FORM OF CONVERTIBLE NOTE

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Exhibit 10.2

[FORM OF CONVERTIBLE NOTE]

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE

NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE 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 IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE

SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE

SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL ADDRESSED TO THE COMPANY, IN A

GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR

APPLICABLE STATE SECURITIES LAWS. 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 SECTIONS 3(C)(III) AND

16(A) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY,

THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET

FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(C)(III) OF THIS NOTE.

CONVERTIBLE NOTE

Issuance Date: December 31, 2002 Principal: U.S. $_________

FOR VALUE RECEIVED, VIEWPOINT CORPORATION, a Delaware corporation (the

"COMPANY"), hereby promises to pay to the order of _____________, or registered

assigns ("HOLDER") the amount set out above as the Principal (as reduced

pursuant to the terms hereof pursuant to redemption, conversion or otherwise,

the "PRINCIPAL") when due, whether upon the Maturity Date (as defined below),

acceleration, redemption or otherwise (in each case in accordance with the terms

hereof) and to pay interest ("INTEREST") on any outstanding Principal at the

rate of 4.95% per annum, subject to periodic adjustment pursuant to Section 2

(the "INTEREST RATE"), from the date set out above as the Issuance Date (the

"ISSUANCE DATE") until the same becomes due and payable, whether upon an

Interest Date (as defined below), the Maturity Date (as defined below),

acceleration, conversion, redemption or otherwise (in each case in accordance

with the terms hereof). This Convertible Note (including all Convertible Notes

issued in exchange, transfer or replacement hereof, this "NOTE") is one of an

issue of Convertible Notes (collectively, the "NOTES" and such other Convertible

Notes, the "OTHER NOTES") issued on the Issuance Date pursuant to the Securities

Purchase Agreement (as defined below). Certain capitalized terms are defined in

Section 29.

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(1) MATURITY. On the Maturity Date, the Holder shall surrender

this Note to the Company and the Company shall pay to the Holder an amount in

cash representing all outstanding Principal, accrued and unpaid Interest and

accrued and unpaid Late Charges, if any. The "MATURITY DATE" shall be December

31, 2007 as extended at the option of the Holder (i) in the event that, and for

so long as, an Event of Default (as defined in Section 4(a)) shall have occurred

and be continuing or any event shall have occurred and be continuing which with

the passage of time and the failure to cure would result in an Event of Default

and (ii) through the date that is ten days after the consummation of a Change of

Control (as defined in Section 5(a)) in the event that a Change of Control is

publicly announced or a Change of Control Notice (as defined in Section 5(a)) is

delivered prior to the Maturity Date.

(2) INTEREST; INTEREST RATE. Interest on this Note shall

commence accruing on the Issuance Date and shall be computed on the basis of a

365-day year and actual days elapsed and shall be payable in arrears on the

first day of each Calendar Quarter during the period beginning on the Issuance

Date and ending on, and including, the Maturity Date (each, an "INTEREST DATE")

with the first Interest Date being April 1, 2003. Interest shall be payable on

each Interest Date in cash or, at the option of the Company, in shares of Common

Stock ("INTEREST SHARES") provided that the Interest which accrued during any

period shall be payable in Interest Shares only if the Company delivers written

notice of such election ("INTEREST ELECTION NOTICE") to each holder of the Notes

and the Separate Tranche Notes at least seven (7) Trading Days prior to the

Interest Date (an "INTEREST ELECTION DATE"). Interest to be paid on an Interest

Date in Interest Shares shall be paid in a number of fully paid and

nonassessable shares (rounded to the nearest whole share in accordance with

Section 3(a)) of Common Stock equal to the quotient of (a) the Interest payable

and (b) the Interest Conversion Price on the applicable Interest Date. If any

Interest Shares are to be paid on an Interest Date, then the Company shall (X)

issue and deliver on the applicable Interest Date, to such address as specified

by the Holder in writing to the Company at least two Business Days prior to the

applicable Interest Date, a certificate, registered in the name of the Holder or

its designee, for the number of Interest Shares to which the Holder shall be

entitled, or (Y) provided that the Company's transfer agent (the "TRANSFER

AGENT") is participating in the Depository Trust Company ("DTC") Fast Automated

Securities Transfer Program, upon the request of the Holder, credit such

aggregate number of Interest 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. Notwithstanding the foregoing, the Company

