schedule of Buyers, or, in the case of a Buyer or any other party named
above, at such other address and/or facsimile number and/or to the attention of
such other person as the recipient party has specified by written notice given
to each other party five (5) days prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by a nationally recognized overnight delivery service shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from a
nationally recognized overnight delivery service in accordance with clause (i),
(ii) or (iii) above, respectively.

                  g. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Notes. The Company shall not assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the holders of a majority of the aggregate principal of the Notes
then outstanding, including by merger or consolidation, except pursuant to a
Change of Control (as defined in Section 4(b) of the Notes) with respect to
which the Company is in compliance with Section 4(k) of the Agreement, Section 4
of the Notes and Section 9 of the Warrants. A Buyer may assign some or all of
its rights hereunder without the consent of the Company, provided, however, that
any such assignment shall not release such Buyer from its obligations hereunder
unless such obligations are assumed by such assignee and the Company has
consented to such assignment and assumption, which consent shall not be
unreasonably withheld. Notwithstanding anything to the contrary contained in the
Transaction Documents, the Buyers shall be entitled to pledge the Securities in
connection with a bona fide margin account or other loan or financing
arrangement secured by the Securities.

                  h. No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.

                  i. Survival. Unless this Agreement is terminated under Section
9(k), the representations and warranties of the Company and the Buyers contained
in Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5 and
9, and the indemnification provisions set forth in Section 8, shall survive the
Closings. Each Buyer shall be responsible only for its own representations,
warranties, agreements and covenants hereunder.

                                      -24-
<PAGE>

                  j. Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

                  k. Termination. In the event that the Closing shall not have
occurred with respect to a Buyer on or before five (5) Business Days from the
date hereof due to the Company's or such Buyer's failure to satisfy the
conditions set forth in Sections 6 and 7 above (and the nonbreaching party's
failure to waive such unsatisfied condition(s)), the nonbreaching party shall
have the option to terminate this Agreement with respect to such breaching party
at the close of business on such date without liability of any party to any
other party; provided, however, that if this Agreement is terminated pursuant to
this Section 9(k), the Company shall remain obligated to reimburse any
nonbreaching Buyers for the expenses described in Section 4(h) above.

                  l. Placement Agent. The Company acknowledges that it has
engaged William Blair & Company as placement agent in connection with the sale
of the Notes and the related Warrants, which placement agent may have formally
or informally engaged other agents on its behalf. The Company shall be
responsible for the payment of any placement agent's fees or broker's
commissions relating to or arising out of the transactions contemplated hereby.
The Company shall pay, and hold each Buyer harmless against, any liability, loss
or expense (including, without limitation, attorneys' fees and out of pocket
expenses) arising in connection with any such claim.

                  m. No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.

                  n. Remedies. Each Buyer and each holder of the Securities
shall have all rights and remedies set forth in the Transaction Documents and
all rights and remedies which such holders have been granted at any time under
any other agreement or contract and all of the rights which such holders have
under any law. Any person having any rights under any provision of this
Agreement shall be entitled to enforce such rights specifically (without posting
a bond or other security), to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by law.

                  o. Payment Set Aside. To the extent that the Company makes a
payment or payments to the Buyers hereunder or pursuant to the Registration
Rights Agreement, the Notes or Warrants or the Buyers enforce or exercise their
rights hereunder or thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
by a trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.

                                   * * * * * *

                                      -25-
<PAGE>

         IN WITNESS WHEREOF, the Buyers and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.

COMPANY:                               BUYERS:

INTERVOICE-BRITE, INC.                 HFTP INVESTMENT L.L.C.
                                       By: Promethean Asset Management L.L.C.
                                           Its: Investment Manager
By:
    -----------------------------
    Name:
          -----------------------
    Title:                             By:
           ----------------------          -------------------------------------
                                           Name:
                                           Title:

                                       GAIA OFFSHORE MASTER FUND,
                                       LTD.
                                       By: Promethean Asset Management L.L.C.
                                           Its: Investment Manager

                                       By:
                                           -------------------------------------
                                           Name:
                                           Title:

                                       CAERUS FUND LTD.
                                       By: Promethean Asset Management L.L.C.
                                           Its: Investment Manager

                                       By:
                                           -------------------------------------
                                           Name:
                                           Title:

<PAGE>

                               SCHEDULE OF BUYERS

<Table>
<Caption>
                                                                                  INITIAL
                                                                                 PRINCIPAL
                                                INVESTOR ADDRESS                 AMOUNT OF         BUYER'S LEGAL REPRESENTATIVES'
         INVESTOR'S NAME                      AND FACSIMILE NUMBER                 NOTES            ADDRESS AND FACSIMILE NUMBER
         ---------------                      --------------------               ---------         ------------------------------
<S>                                  <C>                                        <C>             <C>
HFTP Investment L.L.C.               c/o Promethean Asset Management L.L.C.     $4,500,000      Promethean Investment Group, L.L.C.
                                     750 Lexington Avenue, 22nd Floor                           750 Lexington Ave., 22nd Floor
                                     New York, New York 10022                                   New York, New York 10022
                                     Attention: David M. Kittay                                 Attention: David M. Kittay
                                                Greg Carney                                                Greg Carney
                                     Telephone: (212) 702-5200                                  Telephone: 212-702-5200
                                     Facsimile: (212) 758-9334                                  Facsimile: 212-758-9334
                                     Residence: New York
                                                                                                Katten Muchin Zavis Rosenman
                                                                                                525 W. Monroe Street
                                                                                                Chicago, Illinois 60661-3693
                                                                                                Attention: Robert J. Brantman, Esq.
                                                                                                Telephone: (312) 902-5200
                                                                                                Facsimile: (312) 902-1061

Gaia Offshore Master Fund, Ltd.      c/o Promethean Asset Management L.L.C.     $4,500,000      Promethean Investment Group, L.L.C.
                                     750 Lexington Avenue, 22nd Floor                           750 Lexington Ave., 22nd Floor
                                     New York, New York 10022                                   New York, New York 10022
                                     Attention: David M. Kittay                                 Attention: David M. Kittay
                                                Greg Carney                                                Greg Carney
                                     Telephone: (212) 702-5200                                  Telephone: 212-702-5200
                                     Facsimile: (212) 758-9334                                  Facsimile: 212-758-9334
                                     Residence: New York
                                                                                                Katten Muchin Zavis Rosenman
                                                                                                525 W. Monroe Street
                                                                                                Chicago, Illinois 60661-3693
                                                                                                Attention: Robert J. Brantman, Esq.
                                                                                                Telephone: (312) 902-5200
                                                                                                Facsimile: (312) 902-1061

Caerus Fund Ltd.                     c/o Promethean Asset Management L.L.C.     $1,000,000      Promethean Investment Group, L.L.C.
                                     750 Lexington Avenue, 22nd Floor                           750 Lexington Ave., 22nd Floor
                                     New York, New York 10022                                   New York, New York 10022
                                     Attention: David M. Kittay                                 Attention: David M. Kittay
                                                Greg Carney                                                Greg Carney
                                     Telephone: (212) 702-5200                                  Telephone: 212-702-5200
                                     Facsimile: (212) 758-9334                                  Facsimile: 212-758-9334
                                     Residence: New York
                                                                                                Katten Muchin Zavis Rosenman
                                                                                                525 W. Monroe Street
                                                                                                Chicago, Illinois 60661-3693
                                                                                                Attention: Robert J. Brantman, Esq.
                                                                                                Telephone: (312) 902-5200
                                                                                                Facsimile: (312) 902-1061
</Table>

<PAGE>

                                    SCHEDULES

Schedule 2(d)     Certain Information
Schedule 3(a)     Subsidiaries
Schedule 3(c)     Capitalization
Schedule 3(e)     Conflicts
Schedule 3(f)     SEC Documents
Schedule 3(g)     Material Changes
Schedule 3(o)     Intellectual Property
Schedule 3(q)     Liens
Schedule 3(w)     Certain Transactions
Schedule 4(d)     Use of Proceeds

                                    EXHIBITS

Exhibit A         Form of Note
Exhibit B         Form of Warrant
Exhibit C         Form of Registration Rights Agreement
Exhibit D         Form of Irrevocable Transfer Agent Instructions
Exhibit E-1       Form of Company Counsel Opinion (Fulbright & Jaworski L.L.P.)
Exhibit E-2       Form of Company Counsel Opinion (Thompson & Knight LLP)

<PAGE>
                                  Schedule 2(d)

        See attached Quarter to May 24, 2002 Working Capital and Revenue.

<PAGE>

QUARTER TO DATE WORKING CAPITAL AND REVENUE
--------------------------------------------------------------------------------
$ IN THOUSANDS                                                CONFIDENTIAL

WORKING CAPITAL

<Table>
<Caption>
                              BALANCES AS OF:
                        02/28/2002        04/30/2002
                        ----------        ----------
<S>                     <C>               <C>
Cash                    $ 17,646          $  11,637
Accounts Receivable       40,783             37,676
Inventory                 27,524             26,911
Accounts Payable          22,661             16,940
Deferred Income           24,426             23,631
</Table>

<Table>
<Caption>
                                                                   PERIOD FROM 3/1/02
                                                                       TO 5/24/02
                                                                   ------------------
<S>                                                                <C>
REVENUE CURRENT QUARTER TO DATE

Recognized Revenue
    NSD                                                                  $   9,253
    ESD                                                                     16,383
                                                                         ---------
                                                                            25,636

Booked Revenue
    NSD                                                                  $   7,344
    ESD                                                                      2,601
                                                                         ---------
                                                                             9,945

Recognized and Booked Revenue for period from 3/1/02 to 5/24/02          $  35,581

Revenue to be Booked between 5/25/02 and 5/31/02
                                                                         ---------
Total Revenue for the Quarter ended May 31, 2002
                                                                         =========
</Table>

                                                                    CONFIDENTIAL
<PAGE>

                                  Schedule 3(a)

                                  Subsidiaries

<Table>
<Caption>
       Subsidiary                                        State of Organization
       ----------                                        ---------------------
<S>                                                      <C>
InterVoice GP, Inc.                                              Nevada

InterVoice LP, Inc.                                              Nevada

InterVoice Limited Partnership                                   Nevada

InterVoice do Brasil Ltda                                        Brazil

Brite Voice Systems, Inc.                                        Nevada

Intervoice-Brite Limited                                        England

Intervoice-Brite GmbH                                           Germany

Brite Holding AG                                              Switzerland

Brite Voice Systems AG                                        Switzerland

Intervoice-Brite S.p.A.                                          Italy

InterVoice-Brite Pte. Limited                                  Singapore

Intervoice-Brite (Proprietary) Limited                        South Africa

BVSI, Inc.                                                      Delaware

BVS Investco, Inc.                                              Delaware
</Table>
<PAGE>

                                  Schedule 3(c)

                                 Capitalization

(B)      Debt Instruments

         The Company and its wholly owned subsidiary, Brite Voice Systems, Inc.,
are parties to a Credit Agreement dated June 1, 1999 with the lenders thereto
(as amended, the "Credit Facility"). Term loans and revolving loans under the
Credit Facility totaled approximately $135 million at the inception of the
Credit Facility and were paid down to approximately $30 million as of May 28,
2002.

         The term loans under the Credit Facility are subject to quarterly
principal amortization. In addition, the Credit Facility is subject to certain
mandatory prepayments and commitment reductions tied to the sale of assets, the
issuance of debt, the issuance of equity and the generation of excess cash flow
for a fiscal year. Certain of these prepayment and commitment reduction
requirements are limited by the satisfaction of certain financial ratios.

         The Credit Facility contains certain representations and warranties,
certain negative and affirmative covenants and certain conditions and events of
default which are customarily required for similar financing. Such covenants
include, among others, restrictions and limitations on liens and negative
pledges; limitations on mergers, consolidations and sales of assets; limitations
on incurrence of debt; limitations on dividends, stock redemptions and the
redemption and/or prepayment of other debt; limitations on investments and
acquisitions (other than the acquisition of the Company); and limitations on
capital expenditures. Key financial covenants based on the Company's
consolidated financial statements include minimum net worth, maximum leverage
ratio and minimum fixed charges coverage ratio. The Credit Facility also
requires a first priority perfected security interest in (i) all of the capital
stock of each of the domestic subsidiaries of the Company, and 65% of the
capital stock of each first tier foreign subsidiary of the Company, which
capital stock shall not be subject to any other lien or encumbrance and (ii)
subject to permitted liens, all other present and future material assets and
properties of the Company and its material domestic subsidiaries (including,
without limitation, accounts receivable and proceeds, inventory, real property,
machinery and equipment, contracts, trademarks, copyrights, patents, license
rights and general intangibles).

         The lenders had previously entered into forbearance agreements dated
March 7, 2002 and March 31, 2002, pursuant to which the lenders granted a
temporary waiver of a default under one of four financial covenants (fixed
charge coverage ratio) through May 31, 2002.

         The Company and lenders entered into commitment letters to enter into a
Consent, Waiver, and Third Amendment to Credit Agreement (the "Third Amendment")
to be effective as of May 29, 2002, pursuant to which the lenders will waive the
default under a financial covenant requiring the Company to maintain a minimum
fixed charge coverage ratio. The effectiveness of the Third Amendment is
conditioned on funding under the Convertible Notes.

         The Third Amendment will amend the fixed charge coverage ratio covenant
and a covenant to maintain a minimum leverage ratio (as described in the Credit
Facility) to reflect the Company's current capital structure and liquidity
requirements. The Third Amendment also will

<PAGE>

add a covenant by the Company to maintain a minimum level of EBITDA (as defined
in the Credit Facility).

         Pursuant to the Third Amendment, proceeds from the mortgage of the
Company's office facilities in Dallas, Texas, and proceeds from the purchase of
Convertible Notes, will be applied to repay all outstanding indebtedness under
the term loan, with the remainder applied to the revolving loans. Under the
amended Credit Facility, the lenders will agree to continue making revolving
loans to the Company up to a revised maximum amount of $12 million through June
1, 2003. The maximum amount of revolving loans that may be outstanding will also
be limited by a borrowing base based upon levels of eligible accounts receivable
and eligible inventory securing the revolving loans.

         The Company will not be permitted to have outstanding loans under the
Credit Facility at any time the Company makes principal payments on the
Convertible Notes in cash. Accordingly, the Company will have to repay the
outstanding revolving loans under the Credit Facility before any installment of
principal on the Convertible Notes is paid in cash. At that point, at the
Company's option, installments on the Convertible Notes will be repaid in cash
or by a partial conversion of such notes through the Company's issuance of
common stock. The Credit Facility is cross-defaulted with the Convertible Notes
such that a default or the occurrence of certain other events under the
Convertible Notes will be a default under the Credit Facility.

         The amended Credit Facility will provide that interest would accrue at
a base rate equal to an applicable margin plus the higher of (i) the prime rate
or (ii) the federal funds rate. The applicable margin will be determined in
accordance with a schedule to the Credit Facility and by reference to a ratio of
the Company's funded debt to EBITDA. The Third Amendment will delete provisions
that permit the Company to elect an interest rate equal to the London Interbank
Offer Rate ("LIBOR") plus the applicable margin.

Mortgage Loan

         Effective May 29, 2002, the Company executed and delivered a deed of
trust and promissory note in favor of Beal Bank, S.S.B., for a mortgage loan of
$14 million secured by a first lien on the Company's facilities in Dallas,
Texas. The mortgage loan is a three year balloon note, bearing interest, payable
monthly, at the greater of 10.5% or the prime rate plus 2.0%. Proceeds from the
mortgage will be applied to reduce loans under the Credit Facility. The lenders
under the Credit Facility entered into an agreement with Beal Bank, S.S.B.
subordinating their lien on the Dallas, Texas facilities for purposes of the
mortgage loan.

(C)      1990 Employee Stock Option Plan

         A stock option plan is in effect under which shares of common stock
were authorized for issuance by the Compensation Committee of the Board of
Directors as stock options to key employees. Option prices per share are the
fair market value per share of stock, based on the closing per share price on
the date of grant. The Company has granted options at various dates with terms
under which the options generally become exercisable at the rate of 20%, 25% or
33% per year. Options becoming exercisable at 33% per year expire six or ten
years after the date of grant. Options becoming exercisable at 20% or 25% per
year expire ten years after the date of grant.
<PAGE>
<Table>
<Caption>
                                                              WEIGHTED AVERAGE
                                                               EXERCISE PRICE
                                                SHARES           PER SHARE
                                              ----------      ----------------
<S>                                           <C>             <C>
         Balance at February 28, 1999          2,836,818           $6.03
           Granted                                    --           $  --
           Exercised                            (541,202)          $5.08
           Forfeited                             (87,851)          $4.84
                                              ----------           -----
         Balance at February 29, 2000          2,207,765           $6.31
           Granted                               253,000           $7.41
           Exercised                            (391,492)          $4.97
           Forfeited                            (145,971)          $5.17
                                              ----------           -----
         Balance at February 28, 2001          1,923,302           $6.82
           Granted                                    --           $  --
           Exercised                            (229,184)          $5.05
           Forfeited                             (22,234)          $6.65
                                              ----------           -----
         Balance at February 28, 2002          1,671,884           $7.06
                                              ==========           =====
</Table>

         A total of 1,541,634 employee options were exercisable at an average
price of $7.21 at February 28, 2002.

1998 Employee Non-Qualified Plan

         During fiscal 1999, the Company adopted a stock option plan under which
shares of common stock may be authorized for issuance by the Compensation
Committee of the Board of Directors as non-qualified stock options to key
employees. Option prices per share are the fair market value per share of stock,
based on the closing price per share on the date of grant. The Company has
granted options at various dates with terms under which the options become
exercisable at a rate of 25% or 33% per year and are exercisable for a period of
ten years after the date of grant.

<Table>
<Caption>
                                                               WEIGHTED AVERAGE
                                                                EXERCISE PRICE
                                                    SHARES         PER SHARE
                                                   --------    ----------------
<S>                                                <C>         <C>
         Balance at February 28, 1999               979,500         $ 6.28
           Granted                                   40,000         $10.80
           Exercised                               (113,742)        $ 6.18
           Forfeited                                (60,834)        $ 9.02
                                                   --------         ------
         Balance at February 29, 2000               844,924         $ 6.24
           Granted                                       --         $   --
           Exercised                                (60,418)        $ 4.98
           Forfeited                                (67,501)        $ 6.53
                                                   --------         ------
         Balance at February 28, 2001               717,005         $ 6.47
           Granted                                       --         $   --
           Exercised                               (328,671)        $ 7.03
           Forfeited                                (12,916)        $ 9.27
                                                   --------         ------
         Balance at February 28, 2002               375,418         $ 5.83
                                                   ========         ------
</Table>
<PAGE>

     A total of 322,168 employee options were exercisable at an average price of
$5.61 at February 28, 2002.

