Document:

EXHIBIT 10.23

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

                                 MEDIABAY, INC.

                       CONVERTIBLE SENIOR PROMISSORY NOTE
                                DUE JUNE 30, 2003

$500,000                                                       February 22, 2002

     MEDIABAY, INC. (together with its successors, the "Company"), a Florida
corporation, for value received, hereby promises to pay to Huntingdon
Corporation or registered assigns (the "Holder"), the principal sum of FIVE
HUNDRED THOUSAND DOLLARS ($500,000) on June 30, 2003 (the "Maturity Date"), and
to pay interest on the unpaid principal balance hereof from the date hereof to
the Maturity Date at the rate of two percent (2.0%) per annum above the higher
of (i) the rate of interest announced publicly by The Wall Street Journal as the
"base rate on corporate loans posted by at least 75% of the nation's 30 largest
banks" (or, if The Wall Street Journal ceases quoting a base rate of the type
described, the highest per annum rate of interest published by the Federal
Reserve Board in Federal Reserve statistical release H.15 (519) entitled
"Selected Interest Rates" as the Bank prime loan rate or its equivalent) or (ii)
1/2 of one percent (0.5%) per annum above the Federal Funds Rate (as the case
may be, the "Prime Rate"), subject to the terms set forth herein and the
Intercreditor Agreement (as hereinafter defined), in arrears, quarterly on March
31, June 30, September 30 and December 31 in each year, commencing on March 31,
2002, until the principal amount hereof shall become due and payable; and to pay
on demand interest on any overdue principal (including any overdue partial
payment of principal and principal payable at the maturity hereof) and (to the
extent permitted by applicable law) on any overdue installment of interest (the
due date of such payments to be determined without giving effect to any grace
period) at the rate of four percent (4.0%) per annum above the Prime Rate.

1.   Interest and Payment

     1.1 Interest shall be computed on the basis of a 360 day year of twelve 30
day months for the actual time elapsed. Subject to the provisions of this
Section 1 and the terms of the Senior Credit Agreement, all interest payments to
be paid in cash to Holder hereunder shall accrue until

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ten (10) days following the date that the Senior Debt (as hereinafter defined)
has been paid in full.

     1.2 At the option of the Holder and subject to the terms of the Senior
Credit Agreement, in lieu of paying a scheduled interest payment in cash, the
Company shall pay such interest either (a) by the issuance to Holder of its
convertible promissory note in the form of this Note (each such note defined
herein as an "Interest Payment Note") in the principal amount of the scheduled
interest payment due on such interest payment date upon the same terms and
conditions of this Note or (b) in a number of whole shares of common stock,
without par value ("Common Stock"), of the Company, equal to the quotient of
dividing the amount of accrued and unpaid interest payable on such interest
payment date by an amount equal to the then current Market Price "Market Price"
shall be deemed to mean the average of the daily closing prices of a share of
Common Stock for the 10 consecutive trading days immediately prior to the
interest payment date. The closing price for each day shall be (a) the last
reported sales price or, in the case no such reported sale takes place on such
day, the average of the reported closing bid and asked prices, in either case on
the principal national securities exchange on which the Common stock is listed
or admitted to trading or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, on The Nasdaq Stock Market, Inc.
("Nasdaq"), (b) if the Common Stock is not listed or admitted to trading on any
national securities exchange or quoted on Nasdaq, the average of the closing bid
and asked prices in the over-the-counter market as furnished by any New York
Stock Exchange member firm reasonably selected from time to time by the Company
for that purpose, or (c) if the Common Stock is not listed or admitted to
trading on any national securities exchange or quoted on Nasdaq and the average
price cannot be determined as contemplated by clause (b), the fair market value
of the Common Stock as determined in good faith by resolution of the independent
directors of the Company. For the purposes of the preceding sentence, the term
"trading day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday,
other than any day on which securities are not traded on such exchange or in
such market. No fractional shares of Common Stock will be issued to the Holder
in lieu of cash interest. Instead of any fractional share which would otherwise
be issuable in lieu of cash interest, the Company will calculate and pay a cash
adjustment in respect of such fraction (calculated to the nearest 1/100th of a
share) in an amount equal to the same fraction of the Market Price at the close
of business on the fifth business day immediately preceding such interest
payment date. The Holder may exercise its option to cause the Company to either
(i) issue its Interest Payment Note in lieu of cash interest for the amount
payable on the interest payment date or (ii) to issue shares of Common Stock, in
lieu of cash interest payable on an interest payment date, by giving the Company
written notice of either of its exercise of such option at least five business
days prior to such interest payment date and the Company will deliver or cause
its transfer agent to deliver, to the Holder or its designee on such interest
payment date, either its Interest Payment Note in the amount of such interest
payment or duly executed certificates for the number of whole shares of Common
Stock so issuable to the Holder registered in the Holder's name or such other
name or names and in such denominations as the Holder shall have designated in
its notice of exercise, as the case may be, and, if applicable, a check payable
to the Holder for any cash adjustment in lieu of a fractional share.

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

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

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

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

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

     1.6 Subject to the terms of the Senior Credit Agreement (as defined
herein), the Company may, upon at least three business days prior written notice
to the Holder specifying the date of the prepayment (the "Prepayment Date") and
the principal amount to be prepaid, prepay the unpaid principal balance of this
Note in whole at any time or in part from time to time, without penalty or
premium, in multiples of $100,000 (or if the outstanding principal amount is

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less than $100,000 at such time, then such principal amount) together with
interest on the principal amount being prepaid accrued to the designated
Prepayment Date.

     1.7 In the event of a Change in Control, the Company will, within 15
business days after the occurrence of such event, give notice of such Change in
Control to the Holder. Such notice shall contain an irrevocable offer to the
Holder to repurchase this Note on a date (the "Change in Control Payment Date")
that is not less than the later of (a) thirty (30) days and not more than ninety
(90) days after the date of such notice or (b) five (5) days after payment in
full of the Debt outstanding under the Senior Credit Facility, at a purchase
price equal to 100% of the aggregate principal amount thereof and all interest
accrued and unpaid on such principal amount to the Change in Control Payment
Date (the "Change in Control Purchase Price"). Each such notice shall: (i) be
dated the date of the sending of such notice; (ii) be executed by an executive
officer of the Company; (ii) specify, in reasonable detail, the nature and date
of the Change in Control; (iv) specify the Change in Control Payment Date; (v)
specify the principal amount of this Note outstanding; (vi) specify the interest
that would be due on this Note, accrued to the Change in Control Payment Date;
and (vii) specify that this Note shall be purchased at the Change in Control
Purchase Price. The Holder shall have the option to accept or reject such
offered payment. In order to accept such offered payment, the Holder shall cause
a notice of such acceptance to be delivered to the Company at least five days
prior to the Change in Control Payment Date. A failure to accept in writing such
written offer of payment as provided in this Section 1.7, or a written rejection
of such offered prepayment, shall be deemed to constitute a rejection of such
offer. The offered payment shall be made at the Change in Control Purchase Price
determined as of the Change in Control Payment Date.

