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                             RATEXCHANGE CORPORATION

                                       AND

                                 MURPHY & DURIEU

                             -----------------------

                                PLACEMENT AGENT'S
                                WARRANT AGREEMENT

                          Dated as of November 28, 2001

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<PAGE>

     PLACEMENT  AGENT'S WARRANT  AGREEMENT dated as of November 28, 2001 between
RATEXCHANGE  CORPORATION,  a Delaware corporation (the "Company"),  and MURPHY &
DURIEU, a New York limited  partnership,  (hereinafter  referred to variously as
the "Holder" or the "Placement Agent").

                              W I T N E S S E T H:

     WHEREAS,  the  Company  proposes  to  issue to the  Placement  Agent or its
designee(s)  warrants  ("Warrants") to purchase six and one-half (6.5) placement
agent units  representing  the number of placement  agent units (the  "Placement
Agent Units") of the Company equal to 10% of the aggregate  number of sixty-five
(65) units (the "Units") sold in the  Placement  (as defined  below).  Each Unit
sold in the Placement  consists of (i) a note  (collectively the "Notes") in the
principal  amount of  $50,000  bearing  interest  at an  annual  rate of 12% and
convertible  into shares of the Company's  common  stock,  $0.0001 par value per
share (the  "Common  Stock") at an initial  price  equal to $0.37 per share (the
"Conversion  Price"),  representing the higher of (x) $0.35 per share or (y) the
per  share  price of the  Common  Stock as  evidenced  by the last  trade on the
American  Stock  Exchange  prior to each  closing of the sale of the Units,  and
12,500 Class A Redeemable  Common Stock Purchase  Warrants (the "Stock  Purchase
Warrants").  Each Stock  Purchase  Warrant  entitles  the holder to purchase one
share of Common  Stock at an initial  price equal to the  Conversion  Price (the
"Stock Purchase Warrant Exercise Price").  Each Placement Agent Unit consists of
(i) at the holder's  option except as otherwise  provided  herein,  either (A) a
Note, or (B) up to such number of fully paid and non-assessable shares of Common
Stock which is equal to the total number of securities  issuable upon conversion
of the original  principal amount of a Note issued in the Placement  (whether or
not the Notes have been converted and  notwithstanding  whether or not the Notes
have been repaid) based upon an initial conversion price equal to the Conversion
Price, subject to such adjustments as found in the Note (collectively, the "Note
Shares"), and (ii) 12,500 Class A Warrants; and

     WHEREAS,  the Placement  Agent has agreed  pursuant to the placement  agent
agreement (the "Placement Agent  Agreement") dated as of the date hereof, by and
between the Placement Agent and the Company,  to act as the exclusive  placement
agent in  connection  with the private  offering of  sixty-five  (65) Units (the
"Placement")  on a best efforts basis at an offering  price of $50,000 per Unit;
and

     WHEREAS,  the  Warrants  to be issued  pursuant to this  Agreement  will be
issued  at  each  Closing  (as  such  term is  defined  in the  Placement  Agent
Agreement) by the Company to the Placement  Agent in  consideration  for, and as
part of the Placement  Agent's  compensation  in connection  with, the Placement
Agent acting as the exclusive  placement  agent pursuant to the Placement  Agent
Agreement;

     NOW,  THEREFORE,  in  consideration  of the  premises,  the  payment by the
Placement Agent to the Company of ten dollars  ($10.00),  the agreements  herein
set forth and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:

     1. Grant.  The Holder is hereby granted the right to purchase,  at any time
from the last  Closing  Date (as such term is  defined  in the  Placement  Agent
Agreement)  until  5:00 p.m.  New York time on the date five  years  after  such
Closing  Date, a number of Placement  Agent Units equal to 10% of the  aggregate
number of Units  sold in the  Placement  at an  exercise  price of  $60,000  per
Placement Agent Unit subject to the terms and conditions of this Agreement.

     2.  Warrant   Certificates.   The  warrant   certificates   (the   "Warrant
Certificates") delivered and to be delivered pursuant to this Agreement shall be
substantially in the form set forth in Exhibit A,

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attached  hereto  and made a part  hereof,  with  such  appropriate  insertions,
omissions,  substitutions, and other variations as required or permitted by this
Agreement.

     3. Exercise of Warrant

          3.1 Method of Exercise for Cash. The Warrants are exercisable for cash
at the exercise price per Placement  Agent Unit as set forth in Section 6 hereof
payable by certified  or official  bank check in New York  Clearinghouse  funds.
Upon  surrender  of a Warrant  Certificate,  together  with the annexed  Form of
Election to Purchase  pursuant to this  Section 3.1 (the "Cash  Election  Form")
duly  executed and payment of the Exercise  Price (as  hereinafter  defined) for
Placement Agent Units purchased,  at the Company's  principal offices (currently
located at 100 Pine Street, Suite 500, San Francisco, California 94111-5101) the
registered  holder  ("Holder" or  "Holders") of a Warrant  Certificate  shall be
entitled  to receive (i) at the option of the Holder  (the  "Exercise  Option"),
either  (A) a Note in the  principal  amount  of  $50,000  times  the  number of
Warrants   exercised  (the  "Principal   Amount"),   or  (B)  a  certificate  or
certificates  for such number of Note Shares as shall equal the Principal Amount
divided by the then existing  Conversion  Price of the Notes; and (ii) the Stock
Purchase Warrants so purchased. The Holder shall exercise the Exercise Option by
checking the  appropriate  box in the Cash Election  Form.  The purchase  rights
represented  by each Warrant  Certificate  are  exercisable at the option of the
Holder  thereof,  in whole or in part  (but not as to  fractional  shares of the
Common Stock underlying the Warrants). Warrants may be exercised to purchase all
or part of the Placement  Agent Units  represented  thereby.  In the case of the
purchase  of less  than all the  Placement  Agent  Units  purchasable  under any
Warrant Certificate,  the Company shall cancel said Warrant Certificate upon the
surrender  thereof and shall  execute and deliver a new Warrant  Certificate  of
like tenor for the unexercised  balance of the Placement Agent Units purchasable
thereunder.

          3.3 Definition of Market Price.

               (a) The "Market Price" of a Placement  Agent Unit shall be deemed
to be the sum of (x) the per share  Market  Price of the Common  Stock times the
total number of shares of Common Stock issuable upon  conversion of the original
principal  amount of a Note and (y) the difference  between the per share Market
Price of the Common Stock and the Stock  Purchase  Warrant  Exercise Price times
the number of Stock Purchase Warrants in such Placement Agent Unit.

               (b) The per share "Market  Price" of the Common Stock at any date
shall be deemed to be, the  average of the daily  closing  prices for the thirty
(30)  consecutive  trading days  commencing  forty five (45) trading days before
such date. The closing price for each day shall be the last reported sales price
regular  way or, in case no such  reported  sale  takes  place on such day,  the
closing bid price  regular  way, in either  case as  officially  reported by the
principal securities exchange on which the Common Stock is listed or admitted to
trading or by the National Association of Securities Dealers Automated Quotation
System  ("NASDAQ")  National  Market  ("NNM")  or the  NASDAQ  Small Cap  Market
("NSC"),  or, if the Common  Stock is not listed or  admitted  to trading on any
national  securities  exchange or quoted on NNM or NSC, the average  closing bid
price as furnished by the  National  Association  of  Securities  Dealers,  Inc.
("NASD")  through the  NASDAQ,  or similar  organization  if NASDAQ is no longer
reporting such information.

               (c) If the per share  Market  Price of the Common Stock cannot be
determined pursuant to Section 3.3(b) above, then it shall be determined in good
faith (using  customary  valuation  methods) by resolution of the members of the
Board of Directors of the Company,  based on the best  information  available to
it.

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<PAGE>

     4.  Issuance  of  Certificates.  Upon the  exercise  of the  Warrants,  the
issuance of Notes or certificates  for the Note Shares,  as the case may be, the
Stock Purchase Warrants, or other securities, property or rights underlying such
Warrants (collectively the "Underlying Securities") shall be made forthwith (and
in any  event  such  issuance  shall  be made  within  five  (5)  business  days
thereafter) without charge to the Holder thereof including,  without limitation,
any tax which may be  payable  in  respect  of the  issuance  thereof,  and such
certificates  shall  (subject to the  provisions  of Sections 5 and 7 hereof) be
issued  in the name of,  or in such  names as may be  directed  by,  the  Holder
thereof;  provided,  however,  that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance and
delivery  of any such  certificates  in a name other than that of the Holder and
the Company shall not be required to issue or deliver such  certificates  unless
or until the person or persons  requesting the issuance  thereof shall have paid
to the  Company  the  amount  of  such  tax or  shall  have  established  to the
satisfaction of the Company that such tax has been paid.

     The Warrant  Certificates and the certificates  representing the Underlying
Securities shall be executed on behalf of the Company by the manual or facsimile
signature  of the then  Chairman or Vice  Chairman of the Board of  Directors or
President or Vice President of the Company under its corporate  seal  reproduced
thereon,  attested to by the manual or facsimile signature of the then Secretary
or Assistant Secretary of the Company.  Warrant  Certificates shall be dated the
date of  execution by the Company upon  initial  issuance,  division,  exchange,
substitution or transfer.

     5.   Restriction  On  Transfer  of  Warrants.   The  Holder  of  a  Warrant
Certificate,  by its acceptance thereof,  covenants and agrees that the Warrants
are being,  and the Underlying  Securities  will be, acquired for investment and
not with a view to the distribution thereof.

     6. Exercise Price; Adjustment of Note Conversion and Stock Purchase Warrant
Exercise Prices.

          6.1  Exercise  Price.  The  exercise  price of each  Warrant  shall be
$60,000 per Placement Agent Unit.

          6.2 Adjustment of Note Conversion and Stock Purchase  Warrant Exercise
Prices.  The  Conversion  Price of the  Notes  and the  Stock  Purchase  Warrant
Exercise  Price of the Stock  Purchase  Warrants shall be adjusted in accordance
with the "anti-dilution"  provisions set forth in such securities  commencing on
the date hereof.

     7. Registration Rights.

     7.1  Registration  Under the  Securities  Act of 1933. The Warrants and the
Underlying  Securities have not been registered under the Securities Act of 1933
(the  "Act").  The  Warrants  and upon  exercise,  in part or in  whole,  of the
Warrants,  certificates  representing  the Underlying  Securities shall bear the
following legend:

     The securities  represented by this  certificate  have not been  registered
     under the Securities Act of 1933 (the "Act"), and may not be offered, sold,
     pledged  hypothecated,  assigned or transferred  except  pursuant to (i) an
     effective  registration  statement  under  the  Act,  (ii)  to  the  extent
     applicable,  Rule 144 under the Act (or any  similar  rule  under  such Act
     relating to the disposition of securities), or (iii) an opinion of counsel,
     if such opinion shall be reasonably  satisfactory to counsel to the issuer,
     that an exemption from registration under such Act is available.