1999 Non-Qualified Plan

     During fiscal 2000, the Company adopted a stock option plan under which
shares of common stock may be authorized for issuance by the Compensation
Committee of the Board of Directors as non-qualified stock options to key
employees and non-employee members of the Company's Board of Directors. Option
prices per share are the fair market value per share of stock, based on the
average of the high and low price per share on the date of grant. The Company
has granted options to employees at various dates with terms under which the
options become exercisable at a rate of 25% or 33% per year and are exercisable
for a period of ten years after the date of grant. In addition, the Company has
granted options to non-employee directors at various dates with terms under
which the options become exercisable within the period specified in the
optionee's agreement and are exercisable for a period of ten years from the date
of grant.

<PAGE>
<Table>
<Caption>
                                                               WEIGHTED AVERAGE
                                                                EXERCISE PRICE
                                                    SHARES         PER SHARE
                                                 ----------    ----------------
<S>                                              <C>           <C>
         Balance at February 29, 2000             1,503,000        $14.88
           Granted                                2,458,000        $ 7.92
           Exercised                                (10,000)       $ 6.88
           Forfeited                               (541,063)       $10.99
                                                 ----------        ------
         Balance at February 28, 2001             3,409,937        $10.50
           Granted                                  259,000        $11.47
           Exercised                               (168,223)       $ 8.27
           Forfeited                               (317,398)       $11.37
                                                 ----------        ------
         Balance at February 28, 2002             3,183,316        $10.62
                                                 ==========        ------
</Table>

     A total of 1,442,297 employee options and 66,000 non-employee options were
exercisable at an average price of $11.57 at February 28, 2002.

1990 Non-Employee Option Plan

     Under the 1990 non-employee stock option plan, nonqualified stock options
were issued to non-employee members of the Company's Board of Directors in
accordance with a formula prescribed by the plan. Option prices per share are
the fair market value per share, based on the closing per share price on the
date of grant. Each option became exercisable within the period specified in the
optionee's agreement and is exercisable for 10 years from the date of grant.

<Table>
<Caption>
                                                               WEIGHTED AVERAGE
                                                                EXERCISE PRICE
                                                    SHARES         PER SHARE
                                                 ----------    ----------------
<S>                                              <C>           <C>
         Balance at February 28, 1999              127,000          $7.51
           Exercised                               (35,000)         $8.63
                                                  --------          -----
         Balance at February 29, 2000               92,000          $7.08
           Exercised                                (8,000)         $4.25
                                                  --------          -----
         Balance at February 28, 2001               84,000          $7.35
           Granted                                      --          $  --
           Exercised                                (8,000)         $6.97
                                                  --------          -----
         Balance at February 28, 2002               76,000          $7.39
                                                                    =====
</Table>

     A total of 76,000 non-employee options were exercisable at an average price
of $7.39 at February 28, 2002.

<PAGE>

Employee Stock Purchase Plan

     The Company has adopted an Employee Stock Purchase Plan under which an
aggregate of 1,000,000 shares of common stock may be issued. Options are granted
to eligible employees in accordance with a formula prescribed by the plan and
are exercised automatically at the end of a one-year payroll deduction period.
As adopted, the payroll deduction periods began either December 1 or June 1 and
ended on the following November 30 and May 31, respectively. During fiscal 2000,
the payroll deduction periods were amended to coincide with a calendar year
cycle, with deductions beginning either January 1 or July 1 and ending on the
following December 31 and June 30, respectively. Option prices are 85% of the
lower of the closing price per share of the Company's common stock on the option
grant date or the option exercise date.

<Table>
<Caption>
                                                             WEIGHTED AVERAGE
                                                              EXERCISE PRICE
                                                    SHARES      PER SHARE
                                                   --------  ----------------
<S>                                                <C>       <C>
         Balance at February 28, 1999 ........       88,468      $ 8.61
           Granted ...........................       90,244      $15.50
           Exercised .........................      (76,608)     $ 8.49
           Forfeited .........................      (11,860)     $ 9.37
                                                   --------      ------
         Balance at February 29, 2000 ........       90,244      $15.50
           Granted ...........................      236,505      $ 5.80
           Exercised .........................      (62,213)     $ 7.93
           Forfeited .........................      (28,031)     $ 7.12
                                                   --------      ------
         Balance at February 28, 2001 ........      236,505      $ 5.80
           Granted ...........................      130,518      $10.29
           Exercised .........................     (194,455)     $ 5.84
           Forfeited .........................      (42,050)     $ 5.62
                                                   --------      ------
         Balance at February 28, 2002 ........      130,518      $10.29
                                                   ========      ======
</Table>

         The grant price per option outstanding is either $9.35 or $10.88.

         As of February 28, 2002, no options were exercisable under this plan.

         As of February 28, 2002, 6,257,440 shares of common stock were reserved
for future issuance under all option plans as follows:

<Table>
<Caption>
                                                SHARES AVAILABLE FOR
                                         -----------------------------------
                                          OUTSTANDING          FUTURE
PLAN NAME                                STOCK OPTIONS   STOCK OPTION GRANTS
                                         -------------   -------------------
<S>                                      <C>             <C>
1990 Employee Stock Option Plan ......     1,671,884                --
1998 Employee Non-Qualified Plan .....       375,418           121,751
1999 Non-Qualified Plan ..............     3,183,316           638,461
1990 Non-Employee Option Plan ........        76,000                --
Employee Stock Option Purchase Plan ..       130,518            60,092
                                           ---------         ---------
      Total ..........................     5,437,136           820,304
                                           =========         =========
</Table>
<PAGE>

Restricted Stock Plan

         During fiscal 1996, the Company adopted a Restricted Stock Plan under
which an aggregate of 1,000,000 shares may be issued. Shares issued to senior
executives are earned based on the achievement of certain targeted share prices
and the continued service of each executive for a two-year period after each
target is met. Shares are available for annual grants to other key executives as
a component of their annual bonuses on the achievement of targeted annual
earnings per share objectives and the completion of an additional two years of
service after the grant. Activity related to restricted stock during fiscal
2002, 2001 and 2000 is as follows:

<PAGE>
<Table>
<Caption>
                                                      SENIOR
                                                    EXECUTIVE
                                                       PLAN
                                                    ---------
<S>                                                 <C>
Balance at February 28, 1999                          46,914
  Granted                                            107,164
                                                     -------
Balance at February 29, 2000                         154,078
  Forfeited                                          (20,000)
  Vested                                             (46,914)
                                                     -------
Balance at February 28, 2001                          87,164
  Vested                                             (87,164)
                                                     -------
Balance at February 28, 2002                              --
</Table>

     The weighted average share price for grants in fiscal year 2000 was $31.75
for the Senior Executive Plan. Shares forfeited in fiscal 2001 had been granted
at a weighted average share price of $34.22. At February 28, 2002, 770,570
shares were reserved for future restricted stock grants.

Other Stock Award Plan Disclosures

     Options Outstanding at February 28, 2002:

<Table>
<Caption>
                                         WEIGHTED         WEIGHTED AVERAGE
                                          AVERAGE       REMAINING CONTRACTUAL
EXERCISE PRICES           SHARES      EXERCISE PRICE        LIFE IN YEARS
---------------          ---------    --------------    ---------------------
<S>                      <C>          <C>               <C>
$  4.50 -  6.73          2,179,612        $  5.47                6.81
$  6.81 - 10.38          1,553,939        $  9.09                7.10
$ 10.56 - 34.41          1,703,585        $ 13.89                7.08
                         ---------
                         5,437,136
                         =========
</Table>
     Options Exercisable at February 28, 2002:

<Table>
<Caption>
                                          WEIGHTED         WEIGHTED AVERAGE
                                           AVERAGE       REMAINING CONTRACTUAL
EXERCISE PRICES            SHARES      EXERCISE PRICE        LIFE IN YEARS
---------------           ---------    --------------    ---------------------
<S>                       <C>          <C>               <C>
$  4.50 -  6.13           1,488,734        $  5.22                6.31
$  6.19 - 14.44           1,126,035        $  9.51                6.17
$ 14.88 - 34.41             833,330        $ 14.94                7.48
                          ---------
                          3,448,099
                          ========
</Table>
<PAGE>

Preferred Share Purchase Rights

         One Preferred Share Purchase Right is attached to each outstanding
share of the Company's common stock. The rights will become exercisable upon the
earlier to occur of ten days after the first public announcement that a person
or group has acquired beneficial ownership of 20 percent or more, or ten days
after a person or group announces a tender offer that would result in beneficial
ownership of 20 percent or more of the Company's outstanding common stock. At
such time as the rights become exercisable, each right will entitle its holder
to purchase one eight-hundredth of a share of Series A Preferred Stock for
$37.50, subject to adjustment. If the Company is acquired in a business
combination transaction while the rights are outstanding, each right will
entitle its holder to purchase for $37.50 common shares of the acquiring company
having a market value of $75. In addition, if a person or group acquires
beneficial ownership of 20 percent or more of the Company's outstanding common
stock, each right will entitle its holder (other than such person or members of
such group) to purchase, for $37.50, a number of shares of the Company's common
stock having a market value of $75. Furthermore, at any time after a person or
group acquires beneficial ownership of 20 percent or more (but less than 50
percent) of the Company's outstanding common stock, the Board of Directors may,
at its option, exchange part or all of the rights (other than rights held by the
acquiring person or group) for shares of the Company's common stock on a
one-for-one basis. At any time prior to the acquisition of such a 20 percent
position, the Company can redeem each right for $0.00125. The Board of Directors
is also authorized to reduce the 20 percent thresholds referred to above to not
less than 10 percent. The rights expire in May, 2011. On May 29, 2002, the
Company executed that certain First Amendment to Third Amended and Restated
Agreement, providing, among other things, as follows:

                  The definition of "Acquiring Person" in Section 1 of the
         Agreement is amended to add the following language at the end of such
         definition:

                  Notwithstanding anything contained in this Agreement to the
                  contrary, neither HFTP Investment L.L.C. ("HFTP"), Gaia
                  Offshore Master Fund, Ltd. ("Gaia") nor Caerus Fund Ltd.
                  ("Caerus," and collectively with HFTP and Gaia, the "Buyers")
                  shall become or be an Acquiring Person by virtue of the
                  acquisition of Common Shares pursuant to the terms of that
                  certain Securities Purchase Agreement (the "Securities
                  Purchase Agreement"), dated as of May 29, 2002, among the
                  Company and the Buyers (including without limitation
                  acquisition of the Notes, the Warrants and any Conversion
                  Shares and Warrant Shares, as those terms are defined in the
                  Securities Purchase Agreement), and the acquisition of Common
                  Shares pursuant to the Securities Purchase Agreement shall
                  not, under any circumstances, trigger a Distribution Date
                  within the meaning of this Agreement; provided, however, that
                  only Common Shares (including the Conversion Shares and
                  Warrant Shares) acquired pursuant to the Securities Purchase
                  Agreement shall be deemed excluded from the number of Common
                  Shares deemed beneficially owned by each Buyer in determining
                  whether such Buyer is an Acquiring Person.

<PAGE>

                                  Schedule 3(e)

                                    Conflicts

         The Company's Credit Facility contains various covenants and conditions
including a requirement that the Company maintain certain key financial ratios.
As of May 28, 2002, although the Company had timely made all payments required
under the Credit Facility, the Company was not in compliance with one of four
required financial ratios (fixed charge coverage ratio), and, accordingly, an
event of default had occurred. The Event of Default will be waived in accordance
with the Third Amendment as discussed in Schedule 3(c).

<PAGE>

                                  Schedule 3(f)

1.       Securities Purchase Agreement, dated as of May 29, 2002, between the
         Company and the Buyers named therein (the "Securities Purchase
         Agreement").

2.       Form of Convertible Notes in an aggregate principal amount of $10
         million, dated as of May 29, 2002, between the Company and the Buyers
         under the Securities Purchase Agreement.

3.       Form of Warrants to acquire 621,303 shares of the Company's common
         stock, dated as of May 29, 2002, between the Company and the Buyers
         under the Securities Purchase Agreement.

4.       Registration Rights Agreement, dated May 29, 2002, between the Company
         and the Buyers under the Securities Purchase Agreement.

5.       Consent, Waiver and Third Amendment to Credit Agreement, dated as of
         May __, 2002, to be executed among the Company, BriteVoice Systems,
         Inc. (successor by merger to InterVoice Acquisition Subsidiary III,
         Inc.), Bank of America, National Association (successor by merger to
         Bank of America National Trust and Savings Association), as Agent, and
         the other Lenders named therein, and associated consent letters.

6.       Promissory Note in the amount of $14.0 million, executed by the Company
         in favor of Beal Bank, S.S.B., in connection with a mortgage loan
         relating to the Company's office facilities in Dallas, Texas.

7.       Deed of Trust, dated May 29, 2002, executed by the Company granting
         Beal Bank, S.S.B. a first lien on the Company's office facilities in
         Dallas, Texas, to secure a $14.0 million mortgage loan.

8.       Second Amended Employment Agreement, dated February 18, 2002, between
         the Company and David W. Brandenburg.

9.       First Amendment to Third Amended Restated Rights Agreement, dated May
         29, 2002 between the Company and the Rights Agent.

<PAGE>

                                  Schedule 3(g)

                                Material Changes

         The Company has entered into a letter agreement with a prospective
purchaser for the sale of the Company's office facilities in Wichita, Kansas for
$2.0 million. The sale is expected to close in May 2002.

<PAGE>

                                  Schedule 3(h)

                                   Litigation

Pending Litigation

         David Barrie, et al., on Behalf of Themselves and All Others Similarly
Situated v. InterVoice-Brite, Inc., et al.; No. 3-01CV1071-D, pending in the
United States District Court, Northern District of Texas, Dallas Division:

         Several related class action lawsuits were filed in the United States
District Court for the Northern District of Texas on behalf of purchasers of
common stock of the Company during the period from October 12, 1999 through June
6, 2000, the "Class Period." Plaintiffs have filed claims under Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934 and the Securities and Exchange
Commission Rule 10b-5 against the Company as well as certain named current and
former officers and directors of the Company on behalf of the alleged class
members. In the complaint, Plaintiffs claim that the Company and the named
current and former officers and directors issued false and misleading statements
during the Class Period concerning the financial condition of the Company, the
results of the Company's merger with Brite and the alleged future business
projections of the Company. Plaintiffs have asserted that these alleged
statements resulted in artificially inflated stock prices.

         The Company believes that it and its officers complied with their
obligations under the securities laws, and intends to defend the lawsuits
vigorously. The Company has responded to these complaints, which have now been
consolidated into one proceeding, by filing a motion to dismiss the complaint in
the consolidated proceeding. The Company has asserted that the complaint lacks
the degree of specificity and factual support to meet the pleading standards
applicable to federal securities litigation. On this basis, the Company has
requested that the United States District Court for the Northern District of
Texas dismiss the complaint in its entirety. Plaintiffs have responded to the
Company's request for dismissal, and the Company is preparing to file a
supplemental brief while awaiting a ruling by the Court. All discovery and other
pleadings not related to the dismissal have been stayed pending resolution of
the Company's request to dismiss the complaint.

Vendor Dispute

         On or about April 26, 2002, Telemac Corporation ("Telemac") commenced
an arbitration proceeding in the Los Angeles, California, office of JAMS against
the Company and InterVoice Brite Ltd. and Brite Voice Systems, Inc., JAMS Case
No. 1220026278, claiming fraud, negligent misrepresentation and breach of
contract in connection with formation of and performance under certain
agreements between the Company, and/or its alleged predecessors, and Telemac,
and seeking compensatory damages of approximately $58 million, punitive damages
and attorneys fees and other costs and fees. Telemac's allegations arise out of
the negotiations and terms of the Amended and Restated Prepaid Phone Processing
Agreement between Telemac and Brite Voice Systems Group, Ltd., dated November 1,
1998, and certain amendments thereto under which Telemac licensed prepaid
wireless software for use in various markets and exploited in the

<PAGE>

United Kingdom under agreement with Cellnet, a provider of wireless telephony in
the United Kingdom.

         The Company and Telemac have selected as arbitrator Justice William A.
Masterson (Ret.) formerly of the California Court of Appeal and the Los Angeles
County Superior Court, although Justice Masterson has not yet agreed to serve.
No date has been set for commencement of the arbitration hearing. The Company's
response to Telemac's allegations is due June 4, 2002. The Company acknowledges
it may owe an immaterial amount for certain software development services
rendered by Telemac. With the exception of these immaterial amounts, the Company
believes that the claims asserted by Telemac are without merit. The Company
further believes it has meritorious defenses and intends to vigorously defend
the arbitration.

Intellectual Property Matters

         From time to time Ronald A. Katz Technology Licensing L.P. ("RAKTL")
has sent letters to certain customers of the Company suggesting that the
customer should negotiate a license agreement to cover the practice of certain
patents owned by RAKTL. In the letters, RAKTL has alleged that certain of its
patents pertain to certain enhanced services offered by network providers,
including prepaid card and wireless services and postpaid card services. RAKTL
has further alleged that certain of its patents pertain to certain call
processing applications, including applications for call centers that route
calls using a called party's DNIS identification number. Certain products
offered by the Company can be programmed and configured to provide enhanced
services to network providers and call processing applications for call centers.
The Company's contracts with customers usually include a qualified obligation to
indemnify and defend customers against claims that products as delivered by the
Company infringe a third party's patent.

         None of the Company's customers have notified the Company that RAKTL
has claimed that any product provided by the Company infringes any claims of any
RAKTL patent. Accordingly, the Company has not been required to defend any
customers against a claim of infringement under a RAKTL patent. The Company has,
however, received letters from customers notifying the Company of the efforts by
RAKTL to license its patent portfolio and reminding the Company of its potential
obligations under the indemnification provisions of the applicable agreements in
the event that a claim is asserted. In response to correspondence from RAKTL, a
few customers have attempted to tender to the Company the defense of its
products under contractual indemnity provisions. The Company has informed these
customers that while it fully intends to honor any contractual indemnity
provisions, it does not believe it currently has any obligation to provide such
a defense because RAKTL does not appear to have made a claim that a Company
product infringes a patent. In the matter of Katz Technology Licensing, LP v.
Verizon Communications Inc., et al, No. 01-CV-5627, pending in U.S. District
Court, Eastern District of Pennsylvania, RAKTL has alleged that Verizon
Communications, Inc. ("Verizon") and certain of its affiliates infringe patents
held by RAKTL. From 1997 until November of 2001 the Company's wholly owned
affiliate, Brite, provided prepaid services to an affiliate of Verizon under a
managed services contract. The affiliate, which is named as a defendant in the
lawsuit, recently notified Brite of the pendency of the lawsuit and referenced
provisions of the managed services contract which require Brite to indemnify the
affiliate against claims that its services infringe a patent. The claims in the
lawsuit make general references to prepaid services and a

<PAGE>

variety of other services offered by Verizon and the affiliate but do not refer
to Brite's products or services. The Company has informed the affiliate that it
can find no basis for an indemnity obligation under the expired contract.

