Document:

EXHIBIT 10.9

PLEASE NOTE THAT WE HAVE REQUESTED CONFIDENTIAL TREATMENT FOR CERTAIN PORTIONS
OF THIS EXHIBIT, WHICH PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. A [*] INDICATES THE PLACES IN THIS EXHIBIT
WHERE MATERIAL HAS BEEN OMITTED.

                             PLAYTEX PRODUCTS, INC.
                         MILITARY DISTRIBUTOR AGREEMENT

                                            April 2, 2002

This agreement is between Military Resale Group, Inc., Colorado Springs, CO, and
Playtex Products, Inc., Westport, CT.

Under this agreement, the distributor will provide frequent delivery service of
Playtex products to the Defense Commissary Agency (DeCA) stores listed on Page
2.

1.   Playtex will ship products  ordered by the distributor at the prices listed
     on the Playtex Distributor Price List attached. Terms will be 2% 30 Net 31.
     Title to goods to pass at the distributor destination.

2.   The distributor  will ship Playtex products to the agreed to DeCA stores as
     per the attached product list. Any additions to or deletions from this list
     must be agreed to jointly by the distributor and Playtex.

3.   The  distributor  will send  copies of all  roll-up  tickets via EDI to S&K
     Sales  Company no later than 3 business days after the close of the period.
     Invoices  and delivery  tickets  should be mailed to Playtex at the address
     listed  below.  A cover or recap  page  should  be  included  showing  each
     enclosed by invoice number,  date and amount. This cover page should have a
     unique  invoice  number  that  will  be  used to  expedite  payment  to the
     distributor for shipments made during that period. These should be sent to:

                             Playtex Products, Inc.
                             Attn: Kerry Widener
                             PO Box 7016
                             Dover DE 19903-9921

4.   The  distributor  will  bill  Playtex  at  standard  prices  detailing  all
     shipments  made during that period plus the agreed to service charge of [*]
     of the net amount of the invoice.  Terms of the distributor invoice will be
     2% 30 Net 31 days.

5.   Playtex will issue check (s) for the net amount within the 30 day period.

<PAGE>

6.   The distributor  will have risk of loss of product after delivery to it and
     will provide and maintain insurance to cover all casualty or damage loss to
     such product.

7.   This  agreement  can be  canceled  by either  party with  thirty  (30) days
     written notice.

8.   All purchase orders should be faxed to Playtex Products Order Dept.,  Attn:
     Anna Tribble, Fax 302-678-6313, Phone 800-999-9701, Ext 6158.

                             PLAYTEX PRODUCTS, INC.
                         MILITARY DISTRIBUTOR AGREEMENT
                                     PAGE 2

9.   The initial  purchase order will carry an additional [*] days dating making
     its terms [*].

10.  DeCA Stores covered by this agreement:

     Fitzsimons CO                       USAF Academy CO
     Peterson Field CO                   Ft. Carson CO
     Buckley CO                          FE Warren AFB WY

/s/ ETHAN HOKIT                          /s/ JOHN HORTON
-------------------------------------    ---------------------------------------

ETHAN HOKIT                              JOHN HORTON
-------------------------------------    ---------------------------------------

MILITARY RESALE GROUP, INC.              DIRECTOR, MILITARY SALES

COLORADO SPRINGS, CO                     PLAYTEX PRODUCTS, INC.

                                         WESTPORT CT

<PAGE>

                             DISTRIBUTOR PRICE LIST

<TABLE>
<CAPTION>
For DeCA Conus Regions                                                                  PLAYTEX PRODUCTS, INC.

PIIN Number       01-01 G 2582 DSD                            Effective                 01 FEB TO 28 FEB 2002
                  01-00 G 2030 FDS

                                                                                                            --- -- -- --- -- ---
                                                                                Shelf   Shelf
Item       Case          LSN                                           CS       Reg     VPR      RSL
UPC        UPC           Code               Item              Size     Pk       Price   Price    Code
<S>        <C>           <C>           <C>                     <C>     <C>      <C>     <C>    <C>          <C>

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

014657-   014657-    650500A535-       BINACA BREATH FRESHENER SPRAY (8361)