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     7.2 Piggyback  Registration.  If, at any time during the  five-year  period
commencing on the date the Warrants are issued, the Company proposes to register
any of its  securities  under the Act (other than pursuant to Form S-8, S-4 or a
comparable  registration  statement)  the Company  will give  written  notice by
registered  mail,  at least  thirty  (30) days  prior to the filing of each such
registration  statement,  to the Placement Agent and to all other Holders of the
Underlying Securities of its intention to do so. If the Placement Agent or other
Holders of the Underlying  Securities notify the Company within twenty (20) days
after  receipt of any such  notice of its or their  desire to  include  any Note
Shares and/or Warrant Shares (collectively the "Registrable Securities") in such
proposed  registration  statement,  the Company shall afford the Placement Agent
and such Holders of the Registrable  Securities the opportunity to have any such
Registrable Securities registered under such registration statement.

     Notwithstanding  the provisions of this Section 7.2, the Company shall have
the right at any time after it shall have given written notice  pursuant to this
Section 7.2 (irrespective of whether a written request for inclusion of any such
securities  shall  have  been  made)  to elect  not to file  any  such  proposed
registration  statement,  or to withdraw  the same after the filing but prior to
the effective date thereof.

     7.3  Covenants  With  Respect  to  Registration.  In  connection  with  any
registration  under  Section 7.  hereof,  the  Company  covenants  and agrees as
follows:

     (a) The  Company  shall  pay all  costs  (excluding  fees and  expenses  of
Holder(s)' counsel and any underwriting or selling  commissions or other charges
of any  broker-dealer  acting on  behalf of  Holder(s)),  fees and  expenses  in
connection  with all  registration  statements  filed  pursuant to Sections  7.2
hereof including,  without limitation,  the Company's legal and accounting fees,
printing expenses, blue sky fees and expenses.

     (b) The Company will use its reasonable best efforts to qualify or register
the Registrable Securities included in a registration statement for offering and
sale under the  securities  or blue sky laws of such  states as  reasonably  are
requested by the Holder(s),  provided that the Company shall not be obligated to
execute  or file any  general  consent  to service of process or to qualify as a
foreign corporation to do business under the laws of any such jurisdiction.

     (c) The Company shall indemnify the Holder(s) of the Registrable Securities
to be sold pursuant to any registration  statement and each person,  if any, who
controls  such  Holders  within the  meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against all loss, claim, damage, expense or liability
(including  all  expenses  reasonably  incurred in  investigating,  preparing or
defending  against any claim whatsoever) to which any of them may become subject
under the Act,  the Exchange Act or  otherwise,  arising from such  registration
statement but only to the same extent and with the same effect as the provisions
contained in Section 6 of the Placement  Agent  Agreement  pursuant to which the
Company has agreed to indemnify the Placement Agent.

     (d) The  Holder(s) of the  Registrable  Securities to be sold pursuant to a
registration statement,  and their successors and assigns, shall severally,  and
not jointly,  indemnify the Company, its officers and directors and each person,
if any, who controls the Company  within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, against all loss, claim, damage or expense or
liability   (including  all  expenses   reasonably  incurred  in  investigating,
preparing or defending  against any claim  whatsoever)  to which they may become
subject under the Act, the Exchange Act or otherwise,  arising from  information
in writing  furnished by or on behalf of such  Holders,  or their  successors or
assigns,  for  specific  inclusion  in such  registration  statement to the same
extent and with the same effect as the provisions  contained in Section 6 of the
Placement  Agent  Agreement  pursuant to which the Placement Agent has agreed to
indemnify the Company.

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     (e) Nothing contained in this Agreement shall be construed as requiring the
Holder(s)  to  exercise  their  Warrants  prior  to the  initial  filing  of any
registration statement or the effectiveness thereof.

     (f) For purposes of this Agreement, the term "Majority" in reference to the
Holders of Underlying  Securities shall mean in excess of fifty percent (50%) of
then outstanding  Underlying Securities that (i) are not held by the Company, an
affiliate,  officer,  creditor,  employee  or  agent  thereof  or any  of  their
respective affiliates, members of their family, persons acting as nominees or in
conjunction  therewith and (ii) have not been resold to the public pursuant to a
registration statement filed with the Commission under the Act.

     Anything to the contrary notwithstanding, the Company shall not be required
to register any Registrable  Securities  that, in the reasonable  opinion of the
Company's  counsel,  may be sold  pursuant to the  exemption  from  registration
provided  by Section  (k) of Rule 144  promulgated  under the Act.  8. Merger or
Consolidation or Sale .

          (a) In case of any consolidation of the Company with, or merger of the
Company with, or merger of the Company into,  another  corporation (other than a
consolidation or merger which does not result in any  reclassification or change
of the outstanding  Common Stock),  the corporation formed by such consolidation
or merger  shall  execute  and  deliver  to the  Holder a  supplemental  warrant
agreement  providing  that the Holder of each Warrant then  outstanding or to be
outstanding  shall  have the right  thereafter  (until  the  expiration  of such
Warrant)  to receive,  upon  exercise  of such  Warrant,  the kind and amount of
shares  of  stock  and  other  securities  and  property  receivable  upon  such
consolidation,  merger, sale or transfer by a Holder of the number of Underlying
Securities for which such Warrant might have been exercised immediately prior to
such  consolidation,  merger,  sale or  transfer.  The above  provision  of this
subsection shall similarly apply to successive consolidations or mergers.

          (b)  In  the  event  of  (i)  the  sale  by  the  Company  of  all  or
substantially  all of its  assets,  or (ii) the  engagement  by the Company in a
"Rule 13e-3  transaction"  as defined in  paragraph  (a)(3) of Rule 13e-3 of the
General Rules and Regulations under the Exchange Act, or (iii) a distribution to
the Company's stockholders of any cash, assets,  property,  rights, evidences of
indebtedness,  securities  or any  other  thing  of  value,  or any  combination
thereof,  the Holders of the  unexercised  Warrants shall receive notice of such
sale,  transaction  or  distribution  twenty (20) days prior to the date of such
sale or the record date for such  transaction  or  distribution,  as applicable,
and, if they exercise such Warrants prior to such date,  they shall be entitled,
in addition to the shares of Common Stock issuable upon the exercise thereof, to
receive  such  property,   cash,  assets,  rights,   evidence  of  indebtedness,
securities  or any other  thing of value,  or any  combination  thereof,  on the
payment date of such sale, transaction or distribution.

     9.  Exchange  and  Replacement  of  Warrant   Certificates.   Each  Warrant
Certificate is exchangeable  without expense,  upon the surrender thereof by the
registered  Holder at the principal  executive office of the Company,  for a new
Warrant  Certificate  of like tenor and date  representing  in the aggregate the
right to purchase the same number of Placement Agent Units in such denominations
as shall be designated by the Holder thereof at the time of such surrender.

     Upon receipt by the Company of evidence  reasonably  satisfactory  to it of
the loss, theft,  destruction or mutilation of any Warrant Certificate,  and, in
case of  loss,  theft  or  destruction,  of  indemnity  or  security  reasonably
satisfactory to it, and reimbursement to the Company of all reasonable  expenses
incidental  thereto,  and upon surrender and  cancellation  of the Warrants,  if
mutilated,  the Company will make and deliver a new Warrant  Certificate of like
tenor, in lieu thereof.

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     10. Elimination of Fractional Interests.  The Company shall not be required
to issue certificates  representing fractions of shares of Common Stock upon the
exercise of the Warrants, it being the intent of the parties that all fractional
interests  shall be  eliminated by rounding any fraction up or down, as the case
may be,  to the  nearest  whole  number  of  shares  of  Common  Stock  or other
securities, properties or rights.

     11.  Reservation of Securities.  The Company shall at all times reserve and
keep  available out of its  authorized  shares of Common  Stock,  solely for the
purpose of issuance upon the exercise of the Warrants,  such number of shares of
Common Stock or other securities, properties or rights as shall be issuable upon
the exercise  thereof.  The Company  covenants and agrees that, upon exercise of
the Warrants and payment of the Exercise  Price  therefor,  all shares of Common
Stock and other securities issuable upon such exercise shall be duly and validly
issued,  fully paid,  non-assessable and not subject to the preemptive rights of
any stockholder.

     12. Notices to Warrant Holders.  Nothing  contained in this Agreement shall
be construed as  conferring  upon the Holders the right to vote or to consent or
to receive  notice as a stockholder  in respect of any meetings of  stockholders
for the  election  of  directors  or any other  matter,  or as having any rights
whatsoever as a stockholder of the Company.  If,  however,  at any time prior to
the expiration of the Warrants and their exercise,  any of the following  events
shall occur:

          (a) the  Company  shall take a record of the  holders of its shares of
Common  Stock  for the  purpose  of  entitling  them to  receive a  dividend  or
distribution  payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings,  as indicated by the
accounting  treatment  of such  dividend  or  distribution  on the  books of the
Company; or

          (b) the Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible into
or exchangeable for shares of capital stock of the Company, or any option, right
or warrant to subscribe therefor; or

          (c) a  dissolution,  liquidation  or winding up of the Company  (other
than  in  connection  with  a  consolidation  or  merger)  or a  sale  of all or
substantially  all of its property,  assets and business as an entirety shall be
proposed;

     then,  in any one or more of said  events,  the Company  shall give written
notice of such  event at least  fifteen  (15) days  prior to the date fixed as a
record date or the date of closing the transfer books for the  determination  of
the  stockholders  entitled  to  such  dividend,  distribution,  convertible  or
exchangeable  securities  or  subscription  rights,  or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer  books, as the case may be.
Failure to give such notice or any defect  therein shall not affect the validity
of any action taken in connection  with the  declaration  or payment of any such
dividend,  or the issuance of any  convertible or  exchangeable  securities,  or
subscription  rights,   options  or  warrants,   or  any  proposed  dissolution,
liquidation, winding up or sale.

     13. Notices.

     All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been duly made when delivered,  or mailed
by registered or certified mail, return receipt requested:

          (a) If to the  registered  Holder of the  Warrants,  to the address of
such Holder as shown on the books of the Company; or

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          (b) If to the Company, to the address set forth in Section 3 hereof or
to such other address as the Company may designate by notice to the Holders.

     14.  Supplements  and  Amendments.  The Company and the Placement Agent may
from time to time supplement or amend this Agreement without the approval of any
Holders of Warrant  Certificates  (other than the  Placement  Agent) in order to
cure any  ambiguity,  to correct or supplement  any provision  contained  herein
which may be defective or inconsistent  with any provisions  herein,  or to make
any other provisions in regard to matters or questions  arising  hereunder which
the Company and the  Placement  Agent may deem  necessary or desirable and which
the  Company  and the  Placement  Agent  deem  shall not  adversely  affect  the
interests  of the  Holders  of Warrant  Certificates.  To  otherwise  amend this
Agreement,  the prior  written  consent of the Holders of at least a majority of
the Underlying Securities shall be required.