         Even though RAKTL has not alleged that a product provided by the
Company infringes a RAKTL patent, it is always possible that RAKTL may do so. In
the event that a Company product becomes the subject of litigation, a customer
could attempt to invoke the Company's indemnity obligations under the applicable
agreement. As with most sales contracts with suppliers of computerized
equipment, the Company's contractual indemnity obligations are generally limited
to the products and services provided by the Company, and generally require the
customer to allow the Company to have sole control over any litigation and
settlement negotiations with the patent holder. The customers who have received
letters from RAKTL generally have multiple suppliers of the types of products
that might potentially be subject to claims by RAKTL.

         Even though no claims have been made that a specific product offered by
the Company infringes any claim under the RAKTL patent portfolio, the Company
has received opinions from its outside patent counsel that certain products and
applications offered by the Company do not infringe certain claims of the RAKTL
patents. The Company has also received opinions from its outside counsel that
certain claims under the RAKTL patent portfolio are invalid. Furthermore, based
on the reviews by outside counsel, the Company is not aware of any claims under
the RAKTL portfolio that are infringed by the Company's products. If the Company
does become involved in litigation in connection with the RAKTL patent
portfolio, under a contractual indemnity or any other legal theory, the Company
intends to vigorously contest the claims and to assert appropriate defenses. A
number of companies, including some large, well known companies and some
customers of the Company, have already licensed certain rights under the RAKTL
patent portfolio. During November 2000, RAKTL announced license agreements with,
among others, AT&T Corp., Microsoft Corporation and International Business
Machines Corporation.

         In the matter of Aerotel, Ltd. et al, vs. Sprint Corporation, et al,
Cause No. 99-CIV-11091 (SAS), pending in the United States District Court,
Southern District of New York, Aerotel, Ltd., has sued Sprint Corporation
alleging that certain prepaid services offered by Sprint are infringing
Aerotel's U.S. Patent No. 4,706,275 ("275 patent"). According to Sprint, the
suit originally focused on land-line prepaid services not provided by the
Company. As part of an unsuccessful mediation effort, Aerotel also sought
compensation for certain prepaid wireless services provided to Sprint PCS by the
Company. As a result of the mediation effort, Sprint has requested that the
Company provide a defense and indemnification to Aerotel's infringement claims,
to the extent that they pertain to any wireless prepaid services offered by the
Company. In response to this request, the Company has offered to assist Sprint's
counsel in defending against such claims, to the extent they deal with issues
unique to the system and services provided by the Company, and to reimburse
Sprint for the reasonable attorneys' fees associated therewith. The trial court
has stayed the lawsuit pending certain rulings from the United States Patent and
Trademark Office. The Company has received opinions from its outside patent
counsel that the wireless prepaid services offered by the Company do not
infringe the "275 patent". If the Company does become involved in litigation in
connection with the "275 patent", under a contractual indemnity or any other
legal theory, the Company intends to vigorously

<PAGE>

contest any claims that its prepaid wireless services infringe the "275 patent"
and to assert appropriate defenses.

Claims by Certain Employees

         Certain non-executive employees located in foreign countries have
instituted claims before foreign agencies or tribunals for compensation in
connection with the termination of their employment. In the aggregate, these
claims will not have a Material Adverse Effect.

<PAGE>

                                  Schedule 3(o)

                              Intellectual Property

         From time to time Ronald A. Katz Technology Licensing L.P. ("RAKTL")
has sent letters to certain customers of the Company suggesting that the
customer should negotiate a license agreement to cover the practice of certain
patents owned by RAKTL. In the letters, RAKTL has alleged that certain of its
patents pertain to certain enhanced services offered by network providers,
including prepaid card and wireless services and postpaid card services. RAKTL
has further alleged that certain of its patents pertain to certain call
processing applications, including applications for call centers that route
calls using a called party's DNIS identification number. Certain products
offered by the Company can be programmed and configured to provide enhanced
services to network providers and call processing applications for call centers.
The Company's contracts with customers usually include a qualified obligation to
indemnify and defend customers against claims that products as delivered by the
Company infringe a third party's patent.

         None of the Company's customers have notified the Company that RAKTL
has claimed that any product provided by the Company infringes any claims of any
RAKTL patent. Accordingly, the Company has not been required to defend any
customers against a claim of infringement under a RAKTL patent. The Company has,
however, received letters from customers notifying the Company of the efforts by
RAKTL to license its patent portfolio and reminding the Company of its potential
obligations under the indemnification provisions of the applicable agreements in
the event that a claim is asserted. In response to correspondence from RAKTL, a
few customers have attempted to tender to the Company the defense of its
products under contractual indemnity provisions. The Company has informed these
customers that while it fully intends to honor any contractual indemnity
provisions, it does not believe it currently has any obligation to provide such
a defense because RAKTL does not appear to have made a claim that a Company
product infringes a patent. In the matter of Katz Technology Licensing, LP v.
Verizon Communications Inc., et al, No. 01-CV-5627, pending in U.S. District
Court, Eastern District of Pennsylvania, RAKTL has alleged that Verizon
Communications, Inc. ("Verizon") and certain of its affiliates infringe patents
held by RAKTL. From 1997 until November of 2001 the Company's wholly owned
affiliate, Brite, provided prepaid services to an affiliate of Verizon under a
managed services contract. The affiliate, which is named as a defendant in the
lawsuit, recently notified Brite of the pendency of the lawsuit and referenced
provisions of the managed services contract which require Brite to indemnify the
affiliate against claims that its services infringe a patent. The claims in the
lawsuit make general references to prepaid services and a variety of other
services offered by Verizon and the affiliate but do not refer to Brite's
products or services. The Company has informed the affiliate that it can find no
basis for an indemnity obligation under the expired contract.

         Even though RAKTL has not alleged that a product provided by the
Company infringes a RAKTL patent, it is always possible that RAKTL may do so. In
the event that a Company product becomes the subject of litigation, a customer
could attempt to invoke the Company's indemnity obligations under the applicable
agreement. As with most sales contracts with suppliers of computerized
equipment, the Company's contractual indemnity obligations are generally limited
to the products and services provided by the Company, and generally require

<PAGE>

the customer to allow the Company to have sole control over any litigation and
settlement negotiations with the patent holder. The customers who have received
letters from RAKTL generally have multiple suppliers of the types of products
that might potentially be subject to claims by RAKTL.

         Even though no claims have been made that a specific product offered by
the Company infringes any claim under the RAKTL patent portfolio, the Company
has received opinions from its outside patent counsel that certain products and
applications offered by the Company do not infringe certain claims of the RAKTL
patents. The Company has also received opinions from its outside counsel that
certain claims under the RAKTL patent portfolio are invalid. Furthermore, based
on the reviews by outside counsel, the Company is not aware of any claims under
the RAKTL portfolio that are infringed by the Company's products. If the Company
does become involved in litigation in connection with the RAKTL patent
portfolio, under a contractual indemnity or any other legal theory, the Company
intends to vigorously contest the claims and to assert appropriate defenses. A
number of companies, including some large, well known companies and some
customers of the Company, have already licensed certain rights under the RAKTL
patent portfolio. During November 2000, RAKTL announced license agreements with,
among others, AT&T Corp., Microsoft Corporation and International Business
Machines Corporation.

         In the matter of Aerotel, Ltd. et al, vs. Sprint Corporation, et al,
Cause No. 99-CIV-11091 (SAS), pending in the United States District Court,
Southern District of New York, Aerotel, Ltd., has sued Sprint Corporation
alleging that certain prepaid services offered by Sprint are infringing
Aerotel's U.S. Patent No. 4,706,275 ("275 patent"). According to Sprint, the
suit originally focused on land-line prepaid services not provided by the
Company. As part of an unsuccessful mediation effort, Aerotel also sought
compensation for certain prepaid wireless services provided to Sprint PCS by the
Company. As a result of the mediation effort, Sprint has requested that the
Company provide a defense and indemnification to Aerotel's infringement claims,
to the extent that they pertain to any wireless prepaid services offered by the
Company. In response to this request, the Company has offered to assist Sprint's
counsel in defending against such claims, to the extent they deal with issues
unique to the system and services provided by the Company, and to reimburse
Sprint for the reasonable attorneys' fees associated therewith. The trial court
has stayed the lawsuit pending certain rulings from the United States Patent and
Trademark Office. The Company has received opinions from its outside patent
counsel that the wireless prepaid services offered by the Company do not
infringe the "275 patent". If the Company does become involved in litigation in
connection with the "275 patent", under a contractual indemnity or any other
legal theory, the Company intends to vigorously contest any claims that its
prepaid wireless services infringe the "275 patent" and to assert appropriate
defenses.

         From time to time various owners of patents and copyrighted works send
the Company letters alleging that its products do or might infringe upon the
owners' intellectual property rights, and/or suggesting that the Company should
negotiate a license or cross-license agreement with the owner. The Company's
policy is to never knowingly infringe upon any third party's intellectual
property rights. Accordingly, the Company forwards any such allegation or
licensing request to its outside legal counsel for their review and opinion. The
Company generally attempts to resolve any such matter by informing the owner of
its position concerning non-

<PAGE>

infringement or invalidity, and/or, if appropriate, negotiating a license or
cross-license agreement. Even though the Company attempts to resolve these
matters without litigation, it is always possible that the owner of the patent
or copyrighted works will institute litigation. Owners of patent(s) and/or
copyrighted work(s) have previously instituted litigation against the Company
alleging infringement of their intellectual property rights, although no such
litigation is currently pending against the Company. As noted above, the Company
currently has a portfolio of 57 patents, and it has applied for and will
continue to apply for and receive a number of additional patents to reflect its
technological innovations. The Company believes that its patent portfolio could
allow it to assert counterclaims for infringement against certain owners of
intellectual property rights if those owners were to sue the Company for
infringement. In certain situations, it might be beneficial for the Company to
cross-license certain of its patents for other patents which are relevant to the
call automation industry.

<PAGE>

                                  Schedule 3(q)

                                      Liens

         The Company and its wholly owned subsidiary, Brite Voice Systems, Inc.,
are parties to a Credit Agreement dated June 1, 1999 with the lenders thereto
(as amended, the "Credit Facility"). Term loans and revolving loans under the
Credit Facility totaled approximately $135 million at the inception of the
Credit Facility and were paid down to approximately $30 million prior to the
transactions contemplated by this Agreement.

         The term loans under the Credit Facility are subject to quarterly
principal amortization. In addition, the Credit Facility is subject to certain
mandatory prepayments and commitment reductions tied to the sale of assets, the
issuance of debt, the issuance of equity and the generation of excess cash flow
for a fiscal year. Certain of these prepayment and commitment reduction
requirements are limited by the satisfaction of certain financial ratios.

         The Credit Facility contains certain representations and warranties,
certain negative and affirmative covenants and certain conditions and events of
default which are customarily required for similar financing. Such covenants
include, among others, restrictions and limitations on liens and negative
pledges; limitations on mergers, consolidations and sales of assets; limitations
on incurrence of debt; limitations on dividends, stock redemptions and the
redemption and/or prepayment of other debt; limitations on investments and
acquisitions (other than the acquisition of the Company); and limitations on
capital expenditures. Key financial covenants based on the Company's
consolidated financial statements include minimum net worth, maximum leverage
ratio and minimum fixed charges coverage ratio. The Credit Facility also
requires a first priority perfected security interest in (i) all of the capital
stock of each of the domestic subsidiaries of the Company, and 65% of the
capital stock of each first tier foreign subsidiary of the Company, which
capital stock shall not be subject to any other lien or encumbrance and (ii)
subject to permitted liens, all other present and future material assets and
properties of the Company and its material domestic subsidiaries (including,
without limitation, accounts receivable and proceeds, inventory, real property,
machinery and equipment, contracts, trademarks, copyrights, patents, license
rights and general intangibles).

         The lenders had previously entered into forbearance agreements dated
March 7, 2002 and March 31, 2002, pursuant to which the lenders granted a
temporary waiver of a default under one of four financial covenants (fixed
charge coverage ratio) through May 31, 2002.

         The Company and lenders entered into commitment letters to enter into a
Consent, Waiver, and Third Amendment to Credit Agreement (the "Third Amendment")
to be effective as of May 29, 2002, pursuant to which the lenders will waive the
default under a financial covenant requiring the Company to maintain a minimum
fixed charge coverage ratio. The effectiveness of the Third Amendment is
conditioned on funding under the Convertible Notes.

         The Third Amendment will amend the fixed charge coverage ratio covenant
and a covenant to maintain a minimum leverage ratio (as described in the Credit
Facility) to reflect the Company's current capital structure and liquidity
requirements. The Third Amendment also will

<PAGE>

add a covenant by the Company to maintain a minimum level of EBITDA (as defined
in the Credit Facility).

         Pursuant to the Third Amendment, proceeds from the mortgage of the
Company's office facilities in Dallas, Texas, and proceeds from the sale of the
Convertible Notes, will be applied to repay all outstanding indebtedness under
the term loan, with the remainder applied to the revolving loans. Under the
amended Credit Facility, the lenders will agree to continue making revolving
loans to the Company up to a revised maximum amount of $12 million through June
1, 2003. The maximum amount of revolving loans that may be outstanding will also
be limited by a borrowing base based upon levels of eligible accounts receivable
and eligible inventory securing the revolving loans.

         The Company will not be permitted to have outstanding loans under the
Credit Facility at any time the Company makes principal payments on the
Convertible Notes in cash. Accordingly, the Company will have to repay the
outstanding revolving loans under the Credit Facility before any installment of
principal on the Convertible Notes is paid in cash. At that point, at the
Company's option, installments on the Convertible Notes will be repaid in cash
or by a partial conversion of such notes through the Company's issuance of
common stock. The Credit Facility is cross-defaulted with the Convertible Notes
such that a default or the occurrence of certain other events under the
Convertible Notes will be a default under the Credit Facility.

         The amended Credit Facility will provide that interest would accrue at
a base rate equal to an applicable margin plus the higher of (i) the prime rate
or (ii) the federal funds rate. The applicable margin will be determined in
accordance with a schedule to the Credit Facility and by reference to a ratio of
the Company's funded debt to EBITDA. The Third Amendment will delete provisions
that permit the Company to elect an interest rate equal to the London Interbank
Offer Rate ("LIBOR") plus the applicable margin.

Mortgage Loan

         Effective May 29, 2002, the Company executed and delivered a deed of
trust and promissory note in favor of Beal Bank, S.S.B., for a mortgage loan of
$14 million secured by a first lien on the Company's facilities in Dallas,
Texas. The mortgage loan is a three year balloon note, bearing interest, payable
monthly, at the greater of 10.5% or the prime rate plus 2.0%. Proceeds from the
mortgage will be applied to reduce loans under the Credit Facility. The lenders
under the Credit Facility entered into an agreement with Beal Bank, S.S.B.,
subordinating their lien on the Dallas, Texas facilities for purposes of the
mortgage loan.

<PAGE>

                                  Schedule 3(w)

                              Certain Transactions

                                      None

<PAGE>

                                  Schedule 4(d)

                                 Use of Proceeds

         All $14 million of proceeds from the mortgage loan by Beal Bank,
S.S.B., and all $10 million of proceeds from the sale of the Convertible Notes,
will be applied to repay outstanding indebtedness under the Credit Facility. The
mandatory prepayments will repay all term loans and approximately $6 million in
revolving loans will remain outstanding under the Credit Facility. If the sale
of the Wichita facilities for $2.0 million does close, proceeds will be applied
to reduce revolving loans outstanding under the Credit Facility on the date of
closing.<PAGE>
                                                                     EXHIBIT 4.2

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A)
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR (B) AN OPINION OF
INDEPENDENT COUNSEL, IN FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS
OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THIS NOTE. ANY
TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE,
INCLUDING SECTION 2(d)(viii) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS
NOTE MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO
SECTION 2(d)(viii) HEREOF.

THIS SUBORDINATED CONVERTIBLE NOTE IS SUBJECT TO THE SUBORDINATION PROVISIONS
SET FORTH IN THAT CERTAIN SUBORDINATION AND INTERCREDITOR AGREEMENT DATED MAY
29, 2002, AMONG EACH OF HFTP INVESTMENT L.L.C., GAIA OFFSHORE MASTERFUND, LTD.,
CAERUS FUND LTD., BANK OF AMERICA, NATIONAL ASSOCIATION, AS THE AGENT, AND
CERTAIN OTHER PERSONS SIGNATORY THERETO (INCLUDING EACH SUCH PARTY'S SUCCESSORS
AND ASSIGNS). A COPY OF THAT AGREEMENT IS ON FILE AT THE OFFICE OF THE ISSUER
HEREOF AND IS AVAILABLE FOR INSPECTION AT SUCH OFFICE.

                                CONVERTIBLE NOTE

_______, 2002                                                      $____________

         FOR VALUE RECEIVED, INTERVOICE-BRITE, INC., a Texas corporation (the
"COMPANY"), hereby promises to pay to the order of __________________ or
registered assigns (the "HOLDER") the principal amount of ___________________
United States Dollars ($________________) when due, whether upon maturity,
acceleration, redemption or otherwise.

                  (1) Payments of Principal. All payments of principal of this
Note (to the extent such principal is not converted into Shares (as defined
below) in accordance with the terms hereof) shall be made in lawful money of the
United States of America by wire transfer of immediately available funds to such
account as the Holder may from time to time designate by written notice in
accordance with the provisions of this Note. Whenever any amount expressed to be
due by the terms of this Note is due on any day which is not a Business Day (as
defined below), the same shall instead be due on the next succeeding day which
is a Business Day. Each capitalized term used herein, and not otherwise defined,
shall have the meaning ascribed thereto in the Securities Purchase Agreement,
dated May 29, 2002, pursuant to which this Note and the Other Notes (as defined
below) were originally issued (as such agreement may be amended from time to
time as provided in such agreement, the "SECURITIES PURCHASE AGREEMENT"). This
Note and the Other Notes issued by the Company pursuant to the Securities
Purchase Agreement on the Closing Date (as defined in the

<PAGE>

Securities Purchase Agreement) and all convertible notes issued in exchange
therefor or replacement thereof are collectively referred to in this Note as the
"NOTES."

                  (2) Conversion of this Note. This Note shall be converted into
Shares on the terms and conditions set forth in this Section 2.

                           (a) Certain Defined Terms. For purposes of this Note,
the following terms shall have the following meanings:

                                    (i) "ADDITIONAL AMOUNT" means the result of
                  the following formula: (.06)(N/365) (P).

                                    (ii) "BUSINESS DAY" means any day other than
                  Saturday, Sunday or other day on which commercial banks in the
                  city of New York are authorized or required by law to remain
                  closed.

                                    (iii) "COMMON STOCK" means (A) the Company's
                  common stock, no par value, and (ii) any capital stock
                  resulting from a reclassification of such common stock.

