EXHIBIT 10.19

                          SECURITIES PURCHASE AGREEMENT


            THIS SECURITIES PURCHASE AGREEMENT, dated as of the date of
acceptance set forth below, is entered into by and between AMBIENT CORPORATION,
a Delaware corporation, with headquarters located at 270 Madison Avenue, New
York, NY 10016 (the "Company"), and each entity named on a signature page hereto
(each, a "Buyer") (each agreement with a Buyer being deemed a separate and
independent agreement between the Company and such Buyer, except that each Buyer
acknowledges and consents to the rights granted to each other Buyer under such
agreement and the Transaction Agreements, as defined below, referred to
therein).

                              W I T N E S S E T H:

            WHEREAS, the Company and the Buyer are executing and delivering this
Agreement in accordance with and in reliance upon the exemption from securities
registration afforded, inter alia, by Rule 506 under Regulation D ("Regulation
D") as promulgated by the United States Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "1933 Act"), and/or
Section 4(2) of the 1933 Act; and

            WHEREAS, the Buyer wishes to purchase, upon the terms and subject to
the conditions of this Agreement, 10% Convertible Debentures of the Company (the
"Convertible Debentures") which which will be convertible into shares of Common
Stock, $.001 par value per share, of the Company (the "Common Stock"), upon the
terms and subject to the conditions of such Convertible Debentures, together
with the Warrants (as defined below) exercisable for the purchase of shares of
Common Stock, and subject to acceptance of this Agreement by the Company;

            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 parties agree as
follows:

            1. AGREEMENT TO PURCHASE; PURCHASE PRICE.

            a. Purchase.

            (i) The undersigned hereby agrees to purchase from the Company
Convertible Debentures in the principal amount set forth on the signature page
of this Agreement (the "Debentures," which term includes the Initial Debentures
and the Additional Debentures defined below), out of a total offering of
$2,000,000 of such Convertible Debentures, and having the terms and conditions
and being in the form attached hereto as Annex I.

            (ii) Subject to the terms and conditions of this Agreement and the
other Transaction Agreements, the Buyer will purchase (x) fifty percent (50%) of
the Debentures (the

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"Initial Debentures") on the Initial Closing Date (as defined below) and (y) the
balance of the Debentures (the "Additional Debentures") on the Additional
Closing Date (as defined below).

            (iii) The purchase price to be paid by the Purchaser shall be equal
to the face amount of the Initial Debentures or the Additional Debentures, as
the case may be, and shall be payable in United States Dollars.

            b. Certain Definitions. As used herein, each of the following terms
has the meaning set forth below, unless the context otherwise requires:

            (i) "Securities" means the Debentures, the Warrants and the Common
Stock issuable upon conversion of the Debentures or the exercise of the
Warrants.

            (ii) "Purchase Price" means the purchase price for the Initial
Debentures or the Additional Debentures, as the case may be.

            (iii) "Initial Closing Date" means the date of the closing of the
purchase and sale of the Initial Debentures, as provided herein.

            (iv) "Additional Closing Date" means the date of the closing of the
purchase and sale of the relevant Additional Debentures, as provided herein.

            (v) "Closing Date" means the Initial Closing Date or the Additional
Closing Date, as the case may be.

            (vi) "Buyer's Allocable Share" means the fraction of which the
numerator is the Buyer's Debentures and the denominator is $2,000,000.

            (vii) "Effective Date" means the effective date of the Registration
Statement covering the Registrable Securities (as those terms are defined in the
Registration Rights Agreement defined below).

            (viii) "Converted Shares" means the shares of Common Stock issuable
upon conversion of the Debentures.

            (ix) "Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.

            (x) "Shares" means the shares of Common Stock representing any or
all of the Converted Shares and the Warrant Shares.

            (xi) "Strategic Partner" means a third party unaffiliated with the
Company as of the date hereof which party (i) is engaged in a business which is
the business in which the Company is engaged or a similar or related business,
and (ii) subsequently purchases equity


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securities of the Company (or securities convertible into equity securities of
the Company), where such purchase is accompanied or followed by any one or more
of the following: the licensing by the Company of all or any portion of its
technology to such third party, the licensing by such third party of all or any
portion of its technology to the Company, or any other coordination of all or a
portion of their respective business activities or operations by the Company and
such third party. By way of illustration and not in limitation of the foregoing,
if a third party entity engaged in smartcard interface technology (exclusively
or as one of multiple fields of endeavor) purchases an equity interest in the
Company where the Company and such third party intend that such investment is to
be accompanied by any one or more of a licensing agreement by one or the other
of the other party's technology or by a cross-licensing agreement, by an OEM
agreement, by a joint development agreement or by other coordination of design,
production or marketing activities, such third party would be a Strategic
Partner.

            c. Form of Payment; Delivery of Certificates.

            (i) The Buyer shall pay the Purchase Price for the relevant
Debentures by delivering immediately available good funds in United States
Dollars to the escrow agent (the "Escrow Agent") identified in the Joint Escrow
Instructions attached hereto as Annex II (the "Joint Escrow Instructions") on
the date prior to the relevant Closing Date.

            (ii) No later than the relevant Closing Date, but in any event
promptly following payment by the Buyer to the Escrow Agent of the relevant
Purchase Price, the Company shall deliver the relevant Debentures and the
Warrants, each duly executed on behalf of the Company and issued in the name of
the Buyer (collectively, the "Certificates") to the Escrow Agent.

            (iii) By signing this Agreement, each of the Buyer and the Company,
subject to acceptance by the Escrow Agent, agrees to all of the terms and
conditions of, and becomes a party to, the Joint Escrow Instructions, all of the
provisions of which are incorporated herein by this reference as if set forth in
full.

            d. Method of Payment. Payment into escrow of the Purchase Price
shall be made by wire transfer of funds to:

                  Bank of New York
                  350 Fifth Avenue
                  New York, New York 10001

                  ABA# 021000018
                  For credit to the account of Krieger & Prager LLP, Esqs.
                  Account No.: [To be provided to the Buyer by Krieger
                               & Prager LLP]
                  Re: Ambient Transaction
Not later than 5:00 p.m., New York time, on the date which is seven (7) New York
Stock Exchange trading days after the Company shall have accepted this Agreement
and returned a


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signed counterpart of this Agreement to the Escrow Agent by facsimile, the Buyer
shall deposit with the Escrow Agent the Purchase Price for the Initial
Debentures in currently available funds. Time is of the essence with respect to
such payment, and failure by the Buyer to make such payment, shall allow the
Company to cancel this Agreement.

            e. Escrow Property. The Purchase Price and the Certificates
delivered to the Escrow Agent as contemplated by Sections 1(c) and (d) hereof
are referred to as the "Escrow Property."