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

2.   Registration; Exercise; Substitution

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

     2.2 (a) Upon surrender of this Note at the principal executive office of
the Company, duly endorsed or accompanied by a written instrument of transfer
duly executed by the Holder or the Holder's attorney duly authorized in writing,
the Company will execute and deliver, at the Company's expense (except as
provided in Section 2.2(c)), a new Note (or Notes) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Subject to Section 2.2(b), the new Note(s) shall be registered
in such name(s) as the Holder may request. Each such new Note shall be dated and
bear interest from the date to

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which interest shall have been paid on the surrendered Note or dated the date of
the surrendered Note, if no interest shall have been paid thereon. Each such new
Note shall carry the same rights to unpaid interest and interest to accrue on
the unpaid principal amount thereof as were carried by the Note so exchanged or
transferred.

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

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

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

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

3.   Senior Credit Agreement and Intercreditor Agreement

     The repayment of this Note shall be subject to the terms and conditions of
the Senior Credit Agreement and the rights and priority with respect to any
collateral security for the indebtedness under this Note shall be subject to the
terms and conditions of the Intercreditor Agreement (the "Intercreditor
Agreement") dated the date hereof by and among Holder, the Company and Senior
Lender Agent (as defined therein).

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4.   Conversion

     4.1 The Holder may convert the outstanding principal amount of this Note,
and accrued and unpaid interest thereon (or a portion of such outstanding
principal amount as provided in Section 4.3) into fully paid and nonassessable
shares of Common Stock of the Company ("Conversion Shares") at any time prior to
the time the outstanding principal amount of this Note, and accrued and unpaid
interest thereon is paid in full, at the Conversion Price then in effect, except
that if this Note is to be prepaid in full or repurchased pursuant to the
provisions hereof, such conversion right shall terminate at the close of
business on the Prepayment Date or the Change in Control Purchase Date, as the
case may be. The number of shares of Common Stock issuable upon conversion of
this Note shall be determined by dividing the principal amount (and accrued and
unpaid interest, if any) to be converted by the conversion price in effect on
the Conversion Date (the "Conversion Price"). The initial Conversion Price is
$.56 and is subject to adjustment as provided in this Section 4.

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

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

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

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

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

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

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<PAGE>

          (A) This Note.

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

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

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

          (E) Common Stock issuable upon exercise of options, warrants, stock
     appreciation rights or other rights outstanding or available for future
     grant under the Company's stock option plans or stock incentive plan or any
     future stock option or incentive plan approved by the Company's
     shareholders;

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

          (G) Common Stock, or options, warrants, rights or other securities or
     debt convertible into or exercisable for shares of Common Stock (or shares
     of Common Stock issuable upon conversion or exercise thereof) issued as a
     result of anti-dilution adjustments to any options, warrants, debt or other
     securities issued or outstanding on the date hereof; and

          (H) Common Stock or options, warrants, rights or other securities or
     debt convertible into, or exercisable (or shares of Common Stock issuable
     upon conversion or exercise thereof) which are issued pursuant to a
     Financing Transaction. The term "Financing Transaction" shall mean any
     transaction consummated by the Company the primary purpose of which is to
     raise capital for the Company.

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

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

          (ii) In the case of the issuance or sale (otherwise than as a dividend
     or other distribution on any stock of the Company) of shares of Common
     Stock for a consideration

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     part or all of which shall be other than cash, the amount of the
     consideration therefor other than cash shall be deemed to be the fair
     market value of such consideration as determined in good faith by the Board
     of Directors.

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

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

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

     (B) The aggregate maximum number of shares of Common Stock issuable upon
     conversion or exchange of any convertible or exchangeable securities shall
     be deemed to be issued and outstanding at the time of issuance of such
     securities, and shall be deemed to be issued for a consideration equal to
     the consideration received by the Company in connection with the sale of
     such securities plus the consideration, if any, receivable by the Company
     upon the conversion or exchange thereof; provided, however, that upon the
     termination of the right to convert or exchange such convertible or
     exchangeable securities (whether by reason of redemption or otherwise), the
     number of shares deemed to be issued and outstanding pursuant to this
     subsection (B) shall be reduced by such number of shares as to which the
     conversion or

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<PAGE>

     exchange rights shall have expired or terminated unexercised, and such
     number of shares shall no longer be deemed to be issued and outstanding and
     the Conversion Price then in effect shall forthwith be readjusted and
     thereafter be the price which it would have been had such adjustment been
     made on the basis of the issuance only of shares actually issued or
     issuable upon the conversion or exchange of those convertible or
     exchangeable securities as to which the conversion or exchange rights shall
     not have expired or terminated unexercised.

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

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

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

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

                                      -10-
<PAGE>

or distribution. At the time of any such dividend or distribution, the Company
shall make appropriate reserves to ensure the timely performance of the
provisions of this Subsection.

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

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

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

     4.8 Notice of Certain Events.

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

     (b) Upon the occurrence of each adjustment or readjustment of the
Conversion Price pursuant to this Section 4, the Company, at its expense, shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and prepare and furnish to each Holder a statement, signed by its chief
financial officer, setting forth such adjustment or readjustment and showing in
reasonable detail the facts upon which such adjustment or readjustment is based.
The Company shall, upon the written request at any time of any Holder, furnish
or cause to be

                                      -11-
<PAGE>

furnished to such Holder a like certificate setting forth (i) such adjustment
and readjustment, (ii) the Conversion Price at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the Conversion of the portion of this Note
specified in such request.