                                    (iv) "COMPANY CONVERSION PRICE" means, as of
                  any date of determination, 95% of the arithmetic average of
                  the Weighted Average Price of the Common Stock on each trading
                  day during the period beginning on and including the day
                  immediately following the Settlement Date immediately
                  preceding such date (or if no Settlement Date has occurred
                  during such Installment Period as of such date of
                  determination, then beginning on and including the first day
                  of such Installment Period) and ending on and including such
                  date of determination; provided that if such date of
                  determination is the first trading day of such Installment
                  Period or the first trading day following a Settlement Date,
                  then the Company Conversion Price on such day shall be 95% of
                  the Weighted Average Price of the Common Stock on such day.
                  All such determinations to be appropriately adjusted for any
                  stock dividend, stock split, stock combination or other
                  similar transaction during such period.

                                    (v) "COMPANY REDEMPTION DATE" means, with
                  respect to an Installment Period, the first Business Day of
                  such Installment Period.

                                    (vi) "CONVERSION AMOUNT" means the sum of
                  (1) the Additional Amount and (2) the principal amount of this
                  Note to be converted, redeemed or otherwise with respect to
                  which this determination is being made.

                                    (vii) "CONVERSION PRICE" means (A) as of any
                  Conversion Date or other date of determination (other than
                  with respect to a Settlement Amount on a Settlement Date
                  pursuant to a Company Conversion (as defined in Section 6(a))
                  during the period beginning on the Issuance Date and ending on
                  and including the

                                       2

<PAGE>

                  Maturity Date, the Fixed Conversion Price, and (B) with
                  respect to any Settlement Amount on a Settlement Date pursuant
                  to a Company Conversion, the lower of the Fixed Conversion
                  Price or the Company Conversion Price, each in effect as of
                  such date and subject to adjustment as provided herein.

                                    (ix) "DOLLARS" or "$" means United States
                  Dollars.

                                    (x) "FIXED CONVERSION PRICE" means 200% of
                  the Weighted Average Price of the Common Stock on the Issuance
                  Date, subject to adjustment as provided herein.

                                    (xi) "INSTALLMENT AMOUNT" means, with
                  respect to any Installment Period, the lesser of (A) the
                  quotient of (x) the original principal amount of this Note on
                  the Issuance Date divided by (y) 10, and (B) the principal
                  amount then outstanding under this Note. In the event the
                  Holder shall sell or otherwise transfer any portion of this
                  Note, the transferee shall be allocated a pro rata portion of
                  the Installment Amount.

                                    (xii) "INSTALLMENT PERIOD" means each of the
                  periods beginning on and including the first day and ending on
                  and including the last day of each calendar month during the
                  period beginning on and including September 1, 2002 and ending
                  on and including June 30, 2003; provided that if a Floor
                  Trigger Date (as defined in Section 6(e)) occurs during any
                  Installment Period, then such Installment Period shall end on
                  and include such Floor Trigger Date.

                                    (xiii) "ISSUANCE DATE" means the original
                  date of issuance of this Note pursuant to the Securities
                  Purchase Agreement, regardless of any exchange or replacement
                  hereof.

                                    (xiv) "MATURITY DATE" means July 1, 2003.

                                    (xv) "N" means the number of days from, but
                  excluding, the Issuance Date through and including the
                  Conversion Date or other date of determination.

                                    (xvi) "OTHER NOTES" means the convertible
                  notes, other than this Note, issued by the Company pursuant to
                  the Securities Purchase Agreement and all convertible notes
                  issued in exchange therefor or replacement thereof.

                                    (xvii) "P" means the principal amount of
                  this Note to be converted, redeemed or with respect to which
                  the determination of the Additional Amount is otherwise being
                  made.

                                       3

<PAGE>

                                    (xviii) "PERSON" means an individual, a
                  limited liability company, a partnership, a joint venture, a
                  corporation, a trust, an unincorporated organization and a
                  government or any department or agency thereof.

                                    (xix) "PRINCIPAL" means the outstanding
                  principal amount of this Note as of any date of determination.

                                    (xx) "PRINCIPAL MARKET" means the Nasdaq
                  National Market or, if the Common Stock is not traded on the
                  Nasdaq National Market, then the principal securities exchange
                  or trading market for the Common Stock.

                                    (xxi) "REGISTRATION RIGHTS AGREEMENT" means
                  that certain registration rights agreement among the Company
                  and the initial holders of the Notes relating to the filing of
                  a registration statement covering the resale of the Shares
                  issuable upon conversion of the Notes, as such agreement may
                  be amended from time to time as provided in such agreement.

                                    (xxii) "SEC" means the United States
                  Securities and Exchange Commission.

                                    (xxiii) "SETTLEMENT AMOUNT" means, with
                  respect to any Settlement Date during an Installment Period,
                  the product of (I) the applicable Company Conversion Amount
                  with respect to such Installment Period, multiplied by (II)
                  the quotient of (A) the number of trading days during the
                  period beginning on and including the day immediately
                  following the Settlement Date immediately preceding such date
                  (or if no Settlement Date has occurred during such Installment
                  Period as of such date of determination, then beginning on and
                  including the first day of such Installment Period) and ending
                  on and including such Settlement Date; provided that if such
                  Settlement Date is the first trading day of such Installment
                  Period or the first trading day following a Settlement Date,
                  then the number of trading days shall be deemed to be one (1)
                  for purposes of this clause (A), divided by (B) the aggregate
                  expected number of trading days during such Installment Period
                  as of such date of determination (including such date of
                  determination if it is a trading day and the actual number of
                  trading days preceding such Settlement Date and the expected
                  number of trading days remaining in such Installment Period as
                  of such Settlement Date, but without giving effect to the
                  early termination of such Installment Period as a result of
                  any Floor Trigger Date); provided that if as of the last
                  Settlement Date during an Installment Period in which no Floor
                  Trigger Date has occurred, the sum of all Settlement Amounts
                  determined in accordance with the foregoing with respect to
                  each Settlement Date during an Installment Period would be
                  less than the Company Conversion Amount, then the Settlement
                  Amount for such last Settlement Date shall be deemed to be the
                  amount which, when added to the prior Settlement Amounts with
                  respect to each prior Settlement Date during such Installment
                  Period, would equal the Company Conversion Amount; provided
                  further that in no event

                                       4

<PAGE>

                  shall the sum of all Settlement Amounts with respect to each
                  Settlement Date during an Installment Period exceed the
                  applicable Company Conversion Amount with respect to such
                  Installment Period.

                                    (xxiv) "SETTLEMENT DATE" means (i) each
                  Friday during an Installment Period (or if such a Friday is
                  not a trading day, then the immediately preceding trading day
                  during such Installment Period, if any), (ii) each Floor
                  Trigger Date and (iii) the last trading day of each
                  Installment Period, provided that such last trading day is not
                  also a Friday or a Floor Trigger Date.

                                    (xxv) "SHARES" means shares of Common Stock.

                                    (xxvi)"WARRANTS" means the warrants issued
                  to the holders of the Notes pursuant to the Securities
                  Purchase Agreement, and all warrants issued in exchange
                  therefor or replacement thereof pursuant to the terms of such
                  warrants.

                                    (xxvii)"WEIGHTED AVERAGE PRICE" means, for
                  any security as of any date, the dollar volume-weighted
                  average price for such security on the Principal Market during
                  the period beginning at 9:30 a.m. New York Time (or such other
                  time as the Principal Market publicly announces is the
                  official open of trading), and ending at 4:00 p.m. New York
                  Time (or such other time as the Principal Market publicly
                  announces is the official close of trading) as reported by
                  Bloomberg Financial Markets ("BLOOMBERG") through its "Volume
                  at Price" functions, or, if the foregoing does not apply, the
                  dollar volume-weighted average price of such security in the
                  over-the-counter market on the electronic bulletin board for
                  such security during the period beginning at 9:30 a.m. New
                  York Time (or such other time as the Principal Market publicly
                  announces is the official open of trading), and ending at 4:00
                  p.m. New York Time (or such other time as the Principal Market
                  publicly announces is the official close of trading) as
                  reported by Bloomberg, or, if no dollar volume-weighted
                  average price is reported for such security by Bloomberg for
                  such hours, the average of the highest closing bid price and
                  the lowest closing ask price of any of the market makers for
                  such security as reported in the "pink sheets" by the National
                  Quotation Bureau, Inc. If the Weighted Average Price cannot be
                  calculated for such security on such date on any of the
                  foregoing bases, the Weighted Average Price of such security
                  on such date shall be the fair market value as mutually
                  determined by the Company and the holders of Notes
                  representing a majority of the aggregate principal amount of
                  the Notes then outstanding. If the Company and the holders of
                  the Notes representing a majority of the aggregate principal
                  amount of the Notes then outstanding are unable to agree upon
                  the fair market value of the Common Stock, then such dispute
                  shall be resolved pursuant to Section 2(d)(iii) below with the
                  term "Weighted Average Price" being substituted for the term
                  "Company Conversion Price." All such determinations to be
                  appropriately adjusted for any stock dividend, stock split,
                  stock combination or other similar transaction during such
                  period.

                                       5

<PAGE>

                           (b) Holder's Conversion Right; Mandatory Redemption
at Maturity. Subject to the provisions of Section 5, at any time or times on or
after the Issuance Date, the Holder shall be entitled to convert all or any part
of the Principal (and the Additional Amount relating thereto) into fully paid
and nonassessable Shares in accordance with Section 2(d), at the Conversion Rate
(as defined below). The Company shall not issue any fraction of a Share upon any
conversion. If the issuance would result in the issuance of a fraction of a
Share, then the Company shall round such fraction of a Share up or down to the
nearest whole share. If any Principal remains outstanding on the Maturity Date,
then all such Principal shall be redeemed as of such date in accordance with
Section 2(d)(vii).

                           (c) Conversion Rate. The number of Shares issuable
upon conversion of any principal amount of this Note pursuant to Section 2(b)
shall be determined according to the following formula (the "CONVERSION RATE"):

                                Conversion Amount
                                _________________

                                Conversion Price

                           (d) Mechanics of Conversion. The conversion of this
Note shall be conducted in the following manner:

                                    (i) Holder's Delivery Requirements. To
                  convert a Conversion Amount into Shares on any date (the
                  "CONVERSION DATE"), the Holder shall (A) transmit by facsimile
                  (or otherwise deliver), for receipt on or prior to 11:59 p.m.
                  New York Time on such date, a copy of an executed conversion
                  notice in the form attached hereto as Exhibit I (the
                  "CONVERSION NOTICE") to the Company and (B) if required by
                  Section 2(d)(viii), surrender to a common carrier for delivery
                  to the Company as soon as practicable following such date the
                  original Note being converted (or an indemnification
                  undertaking reasonably acceptable to the Company with respect
                  to this Note in the case of its loss, theft or destruction).

                                    (ii) Company's Response. Upon receipt or
                  deemed receipt (which for purposes hereof shall mean pursuant
                  to Section 6(c)) by the Company of a copy of a Conversion
                  Notice, the Company (I) shall immediately send, via facsimile,
                  a confirmation of receipt of such Conversion Notice to the
                  Holder, the Company's designated transfer agent (the "TRANSFER
                  AGENT"), which confirmation shall constitute an instruction to
                  the Transfer Agent to process such Conversion Notice in
                  accordance with the terms herein and (II) on or before the
                  second (2nd) Business Day following the date of receipt or
                  deemed receipt by the Company of such Conversion Notice (the
                  "SHARE DELIVERY DATE") (A) provided that the Transfer Agent is
                  participating in The Depository Trust Company ("DTC") Fast
                  Automated Securities Transfer Program and provided that the
                  Holder is eligible to receive Shares through DTC, credit such
                  aggregate number of Shares to which the Holder shall be
                  entitled to the Holder's or its designee's balance account
                  with DTC through its Deposit Withdrawal Agent Commission
                  system or (B) issue and deliver to the address as

                                       6

<PAGE>

                  specified in the Conversion Notice, a certificate, registered
                  in the name of the Holder or its designee, for the number of
                  Shares to which the Holder shall be entitled. If this Note is
                  submitted for conversion, as may be required by Section
                  2(d)(viii), and the principal amount represented by this Note
                  is greater than the principal amount being converted, then the
                  Company shall, as soon as practicable and in no event later
                  than three (3) Business Days after receipt of this Note (the
                  "NOTE DELIVERY DATE") and at its own expense, issue and
                  deliver to the Holder a new Note representing the Principal
                  not converted.

                                    (iii) Dispute Resolution. In the case of a
                  dispute as to the determination of the Conversion Price or the
                  arithmetic calculation of the Conversion Rate, the Company
                  shall instruct the Transfer Agent to issue to the Holder the
                  Shares representing the number of Shares that is not disputed
                  and shall transmit an explanation of the disputed
                  determinations or arithmetic calculations to the Holder via
                  facsimile within one (1) Business Day of receipt or deemed
                  receipt of the Holder's Conversion Notice or other date of
                  determination. If the Holder and the Company are unable to
                  agree upon the determination of the Company Conversion Price
                  or arithmetic calculation of the Conversion Rate within one
                  (1) Business Day of such disputed determination or arithmetic
                  calculation being transmitted to the Holder, then the Company
                  shall within two (2) Business Days submit via facsimile (A)
                  the disputed determination of the Company Conversion Price to
                  an independent, reputable investment bank selected by the
                  Company and approved by the holders of Notes representing a
                  majority of the aggregate principal amounts of the Notes then
                  outstanding or (B) the disputed arithmetic calculation of the
                  Conversion Rate to the Company's independent, outside
                  accountant. The Company shall cause the investment bank or the
                  accountant, as the case may be, to perform the determinations
                  or calculations and notify the Company and the Holder of the
                  results no later than three (3) Business Days from the time it
                  receives the disputed determinations or calculations. Such
                  investment bank's or accountant's determination or
                  calculation, as the case may be, shall be binding upon all
                  parties absent error.

                                    (iv) Record Holder. The person or persons
                  entitled to receive the Shares issuable upon a conversion of
                  this Note shall be treated for all purposes as the legal and
                  record holder or holders of such Shares on the Conversion
                  Date.

                                    (v)  Company's Failure to Timely Convert.

                                             (A) Cash Damages. If within three
(3) Business Days after the Company's receipt of the facsimile copy of a
Conversion Notice or deemed receipt of a Conversion Notice the Company shall
fail to issue and deliver a certificate to the Holder for, or credit the
Holder's balance account with DTC with, the number of Shares to which the Holder
is entitled upon the Holder's conversion of any Principal or to issue a new Note
representing the Principal to which such Holder is entitled pursuant to Section
2(d)(ii), then in addition to all other available remedies which the Holder may
pursue hereunder and under the Securities Purchase Agreement

                                       7

<PAGE>

(including indemnification pursuant to Section 8 thereof), the Company shall pay
additional damages to the Holder for each day after the Share Delivery Date such
conversion is not timely effected and/or each day after the Note Delivery Date
such Note is not delivered in an amount equal to 0.5% of the sum of (a) the
product of (I) the number of Shares not issued to the Holder on or prior to the
Share Delivery Date and to which the Holder is entitled and (II) the Weighted
Average Price of the Common Stock on the Share Delivery Date (such product is
referred to herein as the "SHARE PRODUCT AMOUNT"), and (b) in the event the
Company has failed to deliver a Note to the Holder on or prior to the Note
Delivery Date, the product of (y) the number of Shares issuable upon conversion
of the Principal represented by the Note as of the Note Delivery Date and (z)
the Weighted Average Price of the Common Stock on the Note Delivery Date;
provided that in no event shall cash damages accrue pursuant to this Section
2(d)(v)(A) with respect the Share Product Amount during the period, if any, in
which the Conversion Price or the arithmetic calculation of the Conversion Rate
is subject to a bona fide dispute which is subject to and being resolved
pursuant to, and in compliance with the time periods and other provisions of,
the dispute resolution provisions of Section 2(d)(iii). Alternatively, subject
to Section 2(d)(iii), at the election of the Holder made in the Holder's sole
discretion, the Company shall pay to the Holder, in lieu of the additional
damages referred to in the preceding sentence (but in addition to all other
available remedies which the Holder may pursue hereunder and under the
Securities Purchase Agreement (including indemnification pursuant to Section 8
thereof)), 110% of the amount by which (A) the Holder's total purchase price
(including brokerage commissions, if any) for the Shares purchased to make
delivery in satisfaction of a sale by such holder of the Shares to which such
holder is entitled but has not received upon a conversion exceeds (B) the net
proceeds received by such holder from the sale of the Shares to which the Holder
is entitled but has not received upon such conversion. If the Company fails to
pay the additional damages set forth in this Section 2(d)(v) within five (5)
Business Days of the date incurred, then the Holder entitled to such payments
shall have the right at any time, so long as the Company continues to fail to
make such payments, to require the Company, upon written notice, to immediately
issue, in lieu of such cash damages, the number of Shares equal to the quotient
of (X) the aggregate amount of the damages payments described herein divided by
(Y) the Conversion Price in effect on such Conversion Date as specified by the
holder in the Conversion Notice.

                                             (B) Void Conversion Notice;
Adjustment to Conversion Price. If for any reason the Holder has not received
all of the Shares prior to the tenth (10th) Business Day after the Share
Delivery Date with respect to a conversion of this Note, then the Holder, upon
written notice to the Company, may void its Conversion Notice with respect to,
and retain or have returned, as the case may be, any portion of this Note that
has not been converted pursuant to the Holder's Conversion Notice; provided that
the voiding of the Holder's Conversion Notice shall not affect the Company's
obligations to make any payments which have accrued prior to the date of such
notice pursuant to Section 2(d)(v)(A) or otherwise. Thereafter, the Fixed
Conversion Price with respect to all of the Principal shall be adjusted to the
lesser of (I) the Fixed Conversion Price as in effect on the date on which the
Holder voided the Conversion Notice and (II) the lowest Weighted Average Price
during the period beginning on the Conversion Date and ending on the date such
holder voided the Conversion Notice, subject to further adjustment as provided
in this Note; provided that in no event shall an adjustment to the Fixed
Conversion Price with respect to any Principal be made pursuant to this Section
2(d)(v)(B) with respect any conversion of this Note

                                       8

<PAGE>

that is the subject of a bona fide dispute which is subject to and being
resolved pursuant to, and in compliance with the time periods and other
provisions of, the dispute resolution provisions of Section 2(d)(iii), provided
the Shares are delivered to the Holder within one (1) Business Day of the
resolution of such bona fide dispute.

                                             (C) Redemption. If for any reason
the Holder has not received all of the Shares prior to the tenth (10th) Business
Day after the Share Delivery Date with respect to a conversion of this Note (a
"CONVERSION FAILURE"), then the Holder, upon written notice to the Company, may
require that the Company redeem, in accordance with Section 3, all of the
Principal, including the Principal previously submitted for conversion and with
respect to which the Company has not delivered shares of Common Stock; provided
that the Holder shall not be entitled to require redemption of any Principal
pursuant to this clause (C) solely as a result of a Conversion Failure caused by
any Principal being the subject of a bona fide dispute which is subject to and
being resolved pursuant to, and in compliance with the time periods and other
provisions of, the dispute resolution provisions of Section 2(d)(iii), provided
the Shares are delivered to the Holder within one (1) Business Day of the
resolution of such bona fide dispute.