            2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.

            The Buyer represents and warrants to, and covenants and agrees with,
the Company as follows:

            a. Without limiting Buyer's right to sell the Common Stock pursuant
to the Registration Statement, the Buyer is purchasing the Debentures and the
Warrants and will be acquiring the Shares for its own account for investment
only and not with a view towards the public sale or distribution thereof and not
with a view to or for sale in connection with any distribution thereof.

            b. The Buyer is (i) an "accredited investor" as that term is defined
in Rule 501 of the General Rules and Regulations under the 1933 Act by reason of
Rule 501(a)(3), (ii) experienced in making investments of the kind described in
this Agreement and the related documents, (iii) able, by reason of the business
and financial experience of its officers (if an entity) and professional
advisors (who are not affiliated with or compensated in any way by the Company
or any of its affiliates or selling agents), to protect its own interests in
connection with the transactions described in this Agreement, and the related
documents, and (iv) able to afford the entire loss of its investment in the
Securities.

            c. All subsequent offers and sales of the Debentures and the Shares
by the Buyer shall be made pursuant to registration of the Shares under the 1933
Act or pursuant to an exemption from registration.

            d. The Buyer understands that the Debentures are being offered and
sold to it in reliance on specific exemptions from the registration requirements
of United States federal and state securities laws and that the Company is
relying upon the truth and accuracy of, and the Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of the Buyer to acquire the Debentures.

            e. The Buyer and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Debentures and the offer of the
Shares which have been requested by


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<PAGE>

the Buyer, including Annex V hereto. The Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company and have received
complete and satisfactory answers to any such inquiries. Without limiting the
generality of the foregoing, the Buyer has also had the opportunity to obtain
and to review the Company's (1) Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1998, and (2) Quarterly Reports on Form 10-QSB for the fiscal
quarters ended March 31, June 30, and September 30, 1999, respectively (the
"Company's SEC Documents").

            f. The Buyer understands that its investment in the Securities
involves a high degree of risk.

            g. The Buyer understands that no United States federal or state
agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities.

            h. This Agreement has been duly and validly authorized, executed and
delivered on behalf of the Buyer and is a valid and binding agreement of the
Buyer enforceable in accordance with its terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally.

            i. The Buyer represents that, for the five (5) trading days prior to
the date hereof, the Buyer has not engaged in any puts, calls, futures
contracts, short sales and hedging and arbitrage transactions with respect to
the Common Stock.

            3. COMPANY REPRESENTATIONS, ETC. The Company represents and warrants
to the Buyer as of the date hereof and as of each Closing Date that, except as
otherwise provided in the relevant Section or paragraph reference in Annex V
hereto (corresponding to the Section or paragraph references below):

            a. Concerning the Debentures and the Shares. There are no preemptive
rights of any stockholder of the Company, as such, to acquire the Debentures,
the Warrants or the Shares. No party has a currently exercisable right of first
refusal which would be applicable to any or all of the transactions contemplated
by the Transaction Agreements.

            b. Reporting Company Status. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power to own its properties and to
carry on its business as now being conducted. The Company is duly qualified as a
foreign corporation to do business and is in good standing in each jurisdiction
where the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have a material adverse effect on the business, operations
or financial condition or results of operation of the Company and its
subsidiaries taken as a whole.. The Company has registered its Common Stock
pursuant to Section 12 of the 1934 Act, and the


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<PAGE>

Common Stock is listed and traded on The NASDAQ/Bulletin Board Market. The
Company has received no notice, either oral or written, with respect to the
continued eligibility of the Common Stock for such listing, and the Company has
maintained all requirements for the continuation of such listing.

            c. Authorized Shares. The authorized capital stock of the Company
consists of (i) 20,000,000 shares of Common Stock, $.001 par value per share, of
which approximately 8,326,611 shares had been issued as of the date hereof and
(ii) 5,000,000 shares of Preferred Stock, par value $.001 per share, none of
which have been issued as of the date hereof. All issued and outstanding shares
of Common Stock have been duly authorized and validly issued and are fully paid
and nonassessable. The Company has sufficient authorized and unissued shares of
Common Stock as may be necessary to effect the issuance of the Shares. The
Shares have been duly authorized and, when issued upon conversion of, or as
interest on, the Debentures or upon exercise of the Warrants, each in accordance
with its respective terms, will be duly and validly issued, fully paid and
non-assessable and will not subject the holder thereof to personal liability by
reason of being such holder.

            d. Securities Purchase Agreement; Registration Rights Agreement and
Stock. This Agreement and the Registration Rights Agreement, the form of which
is attached hereto as Annex IV (the "Registration Rights Agreement"), and the
transactions contemplated thereby, have been duly and validly authorized by the
Company, this Agreement has been duly executed and delivered by the Company and
this Agreement is, and the Debentures, the Warrants and the Registration Rights
Agreement, when executed and delivered by the Company, will be, valid and
binding agreements of the Company enforceable in accordance with their
respective terms, subject as to enforceability to general principles of equity
and to bankruptcy, insolvency, moratorium, and other similar laws affecting the
enforcement of creditors' rights generally.

            e. Non-contravention. The execution and delivery of this Agreement
and the Registration Rights Agreement by the Company, the issuance of the
Securities, and the consummation by the Company of the other transactions
contemplated by this Agreement, the Registration Rights Agreement, and the
Debentures do not and will not conflict with or result in a breach by the
Company of any of the terms or provisions of, or constitute a default under (i)
the articles of incorporation or by-laws of the Company, each as currently in
effect, (ii) any indenture, mortgage, deed of trust, or other material agreement
or instrument to which the Company is a party or by which it or any of its
properties or assets are bound, including any listing agreement for the Common
Stock except as herein set forth, (iii) to its knowledge, any existing
applicable law, rule, or regulation or any applicable decree, judgment, or order
of any court, United States federal or state regulatory body, administrative
agency, or other governmental body having jurisdiction over the Company or any
of its properties or assets, or (iv) the Company's listing agreement for its
Common Stock, except such conflict, breach or default which would not have a
material adverse effect on the business, operations or financial condition or
results of operations of the Company and its subsidiaries, taken as a whole, or
on the transactions contemplated herein.


