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                                                                     EXHIBIT 4.3

                                                                       EXHIBIT B

                             FORM OF ADDITIONAL NOTE

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

                              SENIOR SECURED NOTE

__________ __, 200__                                               $____________

         FOR VALUE RECEIVED, INFINITY, INC., a Colorado corporation (the
"COMPANY"), hereby promises to pay to the order of __________________ or
registered assigns (the "HOLDER") the principal amount of ___________________
United States Dollars ($________________) when due, whether upon maturity,
acceleration, redemption or otherwise, and to pay interest ("INTEREST") on the
unpaid principal balance hereof on each Interest Payment Date (as defined in
Section 2(a)(xix)) and upon maturity, or earlier upon conversion, acceleration
or redemption pursuant to the terms hereof, at the Applicable Interest Rate.
Interest on this Note payable on each Interest Payment Date and upon maturity,
or earlier upon conversion, acceleration or redemption pursuant to the terms
hereof, shall accrue from the Issuance Date and shall be computed on the basis
of a 365-day year and actual days elapsed.

                  (1) Payments of Principal. All payments of principal of this
Note (to the extent such principal is not converted into Shares (as defined in
Section 2(a)(xli) in accordance with the terms hereof) shall be made in lawful
money of the United States of America by wire transfer of immediately available
funds to such account as the Holder may from time to time designate by written
notice in accordance with the provisions of this Note. Except as provided in
Section 7, the Company has no right, but under certain circumstances may have an
obligation, to make payments of principal of this Note in cash prior to the
Maturity Date (as defined in Section 2(a)(xxiii)). Whenever any amount expressed
to be due by the terms of this Note is due on any

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day that is not a Business Day (as defined in Section 2(a)(vi)), the same shall
instead be due on the next succeeding day that is a Business Day. Each
capitalized term used herein, and not otherwise defined, shall have the meaning
ascribed thereto in the Securities Purchase Agreement, dated as of January 13,
2005, pursuant to which this Note and the Other Notes (as defined below) were
originally issued (as such agreement may be amended from time to time as
provided in such agreement, the "SECURITIES PURCHASE AGREEMENT"). This Note and
all Other Notes issued by the Company pursuant to the Securities Purchase
Agreement on the Initial Closing Date and any Additional Closing Dates and all
notes issued in exchange therefor or replacement thereof are collectively
referred to in this Note as the "NOTES." This Note and each of the Other Notes
originally issued by the Company on the same Closing Date shall be deemed to be
of the same "SERIES."

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

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

                                    (i) "3-MONTH LIBOR RATE" means the London
                  Interbank Offered Rate of LIBOR with respect to a three-month
                  period for deposits of United States Dollars as reported by
                  Bloomberg Financial Markets (or any successor thereto,
                  "BLOOMBERG") at approximately 10:00 a.m. (New York time)
                  through its "LIBOR Rates" function (accessed by typing "LR"
                  [GO] on a Bloomberg terminal, and looking at the row entitled
                  "3 MONTH" and under the column entitled "DOLLAR LIBOR") (or
                  such other page as may replace that page on that service, or
                  such other service as may be selected jointly by the Company
                  and the Holders of the Notes). If such rate appears on the
                  Bloomberg LIBOR Rates page on any date of determination of the
                  3-Month LIBOR Rate (a "LIBOR DETERMINATION DATE"), the 3-Month
                  LIBOR Rate for such date of determination will be such rate.
                  If on any LIBOR Determination Date such rate does not appear
                  on the Bloomberg LIBOR Rates page, the Company and the Holders
                  of the Notes will jointly request each of four major reference
                  banks in the London interbank market, as selected jointly by
                  the Company and the Holders of the Notes, to provide the
                  Company with its offered quotation for United States dollar
                  deposits for the upcoming three-month period, to prime banks
                  in the London interbank market at approximately 4:00 p.m.,
                  London time on any such LIBOR Determination Date and in a
                  principal amount that is representative for a single
                  transaction in United States Dollars in such market at such
                  time. If at least two reference banks provide the Company with
                  offered quotations, 3-Month LIBOR Rate on such LIBOR
                  Determination Date will be the arithmetic mean of all such
                  quotations. If on such LIBOR Determination Date fewer than two
                  of the reference banks provide the Company with offered
                  quotations, 3-Month LIBOR Rate on such LIBOR Determination
                  Date will be the arithmetic mean of the offered per annum
                  rates that three major banks in New York City selected jointly
                  by the Company and the Holders of the Notes quote at
                  approximately 11:00 A.M.

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                  in New York City on such LIBOR Determination Date for
                  three-month United States dollar loans to leading European
                  banks, in a principal amount that is representative for a
                  single transaction in United States dollars in such market at
                  such time. If these New York City quotes are not available,
                  then the 3-Month LIBOR Rate determined on such LIBOR
                  Determination Date will continue to be 3-Month LIBOR Rate as
                  then currently in effect on such LIBOR Determination Date.

                                    (ii) "AFTER-TAX PV10" means, as of the date
                  of any determination, the present value of estimated future
                  revenues to be generated by the Company and its Subsidiaries,
                  on a consolidated basis, from the production of their proved
                  reserves (calculated in accordance with SEC guidelines and
                  based on the most recent independent reserve report), net of
                  estimated lease operating expenses, production taxes, federal
                  income taxes and future development costs, using price and
                  costs as of the date of determination without future
                  escalation and without giving effect to non-property related
                  expenses such as general and administrative expenses, debt
                  service and depreciation, depletion and amortization, and
                  discounted using an annual discount rate of 10% (as most
                  recently disclosed by the Company on a Form 10-K, 10-Q or 8-K
                  based on an independent reserve report that was current as of
                  the date that the Company's After-tax PV10 was disclosed in
                  such Form 10-K, 10-Q or 8-K); provided that After-tax PV10
                  shall mean zero unless the Company has (A) publicly disclosed
                  (either on a Form 10-K, 10-Q or 8-K) its After-tax PV10 as of
                  a date within 100 days of such date of determination and (B)
                  certified as of such date of determination that, to the
                  Knowledge of the Company, After-tax PV10, if determined as of
                  such date of determination, would not be materially lower than
                  After-tax PV10 as most recently disclosed by the Company on a
                  Form 10-K, 10-Q or 8-K.

                                    (iii) "AGGREGATE NOTES BALANCE" means, as of
                  the date of any determination, the aggregate outstanding
                  principal amount of all the Notes, together with all accrued
                  but unpaid interest thereon.

                                    (iv) "ALLOCATION PERCENTAGE" means, with
                  respect to each holder of Note as of the date of any
                  determination, a fraction of which the numerator is the
                  aggregate principal amount of the Notes originally purchased
                  by such holder on the Initial Closing Date and any Additional
                  Closing Dates occurring on or prior to such date of
                  determination, and of which the denominator is the aggregate
                  principal amount of the Notes purchased by all holders on the
                  Initial Closing Date and such Additional Closing Dates.

                                    (v) "APPLICABLE INTEREST RATE" initially
                  shall mean the per annum interest rate equal to the sum of (a)
                  the 3-Month LIBOR Rate in effect on the Issuance Date, and (b)
                  six and three-quarter percent (6.75%); provided, however, that
                  on the first Business Day of each calendar quarter commencing

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                  after the Issuance Date (each, an "INTEREST RESET DATE"), such
                  rate shall be adjusted to the per annum interest rate equal to
                  the sum of (a) the 3-Month LIBOR Rate in effect on such date,
                  and (b) six and three-quarter percent (6.75%). Each Applicable
                  Interest Rate will be applicable as of and after the Interest
                  Reset Date to which it relates to, but not including, the next
                  succeeding Interest Reset Date.

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

                                    (vii) "COMMON STOCK" means (A) the Company's
                  common stock, $0.0001 par value per share, and (B) any capital
                  stock resulting from a reclassification of such common stock.

                                    (viii) "COMPANY ALTERNATIVE REDEMPTION RATE"
                  means at any time during a 12-month period beginning on and
                  including a date set forth below, the rate, expressed as a
                  percentage, set forth opposite such date below:

                                    Issuance Date                           105%
                                    First Anniversary of the Issuance Date  104%
                                    Second Anniversary of the Issuance Date 103%
                                    Third Anniversary of the Issuance Date  102%

                  and, if there has been a Maturity Date Extension (as defined
                  below), the Company Alternative Redemption Rate, at any time
                  during the 12-month period beginning on and including the
                  fourth anniversary of the Issuance Date, shall be 101%.

                                    (ix) "CONVERSION AMOUNT" means (A) the sum
                  of (1) the principal amount of this Note to be converted,
                  redeemed or otherwise with respect to which this determination
                  is being made and (2) the Interest Amount with respect to the
                  amount referred to in the immediately preceding clause (1), or
                  (B) in the case of an Interest Conversion (as defined in
                  Section 6), the Interest Amount to be converted.

                                    (x) "CONVERSION PRICE" means, as of any
                  Conversion Date or other date of determination, 95% of the
                  Weighted Average Price of the Common Stock on the Trading Day
                  immediately preceding the Conversion Date applicable to the
                  conversion for which such determination is being made, subject
                  to adjustment as provided herein.

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

                                    (xii) "EXPECTED TRADING DAYS" means, with
                  respect to any Company Alternative Conversion Period (as
                  defined in Section 8(a)), the number

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                  of regularly scheduled Business Days in such period on which
                  the Principal Market is scheduled to be open for trading of
                  the Common Stock.

                                    (xiii) "FIXED MATURITY DATE" means [INSERT
                  THE DATE THAT IS 42 MONTHS AFTER THE ISSUANCE DATE], or if
                  there has been a Maturity Date Extension, [INSERT THE DATE
                  THAT IS FIFTY-FOUR (54) MONTHS AFTER THE ISSUANCE DATE.]

                                    (xiv) "FREE CASH FLOW AMOUNT" means, as of
                  the date of any determination, the sum of (I) the lesser of
                  (A) the product of (1) the Free Cash Multiple, multiplied by
                  (2) the Services Business Free Cash Flow and (B) the product
                  of (x) 2, multiplied by (y) the Services Business Revenue,
                  plus (II) the lesser of (1) 50% of the result of the
                  immediately preceding clause (I), and (2) 30% of the Company's
                  After-tax PV10, plus (III) 10% of the Company's After-tax
                  PV10.

                                    (xv) "FREE CASH FLOW MULTIPLE" shall be the
                  following number: 10 for any determination of the Free Cash
                  Flow Amount on December 31, 2004, 9.5 for any determination of
                  the Free Cash Flow Amount on March 31, 2005, 9.0 for any
                  determination of the Free Cash Flow Amount on June 30, 2005,
                  8.5 for any determination of the Free Cash Flow Amount on
                  September 30, 2005, and 8.0 for any determination of the Free
                  Cash Flow Amount after September 30, 2005.

                                    (xvi) "FREE CASH FLOW TEST FAILURE" means
                  that, as of the date of any determination, the Free Cash Flow
                  Amount is less than or equal to the Aggregate Notes Balance.

                                    (xvii) "FREE CASH FLOW TEST FAILURE AMOUNT"
                  means that, in the event that there is a Free Cash Flow Test
                  Failure as of the date of any determination, an amount equal
                  to the product of (A) a fraction, of which the numerator is
                  the outstanding principal amount of this Note, together with
                  all accrued but unpaid Interest thereon as of such date, and
                  of which the denominator is the outstanding principal amount
                  of all Notes of the same Series as this Note, together with
                  all accrued but unpaid interest thereon as of such date,
                  multiplied by (B) an amount equal to the result of (x) the
                  Aggregate Notes Balance as of such date of determination,
                  minus (y) the Priority Notes Balance as of such date of
                  determination, minus (z) the Free Cash Flow Amount; provided
                  that, for purposes of this calculation of "Free Cash Flow Test
                  Failure Amount," if the result of (x)-(y)-(z) above is less
                  than zero, then the amount used for (B) in the above
                  calculation shall be zero; and provided, further, that the
                  Free Cash Flow Test Failure Amount, as defined and determined
                  under this Note, shall not exceed the Principal of this Note
                  together with all accrued but unpaid Interest thereon.

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                                    (xviii) "INTEREST AMOUNT" means, with
                  respect to any Principal, all accrued and unpaid Interest
                  (including any Default Interest as defined in Section 6) on
                  such Principal through and including such date of
                  determination.

                                    (xix) "INTEREST PAYMENT DATE" means the
                  first Business Day of each calendar quarter, beginning with
                  the calendar quarter that commences on [INSERT THE FIRST DAY
                  OF THE FIRST CALENDAR QUARTER COMMENCING AFTER THE ISSUANCE
                  DATE] through and including the last calendar quarter that
                  commences prior to the Maturity Date.

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

                                    (xxi) "LIEN" means, with respect to any
                  asset, any mortgage, lien, pledge, hypothecation, charge,
                  security interest, encumbrance or adverse claim of any kind
                  and any restrictive covenant, condition, restriction or
                  exception of any kind that has the practical effect of
                  creating a mortgage, lien, pledge, hypothecation, charge,
                  security interest, encumbrance or adverse claim of any kind
                  (including any of the foregoing created by, arising under or
                  evidenced by any conditional sale or other title retention
                  agreement, the interest of a lessor with respect to a Capital
                  Lease Obligation, or any financing lease having substantially
                  the same economic effect as any of the foregoing).

                                    (xxii) "MANDATORY COMPLIANCE AMOUNT" means,
                  as of the date of any determination, (A) the Free Cash Flow
                  Test Failure Amount, minus (B) any Principal as to which a
                  notice has been given to the Holder by the Company for
                  conversion or redemption in accordance herewith, but which has
                  not been converted or paid prior to the date of such
                  determination, provided the Company is in compliance with
                  Sections 7 and 8 in connection therewith (such amount in this
                  clause (B) being referred to as the "EXCLUDED AMOUNT").

                                    (xxiii) "MATURITY DATE" means the earliest
                  to occur of (A) the Fixed Maturity Date, (B) the date of a
                  Maturity Date Triggering Event, (C) such date as all amounts
                  due under this Note have been fully paid.

                                    (xxiv) "MATURITY DATE EXTENSION" means the
                  holders of Notes representing at least two-thirds (2/3) of the
                  aggregate principal amount of the then outstanding Notes that
                  are of the same Series as this Note, have (A) received a
                  notice from the Company no earlier than sixty (60) days, and
                  no later than thirty (30) days prior to [INSERT THE DATE THAT
                  IS 30 MONTHS AFTER THE ISSUANCE DATE] (which notice the
                  Company may deliver on only one occasion with respect to such
                  Series of Notes), requesting the holders of such Series of
                  Notes to extend the Fixed Maturity Date by twelve (12) months
                  and (B) within ten (10) Business Days of receipt of the notice
                  described in clause (A) (such 10-Business-Day

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                  Period, the "RESPONSE PERIOD"), agreed in writing to extend
                  the Maturity Date of all the Notes of such Series by twelve
                  (12) months, (provided that, for the avoidance of doubt, if
                  the Company does not receive such written agreement within the
                  Response Period from the requisite holders of the Notes of
                  such Series, such requested extension shall be deemed denied
                  and the Fixed Maturity Date shall not be extended).

                                    (xxv) "MATURITY DATE TRIGGERING EVENT" means
                  any principal amount of the 7% Notes is outstanding on the
                  Business Day immediately preceding the scheduled maturity date
                  of the 7% Notes, unless the Free Cash Flow Amount as of the
                  end of the quarterly or annual period covered by the quarterly
                  report on Form 10-Q or annual report on Form 10-K most
                  recently filed, or required to be filed, by the Company with
                  the SEC exceeds 150% of the Aggregate Notes Balance as of the
                  Business Day immediately preceding the scheduled maturity of
                  the 7% Notes.

                                    (xxvi) "OTHER NOTES" means all of the senior
                  secured notes, other than this Note, that have been issued by
                  the Company pursuant to the Securities Purchase Agreement and
                  all notes issued in exchange therefor or replacement thereof.

                                    (xxvii) "PERMITTED LIEN" means (a) Liens
                  created by the Security Documents; (b) Liens existing on the
                  date of this Agreement not otherwise described in any other
                  clause of this definition and set forth on Schedule 3(bb); (c)
                  Liens for taxes or other governmental charges not at the time
                  due and payable so long as the Company and its Subsidiaries
                  maintain adequate reserves in accordance with United States
                  generally accepted accounting principles ("GAAP") in respect
                  of such taxes and charges; (d) Liens arising in the ordinary
                  course of business in favor of carriers, warehousemen,
                  mechanics and materialmen, or other similar Liens imposed by
                  law, which remain payable without penalty or which are being
                  contested in good faith by appropriate proceedings diligently
                  prosecuted, which proceedings have the effect of preventing
                  the forfeiture or sale of the property subject thereto, and in
                  each case for which adequate reserves in accordance with GAAP
                  are being maintained; (e) Liens arising in the ordinary course
                  of business in connection with worker's compensation,
                  unemployment compensation and other types of social security
                  (excluding Liens arising under ERISA) or Liens consisting of
                  cash collateral securing the Company's or any of its Active
                  Subsidiaries' performance of surety bonds, bids, performance
                  bonds and similar obligations (exclusive of obligations for
                  the payment of borrowed money) permitted pursuant to clause
                  (a)(IV) of Section 12 and, in each case, for which the Company
                  maintains adequate reserves; (f) attachments, appeal bonds
                  (and cash collateral securing such bonds), judgments and other
                  similar Liens, for sums not exceeding $500,000 in the
                  aggregate for Company and its Subsidiaries, arising in
                  connection with court proceedings, provided that the execution
                  or other enforcement of such Liens is

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                  effectively stayed; (g) easements, rights of way,
                  restrictions, minor defects or irregularities in title and
                  other similar Liens arising in the ordinary course of business
                  and not materially detracting from the value of the property
                  subject thereto and not interfering in any material respect
                  with the ordinary conduct of the business of the Company or
                  any Subsidiary; (h) Liens in favor of U.S. Bank and LaSalle in
                  respect of the Duke LC Account and the Returned Items Account
                  (each as defined in the Security Agreement) to the extent such
                  accounts are maintained and permitted to exist in accordance
                  with the terms of the Security Agreement; (i) Liens consisting
                  of cash collateral securing the Company's and its Active
                  Subsidiaries' reimbursement obligations under letters of
                  credit permitted by clauses (a)(VI) and (a)(VII) of Section
                  12, provided that the aggregate amount of cash collateral
                  securing such Indebtedness does not exceed the undrawn face
                  amount of all such letters of credit outstanding at any one
                  time; (j) Liens securing Indebtedness listed on Schedule 4(u)
                  of the Securities Purchase Agreement for up to thirty (30)
                  days following the Initial Closing Date; (k) Liens on
                  equipment subject to Capital Lease Obligations permitted to be
                  incurred pursuant to clause (a)(V) of Section 12, to the
                  extent such Liens secure such Capital Lease Obligations; and
                  (l) Liens in favor of Schlumberger Technology Corporation and
                  Red Oak Capital Management LP (collectively, the "SERVICE
                  PARTIES"), granted pursuant to the Joint Value Enhancement
                  Agreement, dated December 3, 2003, among Infinity Oil & Gas of
                  Wyoming, Inc. ("IOGW") and the Service Parties (as in effect
                  on the date hereof, the "JVEA"), on the three (3) Project
                  Wells (as such term is defined in the JVEA) described on
                  Exhibit C to Schedule VIII of the Security Agreement, to the
                  extent such Liens secure the obligations of IOGW to the
                  Service Parties under the JVEA.