                                    (vi) Pro Rata Conversion. In the event the
                  Company receives a Conversion Notice from more than one holder
                  of the Notes for the same Conversion Date and the Company can
                  convert some, but not all, of such Notes, then, subject to
                  Section 14, the Company shall convert from each holder of the
                  Notes electing to have Notes converted at such time a pro rata
                  amount of such holder's Note submitted for conversion based on
                  the principal amount of the Note submitted for conversion on
                  such date by such holder relative to the principal amount of
                  the Notes submitted for conversion on such date.

                                    (vii) Mechanics of Mandatory Redemption. If
                  any Principal remains outstanding on the Maturity Date, then
                  the Holder shall surrender this Note, duly endorsed for
                  cancellation, to the Company and such Principal shall be
                  redeemed as of the Maturity Date by payment on the Maturity
                  Date to the Holder of an amount equal to the sum of (A) 105%
                  of such Principal plus (B) the Additional Amount with respect
                  to such Principal.

                                    (viii) Book-Entry. Notwithstanding anything
                  to the contrary set forth herein, upon conversion of this Note
                  in accordance with the terms hereof, the Holder shall not be
                  required to physically surrender this Note to the Company
                  unless all of the Principal is being converted. The Holder and
                  the Company shall maintain records showing the principal
                  amount converted or redeemed and the dates of such conversions
                  or redemptions or shall use such other method, reasonably
                  satisfactory to the Holder and the Company, so as not to
                  require physical surrender of this Note upon each such
                  conversion or redemption. In the event of any dispute or
                  discrepancy, such records of the Company establishing the
                  Principal to which the Holder is entitled shall be controlling
                  and determinative in the absence of error. Notwithstanding the
                  foregoing, if this Note is converted or redeemed as aforesaid,

                                       9

<PAGE>

                  the Holder may not transfer this Note unless the Holder first
                  physically surrenders this Note to the Company, whereupon the
                  Company will forthwith issue and deliver upon the order of the
                  Holder a new Note of like tenor, registered as the Holder may
                  request, representing in the aggregate the remaining Principal
                  represented by this Note. The Holder and any assignee, by
                  acceptance of this Note, acknowledge and agree that, by reason
                  of the provisions of this paragraph, following conversion or
                  redemption of any portion of this Note, the Principal of this
                  Note may be less than the principal amount stated on the face
                  hereof. Each Note shall bear the following legend:

                  ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS
                  OF THIS NOTE, INCLUDING SECTION 2(d)(viii) HEREOF. THE
                  PRINCIPAL AMOUNT OF THIS NOTE MAY BE LESS THAN THE PRINCIPAL
                  AMOUNT STATED ON THE FACE HEREOF PURSUANT TO SECTION
                  2(d)(viii) HEREOF.

                                    (ix) Application of Conversion Amounts.
                  Subject to Section 6(b), any principal amount which the Holder
                  elects to convert in accordance with this Section 2 (other
                  than pursuant to Company Conversions (as defined in Section 6)
                  shall be deducted first from the Installment Amount relating
                  to the latest Installment Period (i.e., nearest to the
                  Maturity Date) with respect to which Installment Amounts
                  remain outstanding and then sequentially from the immediately
                  preceding Installment Periods (and within each such
                  Installment Amount first from the amounts, if any, which would
                  be subject to a conversion on the latest Settlement Date
                  within such Installment Period and then sequentially from the
                  amounts subject to the immediately preceding Settlement
                  Dates).

                           (e) Taxes. The Company shall pay any and all taxes
that may be payable with respect to the issuance and delivery of Shares upon the
conversion of this Note.

                           (f) Adjustments to Conversion Price. The Conversion
Price will be subject to adjustment from time to time as provided in this
Section 2(f).

                                    (i) Adjustment of Fixed Conversion Price
                  upon Issuance of Common Stock. If and whenever on or after the
                  Issuance Date, the Company issues or sells, or in accordance
                  with this Section 2(f) is deemed to have issued or sold, any
                  Shares (including the issuance or sale of Shares owned or held
                  by or for the account of the Company, but excluding (A) Shares
                  issued or deemed to have been issued by the Company in
                  connection with an Approved Stock Plan (as defined below) or a
                  Future Approved Stock Plan (as defined below), and (B) Shares
                  issued or deemed to have been issued by the Company upon
                  conversion of the Notes or exercise of the Warrants) for a
                  consideration per share less than a price (the "APPLICABLE
                  PRICE")

                                       10

<PAGE>

                  equal to the Fixed Conversion Price in effect immediately
                  prior to such time, then immediately after such issue or sale,
                  the Fixed Conversion Price then in effect shall be reduced to
                  an amount equal to the product of (x) the Fixed Conversion
                  Price in effect immediately prior to such issue or sale and
                  (y) the quotient of (1) the sum of (I) the product of the
                  Applicable Price and the number of Shares Deemed Outstanding
                  (as defined below) immediately prior to such issue or sale and
                  (II) the consideration, if any, received by the Company upon
                  such issue or sale, divided by (2) the product of (I) the
                  Applicable Price multiplied by (II) the number of Shares
                  Deemed Outstanding immediately after such issue or sale. For
                  purposes of determining the adjusted Fixed Conversion Price
                  under this Section 2(f)(i), the following shall be applicable
                  (provided that any references to "Shares", "Options" or
                  "Convertible Securities" in subparagraphs (A) through (D)
                  below shall be deemed to exclude Shares, Options and
                  Convertible Securities issued or deemed to have been issued by
                  the Company in connection with an Approved Stock Plan or a
                  Future Approved Stock Plan or upon conversion of the Notes or
                  exercise of the Warrants):

                                             (A) Issuance of Options. If the
Company in any manner grants or sells any Options (as defined below) and the
lowest price per share for which one Share is issuable upon the exercise of any
such Option or upon conversion, exchange or exercise of any Convertible
Securities (as defined below) issuable upon exercise of such Option is less than
the Applicable Price, then such Share shall be deemed to be outstanding and to
have been issued and sold by the Company at the time of the granting or sale of
such Option for such price per share. For purposes of this Section 2(f)(i)(A),
the "lowest price per share for which one Share is issuable upon the exercise of
any such Option or upon conversion, exchange or exercise of any Convertible
Securities issuable upon exercise of such Option" shall be equal to the sum of
the lowest amounts of consideration (if any) received or receivable by the
Company with respect to any one Share upon granting or sale of the Option, upon
exercise of the Option and upon conversion, exchange or exercise of any
Convertible Security issuable upon exercise of such Option. No further
adjustment of the Fixed Conversion Price shall be made upon the actual issuance
of such Share or of such Convertible Securities upon the exercise of such
Options or upon the actual issuance of such Share upon conversion, exchange or
exercise of such Convertible Securities.

                                             (B) Issuance of Convertible
Securities. If the Company in any manner issues or sells any Convertible
Securities and the lowest price per share for which one Share is issuable upon
such conversion, exchange or exercise thereof is less than the Applicable Price,
then such Share shall be deemed to be outstanding and to have been issued and
sold by the Company at the time of the issuance or sale of such Convertible
Securities for such price per share. For the purposes of this Section
2(f)(i)(B), the "lowest price per share for which one Share is issuable upon
such conversion, exchange or exercise" shall be equal to the sum of the lowest
amounts of consideration (if any) received or receivable by the Company with
respect to any one Share upon the issuance or sale of the Convertible Security
and upon the conversion, exchange or exercise of such Convertible Security. No
further adjustment of the Fixed Conversion Price shall be made upon the actual
issuance of such Share upon conversion, exchange or exercise of such Convertible
Securities, and if any such issue or sale of such Convertible Securities is made
upon exercise of any Options for

                                       11

<PAGE>

which adjustment of the Fixed Conversion Price had been or are to be made
pursuant to other provisions of this Section 2(f)(i), then no further adjustment
of the Fixed Conversion Price shall be made by reason of such issue or sale.

                                             (C) Change in Option Price or Rate
of Conversion. If the purchase, exchange or exercise price provided for in any
Options, the additional consideration, if any, payable upon the issue,
conversion, exchange or exercise of any Convertible Securities, or the rate at
which any Options or Convertible Securities are convertible into or exchangeable
or exercisable for Shares changes at any time, then the Fixed Conversion Price
in effect at the time of such change shall be adjusted to the Fixed Conversion
Price which would have been in effect at such time had such Options or
Convertible Securities provided for such changed purchase, exchange or exercise
price, additional consideration or changed conversion rate, as the case may be,
at the time initially granted, issued or sold. For purposes of this Section
2(f)(i)(C), if the terms of any Option or Convertible Security that was
outstanding as of the Issuance Date are changed in the manner described in the
immediately preceding sentence, then such Option or Convertible Security and the
Shares deemed issuable upon exercise, conversion or exchange thereof shall be
deemed to have been issued as of the date of such change. No adjustment shall be
made if such adjustment would result in an increase of the Fixed Conversion
Price then in effect.

                                             (D) Calculation of Consideration
Received. In case any Option is issued in connection with the issue or sale of
other securities of the Company, together comprising one integrated transaction
in which no specific consideration is allocated to such Options by the parties
thereto, the Options will be deemed to have been issued for a consideration of
$0.01. If any Shares, Options or Convertible Securities are issued or sold or
deemed to have been issued or sold for cash, the consideration received therefor
will be deemed to be the net amount received by the Company therefor. If any
Shares, Options or Convertible Securities are issued or sold for a consideration
other than cash, the amount of the consideration other than cash received by the
Company will be the fair value of such consideration, except where such
consideration received by the Company consists of marketable securities, in
which case the amount of consideration received by the Company will be the
Weighted Average Price of such securities on the date of receipt of such
securities. If any Shares, Options or Convertible Securities are issued to the
owners of the non-surviving entity in connection with any merger in which the
Company is the surviving entity, the amount of consideration therefor will be
deemed to be the fair value of such portion of the net assets and business of
the non-surviving entity as is attributable to such Shares, Options or
Convertible Securities, as the case may be. The fair value of any consideration
other than cash or securities will be determined jointly by the Company and the
holders of Notes representing a majority of the aggregate principal amount of
the Notes then outstanding. If such parties are unable to reach agreement within
ten (10) days after the occurrence of an event requiring valuation (the
"VALUATION EVENT"), the fair value of such consideration will be determined
within five (5) Business Days after the tenth (10th) day following the Valuation
Event by an independent, reputable appraiser jointly selected by the Company and
the holders representing a majority of the aggregate principal amount of the
Notes then outstanding. The determination of such appraiser shall be final and
binding upon all parties absent error and the fees and expenses of such
appraiser shall be borne by the Company.

                                       12

<PAGE>

                                             (E) Record Date. If the Company
takes a record of the holders of Shares for the purpose of entitling them (1) to
receive a dividend or other distribution payable in Shares, Options or in
Convertible Securities or (2) to subscribe for or purchase Shares, Options or
Convertible Securities, then such record date will be deemed to be the date of
the issue or sale of the Shares deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.

                                             (F) Certain Definitions. For
purposes of this Section 2(f)(i), the following terms have the respective
meanings set forth below:

                                                      (I) "APPROVED STOCK PLAN"
means any employee benefit plan which has been approved by the Board of
Directors of the Company prior to the date of the Securities Purchase Agreement,
pursuant to which the Company's securities may be issued to any employee,
officer or director for services provided to the Company.

                                                      (II) "CONVERTIBLE
SECURITIES" means any stock or securities (other than Options) directly or
indirectly convertible into or exchangeable or exercisable for Shares.

                                                      (III) "FUTURE APPROVED
STOCK PLAN" means any employee benefit plan which has been approved by the
shareholders of the Company after the date of the Securities Purchase Agreement,
pursuant to which the Company's securities may be issued to any employee,
officer or director for services provided to the Company.

                                                      (III) "OPTIONS" means any
rights, warrants or options to subscribe for or purchase Shares or Convertible
Securities.

                                                      (IV) "SHARES DEEMED
OUTSTANDING" means, at any given time, the number of Shares actually outstanding
at such time, plus the number of Shares deemed to be outstanding pursuant to
Sections 2(f)(i)(A) and 2(f)(i)(B) hereof regardless of whether the Options or
Convertible Securities are actually exercisable at such time, but excluding any
Shares owned or held by or for the account of the Company or issuable upon
conversion of the Notes or exercise of the Warrants.

                                    (ii) Adjustment of Fixed Conversion Price
                  upon Subdivision or Combination of Common Stock. If the
                  Company at any time subdivides (by any stock split, stock
                  dividend, recapitalization or otherwise) one or more classes
                  of its outstanding Shares into a greater number of shares, the
                  Fixed Conversion Price in effect immediately prior to such
                  subdivision will be proportionately reduced. If the Company at
                  any time combines (by combination, reverse stock split or
                  otherwise) one or more classes of its outstanding Shares into
                  a smaller number of shares, the Fixed Conversion Price in
                  effect immediately prior to such combination will be
                  proportionately increased.

                                       13

<PAGE>

                                    (iii) Holder's Right of Alternative
                  Conversion Price Following Issuance of Convertible Securities.
                  If the Company in any manner issues or sells any Options or
                  Convertible Securities after the Issuance Date that are
                  convertible into or exchangeable or exercisable for Shares at
                  a price which varies or may vary with the market price of the
                  Shares, including by way of one or more resets to a fixed
                  price, or at a price which upon the passage of time or the
                  occurrence of certain events is automatically reduced or is
                  adjusted to a price which is based on some formulation of the
                  then current market price of the Shares (each of the
                  formulations for such variable price being herein referred to
                  as a "VARIABLE PRICE;" provided, however, that a price which
                  upon the passage of time or the occurrence of certain events
                  is automatically reduced or is adjusted to a price which is
                  based on some formulation of the then current market price of
                  the Shares shall not constitute a Variable Price until the
                  passage of such time or the occurrence of such event, as the
                  case may be), then the Company shall provide written notice
                  thereof via facsimile and overnight courier to the Holder
                  ("VARIABLE NOTICE") on the date of issuance of such
                  Convertible Securities or Options. From and after the date the
                  Company issues any such Convertible Securities or Options with
                  a Variable Price, the Holder shall have the right, but not the
                  obligation, in its sole discretion to substitute the Variable
                  Price for the Conversion Price upon conversion of any
                  Principal by designating in the Conversion Notice delivered
                  upon conversion of such Principal (or, in the case of a
                  Company Conversion, by written notice to the Company delivered
                  prior to or on the applicable Settlement Date) that solely for
                  purposes of such conversion the Holder is relying on the
                  Variable Price rather than the Conversion Price then in
                  effect. The Holder's election to rely on a Variable Price for
                  a particular conversion of Principal shall not obligate the
                  holder to rely on a Variable Price for any future conversions
                  of Principal.

                                    (iv) Other Events. If any event occurs of
                  the type contemplated by the provisions of this Section 2(f)
                  but not expressly provided for by such provisions (including,
                  without limitation, the granting of stock appreciation rights,
                  phantom stock rights or other rights with equity features),
                  then the Company's Board of Directors will make an appropriate
                  adjustment in the Conversion Price so as to protect the rights
                  of the Holder; provided that no such adjustment will increase
                  the Conversion Price as otherwise determined pursuant to this
                  Section 2(f).

                                    (v)  Notices.

                                             (A) Promptly upon any adjustment of
the Conversion Price, the Company will give written notice thereof to the
Holder, setting forth in reasonable detail, and certifying, the calculation of
such adjustment.

                                             (B) The Company will give written
notice to the Holder at least ten (10) Business Days prior to the date on which
the Company closes its books or takes a record (I) with respect to any dividend
or distribution upon the Common Stock, (II) with respect to

                                       14

<PAGE>

any pro rata subscription offer to holders of Common Stock or (III) for
determining rights to vote with respect to any Organic Change (as defined in
Section 4(a)), dissolution or liquidation, provided that such information shall
be made known to the public prior to or in conjunction with such notice being
provided to the Holder.

                                             (C) The Company will also give
written notice to the Holder at least ten (10) Business Days prior to the date
on which any Organic Change (as defined in Section 4(a)), dissolution or
liquidation will take place, provided that such information shall be made known
to the public prior to or in conjunction with such notice being provided to the
Holder.

                  (3) Redemption at Option of the Holder.

                           (a) Redemption Option Upon Triggering Event. In
addition to all other rights of the Holder contained herein, after a Triggering
Event (as defined below), the Holder shall have the right, at the Holder's
option, to require the Company to redeem all or a portion of the Principal at a
price ("REDEMPTION PRICE") equal to (x) in the case of a Triggering Event other
than a Triggering Event described in clause (vi) of Section 3(b), the greater of
(i) the sum of (x) 125% of such Principal plus (y) the Additional Amount with
respect to such Principal and (ii) the product of (A) the Conversion Rate in
effect at such time as the Holder delivers a Notice of Redemption at Option of
Holder (as defined below), multiplied by (B) the Weighted Average Price of the
Common Stock on the trading day immediately preceding such Triggering Event on
which the Principal Market is open for trading and (y) in the case of a
Triggering Event described in clause (vi) of Section 3(b), the sum of (I) 100%
of such Principal plus (II) the Additional Amount with respect to such
Principal.