                                                                                                            --- -- -- --- -- ---
81255      02469         603           Fast Blast Hot Mint      .5 oz  84       [*]            K1
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
81301      02270         604           Fast Blast Cool Mint     .5 oz  84       [*]            K2
                                                                                                            --- -- -- --- -- ---

078300    078300     650500A535        PERSONAL CLEANSING CLOTHS (8422)

                                                                                                            --- -- -- --- -- ---
06901      06901         005           Tub                      32 ct   6       [*]            K3
                                                                                                            --- -- -- --- -- ---

078300-   078300-    651000A535-       GENTLE GLIDE TAMPONS (8446 / 011-3120 / 18838)

                                                                                                            --- -- -- --- -- ---
08686      08884         059           Deod Super               20 ct  12       [*]            K1
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
08683      08883         058           Dead Regular             20 ct  12       [*]            K2
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
08673      08886         062           Non-Deod Regular         20 ct  12       [*]            K3
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
08676      08887         063           Non-Deod Super           20 ct  12       [*]            K2
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
08626      08870         339           Deod Multi Pack          20 ct  12       [*]            K3
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
08657      08885         089           Deod Super Plus          20 ct  12       [*]            K3
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
08889      08889         397           Slimfit Deo Regular      20 ct  12       [*]            K3
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
08850      08850         511           Odor Absrbng Reg         20 ct  12       [*]            K5
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
08852      08852         512           Odor Absrb Super+        20 ct  12       [*]            K5
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
08891      08891         398           Slmfit Non-Deo Reg       20 ct  12       [*]            K5
                                                                                                            --- -- -- --- -- ---
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                                                            --- -- -- --- -- ---
                                                                                Shelf   Shelf
Item       Case          LSN                                           CS       Reg     VPR      RSL
UPC        UPC           Code               Item              Size     Pk       Price   Price    Code
<S>        <C>           <C>           <C>                     <C>     <C>      <C>     <C>    <C>          <C>
                                                                                                            --- -- -- --- -- ---

078300-   078300-    650500A535        TRIAL SIZE TAMPONS (1972 / 006-7040)

                                                                                                            --- -- -- --- -- ---
08558      07132         001           Mixed Case               4 ct   36       [*]            01
                                                                                                            --- -- -- --- -- ---
                                       01 NOV TO 15 MAR                         [*]            WM

078300-   078300-    855000A535-       BABY FEEDING (8344 / 010-3060 / 18838)

                                                                                                            --- -- -- --- -- ---
01162      01162         500           VentAire Bottle          9 oz   36       [*]            K1
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
01163      01163         502           VentAire Bottle          6 oz   36       [*]            K2
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
01164      01164         501           VentAire Nipples         2 ct   24       [*]            K1
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
01175      01175         600           Precision Flo Bottle     9 oz   24       [*]            K3
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
01176      01176         601           Precision Flo Bottle     6 oz   24       [*]            K3
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
01185      01185         108           Precision Flo Nipples    2 ct   24       [*]            K3
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
01186      01186         602           Precision Flo Nipples    2 Ct   24       [*]            K3
                                                                                                            --- -- -- --- -- ---

078300-   078300-    855000A535-       BABY FEEDING (8344 / 010-3060 / 18838)

                                                                                                            --- -- -- --- -- ---
05424      05424         510           Spillproof Rplcmt Valves 2 ct   36       [*]            K1
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
05426      65426         391           Spill Proof Cup          6 oz   36       [*]            K1
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
05427      05427         399           Spill Proof Cup          9 oz   36       [*]            K1
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
05428      05428         405           Spill Proof Cup 2-pk     6 oz   36       [*]            K1
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
05432      05502         112           Dspbl Liner 8 oz         80 ct  12       [*]            K1
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
05443      05504         188           Flat Top Silicone Nppls  2 ct   12       [*]            K1
                                                                                                            --- -- -- --- -- ---
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                                                            --- -- -- --- -- ---
                                                                                Shelf   Shelf
Item       Case          LSN                                           CS       Reg     VPR      RSL
UPC        UPC           Code               Item              Size     Pk       Price   Price    Code
<S>        <C>           <C>           <C>                     <C>     <C>      <C>     <C>    <C>          <C>
                                                                                                            --- -- -- --- -- ---

078300-   078300-    855000A535-       BABY FEEDING (83441010-3060 1 18838)