shall not be entitled to pay Interest in Interest Shares and shall be required

to pay such Interest in cash on the applicable Interest Date if (x) any event

constituting an Event of Default or an event that with the passage of time and

assuming it were not cured would constitute an Event of Default has occurred and

is continuing on the applicable Interest Election Date or the Interest Date,

unless consented to in writing by the Holder, (y) the Registration Statement (as

defined in the Registration Rights Agreement) covering the Interest Shares is

not effective and available for the resale of all of the Registrable Securities

(as defined in the Registration Rights Agreement) relating to this Note on the

Interest Election Date or on the Interest Date or (z) the Company has not

obtained the Stockholder Approval (as defined in the

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Securities Purchase Agreement) prior to the Interest Election Date. Prior to the

payment of Interest on an Interest Date, Interest on this Note shall accrue at

the Interest Rate and be payable upon conversion by way of inclusion of the

Interest in the Conversion Amount in accordance with Section 3(b)(i). From and

after the occurrence of an Event of Default, the Interest Rate shall be

increased to 12%. In the event that such Event of Default is subsequently cured,

the adjustment referred to in the preceding sentence shall cease to be effective

as of the date of such cure; provided that the Interest as calculated at such

increased rate during the continuance of such Event of Default shall continue to

apply to the extent relating to the days after the occurrence of such Event of

Default through and including the date of cure of such Event of Default. The

Company shall pay any and all documentary stamp, transfer or similar taxes that

may be payable with respect to the issuance and delivery of Interest Shares.

(3) CONVERSION OF NOTES. This Note shall be convertible into

shares of the Company's common stock, par value $0.001 per share (the "COMMON

STOCK"), on the terms and conditions set forth in this Section 3.

(a) Conversion Right. Subject to the provisions of

Section 3(d), at any time or times on or after the Issuance Date, the Holder

shall be entitled to convert any portion of the outstanding and unpaid

Conversion Amount (as defined below) into fully paid and nonassessable shares of

Common Stock in accordance with Section 3(c), at the Conversion Rate (as defined

below). The Company shall not issue any fraction of a share of Common Stock upon

any conversion. If the issuance would result in the issuance of a fraction of a

share of Common Stock, the Company shall round such fraction of a share of

Common Stock up to the nearest whole share. The Company shall pay any and all

documentary stamp, transfer or similar taxes that may be payable with respect to

the issuance and delivery of Common Stock upon conversion of any Conversion

Amount.

(b) Conversion Rate. The number of shares of Common

Stock issuable upon conversion of any Conversion Amount pursuant to Section 3(a)

shall be determined by dividing (x) such Conversion Amount by (y) the Conversion

Price (as defined below) (the "CONVERSION RATE").

(i) "CONVERSION AMOUNT" means the sum of (A) the portion of the

Principal to be converted, redeemed or otherwise with respect to which

this determination is being made, (B) accrued and unpaid Interest with

respect to such Principal and (C) accrued and unpaid Late Charges with

respect to such Principal and Interest.

(ii) "CONVERSION PRICE" means, as of any Conversion Date (as defined

below) or other date of determination, and subject to adjustment as

provided herein, $2.26.

(c) Mechanics of Conversion.

(i) Optional Conversion. To convert any Conversion Amount into shares of

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Common Stock on any date (a "CONVERSION Date"), the Holder shall (A)

transmit by facsimile (or otherwise deliver), for receipt on or prior to

11:59 p.m., New York Time, on such date, a copy of an executed notice of

conversion in the form attached hereto as Exhibit I (the "CONVERSION

NOTICE") to the Company and (B) if required by Section 3(c)(iii),

surrender this Note to a common carrier for delivery to the Company as

soon as practicable on or following such date (or an indemnification

undertaking with respect to this Note in the case of its loss, theft or

destruction). On or before the first Business Day following the date of

receipt of a Conversion Notice, the Company shall transmit by facsimile

a confirmation of receipt of such Conversion Notice to the Holder and

the Transfer Agent. On or before the second Business Day following the

date of receipt of a Conversion Notice (the "SHARE DELIVERY DATE"), the

Company shall (X) 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 of Common Stock to which the

Holder shall be entitled, or (Y) provided that the Transfer Agent is

participating in DTC Fast Automated Securities Transfer Program, upon

the request of the Holder, credit such aggregate number of shares of

Common Stock 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. If this Note is physically surrendered for

conversion as required by Section 3(c)(iii) and the outstanding

Principal of this Note is greater than the Principal portion of the

Conversion Amount being converted, then the Company shall as soon as

practicable and in no event later than three Business Days after receipt

of this Note and at its own expense, issue and deliver to the holder a

new Note (in accordance with Section 19(d)) representing the outstanding

Principal not converted. The Person or Persons entitled to receive the

shares of Common Stock issuable upon a conversion of this Note shall be

treated for all purposes as the record holder or holders of such shares

of Common Stock on the Conversion Date.