                           (b) Triggering Event. A "TRIGGERING EVENT" shall be
deemed to have occurred at such time as any of the following events:

                                    (i) the failure of the Registration
                  Statement (as defined in the Registration Rights Agreement) to
                  be declared effective by the SEC on or prior to the date that
                  is 30 days after the Effectiveness Deadline (as defined in the
                  Registration Rights Agreement);

                                    (ii) while the Registration Statement is
                  required to be maintained effective pursuant to the terms of
                  the Registration Rights Agreement, the effectiveness of the
                  Registration Statement lapses for any reason (including,
                  without limitation, the issuance of a stop order) or is
                  unavailable to the Holder for sale of all of the Registrable
                  Securities (as defined in the Registration Rights Agreement)
                  in accordance with the terms of the Registration Rights
                  Agreement, and such lapse or unavailability continues for a
                  period of five (5) consecutive trading days or for more than
                  an aggregate of ten (10) trading days in any 365-day period
                  (other than days during an Allowable Grace Period (as defined
                  in the Registration Rights Agreement);

                                    (iii) the suspension from trading or failure
                  of the Common Stock to be listed on the Nasdaq National Market
                  or The New York Stock Exchange, Inc. for a period of five (5)
                  consecutive trading days or for more than an aggregate of ten
                  (10) trading days in any 365-day period;

                                       15

<PAGE>

                                    (iv) the Company's or the Transfer Agent's
                  notice to any holder of the Notes, including by way of public
                  announcement, at any time, of its intention not to comply with
                  a request for conversion of any Notes into Shares that is
                  tendered in accordance with the provisions of the Notes
                  (excluding, however, notices that relate solely to a bona fide
                  dispute which is subject to and being resolved pursuant to,
                  and in compliance with the time periods and other provisions
                  of, the dispute resolution provisions of Section 2(d)(iii)
                  provided neither such dispute nor such notice is publicly
                  disclosed);

                                    (v)  a Conversion Failure (as defined in
                  Section 2(d)(v)(C));

                                    (vi) upon the Company's receipt or deemed
                  receipt of a Conversion Notice, the Company shall not be
                  obligated to issue Shares upon such conversion due to the
                  provisions of Section 14;

                                    (vii) the Company breaches any
                  representation, warranty, covenant or other term or condition
                  of the Securities Purchase Agreement, the Registration Rights
                  Agreement, the Warrants, this Note or any other agreement,
                  document, certificate or other instrument delivered in
                  connection with the transactions contemplated thereby and
                  hereby (excluding, for the avoidance of doubt, the documents
                  referred to in Section 7(xiv) of the Securities Purchase
                  Agreement), except to the extent that such breach would not
                  have a Material Adverse Effect (as defined in Section 3(a) of
                  the Securities Purchase Agreement) and except, in the case of
                  a breach of a covenant or other term which is curable, only if
                  such breach continues for a period of at least ten (10) days;
                  or

                                    (viii) the Company does not comply with the
                  provisions of Section 6 (including, without limitation, the
                  Company's failure to pay the required Company Redemption Price
                  on the applicable Company Redemption Date, but other than the
                  Company's failure to deliver a Company Installment Notice
                  pursuant to Section 6(a)).

                           (c) Mechanics of Redemption at Option of Holder.
Within one (1) day after the occurrence of a Triggering Event, the Company shall
deliver written notice thereof via facsimile and overnight courier ("NOTICE OF
TRIGGERING EVENT") to the Holder and each holder of the Other Notes. At any time
after the earlier of the Holder's receipt of a Notice of Triggering Event and
the Holder becoming aware of a Triggering Event, the Holder may require the
Company to redeem up to all of the Principal by delivering written notice
thereof via facsimile and overnight courier ("NOTICE OF REDEMPTION AT OPTION OF
HOLDER") to the Company, which Notice of Redemption at Option of Holder shall
indicate (i) the Principal that the Holder is electing to have the Company
redeem from it and (ii) the applicable Redemption Price, as calculated pursuant
to Section 3(a) above; provided that (A) a Notice of Redemption at Option of
Holder relating to a Triggering Event described in clauses (iv), (v) or (vi) of
Section 3(b) may only be sent during the period beginning on and including the
date of the Triggering Event and ending on and including the

                                       16

<PAGE>

later of the date which is (I) 20 Business Days after the date on which the
Holder receives a Notice of Triggering Event from the Company with respect to
such Triggering Event and (II) 15 Business Days after the date on which such
Triggering Event is cured and the Holder receives written notice from the
Company confirming such Triggering Event has been cured and (B) a Notice of
Redemption at Option of Holder relating to a Triggering Event described in
clauses (i), (ii), (iii), (vii) or (viii) of Section 3(b) may only be sent
during the period beginning on and including the date of the Triggering Event
and ending on and including the later of the date which is (x) 10 Business Days
after the date on which the Holder receives a Notice of Triggering Event from
the Company with respect to such Triggering Event and (y) 5 Business Days after
the date on which such Triggering Event is cured and the Holder receives written
notice from the Company confirming such Triggering Event has been cured.

                           (d) Payment of Redemption Price. Upon the Company's
receipt of a Notice(s) of Redemption at Option of Holder from any holder of the
Other Notes, the Company shall promptly notify the Holder by facsimile of the
Company's receipt of such notices. Each holder which has sent such a notice
shall, if required pursuant to Section 2(d)(viii), promptly submit to the
Company such holder's Note which such holder has elected to have redeemed. The
Company shall deliver the applicable Redemption Price to the Holder within five
(5) Business Days after the Company's receipt of a Notice of Redemption at
Option of Holder; provided that a holder's Note shall have been so delivered to
the Company. If the Company is unable to redeem all of the Notes submitted for
redemption, the Company shall (i) redeem a pro rata amount from each holder of
the Notes based on the principal amount of the Notes submitted for redemption by
such holder relative to the aggregate principal amount of the Notes submitted
for redemption by all holders of the Notes and (ii) in addition to any remedy
the Holder may have under this Note and the Securities Purchase Agreement, pay
to the Holder interest at the rate of 2.0% per month (prorated for partial
months) in respect of the unredeemed Principal until paid in full.

                           (e) Void Redemption. In the event that the Company
does not pay the Redemption Price within the time period set forth in Section
3(d), at any time thereafter and until the Company pays such unpaid Redemption
Price in full, the Holder shall have the option (the "VOID OPTIONAL REDEMPTION
OPTION") to, in lieu of redemption, require the Company to promptly return to
such the Holder any or all of the Notes representing the Principal that was
submitted for redemption by the Holder under this Section 3 and for which the
Redemption Price (together with any interest thereon) has not been paid, by
sending written notice thereof to the Company via facsimile (the "VOID OPTIONAL
REDEMPTION NOTICE"). Upon the Company's receipt of such Void Optional Redemption
Notice, (i) the Notice of Redemption at Option of Holder shall be null and void
with respect to the Principal subject to the Void Optional Redemption Notice,
(ii) the Company shall immediately return any Note subject to the Void Optional
Redemption Notice, (iii) the Fixed Conversion Price with respect to all the
Principal shall be adjusted to the lesser of (A) the Fixed Conversion Price as
in effect on the date on which the Void Optional Redemption Notice is delivered
to the Company and (B) the lowest Weighted Average Price during the period
beginning on and including the date on which the Notice of Redemption at Option
of Holder is delivered to the Company and ending on and including the date on
which the Void Optional Redemption Notice is delivered to the Company.

                                       17

<PAGE>

                           (f) Disputes; Miscellaneous. In the event of a bona
fide dispute as to the determination of the arithmetic calculation of the
Redemption Price, such dispute shall be resolved pursuant to Section 2(d)(iii)
above with the term "Redemption Price" being substituted for the term
"Conversion Rate". A holder's delivery of a Void Optional Redemption Notice and
exercise of its rights following such notice shall not affect the Company's
obligations to make any payments which have accrued prior to the date of such
notice. In the event of a redemption pursuant to this Section 3 of less than all
of the Principal, the Company shall promptly cause to be issued and delivered to
the Holder a Note representing the remaining Principal which has not been
redeemed, if necessary.

                  (4) Other Rights of Holders.

                           (a) Reorganization, Reclassification, Consolidation,
Merger or Sale. Any recapitalization, reorganization, reclassification,
consolidation, merger, sale of all or substantially all of the Company's assets
to another Person or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as "ORGANIC CHANGE." Prior to
the consummation of any (i) sale of all or substantially all of the Company's
assets to an acquiring Person or (ii) other Organic Change following which the
Company is not a surviving entity, the Company will secure from the Person
purchasing such assets or the successor resulting from such Organic Change (in
each case, the "ACQUIRING ENTITY") a written agreement (in form and substance
satisfactory to the holders representing a majority of the Notes then
outstanding) to deliver to the Holder in exchange for this Note, a security of
the Acquiring Entity evidenced by a written instrument substantially similar in
form and substance to this Note and satisfactory to the holders representing a
majority of the principal amount then outstanding under the Notes. Prior to the
consummation of any other Organic Change, the Company shall make appropriate
provision (in form and substance satisfactory to the holders representing a
majority of the Notes then outstanding) to ensure that the Holder will
thereafter have the right to acquire and receive in lieu of or in addition to
(as the case may be) the Shares immediately theretofore acquirable and
receivable upon the conversion of this Note (without regard to any limitations
on conversion) such shares of stock, securities or assets that would have been
issued or payable in such Organic Change with respect to or in exchange for the
number of Shares which would have been acquirable and receivable upon the
conversion of this Note as of the date of such Organic Change (without taking
into account any limitations or restrictions on the convertibility of this
Note).

                           (b) Optional Redemption Upon Change of Control. In
addition to the rights of the Holder under Section 4(a), upon a Change of
Control (as defined below) of the Company the Holder shall have the right, at
the Holder's option, to require the Company to redeem all or a portion of the
Principal at a price equal to the greater of (A) the sum of (x) 115% of the
Principal plus (y) the Additional Amount with respect to such Principal, and (B)
the product of (I) the Conversion Rate on the date the Holder gives a Notice of
Redemption Upon Change of Control (as defined below), multiplied by (II) the
arithmetic average of the Weighted Average Prices of the Common Stock during the
five (5) trading days immediately preceding such date ("CHANGE OF CONTROL
REDEMPTION PRICE"). No sooner than 30 nor later than 20 Business Days prior to
the consummation of a Change of Control, but not prior to the public
announcement of such Change of

                                       18

<PAGE>

Control, the Company shall deliver written notice thereof via facsimile and
overnight courier (a "NOTICE OF CHANGE OF CONTROL") to the Holder. At any time
during the period beginning after receipt of a Notice of Change of Control (or,
in the event a Notice of Change of Control is not delivered at least ten (10)
Business Days prior to a Change of Control, at any time on or after the date
which is ten (10) Business Days prior to a Change of Control) and ending on the
date of such Change of Control, the Holder may require the Company to redeem all
or a portion of the Principal by delivering written notice thereof via facsimile
and overnight courier (a "NOTICE OF REDEMPTION UPON CHANGE OF CONTROL") to the
Company, which Notice of Redemption Upon Change of Control shall indicate (i)
the Principal that the Holder is submitting for redemption, and (ii) the
applicable Change of Control Redemption Price, as calculated pursuant to this
Section 4(b). Upon the Company's receipt of a Notice(s) of Redemption Upon
Change of Control from any holder of the Other Notes, the Company shall
promptly, but in no event later than one (1) Business Day following such
receipt, notify the Holder by facsimile of the Company's receipt of such
Notice(s) of Redemption Upon Change of Control. The Company shall deliver the
Change of Control Redemption Price simultaneously with the consummation of the
Change of Control; provided that, if required by Section 2(d)(viii), this Note
shall have been so delivered to the Company. Payments provided for in this
Section 4(b) shall have priority to payments to stockholders in connection with
a Change of Control. For purposes of this Section 4(b), "CHANGE OF CONTROL"
means (i) the consolidation, merger or other business combination of the Company
with or into another Person (other than (A) a consolidation, merger or other
business combination in which holders of the Company's voting power immediately
prior to the transaction continue after the transaction to hold, directly or
indirectly, the voting power of the surviving entity or entities necessary to
elect a majority of the members of the board of directors (or their equivalent
if other than a corporation) of such entity or entities, or (B) pursuant to a
migratory merger effected solely for the purpose of changing the jurisdiction of
incorporation of the Company), (ii) the sale or transfer of all or substantially
all of the Company's assets, or (iii) the consummation of a purchase, tender or
exchange offer made to and accepted by the holders of more than the 50% of the
outstanding Shares.

                           (c) Purchase Rights. If at any time the Company
grants, issues or sells any Options, Convertible Securities or rights to
purchase stock, warrants, securities or other property pro rata to the record
holders of any class of its capital stock (the "PURCHASE RIGHTS"), then the
Holder will be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which such holder could have acquired if
the Holder had held the number of Shares acquirable upon complete conversion of
this Note (without taking into account any limitations or restrictions on the
convertibility of this Note) immediately before the date on which a record is
taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights.

                  (5) Limitations on Conversion. The Company shall not effect
any conversion of this Note and the Holder shall not have the right to convert
Principal in excess of that portion of the Principal which, upon giving effect
to such conversion, would cause the aggregate number of Shares beneficially
owned by the holder and its affiliates to exceed 4.99% of the total outstanding
Shares following such conversion. For purposes of the foregoing proviso, the
aggregate number of Shares

                                       19

<PAGE>

beneficially owned by the Holder and its affiliates shall include the Shares
issuable upon conversion of this Note with respect to which the determination of
such proviso is being made, but shall exclude the Shares which would be issuable
upon (i) conversion of the remaining, nonconverted Principal beneficially owned
by the Holder and its affiliates and (ii) exercise, conversion or exchange of
the unexercised, unconverted or unexchanged portion of any other securities of
the Company (including, without limitation, any warrants or convertible
preferred stock) subject to a limitation on conversion, exercise or exchange
analogous to the limitation contained herein beneficially owned by the Holder
and its affiliates. Except as set forth in the preceding sentence, for purposes
of this Section 5, beneficial ownership shall be calculated in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes
of this Section 5, in determining the number of outstanding Shares the Holder
may rely on the number of outstanding Shares as reflected in (1) the Company's
most recent Form 10-Q or Form 10-K, as the case may be, (2) a more recent public
announcement by the Company or (3) any other notice by the Company or its
transfer agent setting forth the number of Shares outstanding. Upon the written
request of the Holder, the Company shall promptly, but in no event later than
one (1) Business Day following the receipt of such request, confirm in writing
to the Holder the number of Shares then outstanding. In any case, the number of
outstanding Shares shall be determined after giving effect to the conversion,
exercise or exchange of securities of the Company, including the Notes and the
Warrants, since the date as of which such number of outstanding Shares was
reported.

                  (6) Company Installment Conversion or Redemption.

                           (a) General. With respect to each Installment Period
the Company shall either (i) require conversion of the applicable Installment
Amount, in whole or in part, in accordance with this Section 6, but subject to
the satisfaction of the Conditions to Company Conversion (as defined below) (a
"COMPANY CONVERSION") or (ii) redeem the applicable Installment Amount, in whole
or in part, in accordance with this Section 6 (a "COMPANY REDEMPTION"); provided
that all of the outstanding applicable Installment Amount must be converted or
redeemed by the Company, subject to the provisions of this Section 6; provided
further that the Company may elect more than one of the Company Conversion and
the Company Redemption, if each such election is with respect to at least 20% of
the Installment Amount. On or prior to the date which is at least 10 days but
not more than 20 days prior to the first day of each Installment Period, the
Company shall deliver written notice (each a "COMPANY INSTALLMENT NOTICE"),
which Company Installment Notice shall state (i) the portion, if any, of the
applicable Installment Amount which the Company elects to convert pursuant to a
Company Conversion (the "COMPANY CONVERSION AMOUNT"), (ii) the portion, if any,
of the applicable Installment Amount which the Company elects to redeem pursuant
to a Company Redemption (the "COMPANY REDEMPTION AMOUNT"), which amount when
added to the Company Conversion Amount must equal the applicable Installment
Amount, (iii) if the Company has elected, in whole or in part, a Company
Conversion, then the Company Installment Notice shall certify that the
Conditions to Company Conversion are satisfied as of the date of the Company
Installment Notice and (iv) if the Company has elected to exercise its right to
an Installment Floor Election with respect to such Installment Period in
accordance with Section 6(e), then the Company Installment Notice shall include
a statement of such election and the price of the Installment Trigger Price (as
defined below). If the Company does not deliver a Company Installment Notice in
accordance with

                                       20

<PAGE>

this Section 6(a), then the "Company Redemption Amount" shall mean the
applicable Installment Amount. The Company Installment Notice shall be
irrevocable. The Company shall redeem and convert the applicable Installment
Amount pursuant to this Section 6 and the corresponding Installment Amounts of
the Other Notes pursuant to the corresponding provisions of the Other Notes in
the same ratio of principal amount being redeemed and principal amount being
converted. The Company Redemption Amount (whether set forth in the Company
Installment Notice or by operation of this Section 6(a)) shall be redeemed in
accordance with Section 6(b) and the Company Conversion Amount shall be
converted in accordance with Section 6(c).

                           (b) Mechanics of Company Redemption. If the Company
elects, or is deemed to have elected, a Company Redemption in accordance with
Section 6(a), then the Company Redemption Amount, if any, which remains
outstanding on the respective Company Redemption Date shall be redeemed by the
Company on such Company Redemption Date, and the Company shall pay to the Holder
on such Company Redemption Date, by wire transfer of immediately available
funds, an amount in cash (the "COMPANY REDEMPTION PRICE") equal to the sum of
(A) 100% of the Company Redemption Amount, plus (B) the Additional Amount with
respect to the Company Redemption Amount calculated as of such Company
Redemption Date. If the Company fails to redeem any Company Redemption Amount
which is outstanding on the respective Company Redemption Date by payment to the
Holder of the applicable Company Redemption Price, then in addition to any
remedy the Holder may have under this Note (including, without limitation,
Section 3) and the Securities Purchase Agreement (including indemnification
pursuant to Section 8 thereof), the Company Redemption Price payable in respect
of such unredeemed Company Redemption Amount shall bear interest at the rate of
2.0% per month (prorated for partial months) until paid in full. Notwithstanding
anything to the contrary in this Section 6, but subject to Section 14, until the
Company Redemption Price (together with any interest thereon) is paid in full,
the Company Redemption Amount (together with any interest thereon) may be
converted, in whole or in part, by the Holder into Shares pursuant to Section 2.
In the event the Holder delivers a Conversion Notice to the Company after the
earlier of the date which is 10 days prior to the first day of the applicable
Installment Period and the Holder's receipt of the Company Installment Notice in
which the Company elects or is deemed to have elected a Company Redemption, the
principal amount specified in such Conversion Notice shall be deducted (1)
first, from the principal represented by the Company Redemption Amount and then
(2) second, in accordance with Section 2(d)(ix).

                           (c) Mechanics of Company Conversion. Subject to
Section 6(e) below, if the Company delivers a Company Installment Notice and
elects, in whole or in part, a Company Conversion in accordance with Section
6(a), then the applicable Company Conversion Amount, if any, which remain
outstanding shall be converted during the applicable Installment Period by
converting on each Settlement Date during such Installment Period the applicable
Settlement Amount with respect to such Settlement Date, as if the Holder had
delivered a Conversion Notice (in accordance with such Holder's Conversion
Notice Information (as defined in Section 4(m) of the Securities Purchase
Agreement)) pursuant to Section 2 with respect to such Settlement Amount on such
Settlement Date but without the Holder being required to actually deliver such
Conversion Notice; provided that the Conditions to Company Conversion are
satisfied (or waived in writing by the Holder) on such Settlement Date. If the
Conditions to Company Conversion are not satisfied (or

                                       21

<PAGE>

waived in writing by the Holder) on such Settlement Date, then at the option of
the Holder either (i) the Company shall redeem all or any part designated by the
Holder of the unconverted Company Conversion Amount (such designated amount is
referred to as the "FIRST REDEMPTION AMOUNT") on such Settlement Date (the
"FIRST PAYMENT DATE") and the Company shall pay to the Holder on the First
Payment Date, by wire transfer of immediately available funds, an amount in cash
(the "FIRST REDEMPTION PRICE") equal to (A) 100% of the First Redemption Amount
plus (B) the Additional Amount with respect to the First Redemption Amount
calculated as of the First Payment Date, or (ii) the Company Conversion shall be
null and void with respect to all or any part designated by the Holder of the
unconverted Company Conversion Amount and the Holder shall be entitled to all
the rights of a holder of this Note with respect to such amount of the Company
Conversion Amount. If the Company fails to redeem any First Redemption Amount on
the First Payment Date by payment of the First Redemption Price, then the Holder
shall have the rights set forth in Section 6(b) as if the Company failed to pay
the applicable Company Redemption Price (including, without limitation, such
failure constituting a Triggering Event described in Section 3(b)(viii)).
Notwithstanding anything to the contrary in this Section 6, but subject to
Section 14, until the applicable portion of the Company Conversion Amount
(together with the Additional Amount with respect thereto) is converted in
accordance with this Section 6, the Company Conversion Amount (together with the
Additional Amount with respect thereto) may be converted by the Holder into
Shares pursuant to Section 2.