                                                                                                            --- -- -- --- -- ---
05449      05503         189           Older Baby Nipples       2 ct   12       [*]            K1
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
05457      05501         075           Dspbl Liner 4 oz         50 ct  12       [*]            K1
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
05472      05506         186           Decorated Holder 8 oz    1 ct   2        [*]            K1
                                                                                                            --- -- -- --- -- ---

078300-   078300-    855000A535-       BABY FEEDING (8344 / 010-3060 / 18838)

                                                                                                            --- -- -- --- -- ---
05482      05482         499           Quickstraw Cup           12 oz  36       [*]            K1
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
05534      05534         497           Drop-Ins Btl Liner 4 oz  50 ct  24       [*]            K1
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
05535      05613         507           Drop-Ins Bottle          1 ct   24       [*]            K1
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
06601      06601         392           Snap N Tote Cup          9 oz   12       [*]            K1
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
05463      05463         604           Soft Comfort Spoon       2pc    36       [*]            K3
                                                                                                            --- -- -- --- -- ---

078300-   078300-    855000A535-       BABY FEEDING (8344 / 010-3060 / 18838)

                                                                                                            --- -- -- --- -- ---
05435      05507         190           Orthodontic Nipples      2 ct   12       [*]            K2
                                                                                                            --- -- -- --- -- ---

078300-   078300-    851000A535-       BABY MAGIC BATH (8345 / 010-3080 / 11203)

                                                                                                            --- -- -- --- -- ---
00612      61256         021           Original                 9 oz   24       [*]            K1
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
33560      33560         020           Lauqh N Splash           9 oz            [*]             P3
                                                                                               ---
                                                                                                            --- -- -- --- -- ---

078300-   078300-    851000A535-       BABY MAGIC POWDER (8347 / 010-3120 / 11203)

                                                                                                            --- -- -- --- -- ---
00659      65956         028           Crnstrch w/Aloe          8 oz   24       [*]            K3
                                                                                                            --- -- -- --- -- ---
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                                                            --- -- -- --- -- ---
                                                                                Shelf   Shelf
Item       Case          LSN                                           CS       Reg     VPR      RSL
UPC        UPC           Code               Item              Size     Pk       Price   Price    Code
<S>        <C>           <C>           <C>                     <C>     <C>      <C>     <C>    <C>          <C>

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

078300- 078300- 650600A535-            TRIAL SIZE BABY MAGIC (1972 / 006-7040 / )

                                                                                                            --- -- -- --- -- ---
00964      96424         002           Handy Pack               2 oz   24       [*]            01
                                                                                                            --- -- -- --- -- ---
                                       01 NOV TO 15 MAR                                 [*] WM

078300-   078300-    855000A535-       DIAPER GENIE (8342 / 010-3020 / 18836)

                                                                                                            --- -- -- --- -- ---
77000      77000         512           Diaper Genie Refill      1 ct   12       [*]            K2
                                                                                                            --- -- -- --- -- ---

076828- 076828- 852000A019-            WET ONES WIPES (1601 / 006-4060 / 21994)

                                                                                                            --- -- -- --- -- ---
04670      04670         014           Original Cannister       40 ct  12       [*]            K1
                                                                                                            --- -- -- --- -- ---

076828-   076828-    852000A019-       WET ONES WIPES (1601 / 006-4060 / 21994)

                                                                                                            --- -- -- --- -- ---
04672      04672         597           Citrus Fresh Cnstr       40 ct  12       [*]            K3
                                                                                                            --- -- -- --- -- ---
                     852000A535

                                                                                                            --- -- -- --- -- ---
04703      04703         706           Antibacterial Cnstr      40 ct  12       [*]            K1
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
04723      04723         420           Singles Antibact         24 ct  10       [*]            K2
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
04710      04710         418           Kids Anti Bctrl          24 ct  10       [*]            K3
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
04721      04721         419           Singles Original         24 ct  10       [*]            K3
                                                                                                            --- -- -- --- -- ---

076828-   076828-    852000A199-       MR BUBBLE (8425 / 011-1100 / 17632)