     4.9 If any of the following shall occur, namely:

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

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

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

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

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

                                      -12-
<PAGE>

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

5.   Affirmative Covenants

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

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

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

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

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

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

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

     (e) comply, in all material respects, with all applicable laws, rules and
regulations (including, without limitation, ERISA, Environmental Laws and
Environmental Permits) and obtain all licenses, permits, franchises and other
governmental authorizations necessary for the ownership of its properties and
the conduct of its business, except where its obligation to so

                                      -13-
<PAGE>

comply being contested in good faith and by appropriate proceedings and adequate
resources have been established are being maintained in accordance with GAAP,
and except where failure to comply could not reasonably be expected to have a
Material Adverse Effect; and

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

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

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

6.   Negative Covenants

     6.1 The Company will not, and will not permit any subsidiary thereof to,
(a) merge with or into or consolidate with any other person, permit any other
person to merge or consolidate with or into it, or (b) sell all or substantially
all of its property to any other person; provided, however, that the foregoing
restriction does not apply to the merger or consolidation of the Company with
another corporation or transfer of all or substantially all of the property of
the Company to any other person if: (i) the corporation that results from such
merger or consolidation or to which all or substantially all of the property of
the Company is transferred (the "Surviving Corporation") (x) is organized under
the laws of, and conducts substantially all of its business and has
substantially all of its properties within, the United States of America or any
jurisdiction or jurisdictions thereof and (y) has shareholders' equity
immediately after such transaction that is equal to or greater than the
shareholders' equity of the Company immediately

                                      -14-
<PAGE>

prior to such transaction; (ii) the due and punctual payment of the principal
of, and interest on this Note, according to their tenor, and the due and
punctual performance and observance of all the covenants in this Note, to be
performed or observed by the Company, are expressly assumed pursuant to such
assumption agreements and instruments in such forms as shall be approved
reasonably by the Holder, or assumed by operation of law, by the Surviving
Corporation; and (iii) immediately prior to, and immediately after the
consummation of the transaction, and after giving effect thereto, no Default or
Event of Default exists or would exist. Notwithstanding the foregoing, a
subsidiary of the Company may merge into the Company so long as the Company is
the Surviving Corporation, and a subsidiary of the Company, may merge with or
into a wholly-owned subsidiary of the Company, so long as such wholly-owned
subsidiary is the Surviving Corporation. Notwithstanding anything contained
herein to the contrary, the Company may (i) sell all or substantially all of its
property to, or enter into a merger transaction with, any other person if such
sale or merger follows and is the result of an acceleration of the Company's
Debt pursuant to the Senior Credit Agreement or this Note and the transaction
has been approved by the Senior Agent and the banks which are parties to the
Senior Credit Agreement and the Holder.

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

          (A) Transfers of inventory and of unnecessary, obsolete or worn-out
     assets, in each case in the ordinary course of business of the Company or
     such subsidiary, including but not limited to any remainder sales of the
     Company;

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

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

          (D) any other Transfer of property to the extent that the proceeds of
     such Transfer, net of transaction costs and expenses incurred and actually
     paid in connection with such Transfer (including sales, transfer or gains
     taxes), within 365 days after such Transfer are applied by the Company or
     such subsidiary (A) to fund its working capital

                                      -15-
<PAGE>

     and capital expenditure or acquisitions requirements, and/or (B) to pay or
     prepay a principal amount of Debt of the Company or any subsidiary thereof
     (other than Junior Subordinated Debt) equal to the amount of such net
     proceeds; and, in connection with any such payment, the Company shall pay
     all accrued interest thereon and any premium or make-whole amount required
     to be paid in connection therewith; then the Company shall, subject to the
     Intercreditor Agreement, prepay, together with such prepayment of such
     other Debt, a proportional and ratable principal amount of this Note
     pursuant to Section 1.6.; and

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

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

          (A) this Note and any guaranties thereof;

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

          (C) Debt existing or issued on the Issue Date and listed on Schedule
     6.3 (including Debt under the Senior Credit Agreement;

          (D) Debt incurred under the Senior Credit Facility from time to time
     following the Issue Date;

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

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

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

          (H) Up to $2,500,000 of additional Debt on the same terms as the
     $500,000 principal amount described in item 2 of Schedule 6.3; and

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

                                      -16-
<PAGE>

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

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

     6.4 The Company will not, and will not permit any subsidiary thereof to,
incur, assume or Guaranty any Debt which is subordinated in right of payment to
any other Debt of the Company or any subsidiary thereof, unless such Debt is
also subordinated in right of payment to the obligations of the Company in
respect of this Note on terms reasonably acceptable to the Holder.

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

7.   Events of Default

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

     (a) The Company defaults in the payment of the principal of this Note when
due (whether at the Maturity Date or any Prepayment Date) or in the payment of
the Change in Control Purchase Price when due or defaults in the payment of any
accrued interest on this Note when due and such default continues for a period
of 30 business days after the date such interest became due; (b) The Company or
any subsidiary thereof defaults in the performance or observance of any of the
covenants contained in Section 5.2(d) or Section 6 hereof or defaults in the
performance or observance of any of the covenants contained in Section 5.2(e)
hereof and such default remains uncured for more than 30 days;

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

     (d) Any warranty, representation or other statement by or on behalf of the
Company contained in this Note or in any certificate, financial statement,
report or notice furnished after the date hereof to Holder pursuant to the terms
of this Note, or in any written amendment,

                                      -17-
<PAGE>

supplement, modification or waiver with respect to any such document shall be
false or misleading in any material respect when made;

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

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

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

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

     (i) The Note shall cease to be in full force and effect or shall be
declared by a court of competent jurisdiction to be void, voidable or
unenforceable, or the validity or enforceability

                                      -18-
<PAGE>

of the Note shall be contested by the Company or any Affiliate, or the Company
or any Affiliate shall deny that the Company has any further liability or
obligation under the Note.

     7.2 Default Remedies

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

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

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

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

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

                                      -19-
<PAGE>

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

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

8.   Interpretation of this Note

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

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

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

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

                                      -20-
<PAGE>

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

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

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

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

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

     "Environmental Law" means any law, statute or regulation enacted by any
governmental authority in connection with or relating to the protection or
regulation of the environment,

                                      -21-
<PAGE>

including, without limitation, those laws, statutes and regulations regulating
the disposal, removal, production, storing, refining, handling, transferring,
processing or transporting of Hazardous Materials and any applicable orders,
decrees or judgments issued by any court of competent jurisdiction in connection
with any of the foregoing.

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

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

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

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

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

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

                                      -22-
<PAGE>

(d) asbestos or urea formaldehyde in any form; and (e) dielectric fluid
containing levels of polychlorinated biphenyls in excess of fifty parts per
million.

     "Intercreditor Agreement" means the Intercreditor Agreement dated April 30,
2001 by and among Holder, Company and Senior Lender Agent (as defined therein).

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

     "Issue Date" means February 22, 2002.

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

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

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

     "Note" means this $500,000 9% Convertible Senior Note due June 30, 2003
issued by the Company, as the same may be amended, modified, supplemented,
refunded, refinanced or extended from time to time.

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

                                      -23-
<PAGE>

any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate
may have any liability.