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

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

                                    (xxx) "PRIORITY NOTES BALANCE" means, as of
                  the date of any determination, the aggregate outstanding
                  principal amount of all the Notes that have a Fixed Maturity
                  Date that is later than the Fixed Maturity Date of this Note,
                  together with all accrued but unpaid interest thereon.

                                    (xxxi) "PRINCIPAL MARKET" means, with
                  respect to the Common Stock or any other security, the NASDAQ
                  National Market or if the Common Stock or such other security,
                  as the case may be, is not traded on the NASDAQ National
                  Market, then the principal securities exchange or trading
                  market for the Common Stock or such other security.

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                                    (xxxii) "REGISTRABLE SECURITIES" for
                  purposes of this Note means Shares issued or issuable upon
                  conversion of this Note, and any shares of capital stock
                  issued or issuable with respect to such Shares as a result of
                  any stock split, stock dividend, recapitalization, exchange or
                  similar event or otherwise, without regard to any limitations
                  on conversions of this Note.

                                    (xxxiii) "REGISTRATION RIGHTS AGREEMENT"
                  means that certain registration rights agreement, dated as of
                  January 13, 2005, among the Company and the initial holders of
                  the Notes relating to the filing of registration statements
                  covering, among other things, the resale of Registrable
                  Securities, as such agreement may be amended from time to time
                  as provided in such agreement.

                                    (xxxiv) "REGISTRATION STATEMENT" means a
                  registration statement or registration statements filed under
                  the 1933 Act pursuant to the Registration Rights Agreement
                  covering the resale of Registrable Securities.

                                    (xxxx) "SEC" means the United States
                  Securities and Exchange Commission, or any successor thereto.

                                    (xxxvi) "SECURITY AGREEMENT" means that
                  certain security agreement among the Company, its Active
                  Subsidiaries and the initial holders of the Notes relating to
                  the granting by the Company and the Subsidiaries of a
                  first-priority security interest in all the assets of the
                  Company and its Active Subsidiaries, as such agreement may be
                  amended from time to time as provided in such agreement.

                                    (xxxvii) "SECURITY DOCUMENTS" means any
                  agreement, document or instrument executed concurrently
                  herewith or at any time hereafter pursuant to which the
                  Company, its Active Subsidiaries or any other Person either
                  (i) guarantees payment or performance of all or any portion of
                  the obligations hereunder or under any other instruments
                  delivered in connection with the transactions contemplated
                  hereby and by the Securities Purchase Agreement, and/or (ii)
                  provides, as security for all or any portion of such
                  obligations, a Lien on any of its assets in favor of the
                  Holder, as any or all of the same may be amended,
                  supplemented, restated or otherwise modified from time to
                  time.

                                    (xxxviii) "SERIES ALLOCATION PERCENTAGE"
                  means, with respect to each holder of Notes of the same Series
                  as this Note, a fraction of which the numerator is the
                  aggregate principal amount of Notes of such Series initially
                  purchased by such holder on the Issuance Date and of which the
                  denominator is the aggregate principal amount of Notes of such
                  Series purchased by all holders on the Issuance Date.

                                    (xxxix) "SERVICES BUSINESS FREE CASH FLOW"
                  means, as of the date of any determination, the result of (A)
                  the consolidated net operating income before interest, taxes,
                  depreciation and amortization of the oil field services

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                  segment of the operations of the Company and its Subsidiaries
                  (as such segment is described in the Company's annual report
                  on Form 10-K for the year ended December 31, 2003), excluding
                  net operating income derived from the Company and its
                  affiliates, for the 12-month period ended on such date of
                  determination, plus (B) the aggregate amount of interest,
                  service charges and fees paid by the Company in connection
                  with the LaSalle Facility and the mortgage Indebtedness of
                  Consolidated Oil Well Services, Inc. listed on Schedule 4(u)
                  to the Securities Purchase Agreement prior to December 31,
                  2004 but during the 12-month period ended on such date of
                  determination, minus (C) all capital expenditures not funded
                  solely out of the proceeds of Permitted Subordinate Debt or
                  issuances of non-redeemable capital stock of the Company,
                  interest and income taxes, in each case, of such segment for
                  such 12-month period, all as determined in accordance with
                  GAAP applied on a consistent basis and disclosed in the
                  Company's most recently filed quarterly report on Form 10-Q
                  and/or annual report on Form 10-K, as applicable.

                                    (xxxx) "SERVICES BUSINESS REVENUE" means, as
                  of the date of any determination, the consolidated revenue
                  from the oil field services segment of the operations of the
                  Company and its Subsidiaries (as such segment is described in
                  the Company's annual report on Form 10-K for the year ended
                  December 31, 2003) excluding net revenue derived from the
                  Company and its affiliates, for the 12-month period ended on
                  such date of determination, determined in accordance with GAAP
                  applied on a consistent basis and disclosed in the Company's
                  most recently filed quarterly report on Form 10-Q and/or
                  annual report on Form 10-K, as applicable.

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

                                    (xlii) "TRADING DAY" means any day on which
                  the Common Stock is traded on its Principal Market; provided
                  that "Trading Day" shall not include any day on which the
                  Principal Market is open for trading for less than 4.5 hours.

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

                                    (xliv) "WEIGHTED AVERAGE PRICE" means, for
                  any security as of any date, the dollar volume-weighted
                  average price for such security on its Principal Market during
                  the period beginning at 9:30 a.m. New York City time (or such
                  other time as its Principal Market publicly announces is the
                  official open of trading) and ending at 4:00 p.m. New York
                  City time (or such other time as its Principal Market publicly
                  announces is the official close of trading) as reported by
                  Bloomberg through its "Volume at Price" functions, or if the
                  foregoing does not apply, the dollar volume-weighted average
                  price of such security in the over-the-

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                  counter market on the electronic bulletin board for such
                  security during the period beginning at 9:30 a.m. New York
                  City time (or such other time as such over-the-counter market
                  publicly announces is the official open of trading), and
                  ending at 4:00 p.m. New York City time (or such other time as
                  such over-the-counter market publicly announces is the
                  official close of trading) as reported by Bloomberg, or, if no
                  dollar volume-weighted average price is reported for such
                  security by Bloomberg for such hours, the average of the
                  highest closing bid price and the lowest closing ask price of
                  any of the market makers for such security as reported in the
                  "pink sheets" by the National Quotation Bureau, Inc. If the
                  Weighted Average Price cannot be calculated for such security
                  on such date on any of the foregoing bases, the Weighted
                  Average Price of such security on such date shall be the fair
                  market value as mutually determined by the Company and the
                  holders of Notes representing at least two-thirds (2/3) of the
                  aggregate principal amount of the Notes then outstanding as to
                  which such determination is being made. If the Company and the
                  holders of the Notes representing at least two-thirds (2/3) of
                  the aggregate principal amount of the Notes then outstanding
                  as to which such determination is being made are unable to
                  agree upon the fair market value of the Common Stock, then
                  such dispute shall be resolved pursuant to Section 2(d)(iii)
                  below with the term "Weighted Average Price" being substituted
                  for the term "Conversion Price." All such determinations shall
                  be appropriately adjusted for any stock dividend, stock split,
                  stock combination or other similar transaction during any
                  period during which the Weighted Average Price is being
                  determined.

                           (b) Holder's Conversion Right; Mandatory Redemption
at Maturity. Subject to the provisions of Section 5, at any time or times on or
after the Issuance Date, the Holder shall be entitled to convert all or any part
of the Principal (and the Interest Amount relating thereto) into fully paid and
nonassessable Shares in accordance with Section 2(d), at the Conversion Rate (as
defined in Section 2(c)). The Company shall not issue any fraction of a Share
upon any conversion. If the issuance would result in the issuance of a fraction
of a Share, then the Company shall round such fraction of a Share up or down to
the nearest whole share (with 0.5 rounded up). If any Principal remains
outstanding on the Maturity Date, then all such Principal (and the Interest
Amount relating thereto) shall be redeemed as of such date in accordance with
Section 2(d)(vii).

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

                                Conversion Amount
                                Conversion Price

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

                                       11
<PAGE>

                                    (i) Holder's Delivery Requirements. To
                  convert a Conversion Amount into Shares on any date (the
                  "CONVERSION DATE"), the Holder shall (A) transmit by facsimile
                  (or otherwise deliver), for receipt on or prior to 11:59 p.m.
                  New York City time on such date, a copy of an executed
                  conversion notice in the form attached hereto as Exhibit I
                  (the "CONVERSION NOTICE") to the Company, and (B) if required
                  by Section 2(d)(viii), surrender to a common carrier for
                  delivery to the Company, no later than three (3) Business Days
                  after the Conversion Date, the original Note being converted
                  (or an indemnification undertaking reasonably acceptable to
                  the Company with respect to this Note in the case of its loss,
                  theft or destruction).

                                    (ii) Company's Response. Upon receipt or
                  deemed receipt by the Company of a copy of a Conversion
                  Notice, the Company (I) shall immediately send, via facsimile,
                  a confirmation of receipt of such Conversion Notice to the
                  Holder and the Company's designated transfer agent (the
                  "TRANSFER AGENT"), which confirmation shall constitute an
                  instruction to the Transfer Agent to process such Conversion
                  Notice in accordance with the terms herein and (II) on or
                  before the second (2nd) Business Day following the date of
                  receipt or deemed receipt by the Company of such Conversion
                  Notice (the "SHARE DELIVERY DATE") (A) provided that the
                  Transfer Agent is participating in The Depository Trust
                  Company ("DTC") Fast Automated Securities Transfer Program and
                  provided that the Holder is eligible to receive Shares through
                  DTC, credit such aggregate number of Shares to which the
                  Holder shall be entitled to the Holder's or its designee's
                  balance account with DTC through its Deposit Withdrawal Agent
                  Commission system, or (B) if the foregoing shall not apply,
                  issue and deliver to the address as specified in the
                  Conversion Notice, a certificate, registered in the name of
                  the Holder or its designee, for the number of Shares to which
                  the Holder shall be entitled. If this Note is submitted for
                  conversion, as may be required by Section 2(d)(viii), and the
                  Principal represented by this Note is greater than the
                  Principal being converted, then the Company shall, as soon as
                  practicable and in no event later than three (3) Business Days
                  after receipt of this Note (the "NOTE DELIVERY DATE") and at
                  its own expense, issue and deliver to the Holder a new Note
                  representing the Principal not converted.

                                    (iii) Dispute Resolution. In the case of a
                  dispute as to the determination of the Conversion Price or the
                  arithmetic calculation of the Conversion Rate, the Company
                  shall instruct the Transfer Agent to issue to the Holder the
                  Shares representing the number of Shares that is not disputed
                  and shall transmit an explanation of the disputed
                  determinations or arithmetic calculations to the Holder via
                  facsimile within two (2) Business Day of receipt or deemed
                  receipt of the Holder's Conversion Notice or other date of
                  determination. If the Holder and the Company are unable to
                  agree upon the determination of the Conversion Price or
                  arithmetic calculation of the Conversion Rate within one (1)
                  Business Day of such disputed determination or arithmetic
                  calculation being transmitted to the Holder, then the Company
                  shall promptly (and in any event

                                       12
<PAGE>

                  within two (2) Business Days) submit via facsimile (A) the
                  disputed determination of the Conversion Price to an
                  independent, reputable investment banking firm agreed to by
                  the Company and the holders of the Notes representing at least
                  two-thirds (2/3) of the aggregate principal amounts of the
                  Notes then outstanding as to which such determination is being
                  made, or (B) the disputed arithmetic calculation of the
                  Conversion Rate to the Company's independent, outside
                  accountant, as the case may be. The Company shall direct the
                  investment bank or the accountant, as the case may be, to
                  perform the determinations or calculations and notify the
                  Company and the Holder of the results no later than two (2)
                  Business Days from the time it receives the disputed
                  determinations or calculations. Such investment bank's or
                  accountant's determination or calculation, as the case may be,
                  shall be binding upon all parties absent demonstrable error.

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

                                    (v) Company's Failure to Timely Convert.

                                            (A) Cash Damages. If within three
(3) Business Days after the Company's receipt of the facsimile copy of a
Conversion Notice or deemed receipt of a Conversion Notice the Company shall
fail to issue and deliver a certificate to the Holder for, or credit the
Holder's or its designee's balance account with DTC with, the number of Shares
to which the Holder is entitled upon the Holder's conversion of any Conversion
Amount, or if the Company fails to issue and deliver a new Note representing the
Principal to which such Holder is entitled on or before the Note Delivery Date
pursuant to Section 2(d)(ii), then in addition to all other available remedies
that the Holder may pursue hereunder and under the Securities Purchase Agreement
(including indemnification pursuant to Section 8 thereof or at law or in
equity), the Company shall pay additional damages to the Holder for each day
after the Share Delivery Date such conversion is not timely effected and/or each
day after the Note Delivery Date such Note is not delivered in an amount equal
to 0.5% of the sum of (a) the product of (I) the number of Shares not issued to
the Holder or its designee on or prior to the Share Delivery Date and to which
the Holder is entitled and (II) the Weighted Average Price of the Common Stock
on the Share Delivery Date (such product is referred to herein as the "SHARE
PRODUCT AMOUNT"), and (b) in the event the Company has failed to deliver a Note
to the Holder on or prior to the Note Delivery Date, the product of (y) the
number of Shares issuable upon conversion of the Principal represented by the
Note as of the Note Delivery Date and (z) the Weighted Average Price of the
Common Stock on the Note Delivery Date; provided that in no event shall cash
damages accrue pursuant to this Section 2(d)(v)(A) with respect to the Share
Product Amount during the period, if any, in which the Conversion Price or the
arithmetic calculation of the Conversion Rate is subject to a bona fide dispute
that is subject to and being resolved pursuant to, and in compliance with the
time periods and other provisions of, the dispute resolution provisions of
Section 2(d)(iii), provided that the Shares are delivered to the Holder within
two (2) Business Days of the resolution of such bona fide dispute.
Alternatively, subject to Section 2(d)(iii), at the election of

                                       13
<PAGE>

the Holder made in the Holder's sole discretion, the Company shall pay to the
Holder, in lieu of the additional damages referred to in the preceding sentence
(but in addition to all other available remedies that the Holder may pursue
hereunder and under the Securities Purchase Agreement (including indemnification
pursuant to Section 8 thereof or at law or in equity)), 110% of the amount by
which (A) the Holder's total purchase price (including brokerage commissions, if
any) for the Shares purchased to make delivery in satisfaction of a sale by the
Holder of the Shares to which the Holder is entitled but has not received upon a
conversion exceeds (B) the net proceeds received by the Holder from the sale of
the Shares to which the Holder is entitled but has not received upon such
conversion. If the Company fails to pay the additional damages set forth in this
Section 2(d)(v)(A) within five (5) Business Days of the date incurred, then the
Holder entitled to such payments shall have the right at any time, so long as
the Company continues to fail to make such payments, to require the Company,
upon written notice, to immediately issue, in lieu of such cash damages, the
number of Shares equal to the quotient of (X) the aggregate amount of the
damages payments described herein divided by (Y) the Conversion Price in effect
on such Conversion Date as specified by the Holder in the Conversion Notice.

                                            (B) Void Conversion Notice;
Adjustment to Conversion Price. If for any reason the Holder has not received
all of the Shares prior to the tenth (10th) Business Day after the Share
Delivery Date with respect to a conversion of this Note, other than due to the
limitation contained in Section 5(b) or to the pendency of a dispute being
resolved in accordance with Section 2(d)(iii) (a "CONVERSION FAILURE"), then the
Holder, upon written notice to the Company (a "VOID CONVERSION NOTICE"), may
void its Conversion Notice with respect to, and retain or have returned, as the
case may be, any portion of this Note that has not been converted pursuant to
the Holder's Conversion Notice; provided that the voiding of the Holder's
Conversion Notice shall not affect the Company's obligations to make any
payments that have accrued prior to the date of such notice pursuant to Section
2(d)(v)(A) or otherwise.

                                            (C) Redemption. In the event of a
Conversion Failure, the Holder, upon written notice to the Company, may require
that the Company redeem, in accordance with Section 3, all of the Principal,
including the Principal previously submitted for conversion and with respect to
which the Company has not delivered shares of Common Stock; provided that the
Holder shall not be entitled to require redemption of any Principal pursuant to
this clause (C) solely as a result of a Conversion Failure caused by any
Principal being the subject of a bona fide dispute that is subject to and being
resolved pursuant to, and in compliance with the time periods and other
provisions of, the dispute resolution provisions of Section 2(d)(iii), provided
the Shares are delivered to the Holder within two (2) Business Days of the
resolution of such bona fide dispute.

                                    (vi) Pro Rata Conversion. In the event the
                  Company receives a Conversion Notice from more than one holder
                  of the Notes for the same Conversion Date and the Company can
                  convert some, but not all, of such Notes, then, subject to
                  Section 5(c), the Company shall convert from each holder of
                  the Notes electing to have Notes converted at such time a pro
                  rata amount of such holder's Note submitted for conversion
                  based on the principal amount of the Note

                                       14
<PAGE>

                  submitted for conversion on such date by such holder relative
                  to the principal amount of the Notes submitted for conversion
                  on such date.

                                    (vii) Mechanics of Mandatory Redemption. If
                  any Principal remains outstanding on the Maturity Date, then
                  the Holder shall surrender this Note, duly endorsed for
                  cancellation, to the Company, and such Principal shall be
                  redeemed by the Company as of the Maturity Date by payment on
                  the Maturity Date to the Holder of an amount equal to the sum
                  of (A) 100% of such Principal plus (B) the Interest Amount
                  with respect to such Principal.

                                    (viii) Book-Entry. Notwithstanding anything
                  to the contrary set forth herein, upon conversion of this Note
                  in accordance with the terms hereof, the Holder shall not be
                  required to physically surrender this Note to the Company
                  unless all of the Principal is being converted. The Holder and
                  the Company shall maintain records showing the Principal
                  converted or redeemed and the dates of such conversions or
                  redemptions or shall use such other method, reasonably
                  satisfactory to the Holder and the Company, so as not to
                  require physical surrender of this Note upon each such
                  conversion or redemption. In the event of any dispute or
                  discrepancy, such records of the Company establishing the
                  Principal to which the Holder is entitled shall be controlling
                  and determinative in the absence of demonstrable error.
                  Notwithstanding the foregoing, if this Note is converted or
                  redeemed as aforesaid, the Holder may not transfer this Note
                  unless the Holder first physically surrenders this Note to the
                  Company, whereupon the Company will forthwith issue and
                  deliver upon the order of the Holder a new Note of like tenor,
                  registered as the Holder may request, representing in the
                  aggregate the remaining Principal represented by this Note.
                  The Holder and any assignee, by acceptance of this Note,
                  acknowledge and agree that, by reason of the provisions of
                  this paragraph, following conversion or redemption of any
                  portion of this Note, the Principal of this Note may be less
                  than the principal amount stated on the face hereof.

                           (e) Taxes. The Company shall pay any and all taxes
(excluding income taxes, franchise taxes or other taxes levied on gross
earnings, profits or the like of the Holder) that may be payable with respect to
the issuance and delivery of Shares upon the conversion of this Note.

                  (3) Redemption at Option of the Holder.

                           (a) Redemption Option Upon Triggering Event. In
addition to all other rights of the Holder contained herein, after a Triggering
Event (as defined in Section 3(b)), the Holder shall have the right, at the
Holder's option, to require the Company to redeem all or a portion of the
Principal at a price ("REDEMPTION PRICE") equal to the sum of (i) 120% of such
Principal plus (ii) the Interest Amount with respect to such Principal.