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<PAGE>

            f. Approvals. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the stockholders of the Company is required to be obtained
by the Company for the issuance and sale of the Securities to the Buyer as
contemplated by this Agreement, except such authorizations, approvals and
consents that have been obtained.

            g. SEC Filings. None of the Company's SEC Documents contained, at
the time they were filed, any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements made therein in light of the circumstances under which they were
made, not misleading. The Company has since January 1, 1999 timely filed all
requisite forms, reports and exhibits thereto with the SEC.

            h. Absence of Certain Changes. Since December 31, 1998, there has
been no material adverse change and no material adverse development in the
business, properties, operations, financial condition, or results of operations
of the Company, except as disclosed in the Company's SEC Documents. Since
December 31, 1998, except as provided in the Company's SEC Documents, the
Company has not (i) incurred or become subject to any material liabilities
(absolute or contingent) except liabilities incurred in the ordinary course of
business consistent with past practices; (ii) discharged or satisfied any
material lien or encumbrance or paid any material obligation or liability
(absolute or contingent), other than current liabilities paid in the ordinary
course of business consistent with past practices; (iii) declared or made any
payment or distribution of cash or other property to stockholders with respect
to its capital stock, or purchased or redeemed, or made any agreements to
purchase or redeem, any shares of its capital stock; (iv) sold, assigned or
transferred any other tangible assets, or canceled any debts or claims, except
in the ordinary course of business consistent with past practices; (v) suffered
any substantial losses or waived any rights of material value, whether or not in
the ordinary course of business, or suffered the loss of any material amount of
existing business; (vi) made any changes in employee compensation, except in the
ordinary course of business consistent with past practices; or (vii) experienced
any material problems with labor or management in connection with the terms and
conditions of their employment.

            i. Full Disclosure. There is no fact known to the Company (other
than general economic conditions known to the public generally or as disclosed
in the Company's SEC Documents) that has not been disclosed in writing to the
Buyer that (i) would reasonably be expected to have a material adverse effect on
the business, operations or financial condition of the Company or results of
operations of the Company and its subsidiaries, taken as a whole , (ii) would
reasonably be expected to materially and adversely affect the ability of the
Company to perform its obligations pursuant to this Agreement or any of the
agreements contemplated hereby (collectively, including this Agreement, the
"Transaction Agreements"), or (iii) would reasonably be expected to materially
and adversely affect the value of the rights granted to the Buyer in the
Transaction Agreements.

            j. Absence of Litigation. Except as set forth in the Company's SEC
Documents, there is no action, suit, proceeding, inquiry or investigation before
or by any court,


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public board or body pending or, to the knowledge of the Company, threatened
against or affecting the Company, wherein an unfavorable decision, ruling or
finding would have a material adverse effect on the properties, business,
operations or financial condition, or results of operation of the Company and
its subsidiaries taken as a whole or the transactions contemplated by any of the
Transaction Agreements or which would adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, any of the Transaction Agreements.

            k. Absence of Events of Default. Except as set forth in Section 3(e)
hereof, no Event of Default (or its equivalent term), as defined in the
respective agreement to which the Company is a party, and no event which, with
the giving of notice or the passage of time or both, would become an Event of
Default (or its equivalent term) (as so defined in such agreement), has occurred
and is continuing, which would have a material adverse effect on the business,
operations or the financial condition or results of operations of the Company
and its subsidiaries, taken as a whole.

            l. Prior Issues. During the twelve (12) months preceding the date
hereof, the Company has not issued any convertible securities. The presently
outstanding unconverted principal amount of each such issuance as at February ,
2000 are set forth in Annex V.

            m. No Undisclosed Liabilities or Events. The Company has no
liabilities or obligations other than those disclosed in the Company's SEC
Documents or those incurred in the ordinary course of the Company's business
since December 31, 1998, and which individually or in the aggregate, do not or
would not have a material adverse effect on the properties, business,
operations, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole. No event or circumstances has occurred or exists
with respect to the Company or its properties, business, operations, financial
condition, or results of operations, which, under applicable law, rule or
regulation, requires public disclosure or announcement prior to the date hereof
by the Company but which has not been so publicly announced or disclosed. There
are no proposals currently under consideration or currently anticipated to be
under consideration by the Board of Directors or the executive officers of the
Company which proposal would (x) change the certificate of incorporation or
other charter document or by-laws of the Company, each as currently in effect,
with or without shareholder approval, which change would reduce or otherwise
adversely affect the rights and powers of the shareholders of the Common Stock
or (y) materially or substantially change the business, assets or capital of the
Company, including its interests in subsidiaries.

            n. No Default. The Company is not in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any material indenture, mortgage, deed of trust or other material
instrument or agreement to which it is a party or by which it or its property is
bound.

            o. No Integrated Offering. Neither the Company nor any of its
affiliates nor any person acting on its or their behalf has, directly or
indirectly, at any time since December


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1, 1998, made any offer or sales of any security or solicited any offers to buy
any security under circumstances that would eliminate the availability of the
exemption from registration under Rule 506 of Regulation D in connection with
the offer and sale of the Securities as contemplated hereby.

            p. Dilution. The number of Shares issuable upon conversion of the
Debentures and the exercise of the Warrants may increase substantially in
certain circumstances, including, but not necessarily limited to, the
circumstance wherein the trading price of the Common Stock declines prior to the
conversion of the Debentures. The Company's executive officers and directors
have studied and fully understand the nature of the Securities being sold hereby
and recognize that they have a potential dilutive effect. The board of directors
of the Company has concluded, in its good faith business judgment, that such
issuance is in the best interests of the Company. The Company specifically
acknowledges that its obligation to issue the Shares upon conversion of the
Debentures and upon exercise of the Warrants is binding upon the Company and
enforceable regardless of the dilution such issuance may have on the ownership
interests of other shareholders of the Company.

            r. Brokers, Finders. Except for payment of fees to Burstein &
Lindsay Securities Corp. (the "Placement Agent"), payment of which is the sole
responsibility of the Company, the Company has taken no action which would give
rise to any claim by any person for brokerage commission, finder's fees or
similar payments by Buyer relating to this Agreement or the transactions
contemplated hereby. Buyer shall have no obligation with respect to such fees or
with respect to any claims made by or on behalf of other Persons for fees of a
type contemplated in this Section 3(r) that may be due in connection with the
transactions contemplated hereby. The Company shall indemnify and hold harmless
each of Buyer, its employees, officers, directors, agents, and partners, and
their respective affiliates, from and against all claims, losses, damages, costs
(including the costs of preparation and attorney's fees) and expenses suffered
in respect of any such claimed or existing fees, as and when incurred.