                                                                                                            --- -- -- --- -- ---
00077      00077         438           Original Liquid          16 oz  12       [*]            K1
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
00075      00075         472           Bubbleberry Liquid       16 oz  12       [*]            K2
                                                                                                            --- -- -- --- -- ---
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                                                            --- -- -- --- -- ---
                                                                                Shelf   Shelf
Item       Case          LSN                                           CS       Reg     VPR      RSL
UPC        UPC           Code               Item              Size     Pk       Price   Price    Code
<S>        <C>           <C>           <C>                     <C>     <C>      <C>     <C>    <C>          <C>

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

078300-    078300-   841500A535-       PLAYTEX LIVING GLOVES (1528 / 005-7180 / 18838)

                                                                                                            --- -- -- --- -- ---
06306       07374        165           Living Glove Small       1 pr   12       [*]            K1
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
06307       07375        169           Living Glove Med         1 pr   12       [*]            K1
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
06308       07376        173           Living Glove Large       1 pr   12       [*]            K1
                                                                                                            --- -- -- --- -- ---

078300-   078300-    841500A535-       PLAYTEX GLOVES (1528 / 005-7180 / 18838)

                                                                                                            --- -- -- --- -- ---
06320      07662         170           Handsaver Small          1 pr   12       [*]            K3
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
06321      07663         178           Handsaver Med            1 pr   12       [*]            K3
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
06322      07664         180           Handsaver Large          1 pr   12       [*]            K3
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
06366      06366         231           Hvy Dty Medium           1 pr   12       [*]            P1
                                        (TO BE DELETED FROM CMF 2/25/02)                                    --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
06367      06367         232           Hvy Dty Large            1 pr   12       [*]            P1
                                        (TO BE DELETED FROM CMF 2/25/02                                     --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
06475      07332         333           Disp All Prps Latex      10 ct  18       [*]            K3
                                                                                                            --- -- -- --- -- ---

078300-   078300-    841500A535-       PLAYTEX GLOVES (1528 / 005-7180 / 18838)

                                                                                                            --- -- -- --- -- ---
06477      07387         588           Disp Hme Hlth Care       10 ct  18       [*]            K3
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
06481      07908         065           Disp All Pros Vinyl             18       [*]            K3
                                                                                                            --- -- -- --- -- ---

078300-   078300-    793000A535-       WOOLITE CLEANER (1513 / 005-6020 / 22158)

                                                                                                            --- -- -- --- -- ---
04032      04032         376           Heavy Traffic            22 oz  12       [*]            K1
                                                                                                            --- -- -- --- -- ---

                                                                                                            --- -- -- --- -- ---
06245      06245         379           Pet Stain                22 oz   9       [*]            K1
                                                                                                            --- -- -- --- -- ---
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                                                            --- -- -- --- -- ---
                                                                                Shelf   Shelf
Item       Case          LSN                                           CS       Reg     VPR      RSL
UPC        UPC           Code               Item              Size     Pk       Price   Price    Code
<S>        <C>           <C>           <C>                     <C>     <C>      <C>     <C>    <C>          <C>

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

078300-   078300-    651000A535-       WOOLITE WIPES 20 PC SHIPPER (1962)

                                                                                                            --- -- -- --- -- ---
           02582         120           Woolite Wipes 20PC Shp   1               [*]            P2
                                        01 NOV TO 30 NOV                                [*]    WM           --- -- -- --- -- ---
                                       Containing:

                                                                                                            --- -- -- --- -- ---
           04047         121           Spot and Stain Wipes 20 ea      6        [*]     [*]    P2
                                        (TO BE DELETED FROM CMF 2/13/02)                                    --- -- -- --- -- ---
</TABLE>EXHIBIT 10.12

THIS CONVERTIBLE NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES OR BLUE SKY LAWS, AND MAY NOT BE SOLD,
OFFERED FOR SALE, TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS IT IS SO
REGISTERED OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.

                           MILITARY RESALE GROUP, INC.
                                CONVERTIBLE NOTE

Principal Amount:   $_______                                      ________, 2002

     MILITARY RESALE GROUP,  INC., a New York corporation  (the "Company"),  for
value received, hereby promises to pay to ______________, or assigns ("Holder"),
on December  31, 2002,  the  principal  amount of  _____________________________
Dollars  ($_____)  (or so much  thereof  as  shall  not  have  been  prepaid  or
surrendered  for  conversion)  in such coin or currency of the United  States of
America  as at the time of  payment  shall be legal  tender  for the  payment of
public and private  debts,  together  with  interest  (computed  on the basis of
360-day year of twelve  30-day  months) on the unpaid  portion of the  principal
amount  hereof at the annual  rate of eight  percent  (8%) from the date  hereof
until June 30, 2002 and,  thereafter,  at the annual rate of nine  percent  (9%)
until the unpaid  portion of such  principal  amount  shall have  become due and
payable.