(ii) Company's Failure to Timely Convert. If the Company shall fail to

issue a certificate to the Holder or credit the Holder's balance account

with DTC for the number of shares of Common Stock to which the Holder is

entitled upon conversion of any Conversion Amount on or prior to the

date which is five Business Days after the Conversion Date (a

"CONVERSION FAILURE"), then (A) the Company shall pay damages to the

Holder for each date of such Conversion Failure in an amount equal to

1.0% of the product of (I) the sum of the number of shares of Common

Stock not issued to the Holder on or prior to the Share Delivery Date

and to which the Holder is entitled, and (II) the Closing Sale Price of

the Common Stock on the Share Delivery Date and (B) the Holder, upon

written notice to the Company, may void its Conversion Notice with

respect to, and retain or have returned, as the case may be, any portion

of this Note that has not been converted pursuant to such Conversion

Notice; provided that the voiding of a Conversion Notice shall not

affect the Company's obligations to make any payments which have accrued

prior to the date of such notice pursuant to this Section 3(c)(ii) or

otherwise.

(iii) Book-Entry. Notwithstanding anything to the contrary set forth

herein, upon

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conversion of any portion of this Note in accordance with the terms

hereof, the Holder shall not be required to physically surrender this

Note to the Company unless (A) the full Conversion Amount represented by

this Note is being converted or (B) the Holder has provided the Company

with prior written notice (which notice may be included in a Conversion

Notice) requesting physical surrender and reissue of this Note. The

Holder and the Company shall maintain records showing the Principal,

Interest, and Late Charges converted and the dates of such conversions

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 conversion.

(iv) Pro Rata Conversion; Disputes. In the event that the Company

receives a Conversion Notice from more than one holder of Notes or

Separate Tranche Notes for the same Conversion Date and the Company can

convert some, but not all, of such portions of the Notes submitted for

conversion, the Company, subject to Section 3(d), shall convert from

each holder of Notes or Separate Tranche Notes electing to have Notes or

Separate Tranche Notes converted on such date a pro rata amount of such

holder's portion of its Notes or Separate Tranche Notes submitted for

conversion based on the principal amount of Notes and Separate Tranche

Notes submitted for conversion on such date by such holder relative to

the aggregate principal amount of all Notes and Separate Tranche Notes

submitted for conversion on such date. In the event of a dispute as to

the number of shares of Common Stock issuable to the Holder in

connection with a conversion of this Note, the Company shall issue to

the Holder the number of shares of Common Stock not in dispute and

resolve such dispute in accordance with Section 24.

(d) Limitations on Conversions.

(i) Beneficial Ownership. The Company shall not effect any conversion of

this Note, and the Holder of this Note shall not have the right to

convert any portion of this Note pursuant to Section 3(a), to the extent

that after giving effect to such conversion, the Holder (together with

the Holder's affiliates) would beneficially own in excess of 4.99% of

the number of shares of Common Stock outstanding immediately after

giving effect to such conversion. For purposes of the foregoing

sentence, the number of shares of Common Stock beneficially owned by the

Holder and its affiliates shall include the number of shares of Common

Stock issuable upon conversion of this Note with respect to which the

determination of such sentence is being made, but shall exclude the

number of shares of Common Stock which would be issuable upon (A)

conversion of the remaining, nonconverted portion of this Note

beneficially owned by the Holder or any of its affiliates and (B)

exercise or conversion of the unexercised or nonconverted portion of any

other securities of the Company (including, without limitation, any

Other Notes, Separate Tranche Notes or warrants) subject to a limitation

on conversion or exercise analogous to the limitation contained herein

beneficially owned by the Holder or any of its affiliates. Except as set

forth in the preceding sentence, for purposes of this Section 3(d)(i),

beneficial ownership shall be calculated in accordance with Section

13(d) of the

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Securities Exchange Act of 1934, as amended. For purposes of this

Section 3(d)(i), in determining the number of outstanding shares of

Common Stock, the Holder may rely on the number of outstanding shares of

Common Stock as reflected in (x) the Company's most recent Form 10-Q or

Form 10-K, as the case may be, (y) a more recent public announcement by

the Company or (z) any other notice by the Company or the Transfer Agent

setting forth the number of shares of Common Stock outstanding. For any

reason at any time, upon the written or oral request of the Holder, the

Company shall within two Business Days confirm in writing to the Holder

the number of shares of Common Stock then outstanding. In any case, the

number of outstanding shares of Common Stock shall be determined after

giving effect to the conversion or exercise of securities of the

Company, including this Note, by the Holder or its affiliates since the

date as of which such number of outstanding shares of Common Stock was

reported.