                           (d) Conditions to Company Conversion. For purposes of
this Section 6, "CONDITIONS TO COMPANY CONVERSION" means the following
conditions: (i) during the period beginning on and including the date of the
Holder's receipt of the Company Installment Notice (the "COMPANY INSTALLMENT
NOTICE DATE") and ending on and including the applicable Settlement Date, the
Company shall have delivered Shares upon conversion of Conversion Amounts of
this Note on a timely basis as set forth in Section 2(d)(ii) and delivered
Shares upon exercise of the Warrants on a timely basis as set forth in Section
2(a) of the Warrants; (ii) on each day during the period beginning on and
including the Company Installment Notice Date and ending on and including the
applicable Settlement Date, the Common Stock shall be listed, and trading in the
Common Stock shall not have been suspended, on the Nasdaq National Market or The
New York Stock Exchange, Inc.; (iii) during the period beginning 30 days prior
to the Company Installment Notice Date and ending on and including the
applicable Settlement Date, there shall not have occurred the consummation of a
Change of Control; (iv) during the period beginning on the Issuance Date and
ending on and including the applicable Settlement Date, there shall not have
occurred either (x) the public announcement of a pending, proposed or intended
Change of Control which has not been abandoned, terminated or consummated or (y)
a Triggering Event or an Event of Default (as defined in Section 11) (except for
a Triggering Event (I) which has been cured and the Company has delivered notice
of such cure to the Holder at least 15 Business Days prior to the Company
Installment Notice Date, (II) with respect to which the Company delivered a
Notice of Triggering Event to the Holder at least 15 Business Days prior to the
Company Installment Notice Date and (III) with respect to which the Holder has
not delivered a Notice of Redemption at Option of Holder to the Company prior to
the Company Installment Notice Date); (v) on each day during the period
beginning on and including the Company Installment Notice Date and ending on and
including the applicable Settlement Date, the Registration Statement (as defined
in the Registration Rights

                                       22

<PAGE>

Agreement) shall be effective and available for the sale of at least all of the
Registrable Securities (as defined in the Registration Rights Agreement) and
there shall not have been any Grace Period (as defined in the Registration
Rights Agreement) during such period; (vi) on or prior to the applicable
Settlement Date there shall not have occurred an Exchange Cap Trigger Date (as
defined below), unless prior to the Company Installment Notice Trigger Date the
Company shall have received the Stockholder Approval (as defined below); and
(vii) on each day during the period beginning on and including the Company
Installment Notice Date and ending on and including the applicable Settlement
Date, the Company otherwise shall have been in compliance with in all respects
and shall not have breached or been in breach of any provision, covenant,
representation or warranty of the Securities Purchase Agreement, the
Registration Rights Agreement, any of the Warrants or any of the Notes. For
purposes of this Section 6(d), "EXCHANGE CAP TRIGGER DATE" means the first date
after the Issuance Date on which the Share Issuance Estimate (as defined below)
is greater than the Exchange Cap (as defined in Section 14). For purposes of
this Section 6(d), "SHARE ISSUANCE ESTIMATE" means, as of any date of
determination, the sum of (i) the number Shares issued by the Company as of such
date of determination pursuant to the conversion of Notes and the exercise of
Warrants, (ii) the number of Shares issuable as of such date of determination
pursuant to the exercise of all outstanding Warrants (without regard to any
limitations on the exercise of such Warrants), plus (iii) the number of Shares
equal to the quotient of (A) the aggregate principal amounts (plus accrued and
unpaid interest thereon) of all the Notes outstanding on such date of
determination, divided by (B) the lower of the Fixed Conversion Price then in
effect and 95% of the arithmetic average of the Weighted Average Price of the
Common Stock on each of the 10 consecutive trading days immediately preceding
such date of determination. For purposes of this Section 6(d), "STOCKHOLDER
APPROVAL" means the affirmative vote of the Company's stockholders at a duly
called meeting pursuant to a proxy statement for the approval of the Company's
issuance of all the Shares pursuant to conversions of the Notes and exercise of
the Warrants in accordance with applicable law and the rules and regulations of
the Nasdaq Stock Market, such that the limitations on the Company's obligation
to issue Shares set forth in Section 14 of the Notes and in Section 12 of the
Warrants are no longer applicable.

                           (e) Installment Floor Election. At the Company's
option it may elect to terminate a Company Conversion pursuant to Section 6(c)
if the Conversion Price during the applicable Installment Period falls below a
price (an "INSTALLMENT TRIGGER PRICE") set by the Company (an "INSTALLMENT FLOOR
ELECTION"). The Company may exercise its right to an Installment Floor Election
by including a statement of such election in the Company Installment Notice and
setting forth in such Company Installment Notice the Installment Trigger Price,
which price may not be higher than the Fixed Conversion Price then in effect.
The Installment Floor Election and selection of an Installment Trigger Price
shall be irrevocable with respect to the applicable Installment Period, but the
Installment Trigger Price shall be subject to adjustment for any stock dividend,
stock split, stock combination or other similar transaction. If the Company has
made an Installment Floor Election in accordance with this Section 6(e) and
Section 6(a), then the first trading day, if any, during the applicable
Installment Period on which the Company Conversion Price on such date is less
than the applicable Installment Trigger Price shall constitute the "FLOOR
TRIGGER DATE" with respect to such Installment Period. If a Floor Trigger Date
occurs during an Installment Period, then in accordance with the definitions of
"Settlement Date" and "Installment Period" in

                                       23

<PAGE>

Section 2(a), such Floor Trigger Date shall constitute the last Settlement Date
of such Installment Period. On or prior to the date which is two (2) Business
Days after such Floor Trigger Date (the "SECOND PAYMENT DATE"), the Company
shall redeem all of the Company Conversion Amount which remains unconverted
after such Floor Trigger Date (the "SECOND REDEMPTION AMOUNT"), by payment to
the Holder on or before the Second Payment Date, by wire transfer of immediately
available funds, an amount in cash (the "SECOND REDEMPTION PRICE") equal to the
sum of (A) 100% of the Second Redemption Amount, plus (B) the Additional Amount
with respect to such Second Redemption Amount calculated as of the Second
Payment Date. If the Company fails to redeem any Second Redemption Amount on or
before the Second Payment Date by payment of the Second Redemption Price, then
the Holder shall have the rights set forth in Section 6(b) as if the Company
failed to pay the applicable Company Redemption Price (including, without
limitation, such failure constituting a Triggering Event described in Section
3(b)(viii)).

                  (7) Company Alternative Redemption.

                           (a) General. After the Issuance Date, the Company
shall have the right to redeem some or all of the Principal (a "COMPANY
ALTERNATIVE REDEMPTION") for an amount in cash equal to the sum of (a) 105% of
the principal amount of this Note being redeemed pursuant to this Section 7,
plus (b) the Additional Amount with respect to such principal amount as of the
Company Alternative Redemption Date (as defined below) (the "COMPANY ALTERNATIVE
REDEMPTION PRICE"); provided that the Conditions to Company Alternative
Redemption (as set forth in Section 7(c)) and the conditions of this Section
7(a) and Section 7(b) are satisfied (or waived in writing by the Holder);
provided, further, that the Company may not elect to redeem pursuant to this
Section 7 any principal amount of this Note which is part of any Installment
Amount for any Installment Period beginning prior to the Company Alternative
Redemption Date (as defined below) or with respect to which the Company has
delivered a Company Installment Notice prior to the Company Alternative
Redemption Notice Date (as defined below). The Company may exercise its right to
Company Alternative Redemption by delivering to the Holder written notice
("COMPANY ALTERNATIVE REDEMPTION NOTICE") at least ten (10) Business Days but
not more than 20 Business Days prior to the date of consummation of such
redemption ("COMPANY ALTERNATIVE REDEMPTION DATE"). The date on which the Holder
receives the Company Alternative Redemption Notice is referred to as the
"COMPANY ALTERNATIVE REDEMPTION NOTICE DATE". The Company Alternative Redemption
Notice shall be irrevocable. If the Company elects a Company Alternative
Redemption pursuant to this Section 7(a), then it must simultaneously take the
similar action with respect to the Other Notes. If the Company elects a Company
Alternative Redemption (or similar action under the Other Notes) with respect to
less than all of the aggregate principal amount of the Notes then outstanding
(ignoring for such purposes all principal amounts which are part of Installment
Amounts for any Installment Periods beginning prior to the Company Alternative
Redemption Date or with respect to which the Company has delivered a Company
Installment Notice prior to the Company Alternative Redemption Notice Date or
the corresponding provisions under the Other Notes), then the Company shall
require redemption of a principal amount (together with the related Additional
Amount) from each of the holders of the Notes equal to the product of (I) the
aggregate principal amount of Notes which the Company has elected to redeem
pursuant to this Section 7, multiplied by (II) the fraction, the numerator of
which is the aggregate principal amount of the Notes initially

                                       24

<PAGE>

purchased by such holder on the Issuance Date and the denominator of which is
the aggregate principal amount of the Notes purchased by all holders on the
Issuance Date (such fraction with respect to each holder is referred to as its
"ALLOCATION PERCENTAGE," and such amount with respect to each holder is referred
to as its "PRO RATA REDEMPTION AMOUNT"). In the event that the initial holder of
any Notes shall sell or otherwise transfer any of such holder's Notes, the
transferee shall be allocated a pro rata portion of such holder's Allocation
Percentage. The Company Alternative Redemption Notice shall state (i) the date
selected by the Company for the Company Alternative Redemption Date in
accordance with this Section 7(a), (ii) the aggregate principal amount of the
Notes which the Company has elected to redeem from all of the holders of the
Notes pursuant to this Section 7 and (iii) each holder's Pro Rata Redemption
Amount of the principal amount of the Notes the Company has elected to redeem
pursuant to this Section 7(a).

                           (b) Mechanics of Company Alternative Redemption. If
the Company has exercised its right to Company Alternative Redemption in
accordance with Section 7(a) and the conditions of this Section 7 are satisfied
(including the Conditions to Company Alternative Redemption as set forth in
Section 7(c)) (or waived in writing by the Holder), then the Holder's Pro Rata
Redemption Amount, if any, which remains outstanding on the Company Alternative
Redemption Date shall be redeemed by the Company on such Company Alternative
Redemption Date by the payment by the Company to the Holder on the Company
Alternative Redemption Date, by wire transfer of immediately available funds, of
an amount equal to the Company Alternative Redemption Price for the Holder's Pro
Rata Redemption Amount. Notwithstanding anything to the contrary in this Section
7, but subject to Section 14, until the Company Alternative Redemption Price is
paid in full to the Holder, the Holder may convert its Pro Rata Redemption
Amount (together with the related Additional Amount) into Shares in accordance
with Section 2. All principal amounts of this Note redeemed pursuant to this
Section 7 shall be deducted first from the Installment Amount relating to the
latest Installment Period (i.e., nearest to the Maturity Date) with respect to
which Installment Amounts remain outstanding and then sequentially from the
immediately preceding Installment Periods (and within each such Installment
Amount first from the amounts, if any, which would be subject to a conversion on
the latest Settlement Date within such Installment Period and then sequentially
from the amounts subject to the immediately preceding Settlement Dates).

                           (c) Conditions to Company Alternative Redemption. For
purposes of this Section 7, "CONDITIONS TO COMPANY ALTERNATIVE REDEMPTION" means
the following conditions: (i) during the period beginning on and including the
Company Alternative Redemption Notice Date and ending on and including the
Company Alternative Redemption Date, the Company shall have delivered Shares
upon conversion of Conversion Amounts on a timely basis as set forth in Section
2(d)(ii) and delivered Shares upon exercise of the Warrants on a timely basis as
set forth in Section 2(a) of the Warrants; (ii) on each day during the period
beginning on and including the Company Alternative Redemption Notice Date and
ending on and including the applicable Settlement Date, the Common Stock shall
be listed, and trading in the Common Stock shall not have been suspended, on the
Nasdaq National Market or The New York Stock Exchange, Inc.; (iii) during the
period beginning on the Issuance Date and ending on and including the applicable
Settlement Date, there shall not have occurred either (x) the public
announcement of a pending, proposed or intended Change of Control which has not
been abandoned, terminated or consummated or (y) a Triggering

                                       25

<PAGE>
 Event or an Event of Default (as defined in Section 11) (except for a
Triggering Event (I) which has been cured and the Company has delivered notice
of such cure to the Holder at least 15 Business Days prior to the Company
Alternative Redemption Notice Date, (II) with respect to which the Company
delivered a Notice of Triggering Event to the Holder at least 15 Business Days
prior to the Company Alternative Redemption Notice Date and (III) with respect
to which the Holder has not delivered a Notice of Redemption at Option of Holder
to the Company prior to the Company Alternative Redemption Notice Date); (iv) on
each day during the period beginning on and including the Company Alternative
Redemption Notice Date and ending on and including the applicable Settlement
Date, the Registration Statement (as defined in the Registration Rights
Agreement) shall be effective and available for the sale of at least all of the
Registrable Securities (as defined in the Registration Rights Agreement) and
there shall not have been any Grace Period (as defined in the Registration
Rights Agreement) during such period; (v) if a Change of Control is consummated
after the Issuance Date, the Company Alternative Redemption Date is at least 20
Business Days after the consummation and public announcement of such Change of
Control; (vi) on each day during the period beginning on and including the
Company Alternative Redemption Notice Date and ending on and including the
applicable Settlement Date, the Company otherwise shall have been in compliance
with in all respects and shall not have breached or been in breach of any
provision, covenant, representation or warranty of the Securities Purchase
Agreement, the Registration Rights Agreement, any of the Warrants or any of the
Notes and (vii) the payment by the Company to the Holder of the Company
Alternative Redemption Price is not prohibited by the Amended Credit Facility
(as defined in Section 4(p) of the Securities Purchase Agreement) or any other
agreement to which the Company is a party and the Holder's right to retain such
Company Alternative Redemption Price is not prohibited by the subordination and
intercreditor agreement referred to in the second legend on the face of this
Note.

                           (d) Remedies. In the event that the Company does not
pay the Company Alternative Redemption Price in full for the Holder's Pro Rata
Redemption Amount on the Company Alternative Redemption Date and the Conditions
to the Company Alternative Redemption were satisfied, or to the extent not
satisfied, were waived by the Holder, then in addition to any remedy the Holder
may have under this Note and the Securities Purchase Agreement (including
indemnification pursuant to Section 8 thereof) (i) the Company Alternative
Redemption Price payable in respect of such unredeemed Pro Rata Redemption
Amount shall bear interest at the rate of 2.0% per month (prorated for partial
months) until paid in full and (ii) the Company shall not be permitted to submit
another Company Alternative Redemption Notice without the prior written consent
of the Holder.

                  (8) Certain Trading Restrictions. So long as any of the
Principal of this Note is outstanding, neither the Holder nor any of its
affiliates shall, directly or indirectly, engage in any transaction constituting
a "short sale" (as defined in Rule 3b-3 under the Securities Exchange Act of
1934, as amended (the "1934 ACT")) of the Shares or establish an open "put
equivalent position" (within the meaning of Rule 16a-1(h) under the 1934 Act)
with respect to the Shares (each a "SHORT SALE"), except on those days (each a
"PERMITTED DAY") on which the aggregate short position (including aggregate open
"put equivalent positions") with respect to the Shares of the Holder and its
affiliates prior to giving effect to any Short Sales by the Holder or its
affiliates on such Permitted Day does not exceed the Holder's Permitted Share
Position (as defined below) on such Permitted Day; provided, however, that the
Holder and its affiliates shall only be entitled to engage in transactions which
constitute Short Sales on a Permitted Day to the extent that following such
transaction, the aggregate short position (including aggregate open "put
equivalent positions") with respect to the Shares of the Holder and its
affiliates does not exceed the Holder's Permitted Share

                                       26

<PAGE>

Position. Notwithstanding the foregoing, the restriction on Short Sales set
forth in the first sentence of this Section 8 shall not apply (a) on and after
the first day after the Issuance Date on which there shall have occurred a
Triggering Event or an Event of Default; (b) on or after the first date after
the Issuance Date on which a Change of Control shall have been consummated or
there shall have been a public announcement of a pending, proposed or intended
Change of Control; or (c) with respect to a Short Sale (and such Short Sale
shall be excluded for purposes of determining compliance with the first sentence
of this Section 8) so long as the Holder delivers or is deemed to have delivered
a Conversion Notice or an Exercise Notice (as defined in the Warrants) on or
before the day of such Short Sale entitling the Holder to receive a number of
Shares at least equal to the number of Shares sold in such Short Sale. Subject
to the foregoing restrictions, the Company acknowledges and agrees that nothing
in this Section 8 or elsewhere in this Note or in the Securities Purchase
Agreement, the Warrants or the Registration Rights Agreement prohibits the
Holder (or any of its affiliates) from, and the Holder (and its affiliates) is
permitted to, engage, directly or indirectly, in hedging transactions involving
the Notes, the Warrants and the Shares (including, without limitation, by way of
short sales, purchases and sales of options, swap transactions and synthetic
transactions) at any time. For purposes of this Section 8, "PERMITTED SHARE
POSITION" means, with respect to any date of determination, the sum of (A) the
number of Shares issuable upon conversion (which shall be determined as if a
Conversion Notice was delivered) of all the outstanding principal amounts (other
than 200% of the Installment Amount with respect to an Installment Period if the
date with respect to which this determination is being made is during such
Installment Period) (together with accrued and unpaid interest on such principal
amounts) represented by the Notes held by the Holder and its affiliates (without
regard to any limitations on conversions) on such date, plus (B) if the date
with respect to which this determination is being made is during an Installment
Period, that number of Shares equal to the quotient of (i) 200% of the
Conversion Amount represented by the applicable Installment Amount for the
Holder and similar amounts with respect to its affiliates under similar
provisions in the Notes held by such affiliates, divided by (ii) the lower of
the Fixed Conversion Price then in effect and 95% of the lowest Weighted Average
Price of the Common Stock during the applicable Installment Period, plus (C) the
number of Shares issuable upon exercise of the Warrants held by the Holder and
its affiliates (without regard to any limitations on exercise) on such date.