            4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

            a. Transfer Restrictions. The Buyer acknowledges that (1) the
Debentures have not been and are not being registered under the provisions of
the 1933 Act and, except as provided in the Registration Rights Agreement, the
Shares have not been and are not being registered under the 1933 Act, and may
not be transferred unless (A) subsequently registered thereunder or (B) the
Buyer shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration; (2) any sale of the Securities made in
reliance on Rule 144 promulgated under the 1933 Act may be made only in
accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such Securities under circumstances in which the
seller, or the person through whom the sale is made, may be deemed to be an
underwriter, as that term is used in the 1933 Act, may require compliance with
some other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; and (3) neither the Company nor any other


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person is under any obligation to register the Securities (other than pursuant
to the Registration Rights Agreement) under the 1933 Act or to comply with the
terms and conditions of any exemption thereunder.

            b. Restrictive Legend. The Buyer acknowledges and agrees that the
Debentures and the Warrants, and, until such time as the Common Stock has been
registered under the 1933 Act as contemplated by the Registration Rights
Agreement and sold in accordance with an effective Registration Statement,
certificates and other instruments representing any of the Securities shall bear
a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of any such Securities):

            THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER
            THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
            THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR
            SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
            SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO
            THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

            c. Registration Rights Agreement. The parties hereto agree to enter
into the Registration Rights Agreement on or before the Closing Date.

            d. Filings. The Company undertakes and agrees to make all necessary
filings in connection with the sale of the Securities to the Buyer under any
United States laws and regulations applicable to the Company, or by any domestic
securities exchange or trading market, and to provide a copy thereof to the
Buyer promptly after such filing.

            e. Reporting Status. So long as the Buyer beneficially owns any of
the Securities, the Company shall file all reports required to be filed with the
SEC pursuant to Section 13 or 15(d) of the 1934 Act, and the Company shall not
terminate its status as an issuer required to file reports under the 1934 Act
even if the 1934 Act or the rules and regulations thereunder would permit such
termination. The Company will take all reasonable action under its control to
obtain and to continue the listing and trading of its Common Stock (including,
without limitation, all Registrable Securities) on The NASDAQ/Bulletin Board
Market and will comply in all material respects with the Company's reporting,
filing and other obligations under the by-laws or rules of the National
Association of Securities Dealers, Inc. ("NASD") or The NASDAQ/Bulletin Board
Market.

            f. Use of Proceeds. The Company will use the proceeds from the sale
of the Debentures (excluding amounts paid by the Company for legal fees,
finder's fees and escrow fees in connection with the sale of the Debentures) for
internal working capital purposes, and, unless specifically consented to in
advance in each instance by the Buyer, the Company shall not, directly or
indirectly, use such proceeds for any loan to or investment in any other


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corporation, partnership enterprise or other person or for the repayment of any
outstanding loan by the Company to any other party.

            g. Certain Agreements. (i) Except to the extent specifically
provided below, but in each such event subject to compliance with all of the
other provisions of this Agreement, the Company covenants and agrees that it
will not, without the prior written consent of the Buyer, enter into any
subsequent or further offer or sale of Common Stock or securities convertible
into Common Stock (collectively, "New Common Stock") with any third party
pursuant to a transaction which in any manner permits the sale of the New Common
Stock on any date which is earlier than one hundred eighty (180) days after the
Effective Date.

            (ii) The provisions of subparagraph (g)(i) will not apply to (x) the
issuance of securities (other than for cash) in connection with an acquisition,
merger, consolidation, or a sale or disposition of assets, or (y) the exchange
of the capital stock for assets, stock or other joint venture interests;
provided, however, that any action contemplated under this subparagraph (g)(ii)
is subject to the condition that registration rights, if any, in connection with
such action shall not require the filing of a Registration Statement in respect
of such stock prior to one hundred eighty (180) days after the Effective Date.

            (iii) The provisions of subparagraph (g)(i) will also not apply to
(x) the issuance of securities to a Strategic Partner (except that the
provisions of subparagraph g(iv) shall apply with respect to the issuance of
such securities to the Strategic Partner) and (y) the issuance of securities to
employees of the Company under the Company's ESOP in existence on the date
hereof.

            (iv) Within ten (10) business days after the Initial Closing Date,
the Company shall obtain the agreement (each, a "Principal's Agreement") of each
of its Principals (as defined below) that, without the prior written consent of
the Buyer in each instance, such Principal will not sell or otherwise transfer
or offer to sell or otherwise transfer (except in a private transaction in which
the transferee agrees in writing for the benefit of Buyer and enforceable by
Buyer, a copy of which written agreement is provided to Buyer, to be bound by
the provisions of the Principal's Agreement as if such transferee were a
Principal) any shares of Common Stock directly or indirectly held by such
Principal prior to one hundred eighty (180) days after the Effective Date. Each
such Principal's Agreement shall (w) specify that it is entered into as an
inducement to the Buyer's execution, delivery and performance of this Agreement,
(x) name the Buyer as a third party beneficiary thereof, (y) acknowledge that
the Company's transfer agent will be provided with instructions that transfers
by a Principal require the consent of the Company and the Buyer, and (z)
contemplate that, in addition to any other damages or remedies that may be
appropriate, the Principal's Agreement shall be enforceable by injunction sought
by the Company and the Buyer or any one or more of them. A "Principal" is a
person who meets any one or more of the following criteria: (A) a person who is
a director or principal officer of the Company (each, a "Company Principal") and
who, directly or indirectly, holds any shares of Common Stock of the Company;
(B) a spouse of a Company Principal (a "Principal's Spouse") who, directly or
indirectly, holds any shares of Common Stock of the Company, (C) a parent,


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<PAGE>

sibling or child of a Company Principal who resides in the household of a
Company Principal or of a Principal's Spouse (each, a "Principal's Relative")
and who, directly or indirectly, holds any shares of Common Stock, (D) any other
person or entity, including, without limitation, for profit or non-profit
corporations, partnerships and trusts, whose voting rights regarding Common
Stock of the Company is subject to the direction, control or other influence of
any Company Principal, Principal's Spouse, or Principal's Relative, or (E) a
Strategic Partner and any person or entity controlled by or in control of such
Strategic Partner. If the Company enters into an agreement with a Strategic
Partner after the date hereof, the Company shall obtain the Principal's
Agreement from the parties contemplated by clause (E) of the immediately
preceding sentence simultaneously with the closing of such agreement. Anything
in the preceding provisions of this subparagraph (iv) to the contrary
notwithstanding, Buyer agrees that each of Aryeh Weinberg and Michael Braunold
may exclude 25,000 shares of the Company's Common Stock currently held by him
from his Principal's Agreement.