     15. Successors. All the covenants and provisions of this Agreement shall be
binding  upon and inure to the  benefit of the  Company,  the  Holders and their
respective successors and assigns hereunder.

     16. Termination. This Agreement shall terminate at the close of business on
November 28, 2004. Notwithstanding the foregoing, the indemnification provisions
of Section 7 shall  survive  such  termination  until the close of  business  on
November 28, 2012.

     17.  Governing  Law;  Submission to  Jurisdiction.  This Agreement and each
Warrant Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of New York and for all  purposes  shall be  construed  in
accordance  with the laws of said State  without  giving  effect to the rules of
said State governing the conflicts of laws.

     The  Company,  the  Placement  Agent and the Holders  hereby agree that any
action,  proceeding  or claim  against it arising out of, or relating in any way
to, this Agreement  shall be brought and enforced in the courts of the State of,
New York or of the United  States of America  for the  Southern  District of New
York, and irrevocably submits to such jurisdiction,  which jurisdiction shall be
exclusive.  The Company,  the Placement Agent and the Holders hereby irrevocably
waive any objection to such exclusive  jurisdiction or inconvenient  forum.  Any
such  process or summons to be served  upon any of the  Company,  the  Placement
Agent  and the  Holders  (at the  option  of the  party  bringing  such  action,
proceeding or claim) may be served by transmitting a copy thereof, by registered
or certified mail, return receipt requested, postage prepaid, addressed to it at
the  address as set forth in Section 13  hereof.  Such  mailing  shall be deemed
personal  service and shall be legal and binding upon the party so served in any
action,  proceeding or claim.  The Company,  the Placement Agent and the Holders
agree that the prevailing  party(ies) in any such action or proceeding  shall be
entitled to recover from the other party(ies) all of its/their  reasonable legal
costs and  expenses  relating to such action or  proceeding  and/or  incurred in
connection with the preparation therefor.

     18. Entire Agreement; Modification. This Agreement (including the Placement
Agent Agreement to the extent  portions  thereof are referred to herein) contain
the entire understanding  between the parties hereto with respect to the subject
matter hereof and may not be modified or amended except by a writing duly signed
by the party  against  whom  enforcement  of the  modification  or  amendment is
sought.

     19.  Severability.  If any provision of this Agreement  shall be held to be
invalid or unenforceable,  such invalidity or unenforceability  shall not affect
any other provision of this Agreement.

                                       8
<PAGE>

     20.  Captions.  The caption  headings of the Sections of this Agreement are
for  convenience  of  reference  only and are not  intended,  nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.

     21.  Benefits  of this  Agreement.  Nothing  in  this  Agreement  shall  be
construed  to give to any person or  corporation  other than the Company and the
Placement Agent and any other registered  Holder(s) of the Warrant  Certificates
or Underlying  Securities  any legal or equitable  right,  remedy or claim under
this Agreement;  and this Agreement shall be for the sole and exclusive  benefit
of the Company and the  Placement  Agent and any other  Holder(s) of the Warrant
Certificates or Underlying Securities.

     22.  Counterparts.  This  Agreement  may  be  executed  in  any  number  of
counterparts and each of such  counterparts  shall for all purposes be deemed to
be an original,  and such counterparts shall together constitute but one and the
same instrument.

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                                       9
<PAGE>

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
duly executed, as of the day and year first above written.

     [SEAL]

                                     RATEXCHANGE CORPORATION

                                     By: ________________________________
                                         D. Jonathan Merriman
                                         Chairman and Chief Executive Officer

Attest:

________________________________
Christopher L. Aguilar
Secretary

                                     MURPHY & DURIEU

                                     By: ________________________________
                                         Name:
                                         Title:

                                       10
<PAGE>

                                    EXHIBIT A

THE WARRANTS  REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES  ISSUABLE
UPON EXERCISE  THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE  "ACT"),  OR ANY STATE  SECURITIES  STATUTE  AND MAY NOT BE  OFFERED  SOLD,
PLEDGED,  HYPOTHECATED,  ASSIGNED  OR  TRANSFERRED  EXCEPT  PURSUANT  TO: (i) AN
EFFECTIVE  REGISTRATION  STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
RULE 144 UNDER  THE ACT (OR ANY  SIMILAR  RULE  UNDER  THE ACT  RELATING  TO THE
DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF THE OPINION SHALL
BE REASONABLY  SATISFACTORY  TO COUNSEL FOR THE ISSUER,  THAT AN EXEMPTION  FROM
REGISTRATION UNDER THE ACT IS AVAILABLE.

THE  TRANSFER OR EXCHANGE OF THE WARRANTS  REPRESENTED  BY THIS  CERTIFICATE  IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.

                            EXERCISABLE ON OR BEFORE

                   5:00 P.M., NEW YORK TIME, November __, 2004

No. W-01                                                 _____ Warrants

                               WARRANT CERTIFICATE

     This Warrant  Certificate  certifies  that MURPHY & DURIEU,  or  registered
assigns,  is the registered  holder of ______ Warrants to purchase,  at any time
from  November  __,  2001 until 5:00 p.m.  New York time on  November  __,  2004
("Expiration  Date"),  up to ______  placement agent units (the "Placement Agent
Units") of RATEXCHANGE CORPORATION,  a Delaware corporation (the "Company"),  at
the exercise  price (the "Exercise  Price") of $60,000 per Placement  Agent Unit
upon surrender of this Warrant  Certificate and payment of the Exercise Price at
an office or agency of the Company,  or by surrender of this Warrant Certificate
in lieu of cash payment,  but subject to the  conditions set forth herein and in
the  Placement  Agent's  Warrant  Agreement,  dated as of the date  hereof  (the
"Warrant  Agreement"),  between the Company and MURPHY & DURIEU.  Payment of the
Exercise  Price shall be made by  certified  or official  bank check in New York
Clearing House funds payable to the order of the Company or by surrender of this
Warrant  Certificate.  Each Placement  Agent Unit shall consist of (i) except as
otherwise  provided  in the  Warrant  Agreement,  such  number of fully paid and
non-assessable  shares of common stock, $0.0001 par value per share (the "Common
Stock") which is equal to a total number of securities  issuable upon conversion
of $50,000 in principal amount of the note (the "Notes") issued in the Placement
(whether or not the Notes have been converted and notwithstanding whether or not
the Notes have been repaid) based upon an initial  conversion price equal to the
higher of (x) $0.35 per share or (y) the per share price of the Common  Stock as
evidenced by the last trade on the American  Stock Exchange prior to the closing
of the sale of the Units (the "Conversion  Price"),  subject to such adjustments
as found in the Note,  or a Note in the  principal  amount of $50,000;  and (ii)
12,500  Class A Warrants.  Each Class A Warrant  entitles the holder to purchase
one share of Common Stock at an initial price equal to the Conversion Price.

     No  Warrant  may be  exercised  after  5:00  p.m.,  New York  time,  on the
Expiration Date, at which time all Warrants  evidenced hereby,  unless exercised
prior thereto, shall thereafter be void.

                                       11
<PAGE>

     The  Warrants  evidenced  by this  Warrant  Certificate  are part of a duly
authorized  issue of Warrants  issued pursuant to the Warrant  Agreement,  which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations,  duties and immunities thereunder of the Company and the
holders  (the words  "holders"  or "holder"  meaning the  registered  holders or
registered holder) of the Warrants.

     Upon  due  presentment  for   registration  of  transfer  of  this  Warrant
Certificate at an office or agency of the Company, a new Warrant  Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants  shall be issued to the  transferee(s)  in exchange for this Warrant
Certificate,  subject to the  limitations  provided  herein  and in the  Warrant
Agreement,  without any charge except for any tax or other  governmental  charge
imposed in connection with such transfer.

     Upon the  exercise  of less  than  all of the  Warrants  evidenced  by this
Certificate,  the  Company  shall  forthwith  issue to the  holder  hereof a new
Warrant Certificate representing such number of unexercised Warrants.

     The  Company  may deem and treat  the  registered  holder(s)  hereof as the
absolute owner(s) of this Warrant Certificate  (notwithstanding  any notation of
ownership  or other  writing  hereon  made by  anyone),  for the  purpose of any
exercise hereof,  and of any distribution to the holder(s)  hereof,  and for all
other  purposes,  and the  Company  shall not be  affected  by any notice to the
contrary.

     All terms used in this Warrant  Certificate that are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.

     IN WITNESS WHEREOF,  the Company has caused this Warrant  Certificate to be
duly executed under its corporate seal.

Dated as of November __, 2001

                                                RATEXCHANGE CORPORATION

[SEAL]                                          By: _________________________
                                                    Name: D. Jonathan Merriman
                                                    Title:

Attest:

________________________________
Christopher L. Aguilar
Secretary

                                       12
<PAGE>

             [FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1]

     The  undersigned   hereby   irrevocably   elects  to  exercise  the  right,
represented by this Warrant  Certificate,  to purchase Placement Agent Units and
herewith  tenders in payment for such  securities a certified  or official  bank
check  payable  in New York  Clearing  House  Funds to the order of  RATEXCHANGE
CORPORATION  (the  "Company")  in the amount of $ , all in  accordance  with the
terms of Section 3.1 of the Placement  Agent's Warrant  Agreement by and between
the Company and the Placement Agent.

         The undersigned elects to purchase [check box]
         |_|   Note in the principal amount $______________*.
         |_|   ______** shares of Common Stock

     The  undersigned   requests  that   certificates  for  such  securities  be
registered in the name of _____________  whose address is  _____________________
and that such  certificates  be delivered to  ________________  whose address is
________________. Dated:

                              Signature ____________________________________

                              (Signature must conform in all respects to name of
                              holder  as  specified  on the face of the  Warrant
                              Certificate.)

                              ______________________________________________
                              (Insert  Social  Security  or  Other   Identifying
                              Number of Holder)

________________________
* $50,000 times the number of Placement Agent Units purchased.
** 50,000  times the  number  Placement  Agent  Units  purchased  divided by the
conversion  price of the Note as  adjusted  as of the  time of  exercise  of the
right, represented by this Warrant Certificate.  The adjusted exercise price can
be obtained from the Company.

                                       13
<PAGE>

                              [FORM OF ASSIGNMENT]

             (To be executed by the registered holder if such holder
                  desires to transfer the Warrant Certificate.)

  FOR VALUE RECEIVED ________________ hereby sells, assigns and transfers unto

________________________________________________________________________________
                  (Please print name and address of transferee)

this Warrant  Certificate,  together with all right, title and interest therein,
and does hereby  irrevocably  constitute  and  appoint  _________  Attorney,  to
transfer  the  within  Warrant  Certificate  on the  books  of the  within-named
Company, with full power of substitution.