(ii) Principal Market Regulation. The Company shall not be obligated to

issue any shares of Common Stock upon conversion of this Note if the

issuance of such shares of Common Stock would exceed that number of

shares of Common Stock which the Company may issue upon conversion of

the Notes and the Separate Tranche Notes without breaching the Company's

obligations under the rules or regulations of the Principal Market (the

"EXCHANGE CAP"), except that such limitation shall not apply in the

event that the Company obtains the approval of its stockholders as

required by the applicable rules of the Principal Market for issuances

of Common Stock in excess of such amount. Until such approval is

obtained, no purchaser of the Notes or Separate Tranche Notes pursuant

to the Securities Purchase Agreement (the "PURCHASERS") shall be issued,

upon conversion of Notes or Separate Tranche Notes, shares of Common

Stock in an amount greater than the product of the Exchange Cap

multiplied by a fraction, the numerator of which is the principal amount

of Notes issued to such Purchaser pursuant to the Securities Purchase

Agreement on the Initial Issuance Date and the denominator of which is

the aggregate principal amount of all Notes issued to the Purchasers

pursuant to the Securities Purchase Agreement on the Initial Issuance

Date (with respect to each Purchaser, the "EXCHANGE CAP ALLOCATION"). In

the event that any Purchaser shall sell or otherwise transfer any of

such Purchaser's Notes or Separate Tranche Notes, the transferee shall

be allocated a pro rata portion of such Purchaser's Exchange Cap

Allocation, and the restrictions of the prior sentence shall apply to

such transferee with respect to the portion of the Exchange Cap

Allocation allocated to such transferee. In the event that any holder of

Notes or Separate Tranche Notes shall convert all of such holder's Notes

or Separate Tranche Notes into a number of shares of Common Stock which,

in the aggregate, is less than such holder's Exchange Cap Allocation,

then the difference between such holder's Exchange Cap Allocation and

the number of shares of Common Stock actually issued to such holder

shall be allocated to the respective Exchange Cap Allocations of the

remaining holders of Notes and Separate Tranche Notes on a pro rata

basis in proportion to the aggregate principal amount of the Notes and

Separate Tranche Notes then held by each such holder.

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(4) RIGHTS UPON EVENT OF DEFAULT.

(a) Event of Default. Each of the following events shall

constitute an "EVENT OF DEFAULT":

(i) the failure of the applicable Registration Statement required to be

filed pursuant to the Registration Rights Agreement to be declared

effective by the SEC on or prior to the date that is 60 days after the

applicable Effectiveness Deadline (as defined in the Registration Rights

Agreement), or, while the applicable Registration Statement is required

to be maintained effective pursuant to the terms of the Registration

Rights Agreement, the effectiveness of the applicable Registration

Statement lapses for any reason (including, without limitation, the

issuance of a stop order) or is unavailable to any holder of the Notes

for sale of all of such holder's 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 10 consecutive days or for more than an

aggregate of 30 days in any 365-day period (other than days during an

Allowable Grace Period (as defined in the Registration Rights

Agreement));

(ii) the suspension from trading or failure of the Common Stock to be

listed on the Principal Market, The New York Stock Exchange, Inc. (the

"NYSE"), or the American Stock Exchange (the "AMEX") for a period of

five consecutive days or for more than an aggregate of 10 days in any

365-day period;

(iii) the Company's (A) failure to cure a Conversion Failure by delivery

of the required number of shares of Common Stock, as applicable, within

10 days after the applicable Conversion Date or (B) written notice to

any holder of the Notes, including by way of public announcement or

through any of its agents, at any time, of its intention not to comply

with a request for conversion of any Notes into shares of Common Stock

that is tendered in accordance with the provisions of the Notes;

(iv) upon the Company's receipt of a Conversion Notice, the Company is

not obligated to issue shares of Common Stock upon such conversion due

to the provisions of Section 3(d)(ii);

(v) at any time following the tenth consecutive Business Day that the

Holder's Authorized Share Allocation is less than the number of shares

of Common Stock that the Holder would be entitled to receive upon a

conversion of the full Conversion Amount of this Note (without regard to

any limitations on conversion set forth in Section 3(d) or otherwise);

(vi) the Company's failure to pay to the Holder any amount of Principal,

Interest, Late Charges or other amounts when and as due under this Note,

the Securities Purchase Agreement, the Registration Rights Agreement,

the Pledge Agreement (as defined in the

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Securities Purchase Agreement) or the Control Agreement (as defined in

the Pledge Agreement), except, in the case of a failure to pay Interest

and Late Charges and such other amounts when and as due, in which case

only if such failure continues for a period of at least five Business

Days;

(vii) any default under, redemption of or acceleration prior to maturity

of any Indebtedness (as defined in Section 3(r) of the Securities

Purchase Agreement) of the Company or any of its Subsidiaries (as

defined in Section 3(a) of the Securities Purchase Agreement) other than

with respect to any Other Notes or Separate Tranche Notes or with

respect to Purchase Money Indebtedness;