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

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

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

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

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

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

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

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

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

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

     "Senior Credit Facility" means and includes:

          (i) the Senior Credit Agreement; and

          (ii) any Credit Facility (whether or not secured), which Credit
     Facility has refinanced in whole or in part the Debt governed by the terms
     of a Senior Credit Facility

                                      -24-
<PAGE>

     which the Company has designated in writing to the Holder as being the
     "Senior Credit Facility;" provided, however, that, by making such
     designation, the predecessor Senior Credit Facility shall cease to be the
     Senior Credit Facility (but any Debt outstanding or incurred thereunder
     shall continue to be Senior Debt for so long as such Debt meets the
     definition thereof).

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

          (i) the Senior Credit Facility;

          (ii) this Note;

          (iii) $2,500,000 of Debt on the same terms as this Note to be issued
     by the Company to Huntingdon Corporation; and

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

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

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

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

                                      -25-
<PAGE>

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

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

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

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

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

9.   Miscellaneous

     9.1 All communications under this Note shall be in writing and shall be
delivered either by nationwide overnight courier or by facsimile transmission
(confirmed by delivery by nationwide overnight courier sent on the day of the
sending of such facsimile transmission). Communications to the Company shall be
addressed as set forth on Annex 1, or at such other address of which the Company
shall have notified the Holder. Communications to the Holder shall be addressed
as set forth on Annex 1, or at such other address of which such Holder shall
have notified the Company (and the Company shall record such address in the
register for the registration and transfer of this Note). Any communication
addressed and delivered as herein provided shall be deemed to be received when
actually delivered to the address of the addressee (whether or not delivery is
accepted) or received by the telecopy machine of the recipient. Any

                                      -26-
<PAGE>

communication not so addressed and delivered shall be ineffective.
Notwithstanding the foregoing provisions of this Section 9.1, service of process
in any suit, action or proceeding arising out of or relating to this Note or any
transaction contemplated hereby, or any action or proceeding to execute or
otherwise enforce any judgment in respect of any breach hereunder or under any
document hereby, shall be delivered in the manner provided in Section 9.6(c).

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

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

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

     (b) Any amendment or waiver consented to as provided in this Section 9.4
shall be binding upon the then current Holder and upon each future holder of
this Note and upon the Company whether or not this Note shall have been marked
to indicate such amendment or waiver. No such amendment or waiver shall extend
to or affect any obligation, covenant,

                                      -27-
<PAGE>

agreement, Default or Event of Default not expressly amended or waived or impair
any right consequent thereon.

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

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

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

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

     (b) ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE
OR TRANSACTIONS CONTEMPLATED HEREBY OR ANY ACTION OR PROCEEDING TO EXECUTE OR
OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF ANY BREACH UNDER THIS NOTE MAY BE
BROUGHT BY SUCH PARTY IN ANY FEDERAL DISTRICT COURT LOCATED IN NEW YORK COUNTY,
NEW YORK, OR ANY NEW YORK STATE COURT LOCATED IN NEW YORK COUNTY, NEW YORK AS
SUCH PARTY MAY IN ITS SOLE DISCRETION ELECT, AND BY THE

EXECUTION AND DELIVERY OF THIS NOTE, THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY SUBMIT TO THE NON-EXCLUSIVE IN PERSONAM JURISDICTION OF EACH
SUCH COURT, AND EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES AND AGREES NOT TO
ASSERT IN ANY PROCEEDING BEFORE ANY TRIBUNAL, BY WAY OF MOTION, AS A DEFENSE OR
OTHERWISE, ANY CLAIM THAT IT IS NOT SUBJECT TO THE IN PERSONAM JURISDICTION OF
ANY SUCH COURT. IN ADDITION, EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS NOTE OR TRANSACTION CONTEMPLATED HEREBY BROUGHT IN ANY SUCH
COURT, AND HEREBY IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

                                      -28-
<PAGE>

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

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

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

                             MEDIABAY, INC.

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

                                      -29-
<PAGE>

                                     Annex I

1.       Holder's Payment Instructions
                  Citibank
                  153 E. 53rd Street
                  New York, NY 10043
                  ABA # 021000089
                  Credit: Norton Herrick
                  Account # 37101489

2.       Addresses for Notices
         (a)  If to the Company, to:
                  MediaBay, Inc.
                  2 Ridgedale Avenue - Suite 300
                  Cedar Knolls, NJ 07927
                  Attention: Chief Financial Officer
                  Telephone No.: 973-539-9528
                  Facsimile No.: 973-539-1273

                  with a copy to:

                  Blank Rome Tenzer Greenblatt LLP
                  405 Lexington Avenue
                  New York, New York 10174
                  Attention: Robert J. Mittman, Esq.
                  Telephone No.: (212) 885-5555
                  Facsimile No.: (212) 885-5001

         (b)      If to the payee, to:
                  Mr. Norton Herrick
                  2 Ridgedale Avenue- Suite 300
                  Cedar Knolls, NJ 07927
                  Telephone No.: 973-539-9528
                  Facsimile No.: 973-539-1237

<PAGE>

                          [FORM OF ELECTION TO CONVERT]

     The undersigned hereby irrevocably elects to exercise its right, pursuant
to the Convertible Senior Promissory Note due June 30, 2003 (the "Note") of
MediaBay, Inc. (the "Company") in the outstanding principal amount of
$_________, which Note is tendered herewith, to convert $__________ of the
amount outstanding under the Note to __________________ shares of the common
stock of the Company (the "Shares"), all in accordance with the terms of the
Note. The undersigned requests that a Certificate for such Shares be registered
in the name of ______________, whose address is ____________, and that such
Certificate be delivered to ________________, whose address is
_________________, [and that a replacement Note in the principal amount of
$___________, representing the balance of the principal amount outstanding
thereunder after giving effect to this conversion, be issued in the amount of
$_________ and delivered to ___________, whose address is ____________].

Dated:                          Signature:
                                           -----------------------------------

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

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

<PAGE>

                                  Schedule 6.3

1.   Debt incurred under the $1,984,250 principal amount of Convertible Senior
     Subordinated Promissory Note due December 31, 2004 issued to Norton
     Herrick.

2.   Debt incurred under the $500,000 principal amount of Convertible Senior
     Subordinated Promissory Note due December 31, 2004 issued to Evan Herrick.

3.   Debt incurred under the $4,200,000 principal amount of Convertible Senior
     Subordinated Promissory Notes due December 31, 2004 issued to ABC
     Investment, L.L.C.

4.   Debt incurred under the $800,000 Convertible Senior Subordinated Promissory
     Note Due December 31, 2002 issued to Huntingdon Corporation.

5.   Debt incurred under the $2,500,000 Convertible Senior Promissory Note Due
     September 30, 2002 issued to Huntington Corporation.Exhibit 10.2

                         MENDOCINO BREWING COMPANY, INC.
                             1994 STOCK OPTION PLAN
                         -------------------------------
                                  (As Amended)

1.   DEFINITIONS.

     As used in this Plan, the underlined terms set forth below have the
meanings set forth in this Article 1.