Dated:______________________________

                              Signature ____________________________________

                              (Signature must conform in all respects to name of
                              holder  as  specified  on the face of the  Warrant
                              Certificate.)

                              ______________________________________________
                              (Insert  Social  Security  or  Other   Identifying
                              Number of Holder)

                                       14THIS NOTE AND THE SECURITIES  REPRESENTED  HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED.  THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THE SECURITIES  UNDER SAID ACT OR AN OPINION OF COUNSEL  SATISFACTORY  TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

                           CONVERTIBLE PROMISSORY NOTE

$5,949,042                                          Effective: September 1, 2001

     FOR  VALUE  RECEIVED  RATEXCHANGE   CORPORATION,   a  Delaware  corporation
("Company") promises to pay to FORSYTHE McARTHUR ASSOCIATES, INC. ("Holder"), or
its  registered  assigns,  the  principal  sum of Five  Million Nine Hundred and
Forty-Nine  Thousand  Forty-Two dollars  ($5,949,042),  or such lesser amount as
shall equal the outstanding principal amount hereof, together with interest from
September  1, 2001 on the unpaid  principal  balance at a rate equal to 9.0% per
annum, computed on the basis of twelve 30 day months, payable as provided herein
and will mature on August 31, 2006.

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

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

     "Affiliate," with respect to any Person, means (i) any director, officer or
employee of such Person,  (ii) any Person directly or indirectly  controlling or
controlled by or under direct or indirect  common control with such Person,  and
(iii)  any  Person  beneficially  owning or  holding  5% or more of any class of
voting  securities  of such  Person  or any  corporation  of which  such  Person
beneficially owns or holds, in the aggregate,  5% or more of any class of voting
securities. The term "control" means the possession,  directly or indirectly, of
the power to direct or cause the direction of the  management  and policies of a
Person,  whether  through the  ownership  of voting  securities,  by contract or
otherwise.  The term  "Affiliate,"  when used herein  without  reference  to any
Person shall mean an Affiliate of Company.

     "Bankruptcy  Law" shall mean Title 11, U.S.  Code or any  similar  federal,
state or foreign bankruptcy, insolvency or similar law.

<PAGE>

     "Business  Day" means any day other than a  Saturday,  a Sunday or a day on
which commercial banks in New York City are required or authorized to be closed.

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

     "Capital Lease Obligation" means, as to any Person, the obligations of such
Person under a lease that are required to be  classified  and  accounted  for as
capital lease obligations  under GAAP and, for purposes of this definition,  the
amount of such obligations at the time any  determination  thereof is to be made
shall be the amount of the liability in respect of a capital lease that would at
such time be so required to be capitalized on a balance sheet in accordance with
GAAP.

     "Common Stock" means Class A common stock,  par value $.0001 per share,  of
Company or any shares into which such shares have been  changed  pursuant to any
recapitalization, merger, consolidation or similar event.

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

     "Conversion Price" has the meaning given in Section 8.1 hereof.

     "Conversion Shares" has the meaning given in Section 8.6 (c) hereof.

     "Custodian"  shall  mean  any  custodian,   receiver,   trustee,  assignee,
sequester, liquidator or similar official under any Bankruptcy Law.

     "Daily Market Price" means the last reported per share sale price,  regular
way on such day,  or, if no sale  takes  place on such day,  the  average of the
reported  closing per share bid and asked  prices on such day,  regular  way, in
either case as  reported  on the  American  Stock  Exchange  or, if such Class A
common stock is not quoted or admitted to trading on such quotation  system,  on
the principal  national  securities  exchange or quotation  system on which such
Class A common stock may be listed or admitted to trading or quoted,  or, if not
listed or admitted to trading or quoted on any national  securities  exchange or
quotation  system,  the average of the closing per share bid and asked prices of
such Class A common stock on the over-the-counter  market on the day in question
as reported by the National Quotation Bureau Incorporated,  or similar generally
accepted reporting service, or, if not so available in such manner, as furnished
by any NASDAQ  member firm  selected from time to time by the Board of Directors
of  Company  for that  purpose,  or,  if not so  available  in such  manner,  as
otherwise determined in good faith by the Board of Directors of Company.

     "Default Rate" has the meaning given in Section 15 hereof.

     "Event of Default" has the meaning given in Section 5 hereof.

                                       2
<PAGE>

     "GAAP" means  generally  accepted  accounting  principles as in effect from
time to time in the United States of America.

     "Guaranty"  means, with respect to any Person,  any obligation  (except the
endorsement  in the ordinary  course of business of negotiable  instruments  for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness,  dividend or other  obligation  of any other Person in any manner,
whether  directly or  indirectly,  including  (without  limitation)  obligations
incurred through an agreement, contingent or otherwise, by such Person:

          (a) to  purchase  such  indebtedness  or  obligation  or any  property
     constituting security therefor;

          (b) to advance or supply funds (i) for the purchase or payment of such
     indebtedness  or  obligation,  or (ii) to maintain  any working  capital or
     other  balance  sheet  condition or any income  statement  condition of any
     other  Person or  otherwise  to  advance  or make  available  funds for the
     purchase or payment of such indebtedness or obligation;

          (c)  to  lease  properties  or  to  purchase  properties  or  services
     primarily  for the purpose of assuring  the owner of such  indebtedness  or
     obligation  of the  ability  of any  other  Person to make  payment  of the
     indebtedness or obligation; or

          (d) otherwise to assure the owner of such  indebtedness  or obligation
     against loss in respect thereof.

     In any computation of the indebtedness or other  liabilities of the obligor
under any Guaranty,  the indebtedness or other  obligations that are the subject
of such Guaranty shall be assumed to be direct obligations of such obligor.

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

     "Indebtedness"  with  respect to any  Person  means,  at any time,  without
duplication,

          (a) its liabilities for borrowed money and its redemption  obligations
     in respect of mandatorily redeemable Preferred Stock;

          (b) its  liabilities  for the  deferred  purchase  price  of  property
     acquired by such Person (excluding accounts payable arising in the ordinary
     course of business but including all  liabilities  created or arising under
     any conditional sale or other title retention agreement with respect to any
     such property);

          (c) all liabilities  appearing on its balance sheet in accordance with
     GAAP in respect of Capital Leases;

                                       3
<PAGE>

          (d) all  liabilities  for  borrowed  money  secured  by any Lien  with
     respect to any property owned by such Person (whether or not it has assumed
     or otherwise become liable for such liabilities);

          (e) all its liabilities in respect of letters of credit or instruments
     serving a similar  function issued or accepted for its account by banks and
     other financial  institutions (whether or not representing  obligations for
     borrowed money);

          (f) Swaps of such Person; and

          (g) any Guaranty of such Person with respect to  liabilities of a type
     described in any of clauses (a) through (f) hereof.

     Indebtedness  of any Person shall include all obligations of such Person of
the  character  described  in clauses  (a) through (g) to the extent such Person
remains  legally  liable  in  respect  thereof  notwithstanding  that  any  such
obligation is deemed to be extinguished under GAAP.

     "Lien"  means,  with respect to any Person,  any  mortgage,  lien,  pledge,
charge, security interest or other encumbrance,  or any interest or title of any
vendor,  lessor,  lender or other  secured  party to or of such Person under any
conditional  sale or other title retention  agreement or Capital Lease,  upon or
with respect to any property or asset of such Person.

     "Material  Subsidiary" means any Subsidiary of Company which at the date of
determination  is a  "significant  subsidiary"  as  defined  in Rule  1-02(w) of
Regulation S-X under the Securities Act and the Exchange Act (as such Regulation
is in effect on the date hereof).

     "Obligations"   shall  mean  and  include  all  loans,   advances,   debts,
liabilities and  obligations,  howsoever  arising,  owed by Company to Holder of
every kind and  description  (whether or not evidenced by any note or instrument
and whether or not for the payment of money),  now existing or hereafter arising
under or pursuant to the terms of this Note and the other Operative  Agreements,
including, all interest, fees, charges, expenses,  attorneys' fees and costs and
accountants'  fees and costs chargeable to and payable by Company  hereunder and
thereunder,  in each case,  whether direct or indirect,  absolute or contingent,
due or to become due,  and whether or not arising  after the  commencement  of a
proceeding  under Title 11 of the United States Code (11 U. S. C. Section 101 et
seq.),  as amended  from time to time  (including  post-petition  interest)  and
whether or not allowed or allowable as a claim in any such proceeding.

     "Operative  Agreements" shall mean that certain Restructure Agreement dated
as of  October  4,  2001  by and  between  Holder  and  Company  and any and all
agreements and documents to be executed and delivered in connection therewith.

     "Person" means an individual,  partnership,  corporation, limited liability
company,  association,  trust, unincorporated  organization,  or a government or
agency or political subdivision thereof.

                                       4
<PAGE>

     "Preferred Stock" means any class of capital stock of a corporation that is
preferred  over any other class of capital stock of such  corporation  as to the
payment  of  dividends  or  the  payment  of  any  amount  upon  liquidation  or
dissolution of such corporation.

     "Subsidiary" means, as to any Person, any corporation, association or other
business entity in which such Person or one or more of its  Subsidiaries or such
Person  and one or more of its  Subsidiaries  owns  sufficient  equity or voting
interests  to  enable  it or them (as a group)  ordinarily,  in the  absence  of
contingencies,  to elect a majority  of the  directors  (or  Persons  performing
similar functions) of such entity, and any partnership or joint venture if a 50%
or more  interest in the  profits or capital  thereof is owned by such Person or
one or  more  of its  Subsidiaries  or  such  Person  and  one  or  more  of its
Subsidiaries  (unless  such  partnership  can and  does  ordinarily  take  major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of Company.

     "Swaps" means, with respect to any Person, payment obligations with respect
to interest rate swaps,  currency swaps and similar obligations  obligating such
Person  to make  payments,  whether  periodically  or upon  the  happening  of a
contingency.  For the purposes of this  Agreement,  the amount of the obligation
under any Swap shall be the amount  determined in respect  thereof as of the end
of the then most  recently  ended fiscal  quarter of such  Person,  based on the
assumption that such Swap had terminated at the end of such fiscal quarter,  and
in making such  determination,  if any agreement  relating to such Swap provides
for the netting of amounts  payable by and to such Person  thereunder  or if any
such agreement  provides for the simultaneous  payment of amounts by and to such
Person,  then in each such case, the amount of such obligation  shall be the net
amount so determined.

     "Trading  Day" shall mean (a) if the  applicable  security is quoted on the
American Stock Exchange,  a day on which trades may be made thereon,  (b) if the
applicable  security  is listed or  admitted  for trading on the NYSE or another
national  securities  exchange,  a day on which the NYSE or such other  national
securities  exchange is open for business or (c) if the  applicable  security is
not so listed, admitted for trading or quoted, any day that is a Business Day.