(viii) the Company or any of its Subsidiaries, pursuant to or within the

meaning of Title 11, U.S. Code, or any similar Federal or state law for

the relief of debtors (collectively, "BANKRUPTCY LAW"), (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

receiver, trustee, assignee, liquidator or similar official (a

"CUSTODIAN"), (D) makes a general assignment for the benefit of its

creditors or (E) admits in writing that it is generally unable to pay

its debts as they become due;

(ix) any proceeding shall be instituted against the Company or any of

its Significant Subsidiaries (as defined in Rule 405 of the Exchange

Act) seeking to adjudicate it a bankrupt or insolvent, or seeking

dissolution, liquidation, winding up, reorganization, arrangement,

adjustment, protection, relief of debtors, or seeking the entry of an

order for relief or the appointment of a Custodian for the Company or

any such Subsidiary or for any substantial part of its assets or

properties, and either such proceeding shall remain undismissed or

unstayed for a period of 60 days or any of the actions sought in such

proceeding (including, without limitation, the entry of an order for

relief against the Company or any such Subsidiary or the appointment of

a Custodian for it or for any substantial part of its assets or

properties) shall occur;

(x) a final judgment or judgments for the payment of money aggregating

in excess of $1,000,000 are rendered against the Company or any of its

Subsidiaries and which judgments are not, within 60 days after the entry

thereof, bonded, discharged or stayed pending appeal, or are not

discharged within 60 days after the expiration of such stay; provided,

however, that any judgment which is covered by insurance or an indemnity

from a credit worthy party shall not be included in calculating the

$1,000,000 amount set forth above so long as the Company provides the

Holder a written statement from such insurer or indemnity provider

(which written statement shall be reasonably satisfactory to the Holder)

to the effect that such judgment is covered by insurance or an indemnity

and the Company will receive the proceeds of such insurance or indemnity

within 30 days of the issuance of such judgment;

(xi) the Company breaches any representation, warranty, covenant or

other term or

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condition of the Securities Purchase Agreement, the Registration Rights

Agreement, this Note, the Other Notes, the Separate Tranche Notes, the

Pledge Agreement, the Control Agreement or any other agreement,

document, certificate or other instrument delivered in connection with

the transactions contemplated thereby and hereby to which the Holder is

a party, 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 which is

curable, only if such breach continues for a period of at least five

consecutive Business Days;

(xii) any breach or failure in any respect to comply with Section 15 of

this Note;

(xiii) any Event of Default (as defined in the Other Notes or the

Separate Tranche Notes) occurs with respect to any Other Notes or

Separate Tranche Notes; or

(xiv) the Company shall, directly or indirectly, repay, prepay, redeem,

defease or otherwise make any payment on any Indebtedness (other than

Purchase Money Indebtedness) existing on the Initial Issuance Date

(including, without limitation, any Indebtedness due to Computer

Associates International, Inc. or any of its affiliates) in cash or cash

equivalents.

(b) Redemption Right. Promptly after the occurrence of

an Event of Default with respect to this Note or any Other Note, the Company

shall deliver written notice thereof via facsimile and overnight courier (an

"EVENT OF DEFAULT Notice") to the Holder. At any time after the earlier of the

Holder's receipt of an Event of Default Notice and the Holder becoming aware of

an Event of Default, the Holder may require the Company to redeem all or any

portion of this Note by delivering written notice thereof (the "EVENT OF DEFAULT

REDEMPTION NOTICE") to the Company, which Event of Default Redemption Notice

shall indicate the portion of this Note the Holder is electing to redeem. Each

portion of this Note subject to redemption by the Company pursuant to this

Section 4(b) shall be redeemed by the Company at a price equal to the greater of

(i) the product of (x) the Conversion Amount to be redeemed and (y) the

Redemption Premium and (ii) the product of (A) the Conversion Rate with respect

to such Conversion Amount in effect at such time as the Holder delivers an Event

of Default Redemption Notice and (B) the Closing Sale Price of the Common Stock

on the date immediately preceding such Event of Default (the "EVENT OF DEFAULT

REDEMPTION PRICE"). Redemptions required by this Section 4(b) shall be made in

accordance with the provisions of Section 12.

(5) RIGHTS UPON CHANGE OF CONTROL.