            (v) In the event the Company breaches the provisions of this Section
4(g), the Conversion Rate (as defined in the Debentures) shall be amended to be
equal to (x) 90% of (y) the amount determined in accordance with the provisions
of the Debenture without regard to this provision, and the Purchaser may require
the Company to immediately redeem all outstanding Debentures in accordance with
Section 4(j)(y) hereof.

            h. Available Shares. The Company shall have at all times authorized
and reserved for issuance, free from preemptive rights, shares of Common Stock
sufficient to yield two hundred percent (200%) of the number of shares of Common
Stock issuable (i) at conversion as may be required to satisfy the conversion
rights of the Buyer pursuant to the terms and conditions of the Debentures and
(ii) upon exercise as may be required to satisfy the exercise rights of the
Buyer pursuant to the terms and conditions of the Warrants.

            i. Warrants. The Company agrees to issue to the Buyer on each
Closing Date transferable, divisible warrants (the "Warrants") for the purchase
of six thousand two hundred fifty (6,250) shares of Common Stock for ten
thousand dollars ($10,000) of Purchase Price for the Debentures issued on that
date. The Warrants attributable to each such conversion shall bear an exercise
price One Dollar ($1.00) per share (subject to adjustment as provided in the
Warrant). The Warrants will expire on the last day of the calendar month in
which the third anniversary of the relevant Closing Date occurs. The Warrants
shall be in the form annexed hereto as Annex VI, together with (x) registration
rights as provided in the Registration Rights Agreement and (y) piggy-back
registration rights after the effectiveness of the Registration Statement
expires, as contemplated by the Registration Rights Agreement.

            j. Limitation on Issuance of Shares. The Company may be limited in
the number of shares of Common Stock it may issue by virtue of (i) the number of
authorized shares or (ii) the applicable rules and regulations of the principal
securities market on which the Common Stock is listed or traded, including, but
not necessarily limited to, NASDAQ Rule 4310(c)(25)(H)(i)(d)(2) (collectively,
the "Cap Regulations"). Without limiting the other provisions thereof, the
Debentures shall provide that (i) the Company will take all steps


                                       12
<PAGE>

reasonably necessary to be in a position to issue shares of Common Stock on
conversion of the Debentures without violating the Cap Regulations and (ii) if,
despite taking such steps, the Company still can not issue such shares of Common
Stock without violating the Cap Regulations, the holder of a Debenture which can
not be converted as result of the Cap Regulations (each such Debenture, an
"Unconverted Debenture") shall have the option, exercisable in such holder's
sole and absolute discretion, to elect either of the following remedies:

            (x) if permitted by the Cap Regulations, require the Company to
      issue shares of Common Stock in accordance with such holder's notice of
      conversion at a conversion purchase price equal to the average of the
      closing price per share of Common Stock for any five (5) consecutive
      trading days (subject to certain equitable adjustments for certain events
      occurring during such period) during the sixty (60) trading days
      immediately preceding the date of notice of conversion; or

            (y) require the Company to redeem each Unconverted Debenture for an
      amount (the "Redemption Amount"), payable in cash, equal to:

                          V                      x           M
                  -----------------
                         CP

      where:

            "V" means the principal of an Unconverted Debenture plus any accrued
      but unpaid interest thereon;

            "CP" means the conversion price in effect on the date of redemption
      (the "Redemption Date") specified in the notice from the holder of the
      Unconverted Debentures electing this remedy; and

            "M" means the highest closing price per share of the Common Stock
      during the period beginning on the Redemption Date and ending on the date
      of payment of the Redemption Amount.

A holder of an Unconverted Debenture may elect one of the above remedies with
respect to a portion of such Unconverted Debenture and the other remedy with
respect to other portions of the Unconverted Debenture. The Debentures shall
contain provisions substantially consistent with the above terms, with such
additional provisions as may be consented to by the Buyer. The provisions of
this paragraph are not intended to limit the scope of the provisions otherwise
included in the Debentures.

            k. Hedging Transactions. (i) The Company understands that the Buyer
may be a so-called "hedge" fund, and the Company hereby expressly agrees that,
except as provided in subparagraph (ii) of this paragraph (k), the Buyer shall
not in any way be prohibited

<PAGE>

or restricted from any purchases or sales of any securities or other instruments
of, or related to, the Company or any of its securities, including, but not
necessarily limited to, puts, calls, futures contracts, short sales and hedging
and arbitrage transactions. The Buyer acknowledges that such purchases, sales
and other transactions may be subject to various federal and state securities
laws and agrees to comply with all such applicable securities laws.

            (ii) The Buyer agrees that, prior to the Effective Date, the Buyer
will not engage in any puts, calls, futures contracts, short sales and hedging
and arbitrage transactions with respect to the Common Stock.

            l. Right of First Refusal. (i) The Company covenants and agrees that
if during the period from the date hereof through and including the date which
is two hundred seventy (270) days after the Effective Date, the Company offers
to enter into any transaction other than with a Strategic Partner (a "New
Transaction") for the sale of New Common Stock, the Company shall notify the
Buyer in writing of all of the terms of such offer (a "New Transaction Offer").
The Buyer shall have the right (the "Right of First Refusal"), exercisable by
written notice given to the Company by the close of business on the fifth
business day after the Buyer's receipt of the New Transaction Offer (the "Right
of First Refusal Expiration Date"), to participate in all or any part of the New
Transaction Offer on the terms so specified.

            (ii) If, and only if, the Buyer does not exercise the Right of First
Refusal in full, the Company may consummate the remaining portion of the New
Transaction with any New Investor on the terms specified in the New Transaction
Offer within thirty (30) days of the Right of First Refusal Expiration Date.

            (iii) If the terms of the New Transaction to be consummated with
such other party differ from the terms specified in the New Transaction Offer so
that the terms are more beneficial in any respect to the New Investor, the
Company shall give the Buyer a New Transaction Offer relating to the terms of
the New Transaction, as so changed, and the Buyer's Right of First Refusal and
the preceding terms of this paragraph (l) shall apply with respect to such
changed terms.

            (iv) If there is more than one Buyer signatory to this Agreement,
the preceding provisions of this paragraph (l) shall apply pro rata among them
(based on their relative Buyer's Allocable Shares), except that, to the extent
any such Buyer does not exercise its Right of First Refusal in full (a
"Declining Buyer"), the remaining Buyer or Buyers who or which have exercised
their own Right of First Refusal in full, shall have the right (pro rata among
them based on their relative Buyer's Allocable Shares, if more than one) to
exercise all or a portion of such Declining Buyer's unexercised Right of
Refusal. Nothing in this paragraph (l) shall be deemed to permit a transaction
not otherwise permitted by subparagraph (g)(i), as modified by the provisions of
subparagraph (g)(ii).