                                       15
<PAGE>

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

                                    (i) the failure of any Note Registration
                  Statement (as defined in the Registration Rights Agreement)
                  required to be filed pursuant to Section 2(a)(iii) or Section
                  2(e)(iii) of the Registration Rights Agreement to be declared
                  effective by the SEC on or prior to the date that is 45 days
                  after the applicable Effectiveness Deadline (as defined in the
                  Registration Rights Agreement);

                                    (ii) while a Note Registration Statement
                  filed pursuant to Section 2(a)(iii), Section 2(a)(iv) or
                  Section 2(e)(iii) of the Registration Rights Agreement is
                  required to be maintained effective pursuant to the terms of
                  the Registration Rights Agreement, the effectiveness of such
                  Note Registration Statement lapses for any reason (including
                  the issuance of a stop order) or is unavailable to the Holder
                  for sale of Note Registrable Securities (as defined in the
                  Registration Rights Agreement) in accordance with the terms of
                  the Registration Rights Agreement, and such lapse or
                  unavailability continues for a period of five (5) consecutive
                  Trading Days or for more than an aggregate of ten (10) Trading
                  Days in any 365-day period (other than days during an
                  Allowable Grace Period (as defined in the Registration Rights
                  Agreement));

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

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

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

                                    (vi) upon the Company's receipt or deemed
                  receipt of a Conversion Notice, the Company not being
                  obligated to issue Shares upon such conversion due to the
                  provisions of Section 5(c).

                                    (vii) the Company or any of its Subsidiaries
                  breaches any representation, warranty, covenant or other term
                  or condition of the Securities Purchase Agreement, the
                  Registration Rights Agreement, the Warrants, this Note, the
                  Security Documents or any other agreement, document,
                  certificate or other

                                       16
<PAGE>

                  instrument delivered in connection with the transactions
                  contemplated thereby and hereby, except to the extent that
                  such breach would not have a Material Adverse Effect (as
                  defined in Section 3(a) of the Securities Purchase Agreement)
                  and except, in the case of a breach of a covenant or other
                  term that is curable, only if such breach continues for a
                  period of at least ten (10) days after any "officer" (as such
                  term is defined in Rule 16a-1 under the 1934 Act) of the
                  Company, or the principal financial officer of any of the
                  Company's Active Subsidiaries, knew or reasonably should have
                  known of such breach; or

                                    (viii) the Company does not comply with the
                  provisions of Section 6, 7, 12 or 13 hereof or Section 4(l),
                  4(n), 4(o), 4(p), 4(q), 4(r), 4(s), 4(t) or 4(v) or the last
                  sentence of Section 4(w) of the Securities Purchase Agreement.

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

                           (d) Payment of Redemption Price. Upon the Company's
receipt of a Notice(s) of Redemption at Option of the Holder from any holder of
the Other Notes, the Company shall promptly notify the Holder by facsimile of
the Company's receipt of such notice(s). Each holder that has sent such a notice
shall, if required pursuant to Section 2(d)(viii), promptly submit to the
Company such holder's Note that such holder has elected to have redeemed. The
Company shall deliver the applicable Redemption Price to the Holder within five
(5) Business Days after the Company's receipt of a Notice of Redemption at
Option of Holder, provided that the Holder's Note shall have been so delivered
to the Company. If the Company is unable to redeem all of the Notes submitted
for redemption, the Company shall (i) redeem a pro rata amount from each holder
of the Notes based on the principal amount of the Notes submitted for redemption
by such holder relative to the aggregate principal amount of the Notes submitted
for redemption by all holders of the Notes, and (ii) in addition to any remedy
the Holder may have under this Note, the Securities Purchase Agreement and the
Security Documents, pay to the Holder interest at the rate of the lesser of 1.5%
per month (prorated for partial months) or the highest lawful maximum interest
rate in respect of the unredeemed Principal until paid in full.

                                       17
<PAGE>

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

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

                  (4) Other Rights of the Holders.

                           (a) Reorganization, Reclassification, Consolidation,
Merger or Sale. Any recapitalization, reorganization, reclassification,
consolidation, merger, sale of all or substantially all of the Company's assets
to another Person or other transaction that is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as "ORGANIC CHANGE." Prior to
the consummation of any (i) sale of all or substantially all of the Company's
assets to an acquiring Person (including, for the avoidance of doubt, the sale
of all or substantially all of the assets of the Company's Subsidiaries in the
aggregate) or (ii) other Organic Change following which the Company is not a
surviving entity, the Company will secure from the Person purchasing such assets
or the successor resulting from such Organic Change (in each case, the
"ACQUIRING ENTITY") a written agreement, in form and substance satisfactory to
the holders representing at least two-thirds (2/3) of the aggregate principal
amount of the Notes then outstanding, to deliver to the Holder in exchange for
this Note, a security of the Acquiring Entity evidenced by a written instrument
substantially similar in form and substance to this Note and satisfactory to the
holders representing at least two-thirds (2/3) of the aggregate principal amount
of the Notes then outstanding. Prior to the consummation of any other Organic
Change, the Company shall make appropriate provision (in form and substance
satisfactory to the holders representing at least two-thirds (2/3) of the
aggregate principal amount of the Notes then outstanding) to ensure that the
Holder will thereafter have the right to acquire and receive in lieu of or in
addition to (as the case may be) the

                                       18
<PAGE>

Shares immediately theretofore acquirable and receivable upon the conversion of
this Note (without regard to any limitations or restrictions on conversion) such
shares of stock, securities or assets that would have been issued or payable in
such Organic Change with respect to or in exchange for the number of Shares that
would have been acquirable and receivable upon the conversion of this Note as of
the date of such Organic Change (without taking into account any limitations or
restrictions on the conversion of this Note).

                           (b) Optional Redemption Upon Change of Control. In
addition to the rights of the Holder under Section 4(a), upon a Change of
Control (as defined below) of the Company the Holder shall have the right, at
the Holder's option, to require the Company to redeem all or a portion of the
Principal at a price equal to 105% (or 115% in the case of an event satisfying
the definition of Change of Control pursuant to subsection (iii) below) of the
Principal plus the Interest Amount with respect to such Principal (the "CHANGE
OF CONTROL REDEMPTION PRICE"). No sooner than thirty (30) nor later than twenty
(20) Business Days prior to the consummation of a Change of Control, but not
prior to the public announcement of such Change of Control, the Company shall
deliver written notice thereof via facsimile and overnight courier (a "NOTICE OF
CHANGE OF CONTROL") to the Holder. At any time during the period beginning after
receipt of a Notice of Change of Control (or, in the event a Notice of Change of
Control is not delivered at least twenty (20) Business Days prior to a Change of
Control, at any time on or after the date which is twenty (20) Business Days
prior to a Change of Control) and ending on the date of such Change of Control,
the Holder may require the Company to redeem all or a portion of the Principal
by delivering written notice thereof via facsimile and overnight courier (a
"NOTICE OF REDEMPTION UPON CHANGE OF CONTROL") to the Company, which Notice of
Redemption Upon Change of Control shall be irrevocable (provided that the
Company complies with its obligations under this Section 4(b)) and shall
indicate (i) the Principal that the Holder is submitting for redemption, and
(ii) the applicable Change of Control Redemption Price, as calculated pursuant
to this Section 4(b). Upon the Company's receipt of a Notice(s) of Redemption
Upon Change of Control from any holder of the Other Notes, the Company shall
promptly, but in no event later than one (1) Business Day following such
receipt, notify the Holder by facsimile of the Company's receipt of such
Notice(s) of Redemption Upon Change of Control. The Company shall deliver the
Change of Control Redemption Price simultaneously with the consummation of the
Change of Control; provided that, if required by Section 2(d)(viii), this Note
shall have been so delivered to the Company. The Company shall not enter into
any binding agreement or other arrangement with respect to a Change of Control
unless the Company provides that the payments provided for in this Section 4(b)
shall have priority to payments to stockholders in connection with such Change
of Control and the Company complies with such provision. For purposes of this
Section 4(b), "CHANGE OF CONTROL" means (i) the consolidation, merger or other
business combination of the Company with or into another Person (other than (A)
a consolidation, merger or other business combination in which holders of the
Company's voting power immediately prior to the transaction continue after the
transaction to hold, directly or indirectly, a majority of the combined voting
power of the surviving entity or entities entitled to vote generally for the
election of a majority of the members of the board of directors (or their
equivalent if other than a corporation) of such entity or entities, or (B)
pursuant to a migratory merger effected solely for the purpose of changing the
jurisdiction of incorporation of the Company), (ii) the sale or transfer of all
or substantially all of the Company's assets (including, for the avoidance of
doubt,

                                       19
<PAGE>

the sale of all or substantially all of the assets of the Company's Subsidiaries
in the aggregate) or (iii) the consummation of a purchase, tender or exchange
offer made to and accepted by the holders of more than the 50% of the
outstanding Shares.

                  (5) Limitations on Conversion.

                           (a) Permitted Conversions. The Holder shall not have
the right to convert this Note except (i) at any time after the Holder delivers
a Void Optional Redemption Notice pursuant to Section 3(e), (ii) at any time
after the Holder delivers a Void Acceleration Notice pursuant to Section 11(c),
(iii) at any time after an Event of Default (as defined in Section 11(a))
arising from an event described in clause (v) or (vi) of Section 11(a), and (iv)
in connection with a Company Alternative Conversion pursuant to Section 8,
including in connection with an Interest Conversion pursuant to Section 6 or a
Mandatory Compliance Conversion pursuant to Section 13.

                           (b) 4.99% Limitation. The Company shall not effect
any conversion of this Note and the Holder shall not have the right to convert
Principal or any Interest Amount in excess of that portion of the Principal
Amount or any Interest Amount that, upon giving effect to such conversion, would
cause the aggregate number of Shares beneficially owned by the Holder and its
affiliates to exceed 4.99% of the total outstanding Shares following such
conversion or issuance of Interest Shares. For purposes of the foregoing
proviso, the aggregate number of Shares beneficially owned by the Holder and its
affiliates shall include the Shares issuable upon conversion of this Note, with
respect to which the determination of such proviso is being made, but shall
exclude the Shares that would be issuable upon (i) conversion of the remaining,
unconverted Principal and any Interest Amount with respect thereto beneficially
owned by the Holder and its affiliates and (ii) exercise, conversion or exchange
of the unexercised, unconverted or unexchanged portion of any other securities
of the Company (including any warrants or convertible preferred stock) subject
to a limitation on conversion, exercise or exchange analogous to the limitation
contained herein beneficially owned by the Holder and its affiliates. Except as
set forth in the preceding sentence, for purposes of this Section 5, beneficial
ownership shall be calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "1934 ACT"). For purposes of this Section
5(b), in determining the number of outstanding Shares the Holder may rely on the
number of outstanding Shares as reflected in (1) the Company's most recent
quarterly report on Form 10-Q, or annual report on Form 10-K, as the case may
be, (2) a more recent public announcement by the Company or (3) any other notice
by the Company or the transfer agent for the common stock setting forth the
number of Shares outstanding. Upon the written request of the Holder, the
Company shall promptly, but in no event later than two (2) Business Days
following the receipt of such request, confirm in writing to the Holder the
number of Shares then outstanding. In any case, the number of outstanding Shares
shall be determined after giving effect to the conversion, exercise or exchange
of securities of the Company, including the Notes and the Warrants, by the
Holder and its affiliates since the date as of which such number of outstanding
Shares was reported. For purposes of determining the maximum number of Shares
that the Company may issue to the Holder pursuant to Section 5(b) upon
conversion of this Note on a particular Conversion Date, Holder's delivery of a
Conversion Notice with respect to such conversion shall

                                       20
<PAGE>

constitute a representation (on which the Company may rely without
investigation) by the Holder that, upon the issuance of the Shares to be issued
to it on such Conversion Date, the shares of Common Stock beneficially owned by
the Holder and its affiliates shall not exceed 4.99% of the total outstanding
Shares immediately after giving effect to such conversion, as determined in
accordance with this Section 5(b).

                           (c) Limitation on Number of Shares Issuable
Hereunder. The Company shall not be obligated to issue any Shares upon
conversion of this Note if the issuance of such Shares would exceed that number
of Shares which the Company may issue upon conversion of the Notes and upon
exercise of the Warrants (the "EXCHANGE CAP") without breaching the Company's
obligations under the rules or regulations of the Principal Market, except that
such limitation shall not apply in the event that the Company (a) obtains
Shareholder Approval or (b) obtains a written opinion from outside counsel to
the Company that such approval is not required, which opinion shall be
reasonably satisfactory to the Holders representing at least two-thirds (2/3) of
the aggregate principal amount of the Notes then outstanding. Until Shareholder
Approval or such written opinion is obtained, no purchaser of Notes pursuant to
the Securities Purchase Agreement (the "PURCHASERS") shall be issued, upon
conversion of, or as interest on, this Note, a number of Shares greater than the
product of (i) the difference of (x) the Exchange Cap, minus (y) the sum of (A)
the aggregate number of Shares that have been issued upon exercise of any
Warrants or upon conversion of any Notes prior to the date of such determination
and (B) 120% of the Shares issuable as of the date of such determination upon
exercise of all Warrants then outstanding, multiplied by (ii) such Purchaser's
Allocation Percentage (the "CAP ALLOCATION AMOUNT"). In the event that any
Purchaser shall sell or otherwise transfer any of such Purchaser's Notes, the
transferee shall be allocated a pro rata portion of such Purchaser's Cap
Allocation Amount. In the event that any holder of Notes shall convert all of
such holder's Notes and exercise all of such holder's Warrants into a number of
Shares in an amount which, in the aggregate, is less than such holder's Cap
Allocation Amount, then the difference between such holder's Cap Allocation
Amount and the number of Shares actually issued to such holder upon conversion
of such holder's Notes and exercise of such holder's Warrants shall be allocated
to the respective Cap Allocation Amounts of the remaining holders of Notes and
Warrants on a pro rata basis in proportion to the aggregate number of Shares
issuable upon conversion of the Notes and exercise of the Warrants then held by
each such Holder.

                  (6) Interest. Interest shall be payable on each Interest
Payment Date, to the record holder of this Note on such Interest Payment Date,
in cash or, as permitted by the provisions of Section 8, by electing to convert
such Interest by giving a Company Alternative Conversion Notice (as defined
below) at least five (5) Business Days prior to such Interest Payment Date (each
an "INTEREST CONVERSION ELECTION") for a Company Alternative Conversion with
respect to an Interest Amount equal to the entire amount of such Interest (the
"INTEREST CONVERSION AMOUNT") in accordance with, and subject to the conditions
and requirements of, Section 8 (an "INTEREST CONVERSION"). If the Company does
not make an Interest Conversion Election with respect to such Interest, such
Interest shall be paid in cash. The Company may only make an Interest Conversion
Election if it makes the same election with respect to all the Notes of the same
Series. An Interest Conversion Election shall be irrevocable by the Company.

                                       21
<PAGE>

Upon delivery of an Alternative Conversion Notice with respect to an Interest
Conversion Amount, the Company shall comply with the provisions of Sections 8.
Any accrued and unpaid Interest which is not paid within five (5) Business Days
of such accrued and unpaid Interest's Interest Payment Date shall bear interest
at the rate of the lesser of 1.5% per month (prorated for partial months) or the
highest lawful maximum interest rate per annum from such Interest Payment Date
until the same is paid in full (the "DEFAULT INTEREST"). The Company shall pay
any and all taxes (excluding income taxes, franchise taxes or other taxes levied
on gross earnings, profits or the like of the Holder) that may be payable with
respect to the issuance and delivery of Interest Shares.

                  (7) Company Alternative Redemption.

                           (a) General. At any time after Issuance Date, the
Company shall have the right to redeem some or all of the Principal (a "COMPANY
ALTERNATIVE REDEMPTION") (excluding Principal that is part of a Pro Rata
Conversion Amount relating to a Company Alternative Conversion Notice Date
occurring prior to the Company Alternative Redemption Notice Date) for an amount
in cash equal to the product of (A) the applicable Company Alternative
Redemption Rate and (B) the sum of (i) the Principal being redeemed pursuant to
this Section 7 and (ii) the Interest Amount with respect to such Principal as of
the Company Alternative Redemption Date (as defined below) (the "COMPANY
ALTERNATIVE REDEMPTION PRICE"); provided that the Conditions to Company
Alternative Redemption (as set forth in Section 7(c)) and the conditions of this
Section 7(a) and Section 7(b) are satisfied (or waived in writing by the
Holder). The Company may exercise its right to Company Alternative Redemption by
delivering to the Holder written notice (the "COMPANY ALTERNATIVE REDEMPTION
NOTICE") at least five (5) Business Days prior to the date of consummation of
such redemption ("COMPANY ALTERNATIVE REDEMPTION DATE"). The date on which the
Holder receives the Company Alternative Redemption Notice is referred to as the
"COMPANY ALTERNATIVE REDEMPTION NOTICE DATE." A Company Alternative Redemption
Notice shall be irrevocable by the Company. If the Company elects a Company
Alternative Redemption pursuant to this Section 7(a), then it must
simultaneously take the same action with respect to all of the Other Notes of
the same Series as this Note. If the Company elects a Company Alternative
Redemption (and similar action under Other Notes of the same Series) with
respect to less than all of the aggregate principal amount of Notes of such
Series then outstanding, then the Company shall elect to redeem a principal
amount (together with the related Interest Amount) from each of the holders of
Notes of such Series equal to the product of (I) the aggregate principal amount
of the Notes of such Series that the Company has elected to redeem pursuant to
this Section 7 (or the similar provisions of such Other Notes), multiplied by
(II) the Holder's Series Allocation Percentage (such amount with respect to each
holder of the Notes is referred to as its "PRO RATA REDEMPTION AMOUNT" and with
respect to the Holder is referred to as the Pro Rata Redemption Amount). In the
event that the initial holder of any Notes of such Series shall sell or
otherwise transfer any of such holder's Notes, the transferee shall be allocated
a pro rata portion of such holder's Series Allocation Percentage. The Company
Alternative Redemption Notice shall state (i) the date selected by the Company
for the Company Alternative Redemption Date in accordance with this Section
7(a), (ii) the aggregate principal amount of Notes of such Series that the
Company has elected to redeem from all of the holders of Notes of such Series
pursuant to

                                       22
<PAGE>

this Section 7 and (iii) each holder's Pro Rata Redemption Amount of the
principal amount of Notes of such Series the Company has elected to redeem
pursuant to this Section 7(a).

                           (b) Mechanics of Company Alternative Redemption. If
the Company has exercised its right to Company Alternative Redemption in
accordance with Section 7(a) and the conditions of this Section 7 are satisfied
on the Company Alternative Redemption Date (including the Conditions to Company
Alternative Redemption as set forth in Section 7(c)) (or waived in writing by
the Holder), then the Holder's Pro Rata Redemption Amount, if any, that remains
outstanding on the Company Alternative Redemption Date shall be redeemed by the
Company on such Company Alternative Redemption Date by the payment by the
Company to the Holder on such Company Alternative Redemption Date, by wire
transfer of immediately available funds, of an amount equal to the Company
Alternative Redemption Price for the Holder's Pro Rata Redemption Amount.
Notwithstanding anything contained herein to the contrary, no notice delivered
by the Company to any Holder regarding a Condition to Company Alternative
Redemption shall contain any material non-public information.