(a) Change of Control. Each of the following events

shall constitute a "CHANGE OF CONTROL":

(i) the consolidation, merger or other business combination (including,

without

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limitation, a reorganization or recapitalization) of the Company with or

into another Person (other than (A) a consolidation, merger or other

business combination (including, without limitation, reorganization or

recapitalization) in which holders of the Company's voting power

immediately prior to the transaction continue after the transaction to

hold, directly or indirectly, the voting power of the surviving entity

or entities necessary to elect a majority of the members of the board of

directors (or their equivalent if other than a corporation) of such

entity or entities, or (B) pursuant to a migratory merger effected

solely for the purpose of changing the jurisdiction of incorporation of

the Company);

(ii) the sale or transfer of all or substantially all of the Company's

assets; or

(iii) a purchase, tender or exchange offer made to and accepted by the

holders of more than the 50% of the outstanding shares of Common Stock.

No sooner than the public announcement of such Change of Control nor later than

10 days prior to the consummation of a Change of Control, the Company shall

deliver written notice thereof via facsimile and overnight courier to the Holder

(a "CHANGE OF CONTROL NOTICE").

(b) Assumption. Prior to the consummation of any Change

of Control, the Company will secure from any Person purchasing the Company's

assets or Common Stock or any successor resulting from such Change of Control

(in each case, an "ACQUIRING ENTITY") a written agreement (in form and substance

reasonably satisfactory to the holders of Notes representing at least two-thirds

of the aggregate principal amount of the Notes then outstanding) to deliver to

each holder of Notes in exchange for such Notes, a security of the Acquiring

Entity evidenced by a written instrument substantially similar in form and

substance to the Notes, including, without limitation, having a principal amount

and interest rate equal to the principal amounts and the interest rates of the

Notes held by such holder, and reasonably satisfactory to the holders of Notes

representing at least two-thirds of the principal amount of the Notes then

outstanding. In the event that an Acquiring Entity is directly or indirectly

controlled by a company or entity whose common stock or similar equity interest

is listed, designated or quoted on a securities exchange or trading market, the

holders of Notes representing at least two-thirds of the aggregate principal

amount of the Notes then outstanding may elect to treat such Person as the

Acquiring Entity for purposes of this Section 5(b).

(c) Holder Redemption Right. At any time during the

period beginning after the Holder's receipt of a Change of Control Notice and

ending on the date of the consummation of such Change of Control (or, in the

event a Change of Control Notice is not delivered at least 10 days prior to a

Change of Control, at any time on or after the date which is 10 days prior to a

Change of Control and ending 10 days after the consummation of such Change of

Control), the Holder may require the Company to redeem all or any portion of

this Note by delivering written notice thereof ("CHANGE OF CONTROL REDEMPTION

NOTICE") to the Company, which Change of Control Redemption Notice shall

indicate the Conversion Amount the Holder is electing to redeem. The portion of

this Note subject to redemption pursuant to this Section

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5(c) shall be redeemed by the Company at a price equal to the greater of (i) the

product of (x) the Conversion Amount being redeemed and (y) the quotient

determined by dividing (A) the Closing Sale Price of the Common Stock

immediately following the public announcement of such proposed Change of Control

by (B) the Conversion Price and (ii) 115% of the Conversion Amount being

redeemed (the "CHANGE OF CONTROL REDEMPTION PRICE"). Redemptions required by

this Section 5(c) shall be made in accordance with the provisions of Section 12

and shall have priority to payments to other stockholders in connection with a

Change of Control.