     Section 1. DEFINITIONS.

          Section 1.01.  TERMS  DEFINED.  The terms defined in this Section 1.01
(except as herein otherwise  expressly  provided or unless the context otherwise
requires) for all purposes of this  Convertible  Note shall have the  respective
meanings specified in this Section 1.01.

          COMMON  STOCK.  The term "Common  Stock" means shares of the Company's
Common Stock, par value $.0001 per share.

          COMPANY.  The term "Company" means MILITARY RESALE GROUP,  INC., a New
York corporation,  and any successor  corporation to the Company  (including the
corporation surviving any subsequent merger).

          CURRENT  CONVERSION  PRICE. The term "Current  Conversion Price" means
the Conversion Price as most recently adjusted pursuant to Section 3.06.

          EVENT  OF  DEFAULT.  The term  "Event  of  Default"  means  any  event
specified in Section  2.01,  continued for the period of time, if any, and after
the giving of notice, if any, therein designated.

<PAGE>

          MATURITY.   The  term  "Maturity"  when  used  with  respect  to  this
Convertible Note means the date on which the principal (and premium,  if any) of
this Convertible Note becomes due and payable as herein provided, whether at (a)
December 31, 2002, (b) declaration of acceleration or (c) otherwise.

          REGISTRATION  STATEMENT.  The term  "Registration  Statement"  means a
Registration Statement on Form SB-2 filed by the Company with the Securities and
Exchange  Commission  pursuant to which the shares of Common Stock issuable upon
conversion of this Convertible Note are registered under the Securities Act.

          SECURITIES ACT. The term  "Securities Act" means the Securities Act of
1933, as amended.

     Section 2. REMEDIES.

          Section 2.01.  EVENTS OF DEFAULT.  An "Event of Default" occurs if one
or more of the  following  shall happen (for any reason  whatsoever  and whether
such happening shall be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance  with any  judgment,  decree or
order of any court or any order,  rule or  regulation of any  administrative  or
governmental body):

               (a)  if default be made in the punctual  payment of the principal
of (or  premium,  if any) or interest on this  Convertible  Note when and as the
same shall become due and payable; or

               (b)  the Registration  Statement is not declared effective by the
Securities  and Exchange  Commission  on or before  December  31, 2002,  or such
Registration Statement does not remain effective for at least 90 days; or

               (c)  the  Company  pursuant  to or  within  the  meaning  of  any
Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of an
order for relief against it in an involuntary  case, (iii) to the appointment of
a Custodian  of it or for any  substantial  part of its  property,  (iv) makes a
general assignment for the benefit of its creditors; or

               (d)  a court of competent  jurisdiction enters an order or decree
under any  Bankruptcy  Law that:  (i) is for relief  against  the  Company in an
involuntary  case,  (ii)  appoints  a  Custodian  of  the  Company  or  for  any
substantial  part of its property,  (iii) orders the liquidation of the Company;
and the order or decree remains unstayed and in effect for 30 days.

          The term  "Bankruptcy  Law" means Title 11,  U.S.  Code or any similar
federal or state law for the relief of debtors.  The term "Custodian"  means any
receiver, trustee, assignee, liquidator,  sequestrator or similar official under
any Bankruptcy Law.

          Section  2.02.  REMEDIES.  In case  any one or more of the  Events  of
Default  specified in Section 2.01 shall have  occurred and be  continuing,  the
Holder of this Convertible Note may proceed to protect and enforce its rights by
suit in  equity,  action  at law or by other  appropriate

                                       2
<PAGE>

proceedings  or both,  whether for the specific  performance  of any covenant or
agreement  contained in this  Convertible  Note or in aid of the exercise of any
power granted in this Convertible Note, or may proceed to enforce the payment of
this  Convertible  Note or to enforce any other legal or equitable  right of the
Holder of this Convertible Note.