                           (c) Conditions to Company Alternative Redemption. For
purposes of this Section 7, "CONDITIONS TO COMPANY ALTERNATIVE REDEMPTION" means
the following conditions: (i) during the period beginning on and including the
Issuance Date and ending on and including the applicable Company Alternative
Redemption Date, there shall not have occurred either (x) the public
announcement of a pending, proposed or intended Change of Control that has not
been abandoned, terminated or consummated and publicly disclosed as such at
least ten (10) Trading Days prior to the Company Alternative Redemption Notice
Date or (y) a Triggering Event or an Event of Default, or an event that with the
passage of time or the giving of notice and without being cured would constitute
a Triggering Event or an Event of Default; and (ii) on each day during the
period beginning 90 days prior to the Company Alternative Redemption Notice Date
and ending on and including the applicable Company Alternative Redemption Date,
the Company and its Subsidiaries otherwise shall have been in compliance with in
all material respects and shall not have breached or been in breach in any
material respect of any provision or covenant of the Securities Purchase
Agreement or any of the other Transaction Documents.

                           (d) Remedies. In the event that the Company does not
pay the Company Alternative Redemption Price in full for the Holder's Pro Rata
Redemption Amount on the Company Alternative Redemption Date and the Conditions
to Company Alternative Redemption were satisfied, or to the extent not
satisfied, were waived by the Holder, then in addition to any remedy the Holder
may have under this Note and the Securities Purchase Agreement (including
indemnification pursuant to Section 8 thereof or at law or in equity), the
Company Alternative Redemption Price payable in respect of such unredeemed Pro
Rata Redemption Amount shall bear interest at the rate of the lesser of 1.5% per
month (prorated for partial months) and the highest lawful maximum interest
rate.

                  (8) Company Alternative Conversion.

                           (a) General. After the date that is ten (10) Trading
Days after the

                                       23
<PAGE>

Registration Statement has been declared effective by the SEC, the Company shall
have the right, in accordance with the terms and subject to the conditions of
this Section 8 (and, in the case of any Interest Conversion Amount, Section 6,
and, in the case of any Mandatory Compliance Amount, Section 13) and provided
that the Conditions to Company Alternative Conversion (as set forth below) are
satisfied, to require that all or any portion of the Principal (together with
the Interest Amount with respect thereto) or any Interest payable on any
Interest Payment Date be converted at the applicable Conversion Price (a
"COMPANY ALTERNATIVE CONVERSION"). The Company may exercise its right to elect a
Company Alternative Conversion by delivering to the Holder written notice
thereof (a "COMPANY ALTERNATIVE CONVERSION NOTICE") at least five (5) Business
Days prior to the first Trading Day of the Company Alternative Conversion Period
(as defined below). The date on which the Holder receives the Company
Alternative Conversion Notice, as applicable is referred to as the "COMPANY
ALTERNATIVE CONVERSION NOTICE DATE"). If the Company elects a Company
Alternative Conversion (including an Interest Conversion pursuant to Section 6
or a Mandatory Compliance Conversion pursuant to Section 13) pursuant to this
Section 8, then it must simultaneously take the same action with respect to all
of the Other Notes of the same Series. The Company shall require conversion of a
Conversion Amount from each holder of Notes of such Series equal to (x) the
product of (I) the aggregate principal amount of Notes of such Series that the
Company has elected to convert pursuant to this Section 8 (or the similar
provisions of such Other Notes), together with the Interest Amount thereon,
multiplied by (II) such holder's Series Allocation Percentage or (y) in the case
of an Interest Conversion, the Interest Conversion Amount (such Conversion
Amount with respect to each such holder is referred to as its "PRO RATA
CONVERSION AMOUNT"). The Company Alternative Conversion Notice shall indicate
the number of consecutive Trading Days selected by the Company during which the
Holder must convert its Pro Rata Conversion Amount (the "COMPANY ALTERNATIVE
CONVERSION PERIOD") and the date of the first day of the Company Alternative
Conversion Period, which date must be at least five (5) Business Days after the
Company Alternative Conversion Notice Date, provided that (I) the Company
Alternative Conversion Period shall be at least ten (10) Trading Days and no
more than thirty (30) Trading Days, (II) in the case of a Company Alternative
Conversion that is a Mandatory Compliance Conversion under Section 13 or an
Interest Conversion under Section 6, the Company Alternative Conversion Period
shall be the twenty (20) consecutive Trading Days commencing five (5) Business
Days after such Company Alternative Conversion Notice Date, and (III) any
Company Alternative Conversion Period set forth in any Company Alternative
Conversion Notice given pursuant to any Other Notes on the same day shall be the
same as the Company Alternative Conversion Period set forth in the Company
Alternative Conversion Notice given pursuant to this Note. The Company
Alternative Conversion Notice shall also indicate the date selected by the
Company for the last Trading Day of the Company Alternative Conversion Period,
which is the last date by which the Holder must convert its Pro Rata Conversion
Amount (the "FINAL COMPANY ALTERNATIVE CONVERSION Date"), (x) the aggregate
principal amount (or Interest in the case of an Interest Conversion Election) of
the Series of Notes that the Company has elected to convert from all the holders
of Notes of such Series pursuant to this Section 8 (or other similar provisions
in such Other Notes), and (y) each holder's Pro Rata Conversion Amount.

         (b) Mechanics of Company Alternative Conversion. If the Company has
exercised its

                                       24
<PAGE>

right to Company Alternative Conversion in accordance with Section 8(a) and
Section 6 or 13, as applicable, and the conditions of this Section 8 are
satisfied (or waived in writing by the Holder) on the Company Alternative
Conversion Notice Date and at each time the Holder delivers a Conversion Notice
or is deemed to have delivered a Conversion Notice with respect to any portion
of the Pro Rata Conversion Amount (a "COMPANY ALTERNATIVE CONVERSION DATE")
(including the Conditions to Company Alternative Conversion as set forth in
Section 8(c)), then, subject to Sections 5 and 8(d), the Holder shall convert
the Pro Rata Conversion Amount, together with any Interest Amount with respect
to the allocable portion of principal represented by such Pro Rata Conversion
Amount accruing through and including the applicable Conversion Date, in whole
or in part and at such time or times as the Holder, in its sole discretion
determines, during the Company Alternative Conversion Period; provided, however,
that the Holder shall not be permitted to convert during the Company Alternative
Conversion Period, any portion of the Conversion Amount that exceeds the product
of (i) the Holder's Series Allocation Percentage and (ii) twenty percent (20%)
of the sum of the daily dollar trading volume (as reported by Bloomberg) of the
Common Stock on its Principal Market on each of the Trading Days during the
Company Alternative Conversion Period (such limitation, the "VOLUME CONVERSION
RESTRICTION Amount"). In the event any Pro Rata Conversion Amount has not been
converted by the Holder prior to the Final Company Alternative Conversion Date,
then, subject to the limitations set forth in Sections 5 and 8(e), the remaining
Pro Rata Conversion Amount shall be converted as of the Final Company
Alternative Conversion Date, as if the Holder had delivered a Conversion Notice
pursuant to Section 2 with respect to such Pro Rata Conversion Amount on the
Final Company Alternative Conversion Date but without the Holder being required
to actually deliver such Conversion Notice, provided that the Conditions to
Company Alternative Conversion are satisfied (or waived in writing by the
Holder) on the Final Company Alternative Conversion Date. In the event that the
Conditions to Company Alternative Conversion are not satisfied on the Final
Company Alternative Conversion Date (and, for the avoidance of doubt, on each
day during the Company Alternative Conversion Period), then the Company
Alternative Conversion shall be null and void with respect to all or any part
designated by the Holder of the unconverted Pro Rata Conversion Amount and the
Holder shall be entitled to all the rights of a holder of this Note with respect
to such amount of the Pro Rata Conversion Amount and, accordingly, shall be
subject to all the other provisions of this Note, including that if such amount
remains outstanding on the Maturity Date, then the Company shall redeem the
Principal represented by such amount in accordance with Section 2(d)(vii),
unless such Pro Rata Conversion Amount is an Interest Conversion Amount, a
Mandatory Compliance Amount or an Excluded Amount, in which the case Company
shall be deemed to have given a Company Alternative Redemption Notice with
respect to such unconverted Pro Rata Conversion Amount (and, for purposes of
Section 7(a), shall be entitled to give such Company Alternative Redemption
Notice), and such amount shall be redeemed or paid by the Company within five
(5) Business Days in accordance with Section 7. Notwithstanding the foregoing,
at any time during a Company Alternative Conversion Period that does not relate
to an Interest Conversion or a Mandatory Compliance Conversion, the Company may
give written notice to the Holder of termination of such Company Alternative
Conversion Period, provided that the Company gives the same notice to all
holders of Notes of this Series, and in such case, such Company Alternative
Conversion Period shall terminate at the end of the first Business Day following
the Holder's receipt of such notice of termination, the Company Alternative
Conversion shall be null

                                       25
<PAGE>

and void with respect to any part of the Pro Rata Conversion Amount that has not
been converted as of such termination of the Company Alternative Conversion
Period (by delivering a Conversion Notice on or prior to the first Business Day
following the Holder's receipt of such notice of termination), and the Holder
shall be entitled to all the rights of a holder of the Note with respect to such
amount of the Pro Rata Conversion Amount and, accordingly, shall be subject to
all the other provisions of this Note, including that if such amount remains
outstanding on the Maturity Date, then the Company shall redeem the Principal
represented by such amount in accordance with Section 2(d)(vii). Notwithstanding
anything contained herein to the contrary, no notice delivered by the Company to
any Holder regarding a Condition to Company Alternative Conversion shall contain
any material non-public information.

                           (c) Conditions to Company Alternative Conversion.
"CONDITIONS TO COMPANY ALTERNATIVE CONVERSION" means the following conditions:
(i) except in the case of an Interest Conversion or Mandatory Compliance
Conversion, the aggregate principal amount of the Notes of any Series selected
for conversion by the Company as reflected in the Company Alternative Conversion
Notice is at least $500,000 (or, if less, the aggregate principal amount of the
Notes of such Series then outstanding); (ii) none of the Expected Trading Days
during the Company Alternative Conversion Period to which the Company
Alternative Conversion Notice relates shall be Expected Trading Days in any
Company Alternative Conversion Period as to which another Company Alternative
Conversion Notice has been given pursuant to this Note or any Other Notes; (iii)
the aggregate Conversion Amount of the Notes selected for conversion by the
Company as reflected in the Company Alternative Conversion Notice shall not
exceed fifteen percent (15%) of the product of (I) the arithmetic average of the
daily dollar trading volume (as reported by Bloomberg) of the Common Stock on
its Principal Market over the twenty (20) consecutive Trading Days ending on and
including the date that is immediately preceding the Company Alternative
Conversion Notice Date multiplied by (II) the number of Expected Trading Days
during the Company Alternative Conversion Period to which the Company
Alternative Conversion Notice relates; (iv) the Company shall not have delivered
the Company Alternative Conversion Notice during any other Company Alternative
Conversion Period nor, except in the case of a Company Alternative Conversion
being effected for purposes of a Mandatory Compliance Conversion under Section
13, within twenty (20) Trading Days after the previous Final Company Alternative
Conversion Date; (v) during the period beginning on and including the Issuance
Date and ending on and including the Company Alternative Conversion Date, there
shall not have occurred either (x) the public announcement of a pending,
proposed or intended Change of Control that has not been abandoned, terminated
or consummated and publicly disclosed as such at least ten (10) Trading Days
prior to the Company Alternative Conversion Date or (y) a Triggering Event or an
Event of Default (as defined in Section 11); (v) during the period beginning on
the Issuance Date and ending on and including the Company Alternative Conversion
Date, the Company shall have delivered Shares upon conversion of the Notes and
upon exercise of the Warrants on a timely basis as set forth in Section 2(d)(ii)
of the Notes and Section 2(a) of the Warrants, respectively; (vi) on each day
during the period beginning on and including the date that is forty-five (45)
days prior to the Company Alternative Conversion Notice Date and ending on and
including the applicable Company Alternative Conversion Date, the Common Stock
is listed on the NASDAQ National Market or the New York Stock Exchange and the
Common Stock has not been suspended from trading on the NASDAQ National Market

                                       26
<PAGE>

or the New York Stock Exchange nor shall delisting or suspension by the NASDAQ
National Market or the New York Stock Exchange have been threatened either (A)
in writing by the NASDAQ National Market or the New York Stock Exchange or (B)
by falling below the minimum listing maintenance requirements of the NASDAQ
National Market or the New York Stock Exchange; (vii) on each day during the
period beginning on and including the date that is ten (10) days prior to the
Company Alternative Conversion Notice Date and ending on and including the
Company Alternative Conversion Date, a Registration Statement shall be effective
and available for the sale of not less 150% of the Registrable Securities
issuable upon conversion as of the Company Alternative Conversion Notice Date of
the aggregate Conversion Amount selected for conversion by the Company as
reflected in the Company Alternative Conversion Notice, in accordance with the
Registration Rights Agreement, and there shall not have been any Grace Period
applicable to such Registration Statement (as defined in the Registration Rights
Agreement); (viii) on each day during the period beginning ninety (90) days
prior to the Company Alternative Conversion Notice Date, the Company and its
Subsidiaries otherwise shall have been in compliance with in all respects and
shall not have breached or been in breach of any provision or covenant of the
Notes or any other Transaction Documents; and (ix) the Company shall have
obtained all requisite approvals of its stockholders for the issuance of the
Shares to the holders of the Notes.

                           (d) Company Alternative Conversion Floor. If the
Weighted Average Price of the Common Stock during the applicable Company
Alternative Conversion Period falls below $4.00 (subject to adjustment for stock
splits, stock dividends, stock combinations and other similar events after the
date of the Securities Purchase Agreement) or such higher price (which shall not
exceed 85% of the lesser of (i) the arithmetic average of the Weighted Average
Price of the Common Stock on each of the five (5) Trading Days immediately
preceding the Company Alternative Conversion Notice Date and (ii) the Weighted
Average Price on the Trading Day immediately preceding the Company Alternative
Conversion Notice Date) as provided by the Company in the applicable Company
Alternative Conversion Notice (the "COMPANY ALTERNATIVE CONVERSION TRIGGER
PRICE"), then any Company Alternative Conversion pursuant to Section 8(b) shall
automatically terminate with respect to any Pro Rata Conversion Amount that is
not subject to a Conversion Notice delivered to the Company on or prior to the
Company Alternative Conversion Floor Trigger Date (as defined below), in
accordance with this Section 8(d). The Company Alternative Conversion Trigger
Price shall be subject to adjustment for any stock dividend, stock split, stock
combination or other similar transaction. The first Trading Day, if any, during
the applicable Company Alternative Conversion Period on which the Weighted
Average Price of the Common Stock is less than the Company Alternative
Conversion Trigger Price shall constitute a "COMPANY ALTERNATIVE CONVERSION
FLOOR TRIGGER DATE" with respect to such Company Alternative Conversion Period.
On the first day immediately following the Company Alternative Conversion Floor
Trigger Date the Company Alternative Conversion shall be null and void with
respect any portion of the Pro Rata Conversion Amount that the Holder has not
converted on or prior to the Company Alternative Conversion Floor Trigger Date
(by delivering a Conversion Notice on or prior to the Company Alternative
Conversion Floor Trigger Date), and the holder shall be entitled to all the
rights of a holder of this Note with respect to such amount of the Pro Rata
Conversion Amount and, accordingly, shall be subject to all the other provisions
of this Note, including that if such

                                       27
<PAGE>

amount remains outstanding on the Maturity Date, then the Company shall redeem
the Principal represented by such amount in accordance with Section 2(d)(vii),
unless such Pro Rata Conversion Amount is an Interest Conversion Amount, a
Mandatory Compliance Amount or an Excluded Amount, in which case the Company
shall be deemed to have given a Company Alternative Redemption Notice with
respect to such unconverted Pro Rata Conversion Amount (and, for purposes of
Section 7(a) shall be entitled to give such Company Alternative Conversion
Notice), and such amount shall be redeemed or paid by the Company within two (2)
Business Days of the Company Alternative Conversion Floor Trigger Date in
accordance with Section 7.

                           (e) Company Alternative Conversion Period Volume
Limitations. Notwithstanding anything contained in this Section 8 to the
contrary, on the applicable Final Company Alternative Conversion Date, (i) the
Holder shall not be required (but shall be permitted subject to clause (ii) of
this Section 8(e)) to convert (and shall not be deemed, solely as a result of
Section 8(b), to have converted) any portion of the Pro Rata Conversion Amount
on the applicable Final Company Alternative Conversion Date in excess of the
difference between (A) the product of (I) the Holder's Series Allocation
Percentage and (II) ten percent (10%) of the sum of the daily dollar trading
volume (as reported by Bloomberg) of the Common Stock on its Principal Market on
each of the Trading Days during the Company Alternative Conversion Period, minus
(B) any Pro Rata Conversion Amount converted by the Holder during the Company
Alternative Conversion Period and (ii) the Holder shall neither be required nor
permitted to convert (and shall not be deemed, solely as a result of Section
8(b) to have converted) any portion of the Pro Rata Conversion Amount on the
applicable Final Company Alternative Conversion Date in excess of the difference
between (A) the applicable Volume Conversion Restriction Amount, minus (B) any
Pro Rata Conversion Amount converted by the Holder during the Company
Alternative Conversion Period. Following the Final Company Alternative
Conversion Date, the Company Alternative Conversion shall be null and void with
respect to the unconverted Pro Rata Conversion Amount, and the Holder shall be
entitled to all the rights of a holder of this Note with respect to such amount
of the Pro Rata Conversion Amount, and, accordingly, shall be subject to all the
other provisions of this Note, including that if such amount remains outstanding
on the Maturity Date, then the Company shall redeem the Principal represented by
such amount in accordance with Section 2(d)(vii), unless such Pro Rata
Conversion Amount is an Interest Conversion Amount, a Mandatory Compliance
Amount or an Excluded Amount, in which case the Company shall be deemed to have
given a Company Alternative Redemption Notice with respect to such unconverted
Pro Rata Conversion Amount (and, for purposes of Section 7(a), shall be entitled
to give such Company Alternative Redemption Notice), and such amount shall be
redeemed or paid by the Company within five (5) Business Days in accordance with
Section 7.

                  (9) Reservation of Shares.

                           (a) Reservation. The Company shall, so long as any of
the Notes are outstanding, take all action necessary to reserve and keep
available out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Notes, such number of Shares as shall
from time to time be sufficient to effect the conversion of all of the principal
amount then outstanding under the Notes (together with accrued and unpaid
Interest

                                       28
<PAGE>

thereon); provided that the number of Shares so reserved shall at no time be
less than 100% of the number of Shares for which the Notes are at any time
convertible (without regard to any limitations on conversions) (the "REQUIRED
RESERVE AMOUNT"). The initial number of Shares reserved for conversions of the
Notes and each increase in the number of Shares so reserved shall be allocated
pro rata among the holders of the Notes based on the principal amount of the
Notes held by each holder at the time of issuance of the Notes or increase in
the number of reserved Shares, as the case may be. In the event the Holder shall
sell or otherwise transfer any portion of the Holder's Notes, each transferee
shall be allocated a pro rata portion of the number of Shares reserved for such
transferor. Any Shares reserved and allocated to any Person that ceases to hold
any Notes shall be allocated to the remaining holders of the Notes, pro rata
based on the principal amount of the Notes then held by such holders.

                           (b) Insufficient Authorized Shares. If at any time
while any of the Notes remain outstanding the Company does not have a sufficient
number of authorized and unreserved Shares to satisfy its obligation to reserve
for issuance upon conversion of the Notes at least a number of Shares equal to
the Required Reserve Amount, then the Company shall immediately take all action
necessary to increase the Company's authorized Shares to an amount sufficient to
allow the Company to reserve the Required Reserve Amount for the Notes then
outstanding.

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

                  (11) Defaults and Remedies.