     "Administrator" means the Board or any of its Committees appointed pursuant
to Article 10.

     "Affiliate" means a parent or subsidiary corporation of the Company,
whether now or hereafter existing, as defined in Sections 424(e) and (f) of the
Code, respectively.

     "Board" means the Board of Directors of the Company.

     "Code" means the Internal Revenue Code of 1986, as amended.

     "Committee" means the applicable committee appointed by the Board under
Article 10.

     "Common Stock" means the common stock of the Company.

     "Company" means Mendocino Brewing Company, Inc., a California corporation.

     "Consultant" means

          (a)  any persons, including an advisor, who is engaged by the Company
               or any Affiliate to render services, either on a continuous or
               project-by-project basis, who is compensated for such services,
               but who is not an Employee; and

          (b)  any director who is not an Employee, regardless of whether the
               director is compensated for such services.

     "Control Person" means a person who directly or indirectly controls, is
controlled by or is under common control with the Company.

     "Corporate Transaction" means

          (a)  a merger in which the shares of the Company outstanding
               immediately before the merger, or in which shares of the
               surviving entity issued with respect to shares of the Company
               outstanding immediately before the merger, represent 50% or less
               of the combined voting power of all of the Company's outstanding
               stock;

          (b)  the sale, transfer, or other disposition of all or substantially
               all of the assets of the Company; or

                                       1
<PAGE>

          (c)  any other corporate reorganization or business combination in
               which the beneficial ownership of 50% or more of the combined
               voting power of all of the Company's outstanding stock is
               transferred.

     "Employee" means any person, including an officer or director, employed by
the Company or any Affiliate. The payment of a director's fee by the Company
does not by itself constitute employment.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     "Fair Market Value" means, as of any date:

          (a)  the closing sales price (or the closing bid, if no sales were
               reported), as quoted on a stock exchange or national market
               system (including without limitation the Nasdaq National Market
               System), for the last market trading day most recently in the
               Wall Street Journal or such other source as the Administrator
               deems reliable; or

          (b)  if (a) does not apply, the mean between the high and low asked
               prices for the Common Stock regularly quoted by a recognized
               securities dealer during the previous 30 days; or

          (c)  if (a) and (b) do not apply, the value determined in good faith
               by the Administrator.

     "Incentive Option" means an Option intended to qualify as an incentive
stock option within the meaning of Code Section 422.

     "Nonstatutory Option" means an Option not intended to qualify as an
Incentive Option.

     "Option" means an option to purchase Common Stock granted pursuant to this
Plan.

     "Option Agreement" means a written agreement, signed by the Optionee and a
duly authorized representative of the Company, evidencing the grant of an
Option.

     "Optionee" means an Employee or Consultant who receives an Option.

     "Outside Director" means a member of the Board who is not an Employee or an
officer of the Company or any Affiliate.

     "Plan" means this 1994 Stock Option Plan.

     "Rule 16b-3" means Rule 16b-3 promulgated under Section 16 of the
Securities Exchange Act of 1934, as amended.

     "Share" means a share of the Common Stock, as adjusted in accordance with
Article 9.

     "Tax Date" means the date on which the amount of any tax to be withheld
upon exercise of an Option is to be determined.

                                       2
<PAGE>

     "Termination of Employment" means the interruption or termination of the
employment relationship by the Company or any Affiliate for any reason including
resignation, discharge, death, or retirement, but does not include a termination
where there is a simultaneous reemployment of the Optionee by the Company or an
Affiliate as an Employee or, in the sole discretion of the Administrator, as a
Consultant. Employment is not considered to be interrupted by (a) sick leave;

          (b)  military leave;

          (c)  any other leave of absence for 90 days or less approved by the
               Board, unless reemployment upon the expiration of such leave is
               guaranteed by contract or statute; or

          (d)  transfers between locations of the Company or between the Company
               and its Affiliates or successor.

     For Consultants, "Termination of Employment" means ceasing to render
services on at least a periodic basis. The Administrator, in its absolute
discretion, shall determine the effect of all matters and questions to
Termination of Employment.

2.   PURPOSE.

     The purpose of this Plan is to advance the interests of the Company by
giving the Company's Employees and Consultants incentive through ownership of
the Company's stock to continue in the service of the Company and thereby to
help the Company compete effectively with other enterprises for the services of
qualified individuals. Options granted under this Plan may be Incentive Options
or Nonstatutory Options, as determined by the Administrator at the time of grant
of any Option and subject to the applicable provisions of Code Section 422, the
regulations promulgated thereunder, or another relevant provisions of the Code
and regulations.

3.   STOCK SUBJECT TO THIS PLAN.

     Subject to the adjustment as provided in Article 9, the Company may issue
Options to purchase up to 1,000,000 Shares. Options that terminate for any
reason other than exercise may be issued again in the future unless this Plan
has been terminated. The Company shall at all times reserve for issuance
pursuant to this Plan a number of its authorized but unissued Shares equal to
the number of Shares issuable pursuant to this Plan. Exercise of an Option shall
decrease the number of Shares available, both under this Plan and under the
Option, by the number of Shares as to which the Option is exercised.

4.   TERM OF PLAN.

     This Plan shall become effective upon its adoption by the Board. Within 12
months after the date of such adoption, this Plan shall be approved by the
shareholders in the Company in the degree and manner required under applicable
state and federal law. No option shall become exercisable unless and until such
shareholder approval has been obtained. Unless sooner terminated under Article 9
or 10, this Plan shall terminate upon the earlier of (a) the tenth

                                       3
<PAGE>

anniversary of its adoption by the Board or (b) the date on which all Shares
available for issuance under this Plan have been issued. Any Option outstanding
under this Plan at the time of its termination shall remain in effect in
accordance with its terms and conditions and those of this Plan.

5.   ELIGIBILITY.

     The Company may grant Nonstatutory Options to Employees and Consultants,
except that Outside Directors who serve as Administrator under Section 10.1 are
eligible to receive Option grants only in accordance with Article 8. The Company
may grant Incentive Options only to Employees. The Company may grant eligible
Optionees additional Options.

6.   TERMS OF OPTIONS.

     6.1 Written Agreements. Grants of Options shall be evidenced by an Option
Agreement, which shall contain the provisions that this Plan requires and may
contain additional provisions that do not conflict with this Plan as the
Administrator deems appropriate. Option Agreements need not have identical
terms. Each Option Agreement shall be subject to this Plan.