          Section 2.03. REMEDIES CUMULATIVE. No remedy herein conferred upon the
Holder of this  Convertible Note is intended to be exclusive of any other remedy
and each and every such remedy shall be  cumulative  and shall be in addition to
every other  remedy given  hereunder  or now or hereafter  existing at law or in
equity or by statute or otherwise.

          Section  2.04.  ENFORCEMENT.  If there  shall be any Event of  Default
under this  Convertible  Note and this  Convertible  Note shall be placed in the
hands of an attorney for  collection,  or shall be collected  through any court,
including any bankruptcy  court, the Company promises to pay to the order of the
Holder hereof the Holder's  reasonable  attorneys' fees and court costs incurred
in  collecting or attempting to collect or securing or attempting to secure this
Convertible Note or enforcing the holder's rights with respect to any collateral
securing this  Convertible  Note, to the extent allowed by the laws of the State
of New  York or any  state in  which  any  collateral  for  this  Note  shall be
situated.

     Section 3. CONVERSION.

          Section 3.01. RIGHT OF CONVERSION, CONVERSION PRICE.

               (a)  Subject to and upon  compliance  with the provisions of this
Section 3, at any time  following  the issuance of this  Convertible  Note,  the
Holder shall have the right,  at his option,  at any time during usual  business
hours to convert the principal  and accrued  interest of this  Convertible  Note
owned by the Holder  into fully paid and  nonassessable  shares of Common  Stock
that have been registered  under the Securities Act pursuant to the Registration
Statement,  at the rate of $0.50 of  principal  for each  share of Common  Stock
(provided,  that the closing price per share of Common Stock, as reported on the
OTC Bulletin Board,  on the date of conversion,  is at least $0.75 per share, or
if such closing price is less than $0.75 per share, a proportionate reduction to
the $0.50 price,  but in no event to a conversion  price that is less than $0.10
per share,  so that the Holder will be able to  immediately  sell such shares on
the OTC Bulletin Board and receive a 50% rate of return on the principal  amount
of this Note) (the "Conversion  Price"),  which price per share shall be payable
by surrender of this Convertible Note.

               (b)  In the event that the shares of Common Stock  issuable  upon
conversion of this Note have not been registered under the Securities Act, on or
prior to December 31, 2002, until such time as such shares are so registered, at
the option of the Holder and in lieu of taking any remedial action in respect of
the Event of Default resulting therefrom,  the Holder may convert this Note into
a number of shares of Common  Stock as is equal to twice the number of shares of
Common Stock as would have been issuable had such shares been  registered  under
the Securities Act on the date of conversion.

          Section 3.02. MANNER OF EXERCISE.

                                       3
<PAGE>

               (a)  In order to exercise  the  conversion  right,  the Holder of
this Convertible Note shall surrender this Convertible Note at the office of the
Company,  accompanied  by written  notice to the  Company  stating  (i) that the
Holder  elects to  convert  this  Convertible  Note or, if less than the  entire
principal  amount  of this  Convertible  Note is to be  converted,  the  portion
thereof (a multiple of $1,000) to be converted, and (ii) the name or names (with
addresses) in which the certificate or  certificates  for shares of Common Stock
issuable on such conversion shall be issued.  Convertible  Notes surrendered for
conversion shall be accompanied by proper  assignment  thereof to the Company or
in blank for  transfer  if the shares are to be issued in a name other than that
of the Holder.

               (b)  In the event this  Convertible  Note which is  converted  in
part only,  upon such  conversion  the Company  shall execute and deliver to the
Holder,  at the expense of the Company,  a new  Convertible  Note of  authorized
denominations  in  principal  amount  equal to the  unconverted  portion of this
Convertible Note.

          Section 3.03. ISSUANCE OF SHARES OF COMMON STOCK ON CONVERSION.

               (a)  As promptly as practicable  after the receipt of such notice
and the  surrender of this  Convertible  Note as  aforesaid,  the Company  shall
issue, at its expense, and shall deliver to the Holder, or on his written order,
at the aforesaid office of the Company (i) a certificate or certificates for the
number of full  shares of Common  Stock  issuable  upon the  conversion  of this
Convertible  Note (or specified  portion  thereof),  and (ii) a  certificate  or
certificates for any fractional  shares of Common Stock issuable upon conversion
of this  Convertible  Note (or specified  portion  thereof) or, at the Company's
option, cash in lieu of scrip for any fraction of a share to which the Holder is
entitled upon conversion as provided in Section 3.05.