                           (a) Events of Default. An "EVENT OF DEFAULT" is (i)
default in payment of any Principal of this Note, any Company Alternative
Redemption Price, or any Change of Control Redemption Price, when and as due;
(ii) default in payment of any Interest on this Note that is not included in an
amount described in the immediately preceding clause (i) that is not cured
within two (2) Business Days from the date such Interest was due; (iii) failure
by the Company for ten (10) days after notice to it to comply with any other
provision of this Note in all material respects; (iv) any default in payment of
at least $300,000, individually or in the aggregate, under or acceleration prior
to maturity of, or any event or circumstances arising such that, any person is
entitled, or could, with the giving of notice and/or lapse of time and/or the
fulfillment of any condition and/or the making of any determination, become
entitled, to require repayment before its stated maturity of, or to take any
step to enforce any security for, any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
indebtedness for money borrowed of at least $300,000 by the Company or any of
its Subsidiaries or for money borrowed the repayment of at least $300,000 of
which is guaranteed by the Company or any of its Subsidiaries, whether such
indebtedness or guarantee now exists or shall be created hereafter; (v) if the
Company or any of its Subsidiaries pursuant to or within the meaning of any
Bankruptcy Law (as defined below); (A) commences a voluntary case; (B) consents
to the entry of an order for relief against it in an involuntary case; (C)
consents to the appointment of a Custodian of it or any of its Subsidiaries for
all or substantially all of its property; (D) makes a general assignment for the
benefit of its creditors; or

                                       29
<PAGE>

(E) admits in writing that it is generally unable to pay its debts as the same
become due; (vi) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that (1) is for relief against the Company in an
involuntary case; (2) appoints a Custodian (as defined below) of the Company or
any Subsidiary for all or substantially all of its property; or (3) orders the
liquidation of the Company or any Subsidiary; (vii) the Company fails to file,
or is determined to have failed to file, in a timely manner any report required
to be filed with the SEC pursuant to the 1934 Act, provided that any filing made
within the time period permitted by Rule 12b-25 under the 1934 Act and pursuant
to a timely filed Form 12b-25 shall, for purposes of this clause (vii), be
deemed to be timely filed; (viii) the Company or any of its Subsidiaries
breaches any representation, warranty, covenant or other term or condition of
the Security Documents that adversely affects the security interest of the
Holder (or any agent or representative thereof on their behalf) in any material
portion of the Collateral (as defined in the Security Agreement) or the
perfection or priority thereof; or (ix) one or more judgments, non-interlocutory
orders or decrees shall be entered by a U.S. state or federal or a foreign court
or administrative agency of competent jurisdiction against any the Company or
any of its Subsidiaries involving in the aggregate a liability (to the extent
not covered by independent third-party insurance) as to any single or related
series of transactions, incidents or conditions, of $300,000 or more, and the
same shall remain unsatisfied, unvacated, unbonded or unstayed pending appeal
for a period of thirty (30) days after the entry thereof. 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 or similar official under any Bankruptcy Law. Within five (5)
Business Days after the occurrence of any Event of Default set forth in clause
(iv), (v), (vi), (viii) or (ix) above, the Company shall deliver written notice
thereof to the Holder.

                           (b) Remedies. If an Event of Default occurs and is
continuing, the Holder of this Note may declare all of this Note, including all
amounts due hereunder (the "ACCELERATION AMOUNT"), to be due and payable
immediately, except that in the case of an Event of Default arising from events
described in clauses (v) and (vi) of Section 11(a), this Note shall immediately
become due and payable without further action or notice. In addition to any
remedy the Holder may have under this Note and the Securities Purchase
Agreement, such unpaid amount shall bear interest at the rate of the lesser of
1.5% per month (prorated for partial months) or the highest lawful maximum
interest rate until paid in full. Nothing in this Section 11 shall limit any
other rights the Holder may have under this Note, the Security Documents or the
Securities Purchase Agreement, including Sections 2 and 3 of this Note.

                           (c) Void Acceleration. In the event that the Company
does not pay the Acceleration Amount within five (5) Business Days of this Note
becoming due under Section 11(b), at any time thereafter and until the Company
pays such unpaid Acceleration Amount in full, the Holder shall have the option
to, in lieu of redemption, require the Company to promptly return this Note (to
the extent this Note has been previously delivered to the Company), in whole or
any portion thereof, to the Holder, by sending written notice thereof to the
Company via facsimile (the "VOID ACCELERATION NOTICE"). Upon the Company's
receipt of such Void Acceleration Notice, (i) the acceleration pursuant to
Section 11(b) shall be null and void with respect to the portion of this Note
subject to such Void Acceleration Notice, and (ii)

                                       30
<PAGE>

the Company shall promptly return the portion of this Note (to the extent this
Note has been previously delivered to the Company) subject to such Void
Acceleration Notice.

                  (12) Other Indebtedness. Payments of principal and other
payments due under this Note shall not be subordinated to any obligations of the
Company. The Holder of this Note is entitled to the benefits of the Security
Documents, and in the event of a transfer of this Note in accordance with the
terms hereof and the Securities Purchase Agreement, the Holder shall be deemed
to have assigned its rights under the Security Documents. For so long as this
Note is outstanding, the Company shall not, and shall not permit any of its
Subsidiaries to, (a) issue, incur, assume or extend the term of any Indebtedness
(as defined below) except for (I) Indebtedness under the Notes, (II)
Indebtedness, (A) the holders of which agree in writing to be subordinate to the
Notes on terms and conditions acceptable to the Buyers, including with regard to
interest payments and repayment of principal, (B) which does not mature or
otherwise require or permit redemption or repayment prior to or on the Maturity
Date of any Notes then outstanding; and (C) which is not secured by any assets
of the Company or any of its Subsidiaries, (III) Indebtedness solely between the
Company and/or one of its domestic Active Subsidiaries, on the one hand, and the
Company and/or one of its domestic Active Subsidiaries, on the other, provided
that in each case a majority of the equity of any such domestic Active
Subsidiary is directly or indirectly owned by the Company, such domestic Active
Subsidiary is controlled by the Company and such domestic Active Subsidiary is a
party to the Guaranty Agreement and the Security Agreement, (IV) surety bonds,
bids, performance bond, and similar obligations (exclusive of obligations for
the payment of borrowed money) obtained by the Company and its Subsidiaries in
the ordinary course of business for the purpose of satisfying federal, state
and/or local legal requirements for owning and operating their oil and gas
properties or operating the Services Business, (V) Capital Lease Obligations
incurred in connection with acquiring equipment for the Company's oil and gas
exploration and production business in amounts not exceeding individually, the
fair market value of the equipment subject to such Capital Lease Obligations and
in an aggregate outstanding amount not exceeding 7.5% of After-tax PV10 at any
one time, (VI) reimbursement obligations in respect of letters of credit issued
by one or more financial institutions for the account of the Company or any of
its Active Subsidiaries in connection with the Company's establishment and
maintenance of a Hedged position with respect to, at any time, a maximum of 2/3
of the Company's estimate of its oil and gas production for the succeeding 12
calendar months on a rolling 12-calendar month basis, (VII) reimbursement
obligations in respect of letters of credit issued for the account of the
Company or any of its Active Subsidiaries for the purpose of securing
performance obligations of the Company or its Active Subsidiaries incurred in
the ordinary course of business (and not issued in connection with the Company's
establishment and maintenance of a Hedged position) so long as the aggregate
face amount of all such letters of credit do not exceed $1,000,000 at any one
time, (VIII) Indebtedness under that certain unsecured promissory note, dated
January 27, 2003, in the name of Dobber Aviation, L.L.C., in a principal amount
not exceeding $2,500,000 (less any payments of principal thereon or other
reductions to principal made from time to time with respect thereto), and (IX)
that certain unsecured obligation of the Company to Premium Assignment
Corporation existing as of the date of this Agreement in an amount not to exceed
$159,623.86 (less any payments of such obligation or other reductions to such
obligation made from time to time with respect thereto); (b) issue, incur,
assume, or extend the term of any

                                       31
<PAGE>

Indebtedness in a principal amount in excess of $2,000,000 where the proceeds of
such Indebtedness are to be used to develop, or in connection with the
development of, assets located outside the United States in which the holders of
the Notes do not have a valid, perfected first priority security interest; (c)
issue any capital stock of the Company or any Subsidiary redeemable prior to the
Maturity Date; (d) directly or indirectly, create, assume or suffer to exist any
Lien, other than a Permitted Lien, on any asset now owned or hereafter acquired
by the Company or any of its Subsidiaries; or (e) except as required or
expressly permitted by Section 4(d), 4(q), 4(r) or 4(u) of the Securities
Purchase Agreement, redeem, or otherwise repay in cash any principal of, any
Indebtedness (other than Indebtedness under the Notes). For purposes of this
Note: (x) "INDEBTEDNESS" of any Person means, without duplication (A) all
indebtedness for borrowed money, (B) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
unsecured account trade payables that are (i) entered into or incurred in the
ordinary course of the Company's and its Subsidiaries' business, (ii) on terms
that require full payment within 90 days, (iii) not unpaid in excess of 90 days
beyond invoice due date or are being contested in good faith and as to which
such reserve as is required by GAAP has been made and (iv) not exceeding at any
one time an aggregate among the Company and its Subsidiaries of $5,000,000 in
the oil and gas production segment of the Company's business (as such segment is
described in the Company's annual report on Form 10-K for the year ended
December 31, 2003) or $1,000,000 in all other segments of the Company's
business, collectively, (C) all reimbursement or payment obligations with
respect to letters of credit, surety bonds and other similar instruments, (D)
all obligations evidenced by notes, bonds, debentures, redeemable capital stock
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
Capital Lease Obligations, (G) all indebtedness referred to in clauses (A)
through (F) above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any mortgage,
Lien, pledge, change, security interest or other encumbrance upon or in any
property or assets (including accounts and contract rights) owned by any Person,
even though the Person that owns such assets or property has not assumed or
become liable for the payment of such indebtedness, and (H) all Contingent
Obligations in respect of indebtedness or obligations of others of the kinds
referred to in clauses (A) through (G) above; (y) "CAPITAL LEASE OBLIGATION"
means, as to any Person, any obligation that is required to be classified and
accounted for as a capital lease on a balance sheet of such Person prepared in
accordance with GAAP, and the amount of such obligation shall be the capitalized
amount thereof, determined in accordance with GAAP; and (z) "CONTINGENT
OBLIGATION" means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any indebtedness, lease,
dividend or other obligation of another Person if the primary purpose or intent
of the Person incurring such liability, or the primary effect thereof, is to
provide assurance to the obligee of such liability that such liability will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such liability will be protected (in whole or in
part) against loss with respect thereto.

                                       32
<PAGE>

                  (13) Free Cash Flow Amount and Mandatory Compliance Conversion
or Redemption. On the first Business Day following each date that the Company
files or is required to file an annual report on Form 10-K or a quarterly report
on Form 10-Q (which in each case shall disclose the Free Cash Flow Amount as of
the end of the period covered by such report and details of the calculation
thereof, and the components thereof), the Company shall deliver to the Holder a
certificate executed by its principal financial officer (an "OFFICER'S
CERTIFICATE") certifying as to whether or not as of the end of the period
covered by such report, there is a Free Cash Flow Test Failure and the related
calculations with respect thereto. Notwithstanding anything contained herein to
the contrary, no Officer's Certificate delivered by the Company to any Holder
regarding a Free Cash Flow Test Failure shall contain any material non-public
information. Upon each occurrence of a Free Cash Flow Test Failure, the Company
shall provide the Holder, by the third (3rd) Business Day following the delivery
of the Officer's Certificate either (i) if permitted by the provisions of
Section 8, a Company Alternative Conversion Notice for a Company Alternative
Conversion of Principal of this Note equal to the applicable Mandatory
Compliance Amount, and any Interest Amount related thereto, in accordance with,
and subject to the conditions and requirements of, Section 8 (a "MANDATORY
COMPLIANCE CONVERSION"), (ii) a Company Alternative Redemption Notice for a
Company Alternative Redemption of the Principal of this Note equal to the
applicable Mandatory Compliance Amount, and any Interest Amount related thereto,
in accordance with Section 7 (a "MANDATORY COMPLIANCE REDEMPTION") or (iii) a
combination of the immediately preceding clauses (i) and (ii); provided that all
of the outstanding applicable Mandatory Compliance Amount, and any Interest
Amount related thereto, must be converted or redeemed by the Company, subject to
the provisions of Section 7 and/or 8, as applicable; provided further that the
Company may elect more than one of the Mandatory Compliance Conversion and the
Mandatory Compliance Redemption, if each such election is with respect to at
least 20% of the Mandatory Compliance Amount and if such election is the same
for all Notes of the same Series. If the Company has not satisfied the
conditions required to make a Mandatory Compliance Conversion election with
respect to one or more Series of Notes, subject to satisfaction of the
conditions of Section 8, the Company may still make a Mandatory Compliance
Conversion election with respect to those Series of Notes for which it can
satisfy the conditions for delivery of a Mandatory Compliance Conversion
election. Upon delivery of a Company Alternative Redemption Notice or Company
Alternative Conversion Notice pursuant to the preceding sentence, the Company is
required to comply with the provisions of Sections 7 and 8, respectively. If a
Company Alternative Conversion Notice does not cover the entire applicable
Mandatory Compliance Amount or no Company Alternative Conversion Notice is given
with respect to an applicable Mandatory Compliance Amount, the Company will be
deemed to have elected a Mandatory Compliance Redemption hereunder with respect
to the remaining Mandatory Compliance Amount not covered by a Company
Alternative Conversion Notice (and, for purposes of Section 7(a), shall be
entitled to elect such Mandatory Compliance Redemption).

                  (14) Participation; Restrictions. While this Note is
outstanding, the Company shall not, and shall not permit any of its Subsidiaries
to: (i) declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any

                                       33
<PAGE>

capital stock; provided however, that any Subsidiary may declare, set aside or
pay any dividends on or make any other distributions (whether in cash, stock,
equity securities or property) in respect of any of its capital stock that is
held solely by the Company or by a domestic Active Subsidiary, provided that a
majority of the equity of such domestic Active Subsidiary is directly or
indirectly owned by the Company, such domestic Active Subsidiary is controlled
by the Company and such domestic Active Subsidiary is a party to the Guaranty
Agreement and the Security Agreement, (ii) purchase, redeem or otherwise
acquire, directly or indirectly, any shares of its capital stock or the capital
stock of any of its Subsidiaries, direct or indirect, except repurchases of
unvested shares at cost in connection with the termination of the employment
relationship with any employee pursuant to stock option or purchase agreements
in effect on the date hereof and set forth on Schedule 3(c) of the Securities
Purchase Agreement, or (iii) grant, issue or sell any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property
pro rata to the record holders of any class of its capital stock. While this
Note is outstanding, the Company and its Subsidiaries shall not enter into any
agreement which would limit or restrict the Company's or any of its
Subsidiaries' ability to perform under, or take any other voluntary action to
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed by it under, this Note, the Securities Purchase Agreement,
the Registration Rights Agreement, the Warrants and the Security Documents.

                  (15) Notices.

                           (a) The Company will give written notice to the
Holder at least ten (10) Business Days prior to the date on which the Company
closes its books or takes a record (I) with respect to any dividend or
distribution upon the Common Stock, (II) with respect to any pro rata
subscription offer to holders of Common Stock or (III) for determining rights to
vote with respect to any Organic Change (as defined in Section 4(a)),
dissolution or liquidation, provided that such information shall be made known
to the public prior to or in conjunction with such notice being provided to the
Holder.

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

                  (16) Vote to Change the Terms of the Notes. The written
consent of the Company and the holders representing at least two-thirds (2/3) of
the principal amount then outstanding under the Notes of the same Series shall
be required for any change that relates only to such Series of Notes (including
this Note) and upon receipt of such consent, each such Note of the such Series
shall be deemed amended thereby. The written consent of the Company and the
holders representing at least two-thirds (2/3) of the principal amount then
outstanding under the all of the Notes shall be required for any change that
relates to all of the Notes (including this Note), and upon receipt of such
consent, each Note shall be deemed amended thereby.

                  (17) Lost or Stolen Notes. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Note,

                                       34
<PAGE>

and, in the case of loss, theft or destruction, of an indemnification
undertaking by the Holder to the Company in customary form and reasonably
satisfactory to the Company and, in the case of mutilation, upon surrender and
cancellation of this Note, the Company shall execute and deliver a new Note of
like tenor and date; provided, however, the Company shall not be obligated to
re-issue a Note if the Holder contemporaneously requests the Company to convert
this Note in its entirety into Shares as permitted hereunder.

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

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

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

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

                  (22) Transfer of this Note. The Holder may assign or transfer
some or all of its rights hereunder, subject to compliance with the 1933 Act and
the provisions of Section 2(f) of the Securities Purchase Agreement without the
consent of the Company, provided that any transfer of this Note to a Person that
is not an affiliate of the Holder of this Note of less than all of the Principal
represented hereby, shall be in Principal amount of not less than $2,000,000.

                                       35
<PAGE>

                  (23) Payment of Collection, Enforcement and Other Costs. If
(a) this Note is placed in the hands of an attorney for collection or
enforcement or is collected or enforced through any legal proceeding; or (b) an
attorney is retained to represent the Holder in any bankruptcy, reorganization,
receivership of the Company or other proceedings affecting Company creditors'
rights and involving a claim under this Note, then the Company shall pay the
costs incurred by the Holder for such collection, enforcement or action,
including reasonable attorneys' fees and disbursements.

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

                  (25) Note Exchangeable for Different Denominations. Subject to
Section 2(d)(viii), in the event of a conversion or redemption pursuant to this
Note of less than all of the Principal, the Company shall promptly cause to be
issued and delivered to the Holder, upon tender by the Holder of this Note, a
new Note of like tenor representing the remaining Principal that has not been so
converted or redeemed. This Note is exchangeable, upon the surrender hereof by
the Holder at the principal office of the Company, for a new Note or Notes
containing the same terms and conditions and representing in the aggregate the
Principal, and each such new Note will represent such portion of such Principal
as is designated by the Holder at the time of such surrender. The date the
Company issued this Note shall be the "Issuance Date" hereof regardless of the
number of times a new Note shall be issued.

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

                  (27) Governing Law. This Note shall be construed and enforced
in accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note shall be governed by, the internal
laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other
country or jurisdiction) that would cause the application of the laws of any
jurisdiction or country other than the State of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Note and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any

                                       36
<PAGE>

right to serve process in any manner permitted by law. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR
ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

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

                  (29) Payment Set Aside. To the extent that the Company makes a
payment or payments to the Holder hereunder or the Holder enforces or exercises
its rights hereunder, and such payment or payments or the proceeds of such
enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
by a trustee, receiver or any other person under any law (including any
bankruptcy law, U.S. state or federal law, common law or equitable cause of
action), then to the extent of any such restoration the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.

                  (30) Interpretative Matters. Unless the context otherwise
requires, (a) all references to Sections, Schedules or Exhibits are to Sections,
Schedules or Exhibits contained in or attached to this Note, (b) each accounting
term not otherwise defined in this Note has the meaning assigned to it in
accordance with GAAP, (c) words in the singular or plural include the singular
and plural and pronouns stated in either the masculine, the feminine or neuter
gender shall include the masculine, feminine and neuter and (d) the use of the
word "including" in this Note shall be by way of example rather than limitation.
If a stock split, stock dividend, stock combination or other similar event
occurs during any period over which an average price is being determined, then
an appropriate adjustment will be made to such average to reflect such event.

                                   * * * * * *

                                       37
<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Note to be signed by
_____________, its ____________________, as of the ___ day of _________ 200__.

                                              INFINITY, INC.