     6.2 Term of Option. The term of each Option shall be no more than 10 years
from the date of grant. The term of an Option granted to person who, at the time
the Option is granted, owns (as that term is defined in Code Section 424(d))
stock representing more than 10% of the combined voting power of all classes of
stock of the Company or any Affiliate shall be no more than 5 years from the
date of grant.

     6.3 Exercise Price. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator, but in no event shall the per Share exercise price of an
Incentive Option be less than the Fair Market Value per Share on the date of
grant, and in no event shall the per Share exercise price of a Nonstatutory
Option be less than 85% of the Fair Market Value per Share on the date of grant.
In the case of an Option granted to an Employee who, at the time of the grant of
such Option, owns, as that term is defined in Section 424(d) of the Code, stock
representing more than 10% of the voting power of all classes of stock of the
Company or any Affiliate, the per Share exercise price shall be no less than
110% of the Fair Market Value per Share on the date of grant.

     6.4 Termination of Employment.

          6.4.1 General Rule. Unless determined otherwise by the Administrator
     pursuant to Section 6.6, to the extent not already expired or exercised,
     and except as provided otherwise by this Section 6.4, every Option shall
     terminate at the earlier of:

               (a)  the expiration date as set forth in the Option Agreement; or

               (b)  3 months after Termination of Employment for reasons other
                    than death or disability;

     An Option shall be exercisable after Termination of Employment only to the
extent that it was exercisable on the date of Termination of Employment. Upon
the expiration of the period of

                                       4
<PAGE>

exercisability after Termination of Employment or (if earlier) upon the
expiration of the Option term, the Option shall terminate.

          6.4.2 Death or Disability. If Termination of Employment is due to the
     Optionee's death or disability (as defined in Code Section 22(e)(3)),
     unless determined otherwise by the Administrator pursuant to Section 6.6,
     the Option, to the extent not already expired or exercised, shall terminate
     at the earlier of (a) the expiration date as set forth in the Option
     Agreement, or (b) one year after the date of the Optionee's disability or
     death. In the event of the death of the Optionee, the Option shall be
     exercisable by the Optionee's estate or any person who acquired the right
     to exercise the Option by bequest or inheritance.

          6.4.3 Special Rule for Incentive Options. For purposes of this Section
     6.4, the limited period of exercisability of Incentive Options following
     Termination of Employment shall be measured from the date the Optionee
     ceased to be Employee.

          6.4.4 Change of Status from Employee to Consultant. Unless the
     Administrator determines otherwise in its sole discretion, following
     termination of an Optionee's employment with the Company or an Affiliate as
     an Employee where there is a simultaneous reemployment of the Optionee by
     the Company or an Affiliate as a Consultant, any Incentive Options held by
     the Optionee shall, at the time the options would otherwise have terminated
     pursuant to subsection 6.4.1, instead convert to Nonstatutory Options.

     6.5 Extension of Exercise Period. The Administrator may at any time extend
the expiration date of an Option following the Optionee's Termination of
Employment beyond the periods specified in Section 6.4, but not beyond the
expiration date set forth in the Option Agreement. Unless the Optionee agrees to
convert an Incentive Option into a Nonstatutory Option or the Option will
continue to meet the requirements of an Incentive Option, the Administrator may
not:

          (a)  extend the expiration date of an Incentive Option after the
               Company has granted the Option, or

          (b)  extend the expiration date of an Incentive Option, beyond one
               year after Termination of Employment by reason of death or
               disability or 3 months after Termination of Employment for other
               reasons.

     6.6 Non-Transferability of Options. An Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution. An Option may be exercised,
during the lifetime of the Optionee, only by the Optionee.

     6.7 Type of Option. Each Option Agreement shall clearly state whether or
not the Option is intended to qualify as an Incentive Option. If only a portion
of an Option is intended to so qualify, (a) the Option Agreement shall so state,
and (b) the Option Agreement shall not require that the number of Incentive
Options exercised reduces the size the Nonstatutory Option portion, or
vice-versa.

                                       5
<PAGE>

     6.8 Limitation on Incentive Options. The aggregate Fair Market Value of the
Shares for which one or more Incentive Options granted to a single Employee
under this Plan (or any other Incentive Option plan of the Company or any
Affiliate) may for the first time become exercisable as Incentive Options under
the Code during any one calendar year shall not exceed $100,000 or such other
amount as may be permitted under subsequent amendments to Code Section 422. To
the extent that any two or more Incentive Options violate this limitation, the
excess Options shall be treated as Nonstatutory Options. For purposes of this
Section 6.9, Incentive Options shall be taken into account in the order in which
they are granted, and the Fair Market Value of the Shares shall be determined as
of the time the Options with respect to such Shares are granted.

     6.9 Time of Granting Options. The date the Company is deemed to grant an
Option shall, for all purposes, be the date on which the Administrator decides
to grant the Option, or such other date as the Administrator may designate. The
Administrator shall notify each Employee or Consultant to whom an Option is
granted within a reasonable time after the date of grant.

     6.10 No Employment Agreement. No Option Agreement, nor anything contained
in this Plan, shall confer upon any Optionee any right of employment or
consulting relationship with the Company or interfere in any way with the right
of the Optionee or the Company to terminate such employment or consulting
relationship at any time, with or without cause.

     6.11 Notice of Disqualifying Disposition of Incentive Options. Optionees
shall give the Company written notice of any disposition of any Share acquired
pursuant to exercise of an Incentive Option if the disposition occurs within (a)
two years of the date the Option was granted or (b) one year of the date the
Optionee purchased the Share, whichever occurs later. A disposition includes any
sale, exchange, gift, or other transfer or attempted transfer of legal title.
The notice shall include the Optionee's name, the number of Shares disposed of,
and the dates and prices the Shares were acquired and disposed of. Failure to
give such notice may result in the Company's failure to claim income tax
deductions with respect to the issuance of the Shares.

     6.12 Adjustments to Option Rights. Subject to the general limitations of
this Plan, the Administrator may adjust the exercise price, term, or any other
provision of an Option (other than Options granted pursuant to Article 8) by
canceling and regranting the Option or by amending or substituting the Option.
Options that have been so adjusted may have higher or lower exercise prices,
have longer or shorter terms, or be subject to different rights and restrictions
than prior Options. The Administrator may also adjust the number of Options
granted to an Optionee by canceling outstanding Options or granting additional
Options. Except for adjustments necessary to ensure compliance with any
applicable state or federal law, no such adjustment shall impair an Optionee's
rights under any Option Agreement without the consent of the Optionee.

7.   EXERCISE OF OPTIONS.

     7.1 When Options Become Exercisable. Options shall be exercisable in
cumulative annual increments of at least 20% per year over five years from the
date the Options are granted, but otherwise at such times and under such
conditions as the Administrator may determine.