     2.  Interest.  Accrued  interest  on this  Note  shall  be due and  payable
quarterly,  commencing  on  March  31,  2002.  Interest  on any  portion  of the
principal hereof that is prepaid shall be paid on the date of such prepayment as
provided herein.  Company may make interest payments in cash or shares of Common
Stock,  provided that (i) if paid in Common Stock,  the Fair Market Value of the
Common Stock must be equal to 100% of the cash interest payment due and (ii) the
shares  issued for  interest  due must be held by Holder of a period of one year
from issuance.  The "Fair Market Value" of a share of Common Stock, for purposes
of this Section 2, shall be equal to the average of the closing market prices of
the Common Stock during the 5 trading days  immediately  preceding  the interest
payment due date (or, if there shall be no such  closing  price on any day,  the
closing  market  price on such day  shall be  deemed  to be the  average  of the
closing bid and asked prices on such day).

                                       5
<PAGE>

     3.  Optional  Prepayment.  At any time and from  time to time on or  before
August  31,  2006,  Company  may  prepay  all or a  portion  of the  outstanding
principal  hereof,  together with accrued  interest  hereon,  so long as Company
gives the Holder at least 30 days irrevocable  written notice in advance of such
prepayment.  The  Company's  decision  to prepay this Note will not, in any way,
affect the Holder's  right of conversion on or before the prepayment as provided
in Section 8 herein.

     4. Representations and Warranties of Company. The Company hereby represents
and warrants to the Holder that:

          (a) This Note, when issued,  sold and delivered for the  consideration
provided  for  herein,  will  be  duly  and  validly  issued,   fully  paid  and
nonassessable.

          (b) The offer and sale of this  Note  solely to Holder is exempt  from
the registration and prospectus  delivery  requirements of the Securities Act of
1933, as amended (the  "Securities  Act") and the  securities  registration  and
qualification   requirements  of  the  currently  effective  provisions  of  the
securities laws of all applicable states.

          (c) The Conversion  Shares have been duly authorized and reserved and,
if and when issued upon  conversion of the Note,  in  accordance  with the terms
hereof, will be validly issued, fully paid and non-assessable,  and the issuance
of the  Conversion  Shares  will not be  subject  to any  preemptive  or similar
rights. The shares will bear a Rule 144 restrictive legend when issued.

     5.  Events of  Default.  An "Event of  Default"  shall  exist if any of the
following conditions or events shall occur and be continuing:

          (a) Company  defaults in the payment of any  interest on the Note when
the same  becomes due and payable and the default  continues  for a period of 30
days; or

          (b) Company  defaults in the payment of any  principal or premium,  if
any, on the Note when the same becomes due and  payable,  whether at maturity or
otherwise; or

          (c) Company  breaches in any material  respect any  representation  or
warranty contained in this Note or the any of the Operative Agreements, or fails
to observe or perform any other covenant or agreement  contained in this Note or
the  Operative  Agreements  required to be  performed  by any of them,  and such
breach is not cured or such failure  continues for a period of 60 days after the
receipt of written notice by Company from the Holder stating that such notice is
a "Notice of Default"; or

          (d) a default  under any  credit  agreement,  mortgage,  indenture  or
instrument  under  which there may be issued or by which there may be secured or
evidenced  any  Indebtedness  for money  borrowed  by  Company  or any  Material
Subsidiary (or the payment of which is Guaranteed by Company or any of Company's
Material Subsidiaries), whether such Indebtedness or Guarantee

                                       6
<PAGE>

exists on the date of this Agreement or is created hereafter,  which default (i)
is caused by a failure  to pay when due any  principal  of or  interest  on such
Indebtedness  within the grace period, if any, provided for in such Indebtedness
(which  failure  continues  beyond any  applicable  grace  period)  (a  "Payment
Default") or (ii) results in the acceleration of such Indebtedness  prior to its
express maturity (without such acceleration being rescinded or annulled) and, in
each  case,  the  principal  amount  of such  Indebtedness,  together  with  the
principal amount of any other such  Indebtedness  under which there is a Payment
Default or the maturity of which has been so accelerated, aggregates $15,000,000
or more and after written  receipt by Company from the Holder  stating that such
notice is a "Notice of Default"; or

          (e) a final, non-appealable judgment or final non-appealable judgments
(other than any judgment as to which a reputable  insurance company has accepted
full  liability)  for the  payment of money are  entered by a court or courts of
competent  jurisdiction  against  Company or any Material  Subsidiary and remain
unstayed,  unbonded or  undischarged  for a period (during which execution shall
not be effectively  stayed) of 60 days,  provided that the aggregate of all such
judgments exceeds $5,000,000; or

          (f)  Company  or any  Material  Subsidiary  pursuant  to or within the
meaning of any Bankruptcy Law: (i) commences a voluntary case or proceeding;  or
(ii)  consents to the entry of an order for relief  against  such company or any
Material  Subsidiary in an involuntary case or proceeding;  or (iii) consents to
the appointment of a Custodian of such company or any Material Subsidiary or for
all or any substantial part of its property;  or (iv) makes a general assignment
for the benefit of its  creditors;  or (v) take  corporate or similar  action to
effect any of the foregoing; or

          (g) a court of competent  jurisdiction enters an order or decree under
any  Bankruptcy  Law that:  (i) is for relief  against  Company or any  Material
Subsidiary in an involuntary case or proceeding; or (ii) appoints a Custodian of
such company or any Material  Subsidiary or for all or any  substantial  part of
the  property of such company or any  Material  Subsidiary;  or (iii) orders the
liquidation  of such  company  or any  Material  Subsidiary;  and in  each  case
referred to in this  subsection (g) the order or decree remains  unstayed and in
effect for 60 days.

     6. Rights of Holder upon Default.

     (a) If an Event of Default  with  respect to Company  described  in Section
5(f) or (g) has occurred (other than an Event of Default described in clause (i)
of Section 5(f) or described in clause (v) of Section 5(f) by virtue of the fact
that  such  clause  encompasses  clause  (i) of  Section  5(f)),  the Note  then
outstanding shall automatically become immediately due and payable. If any other
Event of Default has occurred and is  continuing,  the Holder may at any time at
its option, by notice or notices to Company,  declare the Note to be immediately
due and payable.

     (b) Notwithstanding the foregoing, if (i) any Event of Default described in
Section 5 (a) or (b) has occurred and is continuing,  the Holder of the Note may
at any time, at its option, by notice or notices to Company, declare the Note to
be  immediately  due and  payable;  or (ii) any Event of  Default  described  in
Section 5 (d) has occurred and is continuing and the Payment Default giving

                                       7
<PAGE>

rise to such Event of Default is cured or the  acceleration  giving rise to such
Event of Default  is  annulled  or  rescinded  within 30 days  after  receipt of
written  notice of such Event of Default by Company  from the Holder of the Note
stating  that such notice is a "Notice of  Default,"  then such Event of Default
and any  declaration  under  Section 6 (a) above  shall be deemed  automatically
annulled and rescinded.  Upon the Note becoming due and payable under Section 6,
whether automatically or by declaration,  the Note will forthwith mature and the
entire unpaid  principal  amount  hereof,  plus all accrued and unpaid  interest
thereon,  shall all be  immediately  due and  payable,  in each and  every  case
without presentment,  demand, protest or further notice, all of which are hereby
waived.

     (c) If any Default or Event of Default has occurred and is continuing,  and
irrespective of whether the Note has become or has been declared immediately due
and payable under Section 6, the holder of the Note at the time  outstanding may
proceed to protect and enforce its rights by an action at law, suit in equity or
other  appropriate  proceeding,  whether  for the  specific  performance  of any
agreement contained herein or in the Operative Agreements,  or for an injunction
against a  violation  of any of the terms  hereof or  thereof,  or in aid of the
exercise of any power granted hereby or thereby or by law or otherwise.

          7. Representations and Warranties of Holder. By its acceptance of this
     Note, the Holder makes the following representations and warranties:

          (a) The Holder is aware of Company's  business  affairs and  financial
condition,  and has acquired  information  about Company  sufficient to reach an
informed  and  knowledgeable  decision  to  acquire  this  Note.  The  Holder is
acquiring  this Note for its own account for  investment  purposes  only and not
with a view to, or for the resale in connection with, any "distribution" thereof
in violation of the Act.

          (b) The Holder  understands  that this Note, and the  securities  into
which it is convertible, have not been registered under the Act in reliance upon
a specific  exemption  therefrom,  which  exemption  depends  upon,  among other
things,  the bona fide nature of the  Holder's  investment  intent as  expressed
herein.

          (c) The Holder further  understands that this Note, and the securities
into which it is  convertible,  must be held  indefinitely  unless  subsequently
registered  under the Act and qualified  under any applicable  state  securities
laws, or unless  exemptions from  registration and  qualification  are otherwise
available.  The Holder is aware of the provisions of Rule 144, promulgated under
the Act.

          (d) The Holder is an "accredited  investor" as such term is defined in
Rule 501 of Regulation D promulgated under the Securities Act.

     8. Conversion.

                                       8
<PAGE>

          8.1  Conversion  Privilege.  The holder of this Note may  convert  the
     principal  amount  thereof  (or any  portion  thereof  that is an  integral
     multiple  of $1,000)  into fully paid and  nonassessable  shares of Class A
     common stock,  par value $.0001 per share,  of Company on the maturity date
     of the  Note  at the  Conversion  Price.  Holder  will  not be able to sell
     converted stock for a period of one year after receipt.

          The number of shares of Class A common stock issuable upon  conversion
     of a Note is  determined  by dividing the  principal  amount of the Note so
     converted by the Conversion Price in effect on the Conversion Date.

          "Conversion  Price" means 80% of the average  closing market price for
     the 5 trading days immediately  preceding the date of Holder's  election to
     convert.

          Provisions of this Agreement that apply to conversion of all of a Note
     also  apply to  conversion  of a  portion  of it. A holder of a Note is not
     entitled  to any  rights of a holder  of Class A common  stock  until  such
     holder has converted  such Note into Class A common stock,  and only to the
     extent that such Note is deemed to have been  converted into Class A common
     stock under this Section 8.1.