                                              By:______________________________
                                                 Name:
                                                 Title:

<PAGE>

                                    EXHIBIT I
                                 INFINITY, INC.
                                CONVERSION NOTICE

         Reference is made to the Convertible Note (the "NOTE") of Infinity,
Inc., a Colorado corporation (the "COMPANY"). In accordance with and pursuant to
the Note, the undersigned hereby elects to convert the Conversion Amount (as
defined in the Note) of the Note indicated below into Shares of Common Stock,
par value $0.0001 per share (the "COMMON STOCK"), of the Company, as of the date
specified below.

         Date of Conversion:____________________________________________________

         Aggregate Conversion Amount to be converted, other than pursuant to
Section 6:______________________________________________________________________

         Principal, applicable thereto, to be converted:_______________________

         Interest Conversion Amount to be converted pursuant to Section 6:______

Please confirm the following information:

         Conversion Price:______________________________________________________

         Number of shares of Common Stock to be issued:_________________________

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

         Issue to:______________________________________________________________

         Facsimile Number:______________________________________________________

         Authorization:_______________________
                  By:_________________________
                  Title:______________________

         Dated:_______________________________

         DTC Participant Number and Name (if electronic book entry transfer):___

         Account Number (if electronic book entry transfer):____________________

<PAGE>

                                 ACKNOWLEDGMENT

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

                                            INFINITY, INC.

                                            By:___________________________
                                            Name:_________________________
                                            Title:________________________<PAGE>

                                                                     Exhibit 4.4

                          REGISTRATION RIGHTS AGREEMENT

      REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of January 13,
2005, by and among Infinity, Inc., a Colorado corporation, with headquarters
located at 1401 West Main Street, Suite C, Chanute, Kansas 66720 (the
"COMPANY"), and the undersigned buyers (each, a "BUYER" and collectively, the
"BUYERS").

      WHEREAS:

      A. In connection with the Securities Purchase Agreement by and among the
parties hereto of even date herewith (the "SECURITIES PURCHASE AGREEMENT"), the
Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell at the Initial Closing to the
Buyers (i) senior secured notes of the Company (including accrued and unpaid
interest thereon, the "INITIAL NOTES"), which will be convertible into shares of
the Company's common stock, $0.0001 par value per share (the "COMMON STOCK"), in
accordance with the terms of the Initial Notes (the shares of Common Stock
issuable upon such conversion, the "INITIAL NOTE SHARES"), and (ii) warrants to
purchase shares of Common Stock (the "INITIAL WARRANTS," and the shares of
Common Stock issuable upon exercise of the Initial Warrants, the "INITIAL
WARRANT SHARES");

      B. In connection with the Securities Purchase Agreement, the Company has
the option, upon the terms and subject to the conditions of the Securities
Purchase Agreement, to issue and sell to the Buyers, from time to time during
the Additional Note Issuance Period (as defined in the Securities Purchase
Agreement) (i) additional senior secured conditionally convertible notes of the
Company (any such additional notes, including accrued and unpaid interest
thereon, "ADDITIONAL NOTES" and, collectively with the Initial Notes, "NOTES"),
which will be convertible into shares of Common Stock in accordance with the
terms of the Additional Notes (the shares of Common Stock issuable upon such
conversion, "ADDITIONAL NOTE SHARES," and together with the Initial Note Shares,
"NOTE SHARES") and (ii) additional warrants to purchase shares of Common Stock
(any such warrants, "ADDITIONAL WARRANTS," and the shares of Common Stock
issuable upon exercise of such Additional Warrants, "ADDITIONAL WARRANT SHARES"
and together with the Initial Warrant Shares, the "WARRANT SHARES");

      C. To induce the Buyers to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 ACT"), and
applicable state securities laws.

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each of the Buyers
hereby agree as follows:

<PAGE>

1. DEFINITIONS.

As used in this Agreement, the following terms shall have the following
meanings:

      a.    "ADDITIONAL REGISTRABLE SECURITIES" means (i) Additional Warrant
            Shares issued or issuable upon exercise of any Additional Warrants
            and (ii) any shares of capital stock issued or issuable with respect
            to such Additional Warrant Shares and Additional Warrants as a
            result of any stock split, stock dividend, recapitalization,
            exchange or similar event or otherwise, without regard to any
            limitations on exercises of the Additional Warrants.

      b.    "ADDITIONAL REGISTRATION STATEMENT" means a registration statement
            or registration statements of the Company filed under the 1933 Act
            covering Additional Registrable Securities.

      c.    "EFFECTIVENESS DEADLINE" means the Initial Effectiveness Deadline,
            an Additional Effectiveness Deadline, a Subsequent Effectiveness
            Deadline, a Deficiency Effectiveness Deadline, an Additional
            Deficiency Effectiveness Deadline or a Subsequent Deficiency
            Effectiveness Deadline (each as defined below), as applicable.

      d.    "FILING DEADLINE" means the Initial Filing Deadline, an Additional
            Filing Deadline, a Subsequent Filing Deadline, a Deficiency Filing
            Deadline, an Additional Deficiency Filing Deadline or a Subsequent
            Deficiency Filing Deadline (each as defined below), as applicable.

      e.    "INITIAL REGISTRABLE SECURITIES" means (i) the Initial Warrant
            Shares issued or issuable upon exercise of the Initial Warrants and
            (ii) any shares of capital stock issued or issuable with respect to
            the Initial Warrant Shares and the Initial Warrants as a result of
            any stock split, stock dividend, recapitalization, exchange or
            similar event or otherwise, without regard to any limitations on
            exercises of the Initial Warrants.

      f.    "INITIAL REGISTRATION STATEMENT" means a registration statement or
            registration statements of the Company filed under the 1933 Act
            covering the Initial Registrable Securities.

      g.    "INVESTOR" means a Buyer, any transferee or assignee thereof to whom
            a Buyer assigns its rights under this Agreement and who agrees to
            become bound by the provisions of this Agreement in accordance with
            Section 9 and any transferee or assignee thereof to whom a
            transferee or assignee assigns its rights under this Agreement and
            who agrees to become bound by the provisions of this Agreement in
            accordance with Section 9.

      h.    "NOTE REGISTRABLE SECURITIES" means (i) Note Shares issued or
            issuable upon conversion of any outstanding Notes and (ii) any
            shares of capital stock issued or issuable with respect to such Note
            Shares and Notes as a result of any stock split, stock dividend,
            recapitalization, exchange or similar event or otherwise, without
            regard to any limitations on the conversion of the Notes.

                                       2
<PAGE>

      i.    "NOTE REGISTRATION STATEMENT" means a registration statement or
            registration statements of the Company filed under the 1933 Act
            covering Note Registrable Securities.

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

      k.    "REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration
            effected by preparing and filing one or more Registration Statements
            (as defined below) in compliance with the 1933 Act and pursuant to
            Rule 415 under the 1933 Act or any successor rule providing for
            offering securities on a continuous or delayed basis ("RULE 415"),
            and the declaration or ordering of effectiveness of such
            Registration Statement(s) by the United States Securities and
            Exchange Commission (the "SEC").

      l.    "REGISTRABLE SECURITIES" means the Initial Registrable Securities,
            any Additional Registrable Securities, and any Note Registrable
            Securities; provided, however, that any such Registrable Securities
            shall cease to be Registrable Securities when (i) a Registration
            Statement with respect to the sale of such securities becomes
            effective under the 1933 Act and such securities are disposed of in
            accordance with such Registration Statement, (ii) such securities
            are sold in accordance with Rule 144 (as defined in Section 8) or
            (iii) such securities become transferable without any restrictions
            in accordance with Rule 144(k) (or any successor provision).

      m.    "REGISTRATION STATEMENT" means the Initial Registration Statement,
            any Additional Registration Statement or any Note Registration
            Statement.

      n.    "TRADING DAY" means any day on which the Common Stock is traded on
            the principal securities exchange or securities market on which the
            Common Stock is then traded; provided that "Trading Day" shall not
            include any day on which the Common Stock is scheduled to trade, or
            actually trades on such exchange or market, for less than 4.5 hours.

Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement.

2. REGISTRATION.

            a. Mandatory and Optional Registration

                  (i) Initial Mandatory Registration. The Company shall prepare,
and, as soon as practicable but in no event later than 30 days after the Initial
Closing Date (the "INITIAL FILING DEADLINE"), file with the SEC the Initial
Registration Statement on Form S-3, covering the resale of all of the Initial
Registrable Securities. In the event that Form S-3 is unavailable for such a
registration, the Company shall use such other form as is available for such a
registration, subject to the provisions of Section 2(d). The Initial
Registration Statement prepared pursuant hereto shall register for resale
Initial Registrable Securities consisting of at least that number of shares of
Common Stock equal to 110% of the number of Initial Warrant Shares issuable upon
exercise of all the outstanding Initial Warrants as of the second Trading

                                       3
<PAGE>

Day immediately preceding the date that the Initial Registration Statement is
initially filed with the SEC. The calculations set forth in this paragraph shall
be made without regard to any limitations on the exercise of the Initial
Warrants and such calculation shall assume that the Initial Warrants are then
exercisable into shares of Common Stock at the then-prevailing Warrant Exercise
Price (as defined in the Initial Warrants). The Company shall use its best
efforts to have the Initial Registration Statement declared effective by the SEC
as soon as practicable, but in no event later than the date which is 150 days
after the Initial Closing Date (the "INITIAL EFFECTIVENESS DEADLINE").

                  (ii) Additional Mandatory Registration. The Company shall
prepare, and, as soon as practicable but in no event later than 20 days after an
Additional Closing Date (each, an "ADDITIONAL FILING DEADLINE"), file with the
SEC an Additional Registration Statement on Form S-3, covering the resale of the
Additional Registrable Securities relating to the Additional Warrants issued in
the Additional Closing occurring on such Additional Closing Date. In the event
that Form S-3 is unavailable for such a registration, the Company shall use such
other form as is available for such a registration, subject to the provisions of
Section 2(d). Each Additional Registration Statement prepared pursuant hereto
shall register for resale Additional Registrable Securities consisting of at
least that number of shares of Common Stock equal to 110% of the number of
Additional Warrant Shares issuable upon exercise of all the Additional Warrants
issued in such Additional Closing as of the second Trading Day prior to the date
such Additional Registration Statement is initially filed with the SEC. The
calculations set forth in this paragraph shall be made without regard to any
limitations on the exercise of the Additional Warrants and such calculation
shall assume that the Additional Warrants are then exercisable into shares of
Common Stock at the then-prevailing Warrant Exercise Price (as defined in the
Additional Warrants). The Company shall use its best efforts to have the
Additional Registration Statement declared effective by the SEC as soon as
practicable, but in no event later than the date which is 150 days after the
Additional Closing Date (the "ADDITIONAL EFFECTIVENESS DEADLINE").

                  (iii) Subsequent Mandatory Registration. In the event that (a)
the holder of any Note delivers a Notice of Redemption at Option of Holder (as
defined in the Notes) pursuant to Section 3(c) of such Note and the Company does
not pay the Redemption Price (as defined in the Notes) within the time period
specified in Section 3(d) of such Note, (b) the holder of any Note declares such
Note to be due and payable immediately pursuant to Section 11(b) of such Note
and the Company does not pay the Acceleration Amount (as defined in the Notes)
within five (5) Business Days (as defined in the Notes) of such Note becoming
due under Section 11(b) of such Note, or (c) there is an Event of Default (as
defined in the Notes) arising from an event described in clause (iv) or (v) of
Section 11(a) of such Note, the Company shall prepare, and, as soon as
practicable but in no event later than 15 days thereafter (each, a "SUBSEQUENT
FILING DEADLINE"), file with the SEC one or more Note Registration Statements on
Form S-3, covering the resale of the Note Registrable Securities. In the event
that Form S-3 is unavailable for such a registration, the Company shall use such
other form as is available for such a registration, subject to the provisions of
Section 2(d). Each Note Registration Statement prepared pursuant hereto shall
register for resale Note Registrable Securities relating to all outstanding
Notes and consisting of, with respect to each such Note, at least that number of
shares of Common Stock equal to the difference between (i) 150% of (x) the
aggregate principal amount of such Note, divided by (y) the arithmetic average
of the Weighted Average Price (as

                                       4
<PAGE>

defined in the Notes) of the Common Stock on each of the five (5) consecutive
Trading Days ending on the second Trading Day immediately preceding the date
such Note Registration Statement is initially filed with the SEC, less (ii) the
number of Note Registrable Securities, if any, relating to such Note that are
covered by, and may be resold pursuant to, an effective Registration Statement.
The calculations set forth in the paragraph shall be made without regard to any
limitations on the conversion of the Notes, and such calculations shall assume
that the Notes are then convertible into shares of Common Stock at the
then-prevailing Conversion Price (as defined in the Notes), except as provided
above. The Company shall use its best efforts to have the Note Registration
Statement declared effective by the SEC as soon as practicable, but in no event
later than the date that is 75 days after the Subsequent Filing Deadline (the
"SUBSEQUENT EFFECTIVENESS DEADLINE").

                  (iv) Optional Registration. The Company may, from time to
time, prepare and file with the SEC one or more Note Registration Statements on
Form S-3, covering the resale of any or all of the Note Registrable Securities
or include such Note Registrable Securities in another Registration Statement.
In the event that Form S-3 is unavailable for such a registration, the Company
shall use such other form as is available for such a registration, subject to
the provisions of Section 2(d).

            b. Allocation of Registrable Securities. The initial number of
Registrable Securities included in any Registration Statement and each increase
in the number of Registrable Securities included therein shall be allocated pro
rata among the Investors based on the number of such Registrable Securities held
by each Investor at the time the Registration Statement covering such initial
number of Registrable Securities or increase thereof is declared effective by
the SEC. In the event that an Investor sells or otherwise transfers any of such
Investor's Registrable Securities, each transferee shall be allocated a pro rata
portion of the then remaining number of Registrable Securities included in such
Registration Statement for such transferor. Any shares of Common Stock included
in a Registration Statement and which remain allocated to any Person which
ceases to hold any Registrable Securities covered by such Registration Statement
shall be allocated to the remaining Investors, pro rata based on the number of
Registrable Securities then held by such Investors which are covered by such
Registration Statement. For purposes hereof, the number of Registrable
Securities held by an Investor includes all Registrable Securities issuable upon
exercise of Warrants held by such Investor or conversion of the Notes held by
such Investor, without regard to any limitation on the exercise of the Warrants
or conversion of the Notes.

            c. Legal Counsel. Subject to Section 5 hereof, the Buyers holding
securities representing at least two-thirds (2/3) of the Registrable Securities
shall have the right to select one legal counsel to review and oversee any
offering pursuant to this Section 2 ("LEGAL COUNSEL"), which shall be Katten
Muchin Zavis Rosenman or such other counsel as thereafter designated in writing
to the Company by the holders of at least two-thirds (2/3) of the Registrable
Securities. The Company shall reasonably cooperate with Legal Counsel in
performing the Company's obligations under this Agreement.

            d. Ineligibility for Form S-3. In the event that Form S-3 is not
available for the registration of the resale of Registrable Securities
hereunder, the Company shall undertake to register the Registrable Securities on
Form S-3 as soon as such form is available, provided that

                                       5
<PAGE>

the Company shall maintain the effectiveness of the Registration Statement then
in effect until such time as a Registration Statement on Form S-3 covering the
Registrable Securities has been declared effective by the SEC.

            e. Sufficient Number of Shares Registered.

                  (i) In the event the number of shares of Common Stock
available under the Initial Registration Statement filed pursuant to Section
2(a)(i) is insufficient to cover all of the Initial Registrable Securities
required to be covered by the Initial Registration Statement or an Investor's
allocated portion of the Initial Registrable Securities pursuant to Section
2(b), the Company shall, as soon as practicable, but in any event not later than
15 days after the first date on which the number of shares available under the
Initial Registration Statement is so insufficient (the "DEFICIENCY FILING
DEADLINE"), amend the Initial Registration Statement, or file a new Registration
Statement (on the short form available therefor, if applicable), or both, so
that there are registered for resale Initial Registrable Securities consisting
of at least that number of shares of Common Stock equal to 110% of the number of
Initial Warrant Shares issuable upon exercise of all the outstanding Initial
Warrants as of the second Trading Day immediately preceding the date of the
filing of the amendment or new Registration Statement with the SEC. The Company
shall use its best efforts to cause such amendment and/or new Registration
Statement to become effective as soon as practicable, but in any event not later
than 75 days following the applicable Deficiency Filing Deadline (the
"DEFICIENCY EFFECTIVENESS DEADLINE"). For purposes of the foregoing provision,
the number of shares of Common Stock available under the Initial Registration
Statement shall be deemed "insufficient to cover all of the Initial Registrable
Securities" if as of any date of determination, the number of shares of Common
Stock equal to 100% of the number of Initial Warrant Shares issuable as of such
time upon exercise of all the outstanding Initial Warrants is greater than the
number of shares of Common Stock available for resale under the Initial
Registration Statement. The calculations set forth in this paragraph shall be
made without regard to any limitations on the exercise of the Initial Warrants.

                  (ii) In the event the number of shares of Common Stock
available under any Additional Registration Statement filed pursuant to Section
2(a)(ii) is insufficient to cover all of the Additional Registrable Securities
required to be covered by such Additional Registration Statement or an
Investor's allocated portion of the Additional Registrable Securities pursuant
to Section 2(b), the Company shall, as soon as practicable, but in any event not
later than 15 days after the first date on which the number of shares available
under such Additional Registration Statement is so insufficient (an "ADDITIONAL
DEFICIENCY FILING DEADLINE"), amend an Additional Registration Statement, or
file a new Registration Statement (on the short form available therefor, if
applicable), or both, so that there is registered for resale Additional
Registrable Securities consisting of at least that number of shares of Common
Stock equal to 110% of the number of Additional Warrant Shares issuable upon
exercise of all the outstanding Additional Warrants to which the Additional
Registration Statement relates as of the second Trading Day immediately
preceding the date of the filing of the amendment or new Registration Statement
with the SEC. The Company shall use its best efforts to cause such amendment
and/or new Registration Statement to become effective as soon as practicable,
but in any event not later than 75 days following the applicable Additional
Deficiency Filing Deadline (an "ADDITIONAL DEFICIENCY EFFECTIVENESS DEADLINE").
For purposes of the foregoing provision, the number of shares of Common Stock
available under an Additional Registration Statement shall be deemed

                                       6
<PAGE>

"insufficient to cover all of the Additional Registrable Securities" if as of
any date of determination, the number of shares of Common Stock equal to 100% of
the number of Additional Warrant Shares issuable as of such time upon exercise
of all the outstanding Additional Warrants to which the Additional Registration
Statement relates is greater than the number of shares of Common Stock available
for resale under such Additional Registration Statement. The calculations set
forth in this paragraph shall be made without regard to any limitations on the
exercise of the Additional Warrants.