(d) Acquiring Entity Redemption Right. At any time from

and after the delivery of a Change of Control Notice but not later than the day

immediately preceding the consummation of such Change of Control, the Acquiring

Entity may deliver a written notice via facsimile and overnight courier to the

Holder indicating that if the Company shall not receive from the Holder a Change

of Control Redemption Notice in accordance with Section 5(c), then the Acquiring

Entity is electing to redeem all, but not less than all, of this Note, all Other

Notes and all Separate Tranche Notes (an "ACQUIRING ENTITY CHANGE OF CONTROL

REDEMPTION Notice"). The Acquiring Entity Change of Control Redemption Notice

shall be irrevocable. If the Company shall not receive from the Holder a Change

of Control Redemption Notice in accordance with Section 5(c) and the Conditions

to Acquiring Entity Redemption (as set forth below) are satisfied or waved in

writing by the Holder, then this Note shall be redeemed by the Acquiring Entity

at a price equal to the greater of (i) the Change of Control Redemption Price

and (ii) the Note Valuation Amount (the "ACQUIRING ENTITY CHANGE OF CONTROL

REDEMPTION PRICE"). Notwithstanding the foregoing, the Holder may continue to

convert this Note into Common Stock pursuant to Section 3(a) on or prior to the

date immediately preceding the Acquiring Entity Change of Control Redemption

Date. Redemptions required by this Section 5(d) shall be made in accordance with

the provisions of Section 12 and shall have priority to payments to other

stockholders in connection with a Change of Control. "CONDITIONS TO ACQUIRING

ENTITY REDEMPTION" means the following conditions: (i) on each day during the

period beginning on the date of delivery of the Acquiring Entity Change of

Control Redemption Notice to each holder of the Notes and Separate Tranche Notes

and ending on and including the date immediately preceding the Acquiring Entity

Change of Control Redemption Date, no Grace Period (as defined in the

Registration Rights Agreement) shall be in effect and either (x) the

Registration Statement or Registration Statements required pursuant to the

Registration Rights Agreement shall be effective and available for the sale for

all of the Registrable Securities in accordance with the terms of the

Registration Rights Agreement or (y) all shares of Common Stock issuable upon

conversion of the Notes and the Separate Tranche Notes and shares of Common

Stock issuable upon exercise of the Warrants and the Separate Tranche Warrants

shall be eligible for sale without restriction pursuant to Rule 144(k) and the

state securities laws, (ii) the Company shall have no knowledge of any fact that

would cause (x) the Registration Statements required pursuant to the

Registration Rights Agreement not to be effective and available for the sale of

at least all of the Registrable Securities in accordance with the terms of the

Registration Rights Agreement or (y) any shares of Common Stock issuable upon

conversion or redemption of the Notes and the Separate Tranche Notes and shares

of Common Stock issuable upon exercise of the Warrants and the Separate Tranche

Warrants not to be eligible for

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sale without restriction pursuant to Rule 144(k) and any applicable state

securities laws; (iii) on each day during the period beginning on the date of

delivery of the Acquiring Entity Change of Control Redemption Notice and ending

on and including the date immediately preceding the Acquiring Entity Change of

Control Redemption Date, the Common Stock is designated for quotation on the

Principal Market, the NYSE or the AMEX and shall not have been suspended from

trading on such exchange or market nor shall delisting or suspension by such

exchange or market been threatened or pending either (A) in writing by such

exchange or market or (B) by falling below the minimum listing maintenance

requirements of such exchange or market; (iv) during the period beginning on the

Initial Issuance Date and ending on and including the date immediately preceding

the Acquiring Entity Change of Control Redemption Date, the Company shall have

delivered shares of Common Stock upon any conversion of Conversion Amounts on a

timely basis as set forth in Section 3(c)(i) of this Note (and analogous

provisions under the Other Notes) and the Separate Tranche Notes and delivered

shares of Common Stock upon exercise of any Warrants and the Separate Tranche

Warrants on a timely basis as set forth in Section 1(a) of the Warrants and the

Separate Tranche Warrants; (v) the Company has obtained the Stockholder Approval

prior to the date of delivery of the Acquiring Entity Change of Control

Redemption Notice; and (vi) the Company otherwise shall have been in material

compliance with and shall not have breached, in any material respect, any

provision, covenant, representation or warranty of the Securities Purchase

Agreement, the Registration Rights Agreement, any of the Warrants or the

Separate Tranche Warrants, the Pledge Agreement, the Control Agreement or any of

the Notes or Separate Tranche Notes.

(6) RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER

CORPORATE EVENTS.

(a) Purchase Rights. If at any time the Company grants,

issues or sells any Options, Convertible Securities or rights to purchase stock,

warrants, securities or other property pro rata to the record holders of any

class of Common Stock (the "PURCHASE RIGHTS"), then the Holder will be entitled

to acquire, upon the terms applicable to such Purchase Rights, the aggregate

Purchase Rights which the Holder could have acquired if the Holder had held the

number of shares of Common Stock acquirable upon complete conversion of this

Note (without taking into account any limitations or restrictions on the

convertibility of this Note) immediately before the date on which a record is

taken for the grant, issuance or sale of such Purchase Rights, or, if no such

record is taken, the date as of which the record holders of Common Stock are to

be determined for the grant, issue or sale of such Purchase Rights.

(b) Other Corporate Events. Prior to the consummation of

any recapitalization, reorganization, consolidation, merger, spin-off or other

business combination (other than a Change of Control) pursuant to which holders

of Common Stock are entitled to receive securities or other assets with respect

to or in exchange for Common Stock (a "CORPORATE EVENT"), the Company shall make

appropriate provision to insure that the Holder will thereafter have the right

to receive upon a conversion of this Note, (i) in addition to the

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shares of Common Stock receivable upon such conversion, such securities or other

assets to which the Holder would have been entitled with respect to such shares

of Common Stock had such shares of Common Stock been held by the Holder upon the

consummation of such Corporate Event or (ii) in lieu of the shares of Common

Stock otherwise receivable upon such conversion, such securities or other assets

received by the holders of Common Stock in connection with the consummation of

such Corporate Event in such amounts as the Holder would have been entitled to

receive had this Note initially been issued with conversion rights for the form

of such consideration (as opposed to shares of Common Stock) at a conversion

rate for such consideration commensurate with the Conversion Rate. Provision

made pursuant to the preceding sentence shall be in a form and substance

reasonably satisfactory to the holders of Notes representing at least two-thirds

of the aggregate principal amount of the Notes then outstanding.