                                       6
<PAGE>

Exercisability may also depend upon satisfaction of performance criteria by the
Company and/or the Optionee. Options granted to officers and directors of the
Company shall not be exercisable in whole or in part until six months after the
date of grant. No Option shall be exercisable until the Company and the Optionee
sign an Option Agreement acceptable to the Company.

     7.2 No Fractional Shares. An Option may not be exercised for a fraction of
a Share.

     7.3 Exercise Procedure. An Option is exercised when the person entitled to
exercise the Option gives written notice of exercise to the Company in
accordance with the terms of the Option the Company receives full payment for
the Shares issuable upon such exercise. Full payment may consist of any
consideration and method of payment allowable under Section 7.4 of this Plan,
subject to the approval of the Administrator. Notwithstanding the exercise of an
Option, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to such Shares until the Company issues a
stock certificate evidencing the Shares and the transfer agent makes an
appropriate entry on the stock record books of the Company. The Company shall
issue a stock certificate promptly upon valid exercise of an Option.

     7.4 Payment for Shares. The Administrator shall determine the consideration
to be paid and the method of payment for Shares to be issued upon exercise of an
Option. Unless the Optionee agrees to convert an Incentive Option into a
Nonstatutory Option or the Option will continue to meet the requirements of an
Incentive Option, the Administrator shall not change the consideration to be
paid or the method of payment after the date of grant. Consideration to be paid
for Shares may consist entirely of

          (a)  cash;

          (b)  check;

          (c)  promissory note;

          (d)  other Shares which

               (i)  in the case of Shares acquired upon exercise of an Option
                    either have been owned by the Optionee for more than six
                    months on the date of surrender or were not acquired,
                    directly or indirectly, from the Company, and

               (ii) have a Fair Market Value on the date of surrender equal to
                    the aggregate exercise price of the Shares as to which the
                    Option is exercised;

          (e)  delivery of a properly executed exercise notice together with
               irrevocable instructions to a broker to promptly deliver to the
               Company the amount of sale or loan proceeds required to pay the
               exercise price;

          (f)  any other lawful consideration; or

          (g)  any combination of the foregoing methods of payment.

                                       7
<PAGE>

Unless the Company becomes a Delaware corporation, the Company shall not extend
or guarantee credit to any Optionee in connection with an Option exercise in
excess of the amount equal to the sum of the total aggregate exercise price of
the Options exercised plus any federal and state income and employment tax
liability incurred by the Optionee in connection with the Option exercise. If
the Company becomes a Delaware corporation, the Company shall not extend or
guarantee credit to the Optionee in connection with an Option exercise in excess
of the amount equal to the sum of that portion of the total aggregate exercise
price of the Options exercised that exceeds the amount determined to be capital
under Section 154 of the Delaware General Corporation Law plus any federal and
state income and employment tax liability incurred by the Optionee in connection
with the Option exercise.

     7.5 Withholding Tax Obligations. At the time of exercise of an Option, the
Optionee shall pay to the Company by bank cashier's check or other form of
payment acceptable to the Company, all applicable federal and state withholding
and employment taxes as determined by the Company in its sole discretion. If
authorized by the Administrator in its sole discretion, and if the Option has
been held for six months or more, any Optionee may elect to have the Company
withhold from the Shares to be issued upon exercise of the Option a number of
Shares having a Fair Market Value as determined on the Tax Date equal to the
amount required to be withheld. All such elections shall be in writing in a form
acceptable to the Administrator and shall be subject to the following
restrictions:

          (a)  the Optionee must make the election on or before the applicable
               Tax Date;

          (b)  once made, the election shall be irrevocable as to the particular
               Shares with respect to which the election is made;

          (c)  all elections shall be subject to the consent or disapproval of
               the Administrator; and

          (d)  if the Optionee is subject to Rule 16b-3, the election must
               comply with the applicable provisions of Rule 16b-3 and shall be
               subject to such additional conditions or restrictions as may be
               required thereunder to qualify for the maximum exemption from
               Section 16 of the Exchange act with respect to Plan transactions.

8.   DISINTERESTED ADMINISTRATORS.

     Members of the Board who serve as Administrator under Section 10.1 shall
not be eligible to receive any additional options under this Plan or any other
stock plan of the Company or any Affiliate, except as permitted by Rule 16b-3.

9.   ADJUSTMENTS OF AND CHANGES IN STOCK.

     9.1 Adjustments. Subject to any required action by the shareholders, the
number of Shares covered by each outstanding Option, the number of additional
Shares eligible for issuance under this Plan, and the per Share exercise price
shall be proportionately adjusted upon any change in the Common Stock by reason
of any stock split, reverse stock split, stock dividend, recapitalization,
combination or reclassification of Shares, or other change affecting the

                                       8
<PAGE>

outstanding Common Stock as a class without receipt of consideration, unless the
change results in the termination of all outstanding Options. The Administrator
shall make the adjustments. The Administrator's adjustments shall be final,
binding, and conclusive. Except as expressly provided in this Plan, no issuance
of stock of any class, or of securities convertible into stock of any class,
shall affect the number or exercise price of Shares subject to outstanding
Options.

     9.2 Dissolution. The Board shall notify the Optionees at least fifteen (15)
days before any proposed dissolution or liquidation of the Company. The
outstanding unexercised Options shall terminate immediately before the
dissolution or liquidation of the Company.

     9.3 Corporate Transactions. Upon the consummation of a Corporate
Transaction, all outstanding Options shall terminate to the extent not
previously exercised or assumed by the successor corporation or its parent.
Notwithstanding the foregoing, the Company may, in its discretion, at any time
within 30 days before any scheduled closing of a Corporate Transaction, cancel
all outstanding Options and pay to each Optionee (a) the estimated amount per
Share that the Optionee would receive at the closing with respect to any Shares
the Optionee would receive upon exercise immediately before the closing of all
Options that would be exercisable on the closing date, minus (b) the aggregate
exercise price of the exercisable Options. The Company may withhold from such
amount any taxes that the Company is required to withhold.

     9.4 Other Changes. Upon any other relevant change in the capitalization of
the Company, the Administrator may, as it deems appropriate, provide for an
equitable adjustment in the number of Shares then subject to this Plan and to
any outstanding Options, and to the exercise price of outstanding Options.

     9.5 No Fractional Shares. No right to purchase fractional Shares shall
result from any adjustment to outstanding Options pursuant to this Article. Upon
any such adjustment, the number of Shares subject to outstanding Options of each
Optionee shall be rounded down to the nearest whole Share. The Company shall
give notice of any adjustment to each holder of Options that have been so
adjusted. Such adjustment (whether or not such notice is given) shall be
effective and binding for all purposes of this Plan.