          8.2 Conversion Procedure

     To convert  the Note,  the Holder  must (1)  complete  and sign a notice of
     election to convert  substantially in the form attached hereto (or complete
     and manually sign a facsimile  thereof) and deliver such notice to Company,
     (2) surrender the Note to Company, (3) furnish appropriate  endorsements or
     transfer  documents  if  required  by Company  and (4) pay any  transfer or
     similar tax, if required by Company in accordance  with Section 8.4 hereof.
     The date on which the holder  satisfies  all of those  requirements  is the
     conversion date (the "Conversion  Date").  As promptly as practicable on or
     after the Conversion Date,  Company shall issue and deliver to the holder a
     certificate  or  certificates  for the  number  of whole  shares of Class A
     common stock  issuable upon the conversion and a check or other payment for
     any fractional share in an amount  determined  pursuant to Section 8.3. The
     Person  in whose  name the  certificate  is  registered  shall  become  the
     stockholder  of record on the  Conversion  Date and, as of such date,  such
     Person's  rights as a holder of a Note with respect to the  converted  Note
     shall cease and such converted Note shall no longer be deemed  outstanding;
     provided,  however, that, except as otherwise provided in this Section 8.2,
     no surrender of a Note on any date when the stock transfer books of Company
     shall be closed  shall be effective to  constitute  the Person  entitled to
     receive  the  shares of Class A common  stock upon such  conversion  as the
     stockholder  of record of such shares of Class A common stock on such date,
     but such surrender  shall be effective to constitute the Person entitled to
     receive  such shares of Class A common stock as the  stockholder  of record
     thereof for all  purposes  at the close of business on the next  succeeding
     day on which such stock transfer books are open; provided further, however,
     that such conversion shall be at the Conversion Price in effect on the date
     that such Note shall have been surrendered for conversion,  as if the stock
     transfer books of Company had not been closed.

                                       9
<PAGE>

          No payment or adjustment  will be made for accrued and unpaid interest
     on a converted Note or for dividends or  distributions on shares of Class A
     common stock issued upon  conversion of a Note,  except that, if the Holder
     surrenders  the Note for  conversion  after  the close of  business  on any
     record date for the payment of an  installment of interest and prior to the
     opening of business on the next  succeeding  interest  payment date,  then,
     notwithstanding such conversion, accrued and unpaid interest payable on the
     Note on such interest  payment date shall be paid on such interest  payment
     date  to the  person  who  was  the  holder  of the  Note  (or  one or more
     predecessor Notes) at the close of business on such record date. Holders of
     Class A common stock issued upon conversion will not be entitled to receive
     any  dividends  payable to holders of Class A common stock as of any record
     time before the close of business on the Conversion Date.

          If a holder  converts more than one Note at the same time,  the number
     of whole shares of Class A common stock issuable upon the conversion  shall
     be based on the total principal amount of Notes converted.

          Upon  surrender  of a Note that is converted  in part,  Company  shall
     issue to the holder a new Note equal in principal amount to the unconverted
     portion of the Note surrendered.

          8.3 Fractional  Shares.  Company will not issue  fractional  shares of
     Class A common stock upon  conversion of a Note.  In lieu thereof,  Company
     will pay an amount in cash based upon the Daily Market Price of the Class A
     common stock on the Trading Day prior to the Conversion Date.

          8.4. Taxes on Conversion.  The issuance of certificates  for shares of
     Class A common stock upon the  conversion of the Note shall be made without
     charge to the converting Noteholder for such certificates or for any tax in
     respect of the issuance of such  certificates,  and such certificates shall
     be issued in the  respective  names of, or in such names as may be directed
     by, the holder or holders of the converted Note; provided, however, that in
     the event that  certificates  for shares of Class A common  stock are to be
     issued in a name other  than the name of the holder of the Note  converted,
     such Note,  when  surrendered  for  conversion,  shall be accompanied by an
     instrument of assignment or transfer, in form satisfactory to Company, duly
     executed by the registered holder thereof or his duly authorized  attorney;
     and provided  further,  however,  that Company shall not be required to pay
     any tax which may be payable in respect  of any  transfer  involved  in the
     issuance and delivery of any such certificates in a name other than that of
     the holder of the  converted  Note,  and  Company  shall not be required to
     issue or deliver  such  certificates  unless or until the person or persons
     requesting  the issuance  thereof  shall have paid to Company the amount of
     such tax or shall have established to the satisfaction of Company that such
     tax has been paid or is not applicable.

          8.5.  Company to Provide Stock. The Company shall at all times reserve
     and keep available,  free from preemptive rights, out of its authorized but
     unissued  Class A common  stock,  solely for the purpose of  issuance  upon
     conversion of the Note as herein provided, a

                                       10
<PAGE>

     sufficient  number  of  shares  of  Class A  common  stock  to  permit  the
     conversion of the Note for shares of Class A common stock.

          All shares of Class A common stock which may be issued upon conversion
     of the Note  shall  be duly  authorized,  validly  issued,  fully  paid and
     nonassessable  when so issued. The Company shall take such action from time
     to time as shall be necessary so that par value of the Class A common stock
     shall at all times be equal to or less than the  Conversion  Price  then in
     effect.

          The Company shall from time to time take all action  necessary so that
     the Class A common stock which may be issued upon  conversion  of the Note,
     immediately  upon  their  issuance  (or,  if such  Class A common  stock is
     subject to  restrictions  on  transfer  under the Act,  upon  their  resale
     pursuant  to  an  effective  registration  statement  or  in a  transaction
     pursuant  to which the  certificate  evidencing  such Class A common  stock
     shall no longer bear a restrictive common stock legend),  will be listed on
     the American Stock Exchange or such other interdealer  quotation system and
     market or principal securities exchanges,  if any, on which other shares of
     Class A common stock of Company are then listed or quoted.

          8.6.  Adjustment of Conversion  Price.  The Conversion  Price shall be
     subject to adjustment from time to time as follows:

               (a) In case Company shall (i) pay a dividend in shares of Class A
     common  stock to holders of Class A common  stock (or any event  treated as
     such for U.S.  Federal  income tax purposes),  (ii) make a distribution  in
     shares of Class A common  stock to holders of Class A common  stock (or any
     event  treated  as such  for  U.S.  Federal  income  tax  purposes),  (iii)
     subdivide  its  outstanding  shares of Class A common  stock into a greater
     number of shares of Class A common  stock or (iv)  combine its  outstanding
     shares of Class A common  stock into a smaller  number of shares of Class A
     common stock,  the  Conversion  Price in effect  immediately  prior to such
     action  shall  be  adjusted  so that the  holder  of this  Note  thereafter
     surrendered  for  conversion  shall be  entitled  to receive  the number of
     shares  of Class A common  stock  which he  would  have  owned  immediately
     following  such  action  had the  Note  been  converted  immediately  prior
     thereto.  Any adjustment  made pursuant to this subsection (a) shall become
     effective  immediately  after the record  date in the case of a dividend or
     distribution  and shall become  effective  immediately  after the effective
     date in the case of a subdivision or combination.

               (b) In case Company  shall issue  rights,  options or warrants to
     all holders of Class A common  stock  entitling  them to  subscribe  for or
     purchase  shares of Class A common stock (or  securities  convertible  into
     Class A common  stock) at a price per share (or having a  conversion  price
     per share)  less than the  Current  Market  Price per share (as  determined
     pursuant to subsection (f) below) of the Class A common stock on the record
     date for  determining  the holders of the Class A common stock  entitled to
     receive such rights,  options or warrants,  the  Conversion  Price shall be
     adjusted so that the same shall equal the price  determined by  multiplying
     the Conversion Price in effect  immediately  prior to such record

                                       11
<PAGE>

     date by a fraction of which the numerator  shall be the number of shares of
     Class A common stock outstanding as of the close of business on such record
     date plus the number of shares of Class A common stock which the  aggregate
     offering  price of the total  number  of shares of Class A common  stock so
     offered  (to  the  holders  of  outstanding   Class  A  common  stock)  for
     subscription  or  purchase  (or  the  aggregate  conversion  price  of  the
     convertible  securities so offered)  would  purchase at such Current Market
     Price (as determined  pursuant to subsection  (f) below),  and of which the
     denominator  shall  be the  number  of  shares  of  Class  A  common  stock
     outstanding  on such  record date plus the number of  additional  shares of
     Class A common stock so offered for subscription or purchase (or into which
     the convertible  securities so offered are  convertible).  Such adjustments
     shall become effective immediately after such record date. For the purposes
     of this subsection (b), the number of shares of Class A common stock at any
     time  outstanding  shall not include shares held in the treasury of Company
     but shall include shares issuable in respect of scrip  certificates  issued
     in lieu of  fractions of shares of such Class A common  stock.  The Company
     shall not issue any  rights,  options or  warrants  in respect of shares of
     Class A common  stock  held in the  treasury  of  Company.  In  determining
     whether any rights,  options or warrants  entitle the holders to  subscribe
     for or  purchase  shares of Class A common  stock at less than the  Current
     Market  Price,  and in  determining  the aggregate  offering  price of such
     shares of Class A common  stock,  there  shall be taken  into  account  any
     consideration  received by Company for such rights,  warrants,  or options,
     the value of such consideration,  if any, other than cash, to be determined
     by the Board of Directors.

               (c) In case Company  shall  distribute  to all holders of Class A
     common stock shares of capital stock of Company  (other than Class A common
     stock),  evidences  of  indebtedness,  cash,  rights,  options or  warrants
     entitling  the holders  thereof to  subscribe  for or  purchase  securities
     (other than rights,  options or warrants described in subsection (b) above)
     or other assets  (including  securities  of Persons  other than Company but
     excluding (i) dividends or distributions paid exclusively in cash except as
     described  in  subsection  (d)  below,  (ii)  dividends  and  distributions
     described in  subsection  (a) above and (iii)  distributions  in connection
     with the  consolidation,  merger or transfer  of assets  covered by Section
     8.11),  then in each such case the  Conversion  Price  shall be adjusted so
     that  the  same  shall  equal  the  price  determined  by  multiplying  the
     Conversion  Price  in  effect   immediately  prior  to  the  date  of  such
     distribution  by a fraction  of which the  numerator  shall be the  Current
     Market Price  (determined as provided in subsection (f) below) of the Class
     A common  stock on the record  date  mentioned  below less the fair  market
     value on such record date (as  determined by the Board of Directors,  whose
     determination  shall be  conclusive  evidence of such fair market value and
     described  in a  board  resolution)  of the  portion  of the  evidences  of
     indebtedness,  shares of capital stock, cash, rights, options,  warrants or
     other assets so distributed applicable to one share of Class A common stock
     (determined  on the  basis of the  number  of  shares of the Class A common
     stock  outstanding on the record date), and of which the denominator  shall
     be such Current Market Price of the Class A common stock.  Such  adjustment
     shall  become  effective   immediately   after  the  record  date  for  the
     determination  of the holders of Class A common  stock  entitled to receive
     such distribution. Notwithstanding the foregoing,

                                       12
<PAGE>

     in case Company shall distribute  rights,  options or warrants to subscribe
     for  additional  shares of  Company's  capital  stock  (other than  rights,
     options or warrants  referred to in subsection (b) above) ("Rights") to all
     holders  of  Class A common  stock,  Company  may,  in lieu of  making  any
     adjustment  pursuant to the foregoing  provisions of this subsection (c) of
     Section  8.6  make  proper  provision  so that the  holder  of the Note who
     converts the Note (or any portion  thereof)  after the record date for such
     distribution  and prior to the expiration or redemption of the Rights shall
     be entitled to receive upon such  conversion,  in addition to the shares of
     Class A  common  stock  issuable  upon  such  conversion  (the  "Conversion
     Shares"),  a number of  Rights to be  determined  as  follows:  (i) if such
     conversion  occurs  on or prior to the  date  for the  distribution  to the
     holders of Rights of  separate  certificates  evidencing  such  Rights (the
     "Distribution  Date"),  the same  number  of  Rights to which a holder of a
     number of shares of Class A common stock equal to the number of  Conversion
     Shares is entitled at the time of such  conversion in  accordance  with the
     terms and  provisions  of and  applicable  to the Rights;  and (ii) if such
     conversion occurs after the Distribution Date, the same number of Rights to
     which a holder of the  number of shares of Class A common  stock into which
     the principal  amount of the Note so converted was convertible  immediately
     prior to the Distribution Date would have been entitled on the Distribution
     Date in accordance  with the terms and  provisions of and applicable to the
     Rights.