            (v) In the event the New Transaction is consummated with such other
third party at any time prior to the expiration of ninety (90) days after the
Effective Date on terms providing

<PAGE>

for (x) either a sale price equal to or computed based on, or a determination of
a conversion price based on, a lower percentage of the then current market price
(howsoever defined or computed) than provided in the Debentures for determining,
the Conversion Rate (howsoever defined or computed) and/or (y) the issuance of
warrants at an exercise price lower than that provided in the Warrants, the
terms of any unissued or unconverted Debentures or any unissued or unexercised
Warrants shall be modified to reduce the relevant Conversion Rate or Warrant
exercise price to be equal to that provided in the New Transaction as so
consummated.

            m. Certain Transfers Require Consent of Company. Anything in the
other provisions of this Agreement or any of the other Transaction Agreements to
the contrary notwithstanding, in no event shall any one or more of the Buyers
individually or collectively transfer any of the Debentures, Shares, Warrants or
Warrant Shares to any party except (i) in an ordinary bona fide arm's-length
over-the-counter or other established market transaction, (ii) provided the
transferee in such transaction agrees in writing in favor of the Company and
enforceable by the Company, a copy of which writing shall be provided to the
Company, to be bound by the provisions of this paragraph, to a relative or
affiliate of the Buyer or (iii) with the prior written consent of the Company,
which consent the Company agrees not to unreasonably withhold or delay. The
provisions of this paragraph shall not be read in any way to limit any other
rights the Buyer may have under the Transaction Agreements , including but not
limited to the right to convert the Debentures as contemplated therein and in
this Agreement.

            5. TRANSFER AGENT INSTRUCTIONS.

            a. Promptly following the delivery by the Buyer of the Purchase
Price for the Initial Debentures in accordance with Section 1(c) hereof, the
Company will irrevocably instruct its transfer agent to issue Common Stock from
time to time upon conversion of the Debentures in such amounts as specified from
time to time by the Company to the transfer agent, bearing the restrictive
legend specified in Section 4(b) of this Agreement prior to registration of the
Shares under the 1933 Act, registered in the name of the Buyer or its nominee
and in such denominations to be specified by the Buyer in connection with each
conversion of the Debentures. The Company warrants that no instruction
inconsistent with the instructions referred to in this Section 5 and the stop
transfer instructions to give effect to Section 4(a) hereof prior to
registration and sale of the Shares under the 1933 Act will be given by the
Company to the transfer agent with respect to the Shares and that the Shares
shall otherwise be freely transferable on the books and records of the Company
as and to the extent provided in this Agreement, the Registration Rights
Agreement, and applicable law. Nothing in this Section shall affect in any way
the Buyer's obligations and agreement to comply with all applicable securities
laws upon resale of the Securities. If the Buyer provides the Company with an
opinion of counsel reasonably satisfactory to the Company that registration of a
resale by the Buyer of any of the Securities in accordance with clause (1)(B) of
Section 4(a) of this Agreement is not required under the 1933 Act, the Company
shall (except as provided in clause (2) of Section 4(a) of this Agreement)
permit the transfer of the Securities and, in the case of the Converted Shares
or the Warrant Shares, as the case may be, promptly instruct the Company's
transfer agent to issue one or more certificates for Common Stock without legend
in such name and in such

<PAGE>

denominations as specified by the Buyer.

            b. (i) The Company will permit the Buyer to exercise its right to
convert the Debentures by telecopying or delivering an executed and completed
Notice of Conversion to the Company and delivering, within five (5) business
days thereafter, the original Debentures being converted to the Company by
express courier, with a copy to the transfer agent.

               (ii) The term "Conversion Date" means, with respect to any
conversion elected by the holder of the Debentures, the date specified in the
Notice of Conversion, provided the copy of the Notice of Conversion is
telecopied to or otherwise delivered to the Company in accordance with the
provisions hereof so that it is received by the Company on or before such
specified date.

               (iii) The Company will transmit the certificates representing the
Converted Shares issuable upon conversion of any Debentures (together, unless
otherwise instructed by the Buyer, with Debentures not being so converted) to
the Buyer at the address specified in the Notice of Conversion (which may be the
Buyer's address for notices as contemplated by Section 11 hereof or a different
address) via recognized express or overnight courier, by electronic transfer or
otherwise, within three (3) business days if the address for delivery is in the
United States and within eight (8) business days if the address for delivery is
outside the United States (such third business day or eighth business day, as
the case may be, the "Delivery Date") after (A) the business day on which the
Company has received both of the Notice of Conversion (by facsimile or other
delivery) and the original Debentures being converted (and if the same are not
delivered to the Company on the same date, the date of delivery of the second of
such items) or (B) the date an interest payment on the Debenture, which the
Company has elected to pay by the issuance of Common Stock, as contemplated by
the Debentures, was due.

            c. The Company understands that a delay in the issuance of the
Shares of Common Stock beyond the Delivery Date could result in economic loss to
the Buyer. As compensation to the Buyer for such loss, the Company agrees to pay
late payments to the Buyer for late issuance of Shares upon Conversion in
accordance with the following schedule (where "No. Business Days Late" is
defined as the number of business days beyond two (2) business days from the
Delivery Date):

                                              Late Payment For Each $10,000
                                              of Debenture Principal or Interest
                  No. Business Days Late      Amount Being Converted
                  --------------------------------------------------------------
                        1                             $100
                        2                             $200
                        3                             $300
                        4                             $400
                        5                             $500

<PAGE>

                        6                             $600
                        7                             $700
                        8                             $800
                        9                             $900
                        10                            $1,000
                        >10                           $1,000 +$200 for each
                                                      Business Day Late beyond
                                                      10 days

The Company shall pay any payments incurred under this Section in immediately
available funds upon demand. Nothing herein shall limit the Buyer's right to
pursue actual damages for the Company's failure to issue and deliver the Common
Stock to the Buyer. Furthermore, in addition to any other remedies which may be
available to the Buyer, in the event that the Company fails for any reason to
effect delivery of such shares of Common Stock within two (2) business days
after the Delivery Date, the Buyer will be entitled to revoke the relevant
Notice of Conversion by delivering a notice to such effect to the Company
whereupon the Company and the Buyer shall each be restored to their respective
positions immediately prior to delivery of such Notice of Conversion.

            d. If, by the relevant Delivery Date, the Company fails for any
reason to deliver the Shares to be issued upon conversion of a Debenture and
after such Delivery Date, the holder of the Debentures being converted (a
"Converting Holder") purchases, in an arm's-length open market transaction or
otherwise, shares of Common Stock (the "Covering Shares") in order to make
delivery in satisfaction of a sale of Common Stock by the Converting Holder (the
"Sold Shares"), which delivery such Converting Holder anticipated to make using
the Shares to be issued upon such conversion (a "Buy-In"), the Company shall pay
to the Converting Holder, in addition to all other amounts contemplated in other
provisions of the Transaction Agreements, and not in lieu thereof, the Buy-In
Adjustment Amount (as defined below). The "Buy-In Adjustment Amount" is the
amount equal to the excess, if any, of (x) the Converting Holder's total
purchase price (including brokerage commissions, if any) for the Covering Shares
over (y) the net proceeds (after brokerage commissions, if any) received by the
Converting Holder from the sale of the Sold Shares. The Company shall pay the
Buy-In Adjustment Amount to the Company in immediately available funds
immediately upon demand by the Converting Holder. By way of illustration and not
in limitation of the foregoing, if the Converting Holder purchases shares of
Common Stock having a total purchase price (including brokerage commissions) of
$11,000 to cover a Buy-In with respect to shares of Common Stock it sold for net
proceeds of $10,000, the Buy-In Adjustment Amount which Company will be required
to pay to the Converting Holder will be $1,000.