               (b)  Such  conversion  shall  be  deemed  to have  been  effected
immediately  prior to the close of business on the date  ("Conversion  Date") on
which the  Company  shall have  received  both such  notice and the  surrendered
Convertible Note as aforesaid, and at such time the rights of the Holder of this
Convertible  Note  shall  cease and the Person or Persons in whose name or names
any  certificate  or  certificates  for shares of Common Stock shall be issuable
upon such conversion  shall be deemed to have become the holder or the Holder of
record of the shares represented thereby.

               (c)  In the event this  Convertible Note is converted in whole or
in part into shares of Common  Stock  pursuant to Section  3.01(b)  hereof,  the
certificates  representing  such  shares  shall  contain an  appropriate  legend
indicating  that the shares  represented  thereby  are  "restricted  securities"
within the meaning of the  Securities  Act,  and may not be  transferred  unless
registered  under the  Securities  Act or  transferred  pursuant to an exemption
therefrom.

          Section 3.04. NO ADJUSTMENTS FOR INTEREST OR DIVIDENDS.  No payment or
adjustment  shall be made by or on  behalf  of the  Company  on  account  of any
interest  accrued on this  Convertible  Note  surrendered  for  conversion or on
account of any cash  dividends  on the shares of Common  Stock  issued upon such
conversion  which were  declared  for  payment to the Holder of shares of Common
Stock of record as of a date  prior to the  Conversion  Date.  All  payments  of

                                       4
<PAGE>

accrued  interest on this  Convertible  Note shall be made in cash or additional
stock at the Conversion Price, at the Holder's option.

          Section 3.05. FRACTIONAL SHARES. The Company, at its option, may issue
fractional  shares of Common Stock upon any conversion of this  Convertible Note
or, in lieu of any fraction of a share of Common Stock to which any Holder would
otherwise be entitled  upon  conversion of this  Convertible  Note (or specified
portions thereof), the Company may pay a cash adjustment for such fraction in an
amount equal to same fraction of the Conversion Price per share.

          Section 3.06.  ADJUSTMENT OF CONVERSION  PRICE.  The Conversion  Price
shall be adjusted as set forth in this section.

               (a)  In the event that the Company shall make any distribution of
its assets upon or with respect to its shares of Common Stock,  as a liquidating
or partial  liquidating  dividend,  or other than as a dividend  payable  out of
earnings or any surplus  legally  available for dividends  under the laws of the
state of incorporation of the Company, the Holder of this Convertible Note, upon
the exercise of his right to convert after the record date for such distribution
or,  in the  absence  of a record  date,  after  the date of such  distribution,
receive,  in addition to the shares  subscribed  for,  the amount of such assets
(or, at the option of the Company,  a sum equal to the value thereof at the time
of distribution as determined by the Board of Directors in its sole  discretion)
which would have been distributed to the Holder if he had exercised his right to
convert  immediately  prior to the record date for such  distribution or, in the
absence of a record date, immediately prior to the date of such distribution.

               (b)  In  case  at  any  time  the  Company  shall  subdivide  its
outstanding  shares of Common Stock into a greater number of shares, the Current
Conversion  Price  in  effect  immediately  prior to such  subdivision  shall be
proportionately reduced and conversely, in case the outstanding shares of Common
Stock of the Company  shall be  combined  into a smaller  number of shares,  the
Current  Conversion Price in effect  immediately prior to such combination shall
be proportionately increased.

               (c)  If any capital  reorganization  or  reclassification  of the
capital  stock of the Company,  or  consolidation  or merger of the Company with
another corporation,  or the sale, transfer or lease of all or substantially all
of its assets to another  corporation,  shall be effected in such a way that the
holder of shares of Common Stock shall be entitled to receive shares, securities
or assets with respect to or in exchange for shares of Common Stock,  then, as a
condition of such  reorganization,  reclassification,  consolidation,  merger or
sale, the Company or such successor or purchasing  corporation,  as the case may
be, shall  execute an  amendment to this  Convertible  Note  providing  that the
Holder of this  Convertible  Note shall have the right  thereafter and until the
expiration of the period of convertibility to convert this Convertible Note into
the kind and  amount  of  shares,  securities  or  assets  receivable  upon such
reorganization,  reclassification,  consolidation, merger or sale by a holder of
the number of shares of Common Stock into which this Convertible Note might have
been  converted  immediately  prior  to such  reorganization,  reclassification,
consolidation,  merger or sale,  subject to adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
3.