(7) RIGHTS UPON ISSUANCE OF OTHER SECURITIES.

(a) Adjustment of Conversion Price upon Issuance of

Common Stock. If and whenever on or after the Initial Issuance Date, the Company

issues or sells, or in accordance with this Section 7(a) is deemed to have

issued or sold, any shares of Common Stock (including the issuance or sale of

shares of Common Stock owned or held by or for the account of the Company, but

excluding shares of Common Stock deemed to have been issued or sold by the

Company (I) in connection with any employee benefit plan which has been approved

by the Board of Directors of the Company, pursuant to which the Company's

securities may be issued to any employee, officer or director for services

provided to the Company (an "APPROVED STOCK PLAN"), (II) upon conversion of the

Notes or the Separate Tranche Notes or upon exercise of the Warrants or the

Separate Tranche Warrants, (III) in connection with the payment of any Interest

Shares on the Notes or (IV) in connection with any Excluded Security) for a

consideration per share less than a price (the "APPLICABLE PRICE") equal to the

Conversion Price in effect immediately prior to such issue or sale (the

foregoing, a "DILUTIVE ISSUANCE"), then immediately after such issue or sale,

the Conversion Price then in effect shall be reduced to an amount equal to the

Applicable Price. For purposes of determining the adjusted Conversion Price

under this Section 7(a), the following shall be applicable:

(i) Issuance of Options. If the Company in any manner grants or sells

any Options and the lowest price per share for which one share of Common

Stock is issuable upon the exercise of any such Option or upon

conversion or exchange or exercise of any Convertible Securities

issuable upon exercise of such Option is less than the Applicable Price,

then such share of Common Stock shall be deemed to be outstanding and to

have been issued and sold by the Company at the time of the granting or

sale of such Option for such price per share. For purposes of this

Section 7(a)(i), the "lowest price per share for which one share of

Common Stock is issuable upon the exercise of any such Option or upon

conversion or exchange or exercise of any Convertible Securities

issuable upon exercise of such Option" shall be equal to the sum of the

lowest amounts of consideration (if any) received or receivable by the

Company with respect to any one share of Common

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Stock upon granting or sale of the Option, upon exercise of the Option

and upon conversion or exchange or exercise of any Convertible Security

issuable upon exercise of such Option. No further adjustment of the

Conversion Price shall be made upon the actual issuance of such Common

Stock or of such Convertible Securities upon the exercise of such

Options or upon the actual issuance of such Common Stock upon conversion

or exchange or exercise of such Convertible Securities.

(ii) Issuance of Convertible Securities. If the Company in any manner

issues or sells any Convertible Securities and the lowest price per

share for which one share of Common Stock is issuable upon such

conversion or exchange or exercise thereof is less than the Applicable

Price, then such share of Common Stock shall be deemed to be outstanding

and to have been issued and sold by the Company at the time of the

issuance of sale of such Convertible Securities for such price per

share. For the purposes of this Section 7(a)(ii), the "price per share

for which one share of Common Stock is issuable upon such conversion or

exchange or exercise" shall be equal to the sum of the lowest amounts of

consideration (if any) received or receivable by the Company with

respect to any one share of Common Stock upon the issuance or sale of

the Convertible Security and upon the conversion or exchange or exercise

of such Convertible Security. No further adjustment of the Conversion

Price shall be made upon the actual issuance of such Common Stock upon

conversion or exchange or exercise of such Convertible Securities, and

if any such issue or sale of such Convertible Securities is made upon

exercise of any Options for which adjustment of the Conversion Price had

been or are to be made pursuant to other provisions of this Section

7(a), no further adjustment of the Conversion Price shall be made by

reason of such issue or sale.

(iii) Change in Option Price or Rate of Conversion. If the purchase

price provided for in any Options, the additional consideration, if any,

payable upon the issue, conversion, exchange or exercise of any

Convertible Securities, or the rate at which any Convertible Securities

are convertible into or exchangeable or exercisable for Common Stock

changes at any time, the Conversion Price in effect at the time of such

change shall be adjusted to the Conversion Price which would have been

in effect at such time had such Options or Convertible Securities

provided for such changed purchase price, additional consideration or

changed conversion rate, as the case may be, at the time initially

granted, issued or sold. For purposes of this Section 7(a)(iii), if the

terms of any Option or Convertible Security that was outstanding as of

the Initial Issuance Date are changed in the manner described in the