                  (iii) In the event the number of shares of Common Stock
available under any Note Registration Statement filed pursuant to Section
2(a)(iii) is insufficient to cover all of the Note Registrable Securities
relating to each outstanding Note or an Investor's allocated portion of such
Note Registrable Securities pursuant to Section 2(b), the Company shall, as soon
as practicable, but in any event not later than 15 days after the first date on
which the number of shares available under such Note Registration Statement is
so insufficient (the "SUBSEQUENT DEFICIENCY FILING DEADLINE"), amend such Note
Registration Statement, or file a new Registration Statement (on the short form
available therefor, if applicable), or both, so that there is registered for
resale as Note Registrable Securities relating to such Note, that number of
shares of Common Stock equal to (i) 150% of (x) the aggregate principal amount
of such Note, divided by (y) the arithmetic average of the Weighted Average
Price (as defined in the Notes) of the Common Stock on each of the five (5)
consecutive Trading Days ending on the Trading Day immediately preceding the
date of the filing of the amendment or new Registration Statement with the SEC.
The Company shall use its best efforts to cause such amendment and/or new
Registration Statement to become effective as soon as practicable, but in any
event not later than 75 days following the applicable Subsequent Deficiency
Filing Deadline (the "SUBSEQUENT DEFICIENCY EFFECTIVENESS DEADLINE"). For
purposes of the foregoing provision, the number of shares of Common Stock
available under a Note Registration Statement filed pursuant to Section
2(a)(iii) shall be deemed "insufficient to cover all of the Note Registrable
Securities relating to each outstanding Note" if as of any date of
determination, the number of shares of Common Stock equal to 120% of (x) the
aggregate principal amount of each outstanding Notes to which such Note
Registration Statement relates, divided by (y) the arithmetic average of the
Weighted Average Price (as defined in the Notes) of the Common Stock on each of
the five (5) consecutive Trading Days ending on the Trading Day immediately
preceding such date of determination, is greater than the aggregate number of
shares of Common Stock available for resale under any Note Registration
Statements as Registrable Securities relating to such Note. The calculations set
forth in this paragraph shall be made without regard to any limitations on the
conversion of the Notes and such calculations shall assume that the Notes are
then convertible into shares of Common Stock at the then-prevailing Conversion
Price.

      f.    Effect of Failure to File and Obtain and Maintain Effectiveness of
            Registration Statement.

                  (i) If (i) a Registration Statement covering all the Initial
Registrable Securities and required to be filed by the Company pursuant to
Section 2(a)(i) or Section 2(e)(i) of this Agreement is not (A) filed with the
SEC on or before the applicable Filing Deadline or (B) declared effective by the
SEC on or before the applicable Effectiveness Deadline or (ii) on any day after
the Registration Statement has been declared effective by the SEC sales of all
the Initial Registrable Securities required to be included on such Registration
Statement cannot be

                                       7
<PAGE>

made (other than during an Allowable Grace Period (as defined in Section 3(t)))
pursuant to the Registration Statement (including because of a failure to keep
the Registration Statement effective, to disclose such information as is
necessary for sales to be made pursuant to the Registration Statement or to
register sufficient shares of Common Stock as determined in accordance with
Section 2(e)), then, as partial relief for the damages to any holder of the
Initial Warrants by reason of any such delay in or reduction of its ability to
sell the underlying shares of Common Stock (which remedy shall not be exclusive
of any other remedies available at law or in equity), the Company shall pay to
such holder an amount in cash equal to the product of (i) the total Aggregate
Exercise Price (as defined in the Initial Warrants) of all Initial Warrants held
by such holder and to which the Registration Statement relates, multiplied by
(ii) the sum of (A) 0.02, if the Registration Statement is not filed by the
applicable Filing Deadline, plus (B) 0.02, if the Registration Statement is not
declared effective by the applicable Effectiveness Deadline, plus (C) the
product of (I) 0.000667 multiplied by (II) the sum (without duplication) of (x)
the number of days after the applicable Filing Deadline that such Registration
Statement is not filed with the SEC, plus (y) the number of days after the
applicable Effectiveness Deadline that such Registration Statement is not
declared effective by the SEC, plus (z) the number of days after such
Registration Statement has been declared effective by the SEC that such
Registration Statement is not available (other than during an Allowable Grace
Period) for the sale of at least all the Initial Registrable Securities required
to be included and maintained on such Registration Statement pursuant to Section
2(e).

                  (ii) If (i) a Registration Statement covering any Additional
Registrable Securities and required to be filed by the Company pursuant to
Section 2(a)(ii) or Section 2(e)(ii) of this Agreement is not (A) filed with the
SEC on or before the applicable Filing Deadline or (B) declared effective by the
SEC on or before the applicable Effectiveness Deadline or (ii) on any day after
such Registration Statement has been declared effective by the SEC sales of all
the Additional Registrable Securities required to be included on such
Registration Statement cannot be made (other than during an Allowable Grace
Period (as defined in Section 3(t))) pursuant to such Registration Statement
(including because of a failure to keep the Registration Statement effective, to
disclose such information as is necessary for sales to be made pursuant to such
Registration Statement or to register sufficient shares of Common Stock as
determined in accordance with Section 2(e)), then, as partial relief for the
damages to any holder of the Additional Warrants by reason of any such delay in
or reduction of its ability to sell the underlying shares of Common Stock (which
remedy shall not be exclusive of any other remedies available at law or in
equity), the Company shall pay to such holder an amount in cash equal to the
product of (i) the total Aggregate Exercise Price (as defined in the Additional
Warrants) of all Additional Warrants held by such holder and to which the
Registration Statement relates, multiplied by (ii) the sum of (A) 0.02, if the
Registration Statement is not filed by the applicable Filing Deadline, plus (B)
0.02, if the Registration Statement is not declared effective by the applicable
Effectiveness Deadline, plus (C) the product of (I) 0.000667 multiplied by (II)
the sum (without duplication) of (x) the number of days after the applicable
Filing Deadline that such Registration Statement is not filed with the SEC, plus
(y) the number of days after the applicable Effectiveness Deadline that such
Registration Statement is not declared effective by the SEC, plus (z) the number
of days after such Registration Statement has been declared effective by the SEC
that such Registration Statement is not available (other than during an
Allowable Grace Period) for the sale of at least all the Additional Registrable
Securities required to be included and maintained on such Registration Statement
pursuant to Section 2(e).

                                       8
<PAGE>

                  (iii) If (i) a Registration Statement covering all the Note
Registrable Securities and required to be filed by the Company pursuant to
Section 2(a)(iii) or Section 2(e)(iii) of this Agreement is not (A) filed with
the SEC on or before the applicable Filing Deadline or (B) declared effective by
the SEC on or before the applicable Effectiveness Deadline or (ii) on any day
after the Registration Statement has been declared effective by the SEC, sales
of all the Note Registrable Securities required to be included on such
Registration Statement cannot be made (other than during an Allowable Grace
Period (as defined in Section 3(t))) pursuant to the Registration Statement
(including because of a failure to keep the Registration Statement effective, to
disclose such information as is necessary for sales to be made pursuant to the
Registration Statement or to register sufficient shares of Common Stock as
determined in accordance with Section 2(e)), then, as partial relief for the
damages to any holder of the Notes by reason of any such delay in or reduction
of its ability to sell the underlying shares of Common Stock (which remedy shall
not be exclusive of any other remedies available at law or in equity), the
Company shall pay to such holder an amount in cash equal to the product of (i)
the principal amount of the Notes held by such holder, multiplied by (ii) the
sum of (A) 0.02, if the Registration Statement is not filed by the applicable
Filing Deadline, plus (B) 0.02, if the Registration Statement is not declared
effective by the applicable Effectiveness Deadline, plus (C) the product of (I)
0.000667 multiplied by (II) the sum (without duplication) of (x) the number of
days after the applicable Filing Deadline that such Registration Statement is
not filed with the SEC, plus (y) the number of days after the applicable
Effectiveness Deadline that such Registration Statement is not declared
effective by the SEC, plus (z) the number of days after such Registration
Statement has been declared effective by the SEC that such Registration
Statement is not available (other than during an Allowable Grace Period) for the
sale of at least all the Note Registrable Securities required to be included and
maintained on such Registration Statement pursuant to Section 2(e).

                  (iv) If at any time after a Note Registration Statement
covering the resale of Note Registrable Securities filed pursuant to Section
2(a)(iv) has been declared effective by the SEC, sales of any such Note
Registrable Securities that actually have been issued to, and continue to be
held by, any holder of the Notes, or former holder of Notes which were converted
into Note Registrable Securities, cannot be made (other than during an Allowable
Grace Period (as defined in Section 3(t)) or during a time at which such issued
Note Registrable Securities may be sold by such holder pursuant to Rule 144(k)
of the 1933 Act) pursuant to such Registration Statement (including because of a
failure to keep the Registration Statement effective, or to disclose such
information as is necessary for sales to be made pursuant to the Registration
Statement) then, as partial relief for any damages to such holder of the Notes
by reason of the reduction in its ability to sell such Note Registrable
Securities (which remedy shall not be exclusive of any other remedies available
at law or in equity), the Company shall pay to such holder an amount in cash
equal to the product of (i) the aggregate principal amount of the Notes that
were converted into any such Note Registrable Securities, multiplied by (ii) the
product of (I) 0.000667 multiplied by (II) the number of days after such
Registration Statement has been declared effective by the SEC that such
Registration Statement is not available (other than during an Allowable Grace
Period) for the sale of such Note Registrable Securities.

                  (v) The payments to which a holder shall be entitled pursuant
to this Section 2(f) are referred to herein as "REGISTRATION DELAY PAYMENTS."
Registration Delay Payments shall be paid on the earlier of (I) the last day of
the calendar month during which such

                                       9
<PAGE>

Registration Delay Payments are incurred and (II) the third Business Day after
the event or failure giving rise to the Registration Delay Payments is cured. In
the event the Company fails to make Registration Delay Payments in a timely
manner, such Registration Delay Payments shall bear interest at the rate of the
lesser of 1.5% per month (prorated for partial months) or the highest lawful
maximum interest rate, in each case, until paid in full.

3. RELATED OBLIGATIONS.

            At such time as the Company is obligated, or elects, to file a
Registration Statement with the SEC pursuant to Section 2(a) or 2(e), the
Company will use its best efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following obligations:

            a. The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the applicable Registrable Securities
(but in no event later than the applicable Filing Deadline) and use its best
efforts to cause such Registration Statement relating to the Registrable
Securities to become effective as soon as practicable after such filing (but in
no event later than the applicable Effectiveness Deadline). The Company shall
keep each Registration Statement effective pursuant to Rule 415 at all times
until the earlier of (i) the date as of which the Investors may sell all of the
Registrable Securities covered by such Registration Statement without
restriction pursuant to Rule 144(k) (or successor thereto) promulgated under the
1933 Act or (ii) the date on which the Investors shall have sold all the
Registrable Securities covered by such Registration Statement (the "REGISTRATION
PERIOD"). Such Registration Statement (including any amendments or supplements
thereto and prospectuses contained therein) shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading. The term "best efforts"
shall mean, among other things, that the Company shall submit to the SEC, within
two (2) Business Days after the Company learns that no review of a particular
Registration Statement will be made by the staff of the SEC or that the staff
has no further comments on the Registration Statement, as the case may be, a
request for acceleration of effectiveness of such Registration Statement to a
time and date not later than 48 hours after the submission of such request.

            b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep such Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the 1933 Act with respect to the disposition of
all Registrable Securities of the Company covered by such Registration Statement
until such time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the seller or
sellers thereof as set forth in such Registration Statement. In the case of
amendments and supplements to a Registration Statement which are required to be
filed pursuant to this Agreement (including pursuant to this Section 3(b)) by
reason of the Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any
analogous report under the Securities Exchange Act of 1934, as amended (the
"1934 ACT"), the Company shall have incorporated such report by reference into
the Registration Statement, if applicable, or shall file

                                       10

<PAGE>

such amendments or supplements with the SEC on the same day on which the 1934
Act report is filed which created the requirement for the Company to amend or
supplement the Registration Statement.

            c. The Company shall (A) permit Legal Counsel to review and comment
upon (i) the Initial Registration Statement at least five (5) Business Days
prior to its filing with the SEC, (ii) any Additional Registration Statement and
any Note Registration Statement at least three (3) Business Days prior to its
filing with the SEC and (iii) all other Registration Statements and all
amendments and supplements to all Registration Statements (except for Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K and any similar or successor reports) within a reasonable number of days
prior to their filing with the SEC, and (B) not file any document, registration
statement, amendment or supplement described in the foregoing clause (A) in a
form to which Legal Counsel reasonably objects. The Company shall not submit a
request for acceleration of the effectiveness of a Registration Statement or any
amendment or supplement thereto without providing prior notice thereof to Legal
Counsel and each Investor. The Company shall furnish to Legal Counsel, without
charge, (i) promptly after the same is prepared and filed with the SEC, one copy
of any Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference that
have not been filed via EDGAR, and all exhibits and (ii) upon the effectiveness
of any Registration Statement, one copy of the prospectus included in such
Registration Statement and all amendments and supplements thereto. The Company
shall reasonably cooperate with Legal Counsel in performing the Company's
obligations pursuant to this Section 3.

            d. The Company shall furnish to each Investor whose Registrable
Securities are included in any Registration Statement, without charge, (i)
promptly after the same is prepared and filed with the SEC, at least one copy of
such Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference that
have not been filed via EDGAR, all exhibits and each preliminary prospectus,
(ii) upon the effectiveness of any Registration Statement, ten (10) copies of
the prospectus included in such Registration Statement and all amendments and
supplements thereto (or such other number of copies as such Investor may
reasonably request) and (iii) such other documents, including copies of any
preliminary or final prospectus, as such Investor may reasonably request from
time to time in order to facilitate the disposition of the Registrable
Securities owned by such Investor.

            e. The Company shall use its best efforts to (i) register and
qualify, unless an exemption from registration and qualification applies, the
resale by the Investors of the Registrable Securities covered by a Registration
Statement under the securities or "blue sky" laws of all the states of the
United States, (ii) prepare and file in those jurisdictions, such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (x) qualify to do business in any
jurisdiction where it would not

                                       11

<PAGE>

otherwise be required to qualify but for this Section 3(e) or (y) subject itself
to general taxation in any such jurisdiction. The Company shall promptly notify
Legal Counsel and each Investor who holds Registrable Securities of the receipt
by the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or "blue sky" laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threatening of any
proceeding for such purpose.

            f. The Company shall notify Legal Counsel and each Investor in
writing of the happening of any event, as promptly as practicable after becoming
aware of such event, as a result of which the prospectus included in a
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (provided that in no event shall such
notice contain any material, nonpublic information), and promptly prepare a
supplement or amendment to such Registration Statement to correct such untrue
statement or omission, and deliver ten (10) copies of such supplement or
amendment to Legal Counsel and each Investor (or such other number of copies as
Legal Counsel or such Investor may reasonably request). The Company shall also
promptly notify Legal Counsel and each Investor in writing (i) when a prospectus
or any prospectus supplement or post-effective amendment has been filed, and
when a Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered to Legal
Counsel and each Investor by facsimile on the same day of such effectiveness and
by overnight mail), (ii) of any request by the SEC for amendments or supplements
to a Registration Statement or related prospectus or related information, and
(iii) of the Company's reasonable determination that a post-effective amendment
to a Registration Statement would be appropriate.

            g. The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement,
or the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction and, if such an order or suspension is issued, to
obtain the withdrawal of such order or suspension at the earliest possible
moment and to notify Legal Counsel and each Investor who holds Registrable
Securities being sold of the issuance of such order and the resolution thereof
or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.

            h. At the reasonable request (in the context of the securities laws)
of any Investor, the Company shall furnish to such Investor, on the date of the
effectiveness of the Registration Statement and thereafter from time to time on
such dates as an Investor may reasonably request (i) a letter, dated such date,
from the Company's independent certified public accountants in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the Investors, and
(ii) an opinion, dated as of such date, of counsel representing the Company for
purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
Investors; provided that such Investor shall reimburse the Company for its
out-of-pocket expenses incurred in connection with the furnishing of any such
letter and opinion.

            i. At the reasonable request (in the context of the securities laws)
of any Investor, the Company shall make available for inspection during regular
business hours by (i) any Investor, (ii) Legal Counsel and (iii) one firm of
accountants or other agents retained by the

                                       12

<PAGE>

Investors (collectively, the "INSPECTORS"), all pertinent financial and other
records, and pertinent corporate documents and properties of the Company
(collectively, the "RECORDS"), as shall be reasonably deemed necessary by each
Inspector, and cause the Company's officers, directors and employees to supply
all information which any Inspector may reasonably request; provided, however,
that each Inspector shall agree to hold in strict confidence and shall not make
any disclosure (except to an Investor) or use of any Record or other information
which the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement or is otherwise required under the 1933 Act, (b) the
release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement of which
the Inspector has knowledge. Each Investor agrees that it shall, upon learning
that disclosure of such Records is sought in or by a court or governmental body
of competent jurisdiction or through other means, give prompt notice to the
Company and allow the Company, at its expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, the Records
deemed confidential. Each Inspector which exercises its rights under this
Section 3(i) shall be obligated to execute a non-disclosure agreement containing
such reasonable terms as the Company may request. The fees and expenses of the
Inspectors shall be borne by the applicable Investor.

            j. The Company shall hold in confidence and not make any disclosure
of information concerning an Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Investor and allow such Investor, at the Investor's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.

            k. The Company shall use its best efforts to (i) cause all the
Registrable Securities covered by a Registration Statement to be listed on each
securities exchange on which securities of the same class or series issued by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) secure
designation and quotation of all the Registrable Securities covered by the
Registration Statement on The NASDAQ National Market System, or (iii) if,
despite the Company's best efforts to satisfy the preceding clause (i) or (ii),
the Company is unsuccessful in satisfying the preceding clause (i) or (ii), to
secure the inclusion for quotation on The NASDAQ SmallCap Market for such
Registrable Securities and, without limiting the generality of the foregoing, to
arrange for at least two market makers to register with the National Association
of Securities Dealers, Inc. ("NASD") as such with respect to such Registrable
Securities. The Company shall pay all fees and expenses in connection with
satisfying its obligation under this Section 3(k).

            l. The Company shall cooperate with the Investors who hold
Registrable

                                       13

<PAGE>

Securities being offered and, to the extent applicable, facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legend)
representing the Registrable Securities to be offered pursuant to a Registration
Statement and enable such certificates to be in such denominations or amounts,
as the case may be, as the Investors may reasonably request and registered in
such names as the Investors may request.

            m. The Company shall provide a transfer agent and registrar of all
such Registrable Securities not later than the effective date of the applicable
Registration Statement.

            n. If requested by an Investor, the Company shall (i) as soon as
practicable incorporate in a prospectus supplement or post-effective amendment
such information as an Investor requests to be included therein relating to the
sale and distribution of Registrable Securities, including information with
respect to the number of Registrable Securities being offered or sold, the
purchase price being paid therefor and any other terms of the offering of the
Registrable Securities to be sold in such offering; (ii) as soon as practicable
make all required filings of such prospectus supplement or post-effective
amendment after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment; and (iii) as soon as
practicable, supplement or make amendments to any Registration Statement if
reasonably requested by an Investor of such Registrable Securities.

            o. The Company shall use its best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities in the
United States as may be necessary to consummate the disposition of such
Registrable Securities.

            p. The Company shall make generally available to its security
holders as soon as practical, but not later than 90 days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the 1933 Act) covering a twelve-month period
beginning not later than the first day of the Company's fiscal quarter next
following the effective date of a Registration Statement.

            q. Within two (2) Business Days after a Registration Statement which
covers applicable Registrable Securities is ordered effective by the SEC, the
Company shall deliver, and shall cause legal counsel for the Company to deliver,
to the transfer agent for such Registrable Securities (with copies to the
Investors whose Registrable Securities are included in such Registration
Statement) confirmation that such Registration Statement has been declared
effective by the SEC in substantially the form attached hereto as Exhibit A,
provided that if the Company changes its transfer agent, it shall immediately
deliver any previously delivered notices under this Section 3(r) and any
subsequent notices to such new transfer agent.

            r. The Company shall make such filings with the National Association
of Securities Dealers, Inc. (including providing all required information and
paying required fees thereto) as and when requested by an Investor and make all
other filings reasonably necessary for Investors to sell Registrable Securities
pursuant to a Registration Statement.

            s. Notwithstanding anything to the contrary in Section 3(f), at any
time after the applicable Registration Statement has been declared effective by
the SEC, the Company may delay the disclosure of material non-public information
concerning the Company the disclosure of which at the time is not, in the good
faith opinion of the Board of Directors of the Company and its counsel, in the
best interest of the Company and, in the opinion of counsel to the

                                       14

<PAGE>

Company, otherwise required (a "GRACE PERIOD"); provided, that the Company shall
promptly (i) notify the Investors in writing of the existence of material
non-public information giving rise to a Grace Period (provided that in each
notice the Company shall not disclose the content of such material non-public
information to the Investors) and the date on which the Grace Period will begin,
and (ii) notify the Investors in writing of the date on which the Grace Period
ends; and, provided further, that no Grace Period shall exceed 20 consecutive
days and during any 365 day period such Grace Periods shall not exceed an
aggregate of 40 days and the first day of any Grace Period must be at least two
(2) Trading Days after the last day of any prior Grace Period (an "ALLOWABLE
GRACE PERIOD"). For purposes of determining the length of a Grace Period above,
the Grace Period shall begin on and include the date the holders receive the
notice referred to in clause (i) and shall end on and include the later of the
date the holders receive the notice referred to in clause (ii) and the date
referred to in such notice. The provisions of Section 3(g) hereof shall not be
applicable during the period of any Allowable Grace Period. Upon expiration of
the Grace Period, the Company shall again be bound by the first sentence of
Section 3(f) with respect to the information giving rise thereto unless such
material non-public information is no longer applicable.