            e. In lieu of delivering physical certificates representing the
Common Stock issuable upon conversion, provided the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer program, upon request of the Buyer and its compliance with the
provisions contained in this paragraph, so long as the certificates therefor do
not bear a legend and the Buyer thereof is not obligated to return such

<PAGE>

certificate for the placement of a legend thereon, the Company shall use its
best efforts to cause its transfer agent to electronically transmit the Common
Stock issuable upon conversion to the Buyer by crediting the account of Buyer's
Prime Broker with DTC through its Deposit Withdrawal Agent Commission system.

            f. The Company will authorize its transfer agent to give information
relating to the Company directly to the Buyer or the Buyer's representatives
designated by the Buyer in writing to the Company upon the request of the Buyer
or any such representative. The Company will provide the Buyer with a copy of
the authorization so given to the transfer agent.

            6. CLOSING DATES.

            a. The Initial Closing Date shall occur on the date which is the
first NYSE trading day after each of the conditions contemplated by Sections 7
and 8 hereof shall have either been satisfied or been waived by the party in
whose favor such conditions run.

            b. (i) The Additional Closing Date shall be earlier of the date
specified in the Filing Additional Closing Date Notice or the date contemplated
by the Effectiveness Additional Closing Date Notice (as those terms are defined
below; each an "Additional Closing Date Notice").
Each Additional Closing Date Notice shall be a written notice given by the
Company to the Buyer and to the Escrow Agent by fax transmission or hand
delivery. Additional provisions regarding the giving of any Additional Closing
Date Notice are provided in the following provisions of this Section 6(b).

               (ii) The term "Filing Additional Closing Date Notice" means a
notice given within thirty (30) days after the date (the "Statement Filing
Date") on which the Registration Statement has been filed by the Company with
the SEC (on the SEC's EDGAR system) in which the Company specifies as the
Additional Closing Date a business day which is at least forty-five (45) days
after the Statement Filing Date.

               (iii) Subject to the other provisions of this Section 6(b), the
term "Effectiveness Additional Closing Date Notice" means a notice given no
later than one (1) business day after the Company submits the Effectiveness
Request (as defined below; a copy of the Effectiveness Request shall be attached
to the Effectiveness Additional Closing Date Notice) in which the Company
specifies the the number of business days after the actual Effective Date, which
number shall be at least two (2) and not more than five (5), on which the
Additional Closing Date is to occur. If an Effectiveness Closing Date Notice is
given, the Company shall also notify the Buyer and the Escrow Agent both (x) by
fax transmission or hand delivery and (y) by telephone communication of the
actual Effective Date declared by the SEC no later than noon on the business day
after such Effective Date.

               (iv) The term "Effectiveness Request" means the Company's written
request to the SEC that the SEC declare the Registration Statement effective on
a specified date

<PAGE>

which is more than (5) business days prior to the Additional Closing Date
specified in the Filing Additional Closing Date Notice; provided, however, that
the Effectiveness Request shall be given only after the SEC has advised the
Company informally, in writing or otherwise that it will respond favorably to
such request.

               (v) The closing for the Additional Debentures shall be conducted
upon the same terms and conditions as those applicable to the Initial
Debentures.

               (vi) The Buyer agrees that, anything in Section 10 hereof to the
contrary notwithstanding, an Additional Closing Date Notice and any other
communication contemplated to be given to the Buyer under this Section 6(b)
shall be deemed properly given to the Buyer if such notice is given in the
manner contemplated by this Section 6(b) to Advisor Associates, Inc., 1575 45th
Street, Brooklyn, NY 11219, Attn: Nourit Bassiri, telephone no. (718) 972-6400,
fax no. (718) 972-8141 on behalf of Buyer.

            c. Each closing of the purchase and issuance of Debentures shall
occur on the relevant Closing Date at the offices of the Escrow Agent and shall
take place no later than 3:00 P.M., New York time, on such day or such other
time as is mutually agreed upon by the Company and the Buyer.

            d. Notwithstanding anything to the contrary contained herein, the
Escrow Agent will be authorized to release the Escrow Funds to the Company and
to others and to release the other Escrow Property on the relevant Closing Date
upon satisfaction of the conditions set forth in Sections 7 and 8 hereof and as
provided in the Joint Escrow Instructions.

            7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

            The Buyer understands that the Company's obligation to sell the
relevant Debentures to the Buyer pursuant to this Agreement on the relevant
Closing Date is conditioned upon:

            a. The execution and delivery of this Agreement by the Buyer;

            b. Delivery by the Buyer to the Escrow Agent of good funds as
payment in full of an amount equal to the Purchase Price for the relevant
Debentures in accordance with this Agreement;

            c. The accuracy on such Closing Date of the representations and
warranties of the Buyer contained in this Agreement, each as if made on such
date, and the performance by the Buyer on or before such date of all covenants
and agreements of the Buyer required to be performed on or before such date; and

            d. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained.

<PAGE>

            8. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.

            The Company understands that the Buyer's obligation to purchase the
Debentures on the relevant Closing Date is conditioned upon:

            a. The execution and delivery of this Agreement and the Registration
Rights Agreement by the Company;

            b. Delivery by the Company to the Escrow Agent of the relevant
Certificates in accordance with this Agreement;

            c. The accuracy in all material respects on such Closing Date of the
representations and warranties of the Company contained in this Agreement. each
as if made on such date, and the performance by the Company on or before such
date of all covenants and agreements of the Company required to be performed on
or before such date;

            d. On such Closing Date, the Registration Rights Agreement shall be
in full force and effect and the Company shall not be in default thereunder;

            e. On such Closing Date, the Buyer shall have received an opinion of
counsel for the Company, dated such Closing Date, in form, scope and substance
reasonably satisfactory to the Buyer, substantially to the effect set forth in
Annex III attached hereto;

            f. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained;

            g. From and after the date hereof to and including such Closing
Date, the trading of the Common Stock shall not have been suspended by the SEC
or the NASD and trading in securities generally on the New York Stock Exchange
or The NASDAQ/Bulletin Board Market shall not have been suspended or limited,
nor shall minimum prices been established for securities traded on The
NASDAQ/Bulletin Board Market, nor shall there be any outbreak or escalation of
hostilities involving the United States or any material adverse change in any
financial market that in either case in the reasonable judgment of the Buyer
makes it impracticable or inadvisable to purchase the Debentures; and

            h. With respect to the Additional Closing Date,

            (i) an appropriate Additional Closing Date Notice shall have been
duly given;