               (d) In case Company shall, by dividend or otherwise,  at any time
     make a distribution to all holders of its Class A common stock  exclusively
     in cash  (including  any  distributions  of cash out of current or retained
     earnings of Company but excluding any cash that is distributed as part of a
     distribution requiring a Conversion Price adjustment pursuant to subsection
     (c) of this Section) in an aggregate amount that,  together with the sum of
     (x) the aggregate  amount of any other  distributions  made  exclusively in
     cash to all holders of Class A common stock within the 12 months  preceding
     the  date  fixed  for  determining  the   stockholders   entitled  to  such
     distribution  (the  "Distribution  Record Date") and in respect of which no
     Conversion  Price  adjustment  pursuant  to  subsection  (c) or (e) of this
     Section or this subsection (d) has been made plus (y) the aggregate  amount
     of all Excess Payments in respect of any tender offers or other  negotiated
     transactions by Company or any of its Subsidiaries for Class A common stock
     concluded within the 12 months  preceding the Distribution  Record Date and
     in respect of which no Conversion Price adjustment  pursuant to subsections
     (c) or (e) of this Section or this subsection (d) has been made, exceeds 12
     1/2% of the product of the Current  Market Price per share  (determined  as
     provided in subsection  (f) of this Section) of the Class A common stock on
     the Distribution  Record Date multiplied by the number of shares of Class A
     common stock outstanding on the Distribution  Record Date (excluding shares
     held in the treasury of Company),  the Conversion Price shall be reduced so
     that  the same  shall  equal  the  price  determined  by  multiplying  such
     Conversion Price in effect  immediately  prior to the  effectiveness of the
     Conversion  Price  reduction  contemplated  by  this  subsection  (d)  by a
     fraction of which the numerator shall be the Current Market Price per share
     (determined  as provided in subsection  (f) of this Section) of the Class A
     common stock on the Distribution  Record Date less the sum of the aggregate
     amount of cash and the aggregate  Excess Payments so  distributed,  paid or
     payable within such 12-month period

                                       13
<PAGE>

     (including,  without limitation,  the distribution in respect of which such
     adjustment  is being made)  applicable to one share of Class A common stock
     (which shall be determined  by dividing the sum of the aggregate  amount of
     cash and the aggregate Excess Payments so distributed, paid or payable with
     respect to outstanding shares of Class A common stock within such 12 months
     (including,  without limitation,  the distribution in respect of which such
     adjustment  is being made) by the number of shares of Class A common  stock
     outstanding on the Distribution  Record Date) and the denominator  shall be
     such Current  Market Price per share  (determined as provided in subsection
     (f) of this Section) of the Class A common stock on the Distribution Record
     Date, such reduction to become effective  immediately  prior to the opening
     of business on the day following the Distribution Record Date.

               (e) In case a tender offer or other  negotiated  transaction made
     by Company or any Subsidiary of Company for all or any portion of the Class
     A common  stock  shall be  consummated,  if an  Excess  Payment  is made in
     respect  of such  tender  offer or  other  negotiated  transaction  and the
     aggregate  amount of such Excess Payment,  together with the sum of (x) the
     aggregate  amount of any  distributions,  by dividend or otherwise,  to all
     holders  of  the  Class  A  common  stock  made  in  cash   (including  any
     distributions  of cash out of  current or  retained  earnings  of  Company)
     within  the 12  months  preceding  the  date of  payment  of  such  current
     negotiated  transaction  consideration or expiration of such current tender
     offer,  as the  case  may be (the  "Purchase  Date"),  and as to  which  no
     adjustment in the  Conversion  Price  pursuant to subsection  (c) or (d) of
     this Section or this  subsection  (e) has been made plus (y) the  aggregate
     amount of all Excess  Payments  in respect  of any other  tender  offers or
     other  negotiated  transactions by Company or any of its  Subsidiaries  for
     Class A common stock concluded  within the 12 months preceding the Purchase
     Date and in respect of which no adjustment in the Conversion Price pursuant
     to subsection  (c) or (d) of this Section or this  subsection  (e) has been
     made,  exceeds 12 1/2% of the product of the Current Market Price per share
     (determined  as provided in subsection  (f) of this Section) of the Class A
     common stock on the  Purchase  Date  multiplied  by the number of shares of
     Class A common  stock  outstanding  on the  Purchase  Date  (including  any
     tendered  shares but excluding any shares held in the treasury of Company),
     the  Conversion  Price  shall be reduced  so that the same shall  equal the
     price determined by multiplying such Conversion Price in effect immediately
     prior to the  effectiveness of the Conversion Price reduction  contemplated
     by this  subsection  (e) by a fraction of which the numerator  shall be the
     Current Market Price per share (determined as provided in subsection (f) of
     this Section) of the Class A common stock on the Purchase Date less the sum
     of the  aggregate  amount  of cash and the  aggregate  Excess  Payments  so
     distributed,  paid or  payable  within  such 12  month  period  (including,
     without limitation,  the Excess Payment in respect of which such adjustment
     is being made) applicable to one share of Class A common stock (which shall
     be determined  by dividing the sum of the aggregate  amount of cash and the
     aggregate  Excess Payments so distributed,  paid or payable with respect to
     outstanding   shares  of  Class  A  common  stock  within  such  12  months
     (including, without limitation, the Excess Payment in respect of which such
     adjustment  is being made) by the number of shares of Class A common  stock
     outstanding on the Purchase

                                       14
<PAGE>

     Date) and the  denominator  shall be such  Current  Market  Price per share
     (determined  as provided in subsection  (f) of this Section) of the Class A
     common  stock on the Purchase  Date,  such  reduction  to become  effective
     immediately  prior to the  opening of  business  on the day  following  the
     Purchase Date.

               (f) The "Current  Market Price" per share of Class A common stock
     on any date shall be deemed to be the  average of the Daily  Market  Prices
     for the shorter of (i) 30 consecutive Business Days ending on the last full
     Trading Day on the exchange or market referred to in determining such Daily
     Market  Prices  prior  to the  time of  determination  or (ii)  the  period
     commencing on the date next succeeding the first public announcement of the
     issuance of such rights or such warrants or such other distribution or such
     tender offer or other negotiated transaction through such last full Trading
     Day on the exchange or market referred to in determining  such Daily Market
     Prices prior to the time of determination.

               (g) "Excess Payment" means the excess of (i) the aggregate of the
     cash and fair market value (as determined by the Board of Directors,  whose
     determination  shall be  conclusive  evidence of such fair market value and
     described in a board resolution) of other  consideration paid by Company or
     any of its  Subsidiaries  with  respect to the shares  acquired in a tender
     offer or other  negotiated  transaction over (ii) the Daily Market Price on
     the Trading Day immediately following the completion of the tender offer or
     other negotiated transaction multiplied by the number of acquired shares.

               (h) The Company reserves the right to make such reductions in the
     Conversion Price in addition to those required in the foregoing  provisions
     as it considers to be advisable in order that any event  treated for United
     States  federal  income tax purposes as a dividend of stock or stock rights
     will not be taxable to the recipients.

               (i) The Company  from time to time may  decrease  the  Conversion
     Price by any amount for any period of at least 20 days  (which  decrease is
     irrevocable during such period),  in which case Company shall give at least
     15 days'  notice of such  decrease,  if the Board of  Directors  has made a
     determination that such decrease would be in the best interests of Company,
     which determination  shall be conclusive;  provided however that in no case
     shall Company decrease the Conversion Price to less than 80% of the Current
     Market Price.

               (j) In any case in which this  Section 8.6 shall  require that an
     adjustment  be made  immediately  following  a record  date  for an  event,
     Company may elect to defer, until such event,  issuing to the holder of the
     Note  converted  after such record date the shares of Class A common  stock
     and other capital stock of Company  issuable upon such  conversion over and
     above the shares of Class A common stock and other capital stock of Company
     issuable upon such conversion on the basis of the Conversion Price prior to
     adjustment;  and,  in  lieu of the  shares  the  issuance  of  which  is so
     deferred,  Company  shall issue or cause its  transfer  agents to issue due
     bills or other appropriate evidence of the right to receive such shares.

                                       15
<PAGE>

          8.7. No  Adjustment.  No adjustment in the  Conversion  Price shall be
     required  until  cumulative  adjustments  amount  to  1.0%  or  more of the
     Conversion Price as last adjusted;  provided, however, that any adjustments
     which by reason of this  Section  8.7 are not  required to be made shall be
     carried  forward and taken into account in any subsequent  adjustment.  All
     calculations  under this  Section 8 shall be made to the nearest cent or to
     the nearest  one-hundredth  of a share,  as the case may be. No  adjustment
     need be made for rights to  purchase  Class A common  stock  pursuant  to a
     Company plan for reinvestment of dividends or interest.  No adjustment need
     be made for a change in the par value or no par value of the Class A common
     stock.

          8.8.  Other  Adjustments.  (a) In the  event  that,  as a result of an
     adjustment  made  pursuant  to Section  8.6  above,  the holder of the Note
     thereafter  surrendered for conversion shall become entitled to receive any
     shares of capital  stock of Company other than shares of its Class A common
     stock,  thereafter the Conversion  Price of such other shares so receivable
     upon  conversion  of the Note shall be subject to  adjustment  from time to
     time in a manner and on terms as nearly  equivalent as  practicable  to the
     provisions  with respect to Class A common stock  contained in this Section
     8.

               (b) In the event that any shares of Class A common stock issuable
     upon  exercise  of any of the rights,  options or  warrants  referred to in
     Section  8.6(b) and Section  8.6(c) hereof are not  delivered  prior to the
     expiration of such rights, options, or warrants, the Conversion Price shall
     be readjusted to the  Conversion  Price which would  otherwise have been in
     effect had the adjustment made upon the issuance of such rights, options or
     warrants  been made on the  basis of  delivery  of only the  number of such
     rights, options and warrants which were actually exercised.