4. OBLIGATIONS OF THE INVESTORS.

            a. At least six (6) Business Days prior to the first anticipated
filing date of a Registration Statement and at least five (5) Business Days
prior to the filing of any amendment or supplement to a Registration Statement,
the Company shall notify each Investor in writing of the information, if any,
the Company requires from each such Investor if such Investor elects to have any
of such Investor's Registrable Securities included in such Registration
Statement or, with respect to an amendment or a supplement, if such Investor's
Registrable Securities are included in such Registration Statement (each an
"INFORMATION REQUEST"). Provided that the Company shall have complied with its
obligations set forth in the preceding sentence, it shall be a condition
precedent to the obligations of the Company to complete the registration
pursuant to this Agreement with respect to the Registrable Securities of a
particular Investor that such Investor shall furnish to the Company, in response
to an Information Request, such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request.

            b. Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of any Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from such Registration Statement.

            c. Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(g) or
the first sentence of 3(f) or written notice from the Company of a Grace Period,
such Investor will immediately discontinue disposition of Registrable Securities
pursuant to any Registration Statement(s) covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(g) or the first sentence of 3(f) or receipt
of notice that no

                                       15

<PAGE>

supplement or amendment is required or that the Grace Period has ended.
Notwithstanding anything to the contrary, the Company shall cause its transfer
agent to deliver unlegended shares of Common Stock to a transferee of an
Investor in accordance with the terms of the Securities Purchase Agreement in
connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale prior to the Investor's receipt of
a notice from the Company of the happening of any event of the kind described in
Section 3(g) or the first sentence of 3(f) and for which the Investor has not
yet settled.

5. EXPENSES OF REGISTRATION.

            All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including all registration, listing
and qualifications fees, printers and accounting fees, and fees and
disbursements of counsel for the Company shall be paid by the Company, except as
provided in Section 3(h). The Company shall also reimburse the Investors for the
reasonable fees and disbursements of Legal Counsel in connection with
registration, filing or qualification pursuant to Sections 2 and 3 of this
Agreement.

6.       INDEMNIFICATION.

            In the event any Registrable Securities are included in a
Registration Statement under this Agreement:

            a. To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each Investor, the directors,
officers, partners, employees, agents, representatives of, and each Person, if
any, who controls any Investor within the meaning of the 1933 Act or the 1934
Act (each, an "INDEMNIFIED PERSON"), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys'
fees, amounts paid in settlement or expenses, joint or several, (collectively,
"CLAIMS") incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("INDEMNIFIED DAMAGES"), to which any of them
may become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or in any filing
made in connection with the qualification of the offering under the securities
or other "blue sky" laws of any jurisdiction in which Registrable Securities are
offered ("BLUE SKY FILING"), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) any untrue statement or alleged untrue statement of
a material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, (iii) any violation or alleged violation

                                       16

<PAGE>

by the Company of the 1933 Act, the 1934 Act, any other law, including any state
securities law, or any rule or regulation thereunder relating to the offer or
sale of the Registrable Securities pursuant to a Registration Statement or (iv)
any material violation of this Agreement by the Company (the matters in the
foregoing clauses (i) through (iv) being, collectively, "VIOLATIONS"). Subject
to Section 6(c), the Company shall reimburse the Indemnified Persons, promptly
as such expenses are incurred and are due and payable, for any legal fees or
other reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim by an Indemnified Person arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person for such
Indemnified Person expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto, if
such prospectus was timely made available by the Company pursuant to Section
3(d); (ii) with respect to any preliminary prospectus, shall not inure to the
benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented, if such prospectus was
timely made available by the Company pursuant to Section 3(d), and the
Indemnified Person was promptly advised in writing not to use the incorrect
preliminary prospectus prior to the use giving rise to a violation and such
Indemnified Person, notwithstanding such advice, used it; (iii) shall not be
available to the extent such Claim is based on a failure of the Investor to
deliver or to cause to be delivered the prospectus made available by the
Company, if such prospectus was timely made available by the Company pursuant to
Section 3(d); and (iv) shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.

            b. In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to severally and not
jointly indemnify, hold harmless and defend, to the same extent and in the same
manner as is set forth in Section 6(a), the Company, each of its directors, each
of its officers who signs the Registration Statement, and each Person, if any,
who controls the Company within the meaning of the 1933 Act or the 1934 Act
(each an "INDEMNIFIED PARTY"), against any Claim or Indemnified Damages to which
any of them may become subject, under the 1933 Act, the 1934 Act or otherwise,
insofar as such Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case to the extent, and only to the extent, that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in connection with
such Registration Statement; and, subject to Section 6(c), such Investor will
reimburse any legal or other expenses reasonably incurred by an Indemnified
Party in connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section 6(b) and the
agreement with respect to contribution contained in Section 7 shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of such Investor, which consent shall not be
unreasonably withheld; provided, further, however, that the aggregate liability
of the Investor in connection with any Violation

                                       17

<PAGE>

shall not exceed the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to the Registration Statement giving rise to
such Claim. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investors pursuant to
Section 9. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Party
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.

            c. Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a Claim,
such Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be. In any such proceeding, any
Indemnified Person or Indemnified Party may retain its own counsel, but, except
as provided in the following sentence, the fees and expenses of that counsel
will be at the expense of that Indemnified Person or Indemnified Party, as the
case may be, unless (i) the indemnifying party and the Indemnified Person or
Indemnified Party, as applicable, shall have mutually agreed to the retention of
that counsel, (ii) the indemnifying party does not assume the defense of such
proceeding in a timely manner or (iii) in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel for the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding. The Company shall pay reasonable fees for up to one
separate legal counsel for the Investors, and such legal counsel shall be
selected by the Investors holding at least two-thirds (2/3) in interest of the
Registrable Securities included in the Registration Statement to which the Claim
relates. The Indemnified Party or Indemnified Person shall cooperate fully with
the indemnifying party in connection with any negotiation or defense of any such
action or Claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Indemnified Party or
Indemnified Person which relates to such action or Claim. The indemnifying party
shall keep the Indemnified Party or Indemnified Person fully apprised at all
times as to the status of the defense or any settlement negotiations with
respect thereto. No indemnifying party shall be liable for any settlement of any
action, claim or proceeding effected without its prior written consent,
provided, however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent. No indemnifying party shall, without the prior
written consent of the Indemnified Party or Indemnified Person, consent to entry
of any judgment or enter into any settlement or other compromise with respect to
any pending or threatened action or claim in respect of which indemnification or
contribution may be or has been sought hereunder (whether or not the Indemnified
Party or Indemnified Person is an actual or potential party to such action or
claim), which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified Person of a
release from all liability in respect to such

                                       18

<PAGE>

Claim or litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party or
Indemnified Person with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action.

            d. The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.

            e. The indemnity agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.

7. CONTRIBUTION.

            To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no Person involved in the sale of Registrable Securities which Person is
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) in connection with such sale, shall be entitled to contribution
from any Person involved in such sale of Registrable Securities who was not
guilty of fraudulent misrepresentation; and (ii) contribution by any seller of
Registrable Securities shall be limited to an amount equal to the net amount of
proceeds received by such seller from the sale of such Registrable Securities
pursuant to the Registration Statement giving rise to such action or claim for
indemnification less the amount of any damages that such seller has otherwise
been required to pay in connection with such sale.

8. REPORTS UNDER THE 1934 ACT.

            With a view to making available to the Investors the benefits of
Rule 144 promulgated under the 1933 Act or any other similar rule or regulation
of the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees to:

            a. make and keep public information available, as those terms are
understood and defined in Rule 144;

            b. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements (it being understood that
nothing herein shall limit the Company's obligations under Section 4(c) of the
Securities Purchase Agreement) and the filing of such

                                       19

<PAGE>

reports and other documents is required for the applicable provisions of Rule
144; and

            c. furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon written request, (i) a written statement
by the Company that it has complied with the reporting requirements of Rule 144,
the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.

9. ASSIGNMENT OF REGISTRATION RIGHTS.

            The rights under this Agreement shall be automatically assignable by
the Investors to any transferee of all or any portion of Registrable Securities
if: (i) the Investor agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company within
five (5) Business Days after such transfer or assignment; (ii) the Company is,
within five (5) Business Days after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee, and
(b) the securities with respect to which such registration rights are being
transferred or assigned; (iii) immediately following such transfer or assignment
the further disposition of such securities by the transferee or assignee is
restricted under the 1933 Act and applicable state securities laws; (iv) at or
before the time the Company receives the written notice contemplated by clause
(ii) of this sentence, the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained herein; and (v) such
transfer shall have been made in accordance with the applicable requirements of
the Securities Purchase Agreement.

10. AMENDMENT OF REGISTRATION RIGHTS.

            Provisions of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investors who then hold at least two-thirds (2/3) of the Registrable
Securities. Any amendment or waiver effected in accordance with this Section 10
shall be binding upon each Investor and the Company. No such amendment shall be
effective to the extent that it applies to less than all of the holders of the
Registrable Securities. No consideration shall be offered or paid to any Person
to amend or consent to a waiver or modification of any provision of any of this
Agreement unless the same consideration also is offered to all of the parties to
this Agreement.

11. MISCELLANEOUS.

            a. A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from the registered owner of such Registrable Securities.

            b. Any notices, consents, waivers or other communications required
or

                                       20

<PAGE>

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

      If to the Company:

               Infinity, Inc.
               1401 West Main Street
               Suite C
               Chanute, Kansas   66720
               Telephone: (620) 431-6200
               Facsimile: (620) 431-6262
               Attention: Chief Executive Officer

      and
               Infinity, Inc.
               950 17th Street
               Suite 800
               Denver, Colorado 80202
               Telephone: (720) 932-7800
               Facsimile: (720) 932-5409
               Attention: Senior Vice President

      With a copy to:

               Davis Graham & Stubbs, LLP
               1550 Seventeenth Street, Suite 500
               Denver, Colorado 80202
               Telephone: (303) 892-9400
               Facsimile: (303) 893-1379
               Attention: Deborah Friedman, Esq.

      If to Legal Counsel:

               Katten Muchin Zavis Rosenman
               525 West Monroe Street
               Chicago, Illinois 60661-3693
               Telephone: (312) 902-5200
               Facsimile: (312) 902-1061
               Attention: Mark D. Wood, Esq.

      If to a Buyer, to its address and facsimile number set forth on the
Schedule of Buyers attached hereto, with copies to such Buyer's representatives
as set forth on the Schedule of

                                       21

<PAGE>

Buyers, or if, in the case of a Buyer or other party named above, to such other
address and/or facsimile number and/or to the attention of such other person as
the recipient party has specified by written notice given to each other party at
least five (5) days prior to the effectiveness of such change.

      If to an Investor (other than a Buyer), to such Investor at the address
and/or facsimile number reflected in the records of the Company. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated by
the sender's facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided by a
courier or overnight courier service shall be rebuttable evidence of personal
service, receipt by facsimile or deposit with a nationally recognized overnight
delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.

            c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

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

            e. This Agreement and the other Transaction Documents constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein. This
Agreement and the other Transaction Documents supersede all prior

                                       22
<PAGE>

agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.

            f. Subject to the requirements of Section 9, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto.

            g. The headings in this Agreement are for convenience of reference

only and shall not limit or otherwise affect the meaning hereof.

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

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

            j. All consents and other determinations to be made by the Investors
pursuant to this Agreement shall be made, unless otherwise specified in this
Agreement, by Investors holding at least two-thirds (2/3) of the Registrable
Securities, determined as if all of the Notes and the Warrants then outstanding
have been converted into or exercised for Registrable Securities without regard
to any limitations on conversion of the Notes or the exercise of the Warrants.
Any consent or other determination approved by Investors as provided in the
immediately preceding sentence shall be binding on all Investors.

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

            l. This Agreement is intended for the benefit of the parties hereto
and their respective permitted successors and assigns, and, to the extent
provided in Sections 6(a) and 6(b) hereof, each Investor, the directors,
officers, partners, employees, agents, representatives of, and each Person, if
any who controls any Investor within the meaning of the 1933 Act and the 1934
Act and each of the Company's directors, each of the Company's officers who
signs the Registration Statement, and each Person, if any, who controls the
Company within the meaning of the 1933 Act and the 1934 Act, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.

            m. Unless the context otherwise requires, (a) all references to
Sections, Schedules or Exhibits are to Sections, Schedules or Exhibits contained
in or attached to this Agreement, (b) each accounting term not otherwise defined
in this Agreement has the meaning assigned to it in accordance with GAAP, (c)
words in the singular or plural include the singular and plural and pronouns
stated in either the masculine, the feminine or neuter gender shall

                                       23
<PAGE>

include the masculine, feminine and neuter and (d) the use of the word
"including" in this Agreement shall be by way of example rather than limitation.

                                   * * * * * *

                                       24
<PAGE>

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

COMPANY:                                BUYERS:

INFINITY, INC.                          HFTP INVESTMENT L.L.C.
                                        By: Promethean Asset Management L.L.C.
                                        Its: Investment Manager

By: /s/ James A. Tuell
    -----------------------------
       Name:  James A. Tuell
       Title: Senior Vice President     By: /s/ Robert J. Brantman
                                            ------------------------------------
                                               Name:  Robert J. Brantman
                                               Title: Partner and Authorized
                                                      Signatory

                                        AG DOMESTIC CONVERTIBLES, L.P.
                                        By: Angelo, Gordon & Co., L.P.
                                            Managing Member of the General
                                            Partner

                                        By: /s/ Joseph R. Wekselblatt
                                            ------------------------------------
                                            Name:  Joseph R. Wekselblatt
                                            Title: Authorized Person

                                        AG OFFSHORE CONVERTIBLES, LTD.
                                        By:  Angelo, Gordon & Co., L.P.
                                             Director

                                        By: /s/ Joseph R. Wekselblatt
                                            ------------------------------------
                                            Name:  Joseph R. Wekselblatt
                                            Title: Authorized Person

<PAGE>

                               SCHEDULE OF BUYERS
<TABLE>
<CAPTION>
                                            INVESTOR ADDRESS                    INVESTOR'S LEGAL REPRESENTATIVE'S
        INVESTOR'S NAME                   AND FACSIMILE NUMBER                   ADDRESS AND FACSIMILE NUMBER
<S>                               <C>                                     <C>
HFTP Investment L.L.C.            c/o Promethean Asset Management L.L.C.  Katten Muchin Zavis Rosenman
                                  750 Lexington Avenue, 22nd Floor        525 W. Monroe Street
                                  New York, New York 10022                Chicago, Illinois 60661-3693
                                  Attention: Robert J. Brantman           Attention: Mark D. Wood, Esq.
                                  Telephone: 212-702-5200                 Telephone: (312) 902-5200
                                  Facsimile: (212) 758-9620               Facsimile: (312) 902-1061

AG Domestic Convertibles, L.P.    c/o Angelo, Gordon & Co.                Paul, Weiss, Rifkind, Wharton & Garrison LLP
                                  245 Park Avenue                         1285 Avenue of the Americas
                                  New York, New York 10167                New York, New York 10019-6064
                                  Attention: Gary I. Wolf                 Attention: Douglas A. Cifu, Esq.
                                  Telephone: (212) 692-2058               Telephone: (212) 373-3000
                                  Facsimile: (212) 867-6449               Facsimile: (212) 759-3990
                                  Residence: Delaware

AG Offshore Convertibles, Ltd.    c/o Angelo, Gordon & Co.                Paul, Weiss, Rifkind, Wharton & Garrison LLP
                                  245 Park Avenue                         1285 Avenue of the Americas
                                  New York, New York 10167                New York, New York 10019-6064
                                  Attention: Gary I. Wolf                 Attention: Douglas A. Cifu, Esq.
                                  Telephone: (212) 692-2058               Telephone: (212) 373-3000
                                  Facsimile: (212) 867-6449               Facsimile: (212) 759-3990
                                  Residence: British Virgin Islands
</TABLE>

<PAGE>

                                                                       EXHIBIT A

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

[TRANSFER AGENT]
ATTN:___________________

            RE:      INFINITY, INC.

Ladies and Gentlemen:

      We are counsel to Infinity, Inc., a Colorado corporation (the "COMPANY"),
and have represented the Company in connection with that certain Securities
Purchase Agreement (the "PURCHASE AGREEMENT") entered into by and among the
Company and the buyers named therein (collectively, the "HOLDERS") pursuant to
which the Company issued to the Holders senior secured notes (the "INITIAL
NOTES"), convertible into shares of the Company's common stock, $0.0001 par
value per share (the "COMMON STOCK"), and warrants to purchase an aggregate of
_________ shares of Common Stock, subject to adjustment (the "INITIAL
WARRANTS"), and pursuant to which the Company has the option to issue to the
Holders additional senior secured notes (such additional notes together with the
Initial Notes, the "NOTES"), convertible into shares of Common Stock and
additional warrants to purchase shares of Common Stock, subject to adjustment
(such additional warrants together with the Initial Warrants, the "WARRANTS"),
as set forth in, and subject to the terms and conditions of, the Securities
Purchase Agreement. Pursuant to the Purchase Agreement, the Company also has
entered into a Registration Rights Agreement with the Holders (the "REGISTRATION
RIGHTS AGREEMENT") pursuant to which the Company agreed, among other things, to
register the Registrable Securities (as defined in the Registration Rights
Agreement), including the shares of Common Stock issuable upon exercise of the
Warrants and conversion of the Notes, under the Securities Act of 1933, as
amended (the "1933 ACT"). In connection with the Company's obligations under the
Registration Rights Agreement, on ____________ ___, 200_, the Company filed a
Registration Statement on Form S-3 (File No. 333-_____________) (the
"REGISTRATION STATEMENT") with the Securities and Exchange Commission (the
"SEC") relating to ________ Registrable Securities (subject to adjustment)
issued or issuable upon [EXERCISE OF WARRANTS ISSUED ON ________ __, 200_] [AND]
[CONVERSION OF NOTES DATED ______ __, 200_], which names each of the Holders as
a selling stockholder thereunder.

<PAGE>

      In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.

                                             Very truly yours,

                                             [ISSUER'S COUNSEL]

                                             By:______________________________

cc: [LIST NAMES OF HOLDERS]

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