10.  ADMINISTRATION OF PLAN.

     10.1 Administration With Respect to Directors and Officers. With respect to
grants of Options to officers or directors of the Company, this Plan shall be
administered by (a) the Board if the Board may administer this Plan in
compliance with Rule 16b-3, or (b) a Committee of the Board, which shall be
constituted in such a manner as to permit this Plan to comply with Rule 16b-3.
Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may
increase the size of such Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members, fill vacancies,
however caused, and remove all members of the Committee and thereafter directly
administer this Plan, all to the extent permitted by Rule 16b-3.

     10.2 Administration With Respect to Consultants and Other Employees. With
respect to grants of Options to Employees or Consultants who are neither
directors nor officers of the Company, this Plan shall be administered by (a)
the Board or (b) a Committee of the Board,

                                       9
<PAGE>

which shall be constituted in such a manner as to satisfy the legal requirements
relating to the grant of Options and the administration of Incentive Option
plans. Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may
increase the size of such Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members, fill vacancies,
however caused, and remove all members of the Committee and thereafter directly
administer this Plan, all to the extent permitted by applicable law.

     10.3 Multiple Administrative Bodies. If permitted by Rule 16b-3, this Plan
may be administered by different bodies with respect to directors, non-director
officers, and Employees and Consultants who are neither directors nor officers.

     10.4 Powers of the Administrator. Subject to the provisions of this Plan
and in the case of a Committee, the specific duties delegated by the Board to
the Committee, the Administrator shall have the authority, in its discretion:

          (a)  to determine the Fair market Value of the Common Stock;

          (b)  to select the Employees and Consultants to whom Options may from
               time to time be granted under this Plan;

          (c)  to determine whether Options are granted;

          (d)  to determine the number of Shares to be covered by each Option;

          (e)  to approve forms of Option Agreement for use under this Plan;

          (f)  to determine the terms and conditions, not inconsistent with the
               terms of this Plan, of any Option granted under this Plan
               (including, but not limited to, the exercise price and any
               restriction or limitation on any Option and/or the Shares
               relating thereto, based in each case on such factors as the
               Administrator may determine, in its sole discretion);

          (g)  to determine whether and under what circumstances an Option may
               be settled in cash instead of Common Stock under Section 10.5;

          (h)  to adopt rules and regulations for implementing this Plan;

          (i)  to interpret this Plan; and

          (j)  to take such other action as is appropriate to the administration
               of this Plan.

     10.5 Buyout Provisions. The Administrator may at any time offer to buy out
for a payment in cash or Shares, an Option previously granted, based on such
terms and conditions as the Administrator may establish and communicate to the
Optionee at the time that the offer is made.

                                       10
<PAGE>

     10.6 Rule 16b-3. Unless the Board determines otherwise in a specific case,
Options granted to persons subject to Section 16(b) of the Exchange Act shall
comply with Rule 16b-3 and shall contain such additional conditions or
restrictions as may be required to qualify for the maximum exemption from
Section 16(b) of the Exchange Act with respect to Plan transactions. In no event
shall the Board take any action that would violate Section 10.1 of this Plan.

     10.7 Effect of Administrator's Decision. All decisions, determinations, and
interpretations of the Administrator shall be final and binding on all Optionees
and any other persons having an interest in any Options.

11.  AMENDMENT AND TERMINATION OF THE PLAN.

     11.1 Amendment and Termination. The Board may at any time amend, suspend,
or terminate this Plan. Amendments to this Plan shall be subject to shareholder
approval to the extent such approval is necessary to enable this Plan to comply
with Rule 16b-3, Code Section 422, or any other applicable law or regulation,
including the requirements of the NASD or an established stock exchange if the
Company is then subject to such requirements.

     11.2 Effect of Amendment or Termination. Except as provided in this Plan or
in an Option Agreement, no amendment, suspension, or termination of this Plan
shall alter or impair the rights of any Optionee under any Option outstanding at
the time without the written consent of the Optionee.

     11.3 Amendments Required by Code. Notwithstanding the provisions of Section
11.2, the Board hereby reserves the right to amend or modify this Plan and any
Options outstanding to the extent necessary to qualify Options for such
favorable federal income tax treatment as may be afforded employee stock options
under Code Section 422 and regulations subsequently promulgated thereunder.

12.  CONDITIONS UPON ISSUANCE OF SHARES.

     The Company shall obtain all approvals and permits required by regulatory
authorities who have jurisdiction over this Plan, the Options, or the Shares
(including, without limitation, any stock exchange or market upon which the
Shares may then be listed or traded) before implementing this Plan, granting
Options, or issuing Shares. The inability of the Company to obtain any such
approvals or permits shall relieve the Company of any liability for failing to
grant Options or issue Shares with respect to which such approval or permit has
not have been obtained. As a condition to the exercise of an Option, the Company
may require the person exercising such Option to represent and warrant at the
time of exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any
applicable exemption from registration or qualification under federal or state
law.

13.  INFORMATION TO OPTIONEES.

     The Company shall provide each Optionee, during the period for which the
Optionee has one or more Options outstanding, copies of all annual reports and
other information that the Company provides to its shareholders. This Article 13
shall not be construed to require the

                                       11
<PAGE>

Company to provide such information to employees whose duties in connection with
the Company assure their access to equivalent information.

14.  TAX STATUS.

     The Company does not hereby, nor by way of any plan, document, Option
Agreement, or otherwise, represent or warrant to any person, including the
Optionees, that the grant or exercise of an Option or the subsequent disposition
of Shares obtained by the exercise of an Option pursuant to this Plan, or any
other aspect of this Plan, will have any particular tax effect. Optionees are
responsible for understanding the tax effects of the Options on them.

15.  PLAN GOVERNS.

     If there is any inconsistency between this Plan and any documents related
to this Plan, including any Option Agreement, this Plan shall govern. Nothing
contained in this Plan shall be construed to constitute, or be evidence of, any
right in favor of any person to receive Options.

16.  APPLICABLE LAW; SEVERABILITY.

     This Plan shall be governed and construed in all respects in accordance
with the laws of the State of California excluding its conflict of laws rules to
the extent such rules would apply the law of another jurisdiction. Incentive
Options granted under this Plan shall be interpreted and administered in
accordance with Code Section 422. If any provision is susceptible of more than
one interpretation, it shall be interpreted in a manner consistent with this
Plan being an Incentive Option plan. If any provision of this Plan is found by a
court of competent jurisdiction to be invalid or unenforceable, the remaining
provisions shall continue to be fully effective.

                                       12

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