                                       5
<PAGE>

               (d)  Upon such adjustment of the Conversion Price pursuant to the
provisions of this Section 3.06, the number of shares  issuable upon  conversion
of this  Convertible  Note  shall be  adjusted  to the  nearest  full  amount by
multiplying a number equal to the Conversion Price in effect  immediately  prior
to such  adjustment  by the  number  of shares of  Common  Stock  issuable  upon
exercise of this  Convertible  Note  immediately  prior to such  adjustment  and
dividing the product so obtained by the adjusted Conversion Price.

          Section 3.07. COVENANT TO RESERVE SHARES FOR CONVERSION.

               The  Company covenants that it will at all times reserve and keep
available out of its authorized shares of Common Stock, such number of shares of
Common  Stock  as  shall  then  be  deliverable  upon  the  conversion  of  this
Convertible Note. All shares of Common Stock which shall be deliverable shall be
duly and validly issued and fully paid and nonassessable.

          Section  3.08.  NOTICE OF CHANGE OF  CONVERSION  PRICE.  Whenever  the
Conversion  Price is adjusted,  as herein  provided,  the Company shall promptly
send to the Holder a certificate  of a firm of  independent  public  accountants
(who may be the accountants  regularly  employed by the Company) selected by the
Board of Directors  setting forth the Conversion Price after such adjustment and
setting forth a brief  statement of the facts  requiring such  adjustment.  Such
certificate shall be conclusive evidence of the correctness of such adjustment.

     Section 4. MISCELLANEOUS.

          Section  4.01.  OPTIONAL  PREPAYMENTS.  The  Company  shall  have  the
privilege, at any time and from time to time prior to Maturity, upon at least 90
days prior written  notice to the Holder,  of prepaying this  Convertible  Note,
either  in  whole  or in  part,  by  payment  of the  principal  amount  of this
Convertible Note, or portion thereof to be prepaid, and accrued interest thereon
to the date of such prepayment,  without premium or penalty; provided,  however,
that nothing in this Section 4.01 shall prohibit the Holder from converting this
Convertible  Note in accordance  with Section 3 hereof after the date of receipt
of notice of prepayment  and prior to the date of receipt in cash of all amounts
to be prepaid.

          Section 4.02.  GOVERNING LAW. This Convertible Note shall be construed
in  accordance  with the laws of the State of New York  applicable  to contracts
entered into and to be performed wholly within said State.

          Section 4.03. SUCCESSORS AND ASSIGNS. All the covenants, stipulations,
promises and  agreements in this  Convertible  Note contained by or on behalf of
the Company shall bind its successors and assigns, whether so expressed or not.

          Section  4.04.  COURSE OF  DEALING;  NO  WAIVER.  No course of dealing
between the Company and the Holder shall operate as a waiver of any right of the
Holder and no delay on the part of the Holder in exercising any right  hereunder
shall so operate.

          Section 4.05. WAIVER OF COMPLIANCE.  Any term, covenant,  agreement or
condition hereof may be amended,  or compliance  therewith may be waived (either
generally or in a particular

                                       6
<PAGE>

instance and either  retroactively or prospectively),  if the Company shall have
obtained the agreement or consent in writing of the Holder.

          Section  4.06.   OTHER   PROVISIONS.   The  Company   waives   demand,
presentment,  protest, notice of dishonor and any other form of notice, that may
be required to hold the Company liable on this Note.

     IN WITNESS WHEREOF,  the undersigned has caused this Convertible Note to be
signed in its corporate name by one of its officers  thereunto duly  authorized,
and to be dated as of the date first written above.

                                                 MILITARY RESALE GROUP, INC.

                                                 By: /s/ EDWARD T. WHELAN
                                                     ---------------------------
                                                         Edward T. Whelan
                                                         Chief Executive Officer

                                       7

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