               (c) In any  case in  which  Section  8.6  shall  require  that an
     adjustment  be made  immediately  following a record date for a dividend or
     distribution  and  the  dividend  or  distribution   does  not  occur,  the
     Conversion Price shall again be adjusted to the Conversion Price that would
     then be in effect if such dividend or distribution had not been declared.

          8.9. Notice of Adjustment.  Whenever the Conversion Price is adjusted,
     Company shall promptly mail to the Holder a notice of the adjustment.  Such
     notice shall  briefly  state the facts  requiring  the  adjustment  and the
     manner of computing it and shall be signed by a Senior Financial Officer.

          8.10.  Notice of Certain  Transactions.In  the event that: (a) Company
     takes any action which would require an adjustment in the Conversion Price;
     (b) Company  takes any action  described in Section 8.11; or (c) there is a
     dissolution or  liquidation of Company;  Company shall mail to the Holder a
     notice stating the proposed  record or effective  date, as the case may be.
     The  Company  shall  mail the  notice at least 15 days  before  such  date;
     however, failure to mail such notice or any defect therein shall not affect
     the  validity of any  transaction  referred to in clause (a), (b) or (c) of
     this Section 8.10.

                                       16
<PAGE>

          8.11.   Effect   of   Reclassifications,    Consolidations,   Mergers,
     Continuances  or Sales on  Conversion  Privilege.  If any of the  following
     shall occur,  namely:  (i) any  reclassification  or change of  outstanding
     shares of Class A common stock issuable upon  conversion of the Note (other
     than a change in par value,  or from par value to no par value,  or from no
     par value to par value,  or as a result of a subdivision  or  combination),
     (ii) any  consolidation  or merger to which Company is a party other than a
     merger in which Company is the  continuing  corporation  and which does not
     result in any  reclassification of, or change (other than a change in name,
     or par value,  or from par value to no par  value,  or from no par value to
     par value or as a result of a subdivision or combination)  in,  outstanding
     shares of Class A common stock, (iii) any continuance in a new jurisdiction
     which does not result in any  reclassification  of, or change (other than a
     change in name, or par value, or from par value to no par value, or from no
     par value to par value) in,  outstanding shares of Class A common stock, or
     (iv) any sale or conveyance of all or substantially  all of the property of
     Company  (determined  on a  consolidated  basis),  then  Company,  or  such
     successor  or  purchasing  corporation,  as the  case may be,  shall,  as a
     condition  precedent  to  such  reclassification,   change,  consolidation,
     merger, continuance, sale or conveyance,  execute and deliver to the Holder
     a written notice  providing that the Holder shall have the right to convert
     the Note into the kind and  amount of shares of stock and other  securities
     and  property  (including  cash)  receivable  upon  such  reclassification,
     change, consolidation,  merger, continuance, sale or conveyance by a holder
     of the number of shares of Class A common stock deliverable upon conversion
     of  such  Note  immediately   prior  to  such   reclassification,   change,
     consolidation,  merger, continuance,  sale or conveyance. Such notice shall
     provide for  adjustments of the  Conversion  Price which shall be as nearly
     equivalent as may be practicable to the adjustments of the Conversion Price
     provided for in this Section 8. The  foregoing,  however,  shall not in any
     way affect the right a holder of a Note may  otherwise  have,  pursuant  to
     clause  (ii) of the last  sentence  of  subsection  (c) of Section  8.6, to
     receive  Rights  upon  conversion  of a Note.  If,  in the case of any such
     reclassification,  change,  consolidation,  merger,  continuance,  sale  or
     conveyance,  the stock or other  securities and property  (including  cash)
     receivable thereupon by a holder of Class A common stock includes shares of
     stock or other  securities  and property of a corporation or other business
     entity other than the successor or purchasing corporation,  as the case may
     be, in such reclassification,  change, consolidation,  merger, continuance,
     sale or  conveyance,  then such notice shall also be executed by such other
     corporation  or other  business  entity and shall  contain such  additional
     provisions  to protect the interests of the holder of the Note as the Board
     of Directors of Company shall  reasonably  consider  necessary by reason of
     the foregoing.  The provision of this Section 8.11 shall similarly apply to
     successive    reclassifications,    changes,    consolidations,    mergers,
     continuances, sales or conveyances.

          8.12.  Cancellation  of  Converted  Notes.  All  Notes  delivered  for
     conversion shall be delivered to Company to be canceled.

                                       17
<PAGE>

     9.  Successors  and  Assigns.  Subject  to  the  restrictions  on  transfer
described in Sections 11 and 12 below, the rights and obligations of Company and
Holder of this Note shall be binding upon and benefit the  successors,  assigns,
heirs, administrators and transferees of the parties.

     10. Waiver and Amendment. Any provision of this Note may be amended, waived
or modified upon the written consent of Company and Holder.

     11. Transfer of this Note or Securities Issuable on Conversion Hereof. With
respect to any offer,  sale or other disposition of this Note or securities into
which such Note may be  converted,  Holder will give  written  notice to Company
prior  thereto,  describing  briefly  the  manner  thereof,  together  with,  if
requested by Company, a written opinion of Holder's counsel,  to the effect that
such offer, sale or other  distribution may be effected without  registration or
qualification  (under any federal or state law then in effect).  Upon  receiving
such  written  notice and  reasonably  satisfactory  opinion,  if so  requested,
Company, as promptly as practicable, shall notify Holder that Holder may sell or
otherwise  dispose of this Note or such  securities,  all in accordance with the
terms of the notice  delivered  to  Company.  If a  determination  has been made
pursuant  to this  Section  11 that the  opinion  of  counsel  for Holder is not
reasonably  satisfactory  to Company,  Company shall so notify  Holder  promptly
after such  determination  has been made.  Each Note thus  transferred  and each
certificate  representing the securities thus transferred shall bear a legend as
to the applicable  restrictions on transferability in order to ensure compliance
with the Act,  unless in the opinion of counsel  for Company  such legend is not
required  in order to ensure  compliance  with the Act.  Company  may issue stop
transfer   instructions   to  its  transfer   agent  in  connection   with  such
restrictions.  Subject  to  the  foregoing  transfers  of  this  Note  shall  be
registered upon  registration  books maintained for such purpose by or on behalf
of Company.  Prior to  presentation  of this Note for  registration of transfer,
Company shall treat the registered holder hereof as the owner and holder of this
Note for the purpose of receiving all payments of principal and interest  hereon
and for all other purposes whatsoever, whether or not this Note shall be overdue
and Company shall not be affected by notice to the contrary.

     12.  Assignment  by  Company.  Neither  this  Note  nor any of the  rights,
interests  or  obligations  hereunder  may be  assigned,  by operation of law or
otherwise,  in whole or in part, by Company without the prior written consent of
Holder  except  in  connection  with  an  assignment  in  whole  to a  successor
corporation  to  Company  in  connection  with a  reincorporation  of Company in
another state of the United States.

     13.  Notices.  Any  notice,  request  or other  communication  required  or
permitted  hereunder  shall be in writing  and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail, postage
prepaid,  or by  recognized  overnight  courier  or  personal  delivery  at  the
respective  addresses of the parties as set forth in the Modification  Agreement
or on the  register  maintained  by Company.  Any party  hereto may by notice so
given change its address for future notice hereunder.  Notice shall conclusively
be deemed to have been given when received.

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

                                       18
<PAGE>

     15. Default Rate; Usury. During any period in which an Event of Default has
occurred and is continuing,  Company shall pay interest on the unpaid  principal
balance  hereof  at a rate per  annum  equal to the  rate  otherwise  applicable
hereunder plus four percent (4%). In the event any interest is paid on this Note
which is  deemed  to be in  excess of the then  legal  maximum  rate,  then that
portion of the  interest  payment  representing  an amount in excess of the then
legal  maximum rate shall be deemed a payment of principal  and applied  against
the principal of this Note.

     16.  Expenses;  Waivers.  If action is  instituted  to  collect  this Note,
Company promises to pay all costs and expenses,  including,  without limitation,
reasonable  attorneys' fees and costs,  incurred in connection with such action.
Company  hereby  waives  notice of default,  presentment  or demand for payment,
protest or notice of  nonpayment  or dishonor  and all other  notices or demands
relative to this instrument.

     17. No  Impairment.  The Company  will not, by  amendment  of its  Articles
and/or  Certificate  of  Incorporation  or Bylaws,  or  through  reorganization,
consolidation,  merger, dissolution, issue or sale of securities, sale of assets
or any other voluntary  action,  willfully avoid or seek to avoid the observance
or  performance  of any of the terms of this Note,  but will at all times and in
good faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the holder under this Note against  wrongful  impairment.  Without  limiting the
generality  of the  foregoing,  Company  will  take  all such  action  as may be
necessary or  appropriate in order that Company may duly and validly issue fully
paid and nonassessble Conversion Shares upon the conversion of this Note.

     18.  Severablity.  If one or more  provisions  of this  Note are held to be
unenforceable  under  applicable law, such  provision(s)  shall be excluded from
this  Note  and  the  balance  of the  Note  shall  be  interpreted  as if  such
provision(s)  were so excluded and shall be enforceable  in accordance  with its
terms.

                                       19
<PAGE>

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

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

                                 ,
                                a Delaware corporation

                                By: __________________________________

                                Title:  ______________________________

                                       20
<PAGE>

                               ELECTION TO CONVERT

     To XXXXXXXXXXXXXXXXXX:

     The undersigned owner of the Convertible Promissory Note dated _______ (the
"Note")  hereby  irrevocably  exercises  the option to convert the Note,  or the
portion  below  designated,  into  Class A  common  stock of  XXXXXXXXXXXXXX  in
accordance  with the terms of the Note, and directs that the shares issuable and
deliverable upon  conversion,  together with any check in payment for fractional
shares,  be issued in the name of and  delivered  to the  undersigned,  unless a
different name has been indicated  below. If shares are to be issued in the name
of a person other than the  undersigned,  the undersigned  will pay all transfer
taxes payable with respect thereto.

     The undersigned agrees to be bound by the terms of the Note relating to the
Class A common stock issued upon  conversion of the Note. If you want to convert
the Note in whole, check the box below. If you want to convert the Note in part,
indicate the portion of the Note to be converted in the space provided below.

     In whole / /

     or

     Portion of Note to be converted ($1,000 or any integral multiple  thereof):
$______________

     Date: ______________

     Name of Holder:

     Signature of Authorized Representative of Holder

                                       21
<PAGE>

     ______________________________________  (Sign  exactly as your name appears
on the other side of this Note)

     Medallion Signature Guarantee:_____________________________________

     Please print or typewrite  your name and address,  including zip code,  and
social security or other identifying number:

     If the Class A common stock is to be issued and  delivered to someone other
than you,  please print or typewrite  the name and address,  including zip code,
and social security or other identifying number of that person:

                                       22

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