            (ii) if the Additional Closing Date is the date contemplated by the
Effectiveness Additional Closing Date Notice, the Registration Statement shall
have been declared effective by the SEC to cover all Registrable Securities for
all the Debentures (and all the related Warrants), as contemplated by the
Registration Rights Agreement, prior to such Additional Closing Date;

<PAGE>

            (iii) the representations and warranties of the Company contained in
Section 3 hereof shall be true and correct in all material respects (and the
Company's issuance of the relevant Additional Debentures shall constitute the
Company's making each such representation and warranty as of such date) and
there shall have been no material adverse changes (financial or otherwise) in
the business or conditions of the Company from the Initial Closing Date through
and including the Additional Closing Date (and the Company's issuance of the
relevant Additional Debentures shall constitute the Company's making such
representation and warranty as of such date), (iv) the Company shall have timely
issued all shares issuable upon conversion of the Debentures prior to the date
of such Additional Closing Date; and

            (iv) the Company shall have available and shall reserve for issuance
to Buyer at least one hundred percent (100%) of the number of Shares which would
be issued on conversion of all unconverted Initial Debentures and all Additional
Debentures and exercise of all unexercised Warrants and all Warrants which would
be issued in connection with the conversion of any unconverted Debentures
(including all Additional Debentures).

            9. GOVERNING LAW: MISCELLANEOUS.

            a. This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Delaware for contracts to be wholly performed in
such state and without giving effect to the principles thereof regarding the
conflict of laws. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the City of Wilmington or
the state courts of the State of Delaware sitting in the City of Wilmington in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent permitted by law, any objection, including any objection
based on forum non conveniens, to the bringing of any such proceeding in such
jurisdictions. To the extent determined by such court, the Company shall
reimburse the Buyer for any reasonable legal fees and disbursements incurred by
the Buyer in enforcement of or protection of any of its rights under any of the
Transaction Agreements.

            b. 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.

            c. This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties hereto.

            d. All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.

            e. A facsimile transmission of this signed Agreement shall be legal
and binding on all parties hereto.

<PAGE>

            f. This Agreement may be signed in one or more counterparts, each of
which shall be deemed an original.

            g. The headings of this Agreement are for convenience of reference
and shall not form part of, or affect the interpretation of, this Agreement.

            h. 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 or the
validity or enforceability of this Agreement in any other jurisdiction.

            i. This Agreement may be amended only by an instrument in writing
signed by the party to be charged with enforcement thereof.

            j. This Agreement supersedes all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof.

            10. NOTICES. Any notice required or permitted hereunder shall be
given in writing (unless otherwise specified herein) and shall be deemed
effectively given on the earliest of

            (a) the date delivered, if delivered by personal delivery as against
            written receipt therefor or by confirmed facsimile transmission,

            (b) the seventh business day after deposit, postage prepaid, in the
            United States Postal Service by registered or certified mail, or

            (c) the third business day after mailing by international express
            courier, with delivery costs and fees prepaid,

in each case, addressed to each of the other parties thereunto entitled at the
following addresses (or at such other addresses as such party may designate by
ten (10) days' advance written notice similarly given to each of the other
parties hereto):

COMPANY:          Ambient Corporation
                  270 Madison Avenue
                  New York, NY 10016
                  Attn:
                  Telephone No.: (888) 861-0205
                  Telecopier No.:(212)    -

                  with a copy to:

                  Baer Marks & Upham

<PAGE>

                  New York, NY
                  Attn: Samuel Ottensosser, Esq.
                  Telephone No.: (212) 702-5700
                  Telecopier No. (212)    -

                  and with a copy to:

                  Aboudi & Brounstein
                  3 Gavish St.
                  P.O.B.  2432
                  Kfar Saba Industrial Zone, Israel 44641
                  Attn: David Aboudi, Esq.
                  Telephone No.: (011 972 9) 764-4833
                  Telecopier No.:(011 972 9) 764-4834

<PAGE>

BUYER:            At the address set forth on the signature page of this
                  Agreement.

                  with a copy to:

                  Krieger & Prager LLP, Esqs.
                  39 Broadway
                  Suite 1440
                  New York, NY 10006
                  Attn: Samuel Krieger, Esq.
                  New York, New York 10016
                  Telephone No.: (212) 363-2900
                  Telecopier No. (212) 363-2999

ESCROW AGENT:     Krieger & Prager LLP, Esqs.
                  39 Broadway
                  Suite 1440
                  New York, NY 10006
                  Attn: Samuel Krieger, Esq.
                  New York, New York 10016
                  Telephone No.: (212) 363-2900
                  Telecopier No. (212) 363-2999

            11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's and the
Buyer's representations and warranties herein shall survive the execution and
delivery of this Agreement and the delivery of the Certificates and the Warrants
and the payment of the Purchase Price, and shall inure to the benefit of the
Buyer and the Company and their respective successors and assigns.

                   [BALANCE OF PAGE INTENTIONALLY LEFT BLANK.]

<PAGE>

            IN WITNESS WHEREOF, this Agreement has been duly executed by the
Buyer by one of its officers thereunto duly authorized as of the date set forth
below.

AMOUNT AND PURCHASE PRICE OF DEBENTURES:        $

                             SIGNATURES FOR ENTITIES

      IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this       day of            , 2000.
                                                ------       -----------


--------------------------------
Address                             Printed Name of Subscriber

--------------------------------
                                    By:


Telecopier No.                     (Signature of Authorized Person)
              ------------------
                                    -------------------------------------
                                    Printed Name and Title


-----------------------------
Jurisdiction of Incorporation
or Organization

 As of the date set forth below, the undersigned hereby accepts this Agreement
and represents that the foregoing statements are true and correct and that it
has caused this Securities Purchase Agreement to be duly executed on its behalf.

AMBIENT CORPORATION

By:

Title:
Date:                                                ,2000
                  ----------------------------------------

<PAGE>

      ANNEX I           FORM OF DEBENTURE

      ANNEX II          JOINT ESCROW INSTRUCTIONS

      ANNEX III         OPINION OF COUNSEL

      ANNEX IV          REGISTRATION RIGHTS AGREEMENT

      ANNEX V           COMPANY DISCLOSURE MATERIALS

      ANNEX VI          FORM OF WARRANT