                  (9) Reservation of Shares.

                           (a) Reservation. The Company shall, so long as any of
the Notes are outstanding, take all action necessary to reserve and keep
available out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Notes, such number of Shares as shall
from time to time be sufficient to effect the conversion of all of the principal
amount then outstanding under the Notes (together with accrued interest
thereon); provided that the number of Shares so reserved shall at no time be
less than 150% of the number of Shares for which the Notes are at any time
convertible (without regard to any limitations on conversions) (the "REQUIRED
RESERVE AMOUNT"). The initial number of Shares reserved for conversions of the
Notes and each increase in the number of shares so reserved shall be allocated
pro rata among the holders of the Notes based on the principal amount of the
Notes held by each holder at the time of issuance of the Notes or increase in
the number of reserved Shares, as the case may be. In the event the Holder shall
sell or otherwise transfer any portion of the Holder's Notes, each transferee
shall be allocated a pro

                                       27

<PAGE>

rata portion of the number of Shares reserved for such transferor. Any Shares
reserved and allocated to any Person which ceases to hold any Notes shall be
allocated to the remaining holders of the Notes, pro rata based on the principal
amount of the Notes then held by such holders.

                           (b) Insufficient Authorized Shares. If at any time
while any of the Notes remain outstanding the Company does not have a sufficient
number of authorized and unreserved Shares to satisfy its obligation to reserve
for issuance upon conversion of the Notes at least a number of Shares equal to
the Required Reserve Amount (an "AUTHORIZED SHARE FAILURE"), then the Company
shall immediately take all action necessary to increase the Company's authorized
Shares to an amount sufficient to allow the Company to reserve the Required
Reserve Amount for the Notes then outstanding. Without limiting the generality
of the foregoing sentence, as soon as practicable after the date of the
occurrence of an Authorized Share Failure, but in no event later than 60 days
after the occurrence of such Authorized Share Failure, the Company shall hold a
meeting of its stockholders for the authorization of an increase in the number
of authorized Shares. In connection with such meeting, the Company shall provide
each stockholder with a proxy statement and shall use its best efforts to
solicit its stockholders' approval of such increase in authorized Shares and to
cause its board of directors to recommend to the stockholders that they approve
such proposal.

                  (10) Voting Rights. Holders of the Notes shall have no voting
rights, except as required by law and as expressly provided in this Note.

                  (11) Defaults and Remedies.

                           (a) Events of Default. An "EVENT OF DEFAULT" is (i)
default in payment of any principal amount of this Note, the Company Redemption
Price or the Company Alternative Redemption Price when and as due; (ii) failure
by the Company for ten (10) days after notice to it to comply with any other
material provision of this Note; (iii) any default in payment of at least
$1,000,000 under or acceleration prior to maturity of any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed of at least $1,000,000 by the
Company or for money borrowed the repayment of at least $1,000,000 of which is
guaranteed by the Company, whether such indebtedness or guarantee now exists or
shall be created hereafter; (iv) if the Company pursuant to or within the
meaning of any Bankruptcy Law (as defined below); (A) commences a voluntary
case; (B) consents to the entry of an order for relief against it in an
involuntary case; (C) consents to the appointment of a Custodian of it or any of
its subsidiaries for all or substantially all of its property; (D) makes a
general assignment for the benefit of its creditors; or (E) admits in writing
that it is generally unable to pay its debts as the same become due; (v) a court
of competent jurisdiction enters an order or decree under any Bankruptcy Law
that: (1) is for relief against the Company in an involuntary case; (2) appoints
a Custodian (as defined below) of the Company or any subsidiary for all or
substantially all of its property; or (3) orders the liquidation of the Company
or any subsidiary; or (vi) the Company fails to file, or is determined to have
failed to file, in a timely manner any report required to be filed with the SEC
pursuant to the 1934 Act. The term "BANKRUPTCY

                                       28

<PAGE>

LAW" means Title 11, U.S. Code, or any similar federal or state law for the
relief of debtors. The term "CUSTODIAN" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law. Within five (5)
Business Days after the occurrence of any Event of Default set forth in clause
(iii) or clause (vi) above, the Company shall deliver written notice thereof to
the Holder.

                           (b) Remedies. If an Event of Default occurs and is
continuing, the Holder of this Note may declare all of this Note, including all
amounts due hereunder (the "ACCELERATION AMOUNT"), to be due and payable
immediately, except that in the case of an Event of Default arising from events
described in clauses (iv) and (v) of Section 11(a), this Note shall become due
and payable without further action or notice. In addition to any remedy the
Holder may have under this Note and the Securities Purchase Agreement, such
unpaid amount shall bear interest at the rate of 2.0% per month (prorated for
partial months) until paid in full. Nothing in this Section 11 shall limit any
other rights the Holder may have under this Note and the Securities Purchase
Agreement, including Section 3 of this Note.

                           (c) Void Acceleration. In the event that the Company
does not pay the Acceleration Amount within five (5) Business Days of this Note
becoming due under Section 11(b), at any time thereafter and until the Company
pays such unpaid Acceleration Amount in full, the Holder shall have the option
(the "VOID ACCELERATION OPTION") to, in lieu of redemption, require the Company
to promptly return this Note to the Holder, by sending written notice thereof to
the Company via facsimile (the "VOID ACCELERATION NOTICE"). Upon the Company's
receipt of such Void Acceleration Notice, (i) the acceleration pursuant to
Section 11(b) shall be null and void, (ii) the Company shall promptly return
this Note, (iii) the Fixed Conversion Price with respect to all the Principal
shall be adjusted to the lesser of (A) the Fixed Conversion Price as in effect
on the date on which the Void Acceleration Notice is delivered to the Company
and (B) the lowest Weighted Average Price of the Common Stock during the period
beginning on and including the date on which this Note became due under Section
11(b) and ending on and including the date on which the Void Acceleration Notice
is delivered to the Company.

                  (12) Other Indebtedness. Payments of principal and other
payments due under this Note shall not be subordinated to any unsecured
obligations of the Company. For so long as this Note is outstanding, the Company
shall not issue or incur any indebtedness or other obligation, except for (a) up
to an aggregate of $12,000,000 of secured indebtedness which replaces the
Amended Credit Facility (as defined in Section 4(p) of the Securities Purchase
Agreement), (b) indebtedness or obligations the holders of which agree in
writing to be subordinate to this Note on terms and conditions reasonably
acceptable to the Holder and (c) up to $10,000,000 original principal amount of
convertible indebtedness which (i) is on substantially the same terms as this
Note (including, without limitation, the amortization schedule of the
Installment Periods and being subject to subordination provisions set forth in
the agreement referred to in the second legend on the face of this Note), (ii)
is not senior to this Note, (iii) is issued by the Company on or before July 1,
2002 and (iv) is issued to a Person or Persons reasonably acceptable to the
Holder.

                                       29

<PAGE>

                  (13) Participation; Restrictions. The Holder shall be entitled
to such dividends paid and distributions made to the holders of Common Stock to
the same extent as if the Holder had converted this Note in full into Shares
(without taking into account any limitations or restrictions on the
convertibility of this Note) immediately prior to the record date for such
dividend or distribution, or, if no such record date is taken, immediately prior
to the date as of which the record holders of Common Stock are to be determined
for such dividend or distribution. Payments made pursuant to the previous
sentence shall be made concurrently with the dividend or distribution to the
holders of Common Stock. While this Note is outstanding, the Company shall not,
directly or indirectly, redeem, repay or purchase any of the Company's capital
stock without the prior express written consent of the Holder (except for the
repayment or redemption of the Notes in accordance with the terms thereof or,
with respect to the Warrants, pursuant to Section 13 of the Warrants). While
this Note is outstanding, the Company shall not enter into any agreement which
would limit or restrict the Company's ability to perform under, or take any
other voluntary action to avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed by it under, this Note, the
Securities Purchase Agreement, the Registration Rights Agreement and the
Warrants.

                  (14) Limitation on Number of Conversion Shares. The Company
shall not be obligated to issue any Shares upon conversion of the Notes if the
issuance of such Shares would exceed that number of Shares which the Company may
issue upon conversion of the Notes (the "EXCHANGE CAP") without breaching the
Company's obligations under the rules or regulations of the Principal Market,
except that such limitation shall not apply in the event that the Company (a)
obtains the approval of its stockholders as required by the applicable rules of
the Principal Market (or any successor rule or regulation) for issuances of
Shares in excess of such amount or (b) obtains a written opinion from outside
counsel to the Company that such approval is not required, which opinion shall
be reasonably satisfactory to the holders representing a majority of the
aggregate principal amounts of the Notes then outstanding. Until such approval
or written opinion is obtained, no purchaser of the Notes pursuant to the
Securities Purchase Agreement (the "PURCHASERS") shall be issued, upon
conversion of the Notes, Shares in an amount greater than the product of (i) the
Exchange Cap amount multiplied by (ii) a fraction, the numerator of which is the
principal amount of the Note issued to such Purchaser pursuant to the Securities
Purchase Agreement and the denominator of which is the aggregate principal
amount of all the Notes issued to the Purchasers pursuant to the Securities
Purchase Agreement (the "CAP ALLOCATION AMOUNT"). In the event that any
Purchaser shall sell or otherwise transfer any of such Purchaser's Notes, the
transferee shall be allocated a pro rata portion of such Purchaser's Cap
Allocation Amount. In the event that any holder of the Notes shall convert all
of such holder's Notes into a number of shares of Common Stock which, in the
aggregate, is less than such holder's Cap Allocation Amount, then the difference
between such holder's Cap Allocation Amount and the number of Shares actually
issued to such holder shall be allocated to the respective Cap Allocation
Amounts of the remaining holders of Notes on a pro rata basis in proportion to
the principal amount then outstanding under the Notes then held by each such
holder.

                  (15) Vote to Change the Terms of the Notes. The written
consent of the Company and the holders representing a majority of the principal
amount then outstanding under the Notes,

                                       30

<PAGE>

shall be required for any change to the Notes (including this Note) and upon
receipt of such consent, each Note shall be deemed amended thereby.

                  (16) Lost or Stolen Notes. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Note, and, in the case of loss, theft or destruction, of
an indemnification undertaking by the Holder to the Company in customary form
and reasonably satisfactory to the Company and, in the case of mutilation, upon
surrender and cancellation of this Note, the Company shall execute and deliver a
new Note of like tenor and date; provided, however, the Company shall not be
obligated to re-issue a Note if the Holder contemporaneously requests the
Company to convert this Note into Shares.

                  (17) Remedies, Characterizations, Other Obligations, Breaches
and Injunctive Relief. The remedies provided in this Note shall be cumulative
and in addition to all other remedies available under this Note, at law or in
equity (including a decree of specific performance and/or other injunctive
relief), no remedy contained herein shall be deemed a waiver of compliance with
the provisions giving rise to such remedy and nothing herein shall limit the
Holder's right to pursue actual damages for any failure by the Company to comply
with the terms of this Note. The Company covenants to the Holder that there
shall be no characterization concerning this instrument other than as expressly
provided herein. Amounts set forth or provided for herein with respect to
payments, conversion and the like (and the computation thereof) shall be the
amounts to be received by the Holder thereof and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the
performance thereof). The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Holder and that the
remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened breach, the Holder
shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.

                  (18) Specific Shall Not Limit General; Construction. No
specific provision contained in this Note shall limit or modify any more general
provision contained herein. This Note shall be deemed to be jointly drafted by
the Company and all Purchasers and shall not be construed against any person as
the drafter hereof.

                  (19) Failure or Indulgence Not Waiver. No failure or delay on
the part of a the Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.

                  (20) Notice. Whenever notice is required to be given under
this Note, unless otherwise provided herein, such notice shall be given in
accordance with Section 9(f) of the Securities Purchase Agreement.

                  (21) Transfer of this Note. The Holder may assign or transfer
some or all of its rights hereunder, subject to compliance with the 1933 Act and
the provisions of Section 2(f) of the

                                       31

<PAGE>

Securities Purchase Agreement, (i) to a Permitted Transferee (as defined below)
without the consent of the Company and (ii) to a Person which is not a Permitted
Transferee with the prior consent of the Company, which consent shall not be
unreasonably withheld. For purposes of this Section 21, a "PERMITTED TRANSFEREE"
means: (i) a Buyer (as defined in the Securities Purchase Agreement); (ii) an
Affiliate (as defined below) of the Holder; (iii) a holder of Notes or Warrants;
(iv) an Affiliate of a holder of Notes or Warrants; (v) any entity which has the
same investment advisor or manager or trading advisor or manager as any of the
Persons described in the immediately preceding clauses (i) through (iv); (vi) a
pledgee (or a transferee of such pledgee) in connection with a bona fide margin
account or other loan or financing arrangement secured by this Note if such
pledgee seeks to enforce or realize such pledge; and (vii) any fund, financial
institution or entity with assets, or assets under management, of at least
$100,000,000. "AFFILIATE" for purposes of this Section 21 means, with respect to
any Person, another Person, directly or indirectly, which (A) has a 25% or more
equity interest in that Person, (B) has a 25% or more common ownership with that
Person, (C) controls that Person, (D) is controlled by that Person, or (E) is
under common control with that person or entity. "CONTROL" or "CONTROLS" for
purposes of this Section 21 means that a Person has the power, directly or
indirectly, to conduct or govern the policies of another Person.

                  (22) Payment of Collection, Enforcement and Other Costs. If:
(i) this Note is placed in the hands of an attorney for collection or
enforcement or is collected or enforced through any legal proceeding; or (ii) an
attorney is retained to represent the Holder in any bankruptcy, reorganization,
receivership of the Company or other proceedings affecting Company creditors'
rights and involving a claim under this Note, then the Company shall pay the
costs incurred by the Holder for such collection, enforcement or action,
including but not limited to reasonable attorneys' fees and disbursements.

                  (23) Cancellation. After all principal and other amounts at
any time owed under this Note have been paid in full or converted into Shares in
accordance with the terms hereof, this Note shall automatically be deemed
canceled, shall be surrendered to the Company for cancellation and shall not be
reissued.

                  (24) Note Exchangeable for Different Denominations. This Note
is exchangeable, upon the surrender hereof by the Holder at the principal office
of the Company, for a new Note or Notes containing the same terms and conditions
and representing in the aggregate the Principal, and each such new Note will
represent such portion of such Principal as is designated by the Holder at the
time of such surrender. The date the Company initially issues this Note will be
deemed to be the "Issuance Date" hereof regardless of the number of times a new
Note shall be issued.

                  (25) Waiver of Notice. To the extent permitted by law, the
Company hereby waives demand, notice, protest and all other demands and notices
in connection with the delivery, acceptance, performance, default or enforcement
of this Note and the Securities Purchase Agreement.

                  (26) Governing Law. This Note shall be construed and enforced
in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this

                                       32

<PAGE>

Note shall be governed by, the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other country or jurisdiction) that would cause
the application of the laws of any jurisdiction or country other than the State
of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in the City of New York, borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Note and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED
HEREBY.

                  (27) Reissuance of Notes. Subject to Section 2(d)(viii), in
the event of a conversion or redemption pursuant to this Note of less than all
of the Principal, the Company shall promptly cause to be issued and delivered to
the Holder, upon tender by the Holder of this Note, a new Note of like tenor
representing the remaining Principal which has not been so converted or
redeemed. The date the Company issued this Note shall be the "Issuance Date"
hereof regardless of the number of times a new Note shall be issued.

                  (28) Effect of Redemption or Conversion; No Prepayment. Upon
payment of the Redemption Price, the Change of Control Redemption Price, the
Company Redemption Price, the Company Alternative Redemption Price, the First
Redemption Price, the Second Redemption Price, or the amount provided for in
Section 2(d)(vii), each in accordance with the terms hereof with respect to any
portion of the principal of this Note, or delivery of Shares upon conversion of
any portion of the principal of this Note in accordance with the terms hereof,
such portion of the principal of this Note shall be deemed paid in full and
shall no longer be deemed outstanding for any purpose. Except as specifically
set forth in this Note, the Company does not have any right, option, or
obligation, to pay any portion of the Principal at any time prior to the
Maturity Date.

                  (29) Payment Set Aside. To the extent that the Company makes a
payment or payments to the Holder hereunder or the Holder enforces or exercises
its rights hereunder, and such payment or payments or the proceeds of such
enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
by a trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, U.S. state or federal law, common law or
equitable cause of action), then to the extent of any such restoration the
obligation or part thereof originally intended to be satisfied shall be revived
and

                                       33

<PAGE>

continued in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.

                                   * * * * * *

                                       34

<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Note to be signed by
___________________, its _____________________________, as of the ____ day of
_________ 2002.

                                                  INTERVOICE-BRITE, INC.

                                                  By:
                                                     ---------------------------
                                                  Name:
                                                       -------------------------
                                                  Title:
                                                        ------------------------

<PAGE>

                                    EXHIBIT I

                             INTERVOICE-BRITE, INC.
                                CONVERSION NOTICE

Reference is made to the Convertible Note (the "NOTE") of InterVoice-Brite,
Inc., a Texas corporation (the "COMPANY"), payable to the undersigned. In
accordance with and pursuant to the Note, the undersigned hereby elects to
convert the Conversion Amount (as defined in the Note) of the Note indicated
below into shares of Common Stock, no par value (the "COMMON STOCK"), of the
Company, as of the date specified below.

         Date of Conversion:
                            ----------------------------------------------------

         Aggregate Conversion Amount to be converted:
                                                     ---------------------------

Please confirm the following information:

         Conversion Price:
                          ------------------------------------------------------

         Number of shares of Common Stock to be issued:
                                                       -------------------------

         Is the Variable Price being relied on pursuant to Section 2(f)(iii) of
the Note? (check one) YES      No
                          ----    ----

Please issue the Common Stock into which the Note is being converted in the
following name and to the following address:

         Issue to:
                  --------------------------------------------------------------

         Facsimile Number:
                          ------------------------------------------------------

         Authorization:
                       ---------------------------------------------------------

                  By:
                     -----------------------------------------
                  Title:
                        --------------------------------------

         Dated:
               -----------------------------------------------------------------

         Account Number (if electronic book entry transfer):
                                                            --------------------

         Transaction Code Number (if electronic book entry transfer):
                                                                     -----------

<PAGE>

                                 ACKNOWLEDGMENT

         The Company hereby acknowledges this Conversion Notice and hereby
directs [TRANSFER AGENT] to issue the above indicated number of shares of Common
Stock in accordance with the Transfer Agent Instructions dated ___________ ___,
200_ from the Company and acknowledged and agreed to by [TRANSFER AGENT].

                                                  INTERVOICE-BRITE, INC.

                                                  By:
                                                     ---------------------------
                                                  Name:
                                                       -------------------------
                                                  Title:
                                                        ------------------------

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