EXHIBIT 4.1

                          SECURITIES PURCHASE AGREEMENT

      THIS SECURITIES PURCHASE AGREEMENT, dated as of the date of acceptance set
forth below (this  "Agreement"),  is entered into by and between  NATURAL HEALTH
TRENDS CORP., a Florida  corporation,  with headquarters  located at 380 Lashley
Street, Longmont, CO 80501 (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  Regulation  S  ("Regulation  S")  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,  shares of Series J Convertible  Preferred  Stock,
$.001par value, and having a liquidation  preference of $1,000 per share, of the
Company (the  "Convertible  Preferred  Stock")  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
Preferred Stock,  together with the Warrants (as defined below)  exercisable for
the purchase of shares of Common Stock (the  "Warrant  Shares"),  and subject to
acceptance of this Agreement by the Company; and

      WHEREAS,  the  Convertible  Preferred Stock and the Shares (as those terms
are defined  below) have not been  registered  under the 1933 Act and may not be
offered or sold in the United States or to U.S. Persons, other than distributors
(as such terms are defined in Regulation  S), unless the  Convertible  Preferred
Stock or the Shares,  as the case may be, are registered  under the 1933 Act, or
an exemption or safe harbor from the registration  provisions of the 1933 Act is
available;

      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; Certain Definitions.

      (i) The undersigned hereby agrees to purchase from the Company Convertible
Preferred  Stock having a liquidation  preference in the amount set forth on the
Buyer's signature page


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of this Agreement (the "Preferred Stock"), out of a total offering of $1,000,000
of such  Convertible  Preferred  Stock,  and having the terms and conditions set
forth in the Statement of  Designations  of the Series J  Convertible  Preferred
Stock  of  the  Company  attached  hereto  as  Annex  I  (the   "Certificate  of
Designations").

      (ii)  The  purchase  price to be paid by the  Buyer  shall be equal to the
amount set forth on the Buyer's  signature page of this Agreement,  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 Preferred  Stock, the Warrants and the Common
Stock  issuable upon  conversion  of the Preferred  Stock or the exercise of the
Warrants.

      (ii) "Purchase Price" means the purchase price for the Preferred Stock.

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

      (iv) "Buyer's  Allocable  Share" means the fraction of which the numerator
is the  liquidation  preference of the Buyer's  Preferred Stock specified on the
Buyer's signature page of this Agreement and the denominator is $1,000,000.

      (v)  "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).

      (vi)  "Converted  Shares"  means the shares of Common Stock  issuable upon
conversion of the Preferred Stock.

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

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

      (ix) As used herein, the term "Market Price of the Common Stock" means the
average  closing bid price of the Common  Stock for the three (3)  trading  days
(which need not be  consecutive)  during the period of the twenty  (20)  trading
days ending on the  trading day  immediately  before the date  indicated  in the
relevant  provision  hereof (unless a different  relevant period is specified in
the relevant  provision) for which the closing bid price of the Common Stock (as
reported by Bloomberg,  LP or, if not so reported, as reported by the securities
exchange or automated quotation system on which the Common Stock is listed or on
the over-the-counter market) were the lowest.


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      (x)  "Person"  means any  living  person or any  entity,  such as, but not
necessarily limited to, a corporation, partnership or trust.

      (xi) "Affiliate"  means,  with respect to a specific Person referred to in
the relevant provision, another Person who or which controls or is controlled by
or is under common control with such specified Person.

      (xii) "Transaction  Agreements" means the Securities  Purchase  Agreement,
the  Registration  Rights  Agreement  (as defined  below),  the  Certificate  of
Designations,  the  Warrants,  and the Joint  Escrow  Instructions  (as  defined
below).

      c. Form of Payment; Delivery of Certificates.

      (i) The Buyer  shall pay the  Purchase  Price for the  Preferred  Stock 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 Closing Date.

      (ii) No later than the Closing Date, but in any event  promptly  following
payment by the Buyer to the Escrow  Agent of the  Purchase  Price,  the  Company
shall deliver one or more certificates  representing the Preferred Stock and, if
relevant  to the  transactions  to be  consummated  on that  Closing  Date,  the
Warrants to be issued hereunder, each duly executed on behalf of the Company and
issued in the name of the Buyer (collectively, the "Certificates") to the Escrow
Agent. Time is of the essence with respect to such delivery,  and failure by the
Company to make such delivery shall allow the Buyer to cancel this Agreement.

      (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: Natural Health Trends Transaction


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Not later than 5:00 p.m., New York time, on the date which is three (3) New York
Stock Exchange  ("NYSE") trading days after the Company shall have accepted this
Agreement  and  returned a signed  counterpart  of this  Agreement to the Escrow
Agent by  facsimile,  the Buyer shall deposit with the Escrow Agent the Purchase
Price for the Preferred  Stock in immediately  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  Preferred  Stock 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.    (i) The Buyer is not a U.S.  Person as that  term is  defined  under
Regulation S, and is not controlled, directly or indirectly, by a U.S. Person.

            (ii) The Buyer is outside  the  United  States as of the date of the
execution and delivery of this Agreement.

            (iii)  The  Buyer is  purchasing  the  Preferred  Stock  for its own
account  and not on  behalf  of any  U.S.  Person,  and the  Buyer  is the  sole
beneficial  owner of the Preferred  Stock,  and has not pre-arranged any sale of
the Securities with any purchaser or purchasers in the United States.

            (iv) The Buyer  understands  that the Preferred Stock and the Shares
may not be transferred, offered or sold in the United States or to a U.S. Person
or  citizen  of the  United  States  prior  to  the  end of  the  one  (1)  year
Distribution Compliance Period (the "Restricted Period") commencing on the later
of (A) the date the  Preferred  Stock are first  offered to  persons  other than
Distributors  (as defined in  Regulation S) or (B) the date of the final closing
of the Offering of the Preferred  Stock by the Company.  The Buyer  acknowledges
that the Company may not allow a transfer of the  Preferred  Stock in the United
States or to a U.S.  Person or citizen of the United States if, in the Company's
opinion,  Regulation  S or  any  other  applicable  state,  federal  or  foreign
securities laws have not been complied with.


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            (v) The Buyer  understands that in the view of the SEC the statutory
basis for the exemption claimed for this transaction would not be present if the
offering of Preferred  Stock,  and the Shares issuable upon conversion  thereof,
although in technical  compliance with Regulation S, is part of a plan or scheme
to evade the registration provisions of the 1933 Act. The Buyer is acquiring the
Preferred Stock for investment purposes and has no present intention to sell the
Preferred Stock, or the Shares issuable upon conversion  thereof,  in the United
States or to a U.S. Person or for the account or benefit of a U.S. Person either
now or after  the  expiration  of the  Restricted  Period,  except  pursuant  to
registration thereof or an exemption or safe harbor from registration.

            (vi)  The  Buyer  is  not an  underwriter  of,  or  dealer  in,  the
Securities,  and the  Buyer  is not  participating,  pursuant  to a  contractual
agreement, in the distribution of the Securities.

            (vii)  No offer to sell the  Preferred  Stock  has been  made to the
Buyer  within  the  United  States,  and the Buyer is not and will not be in the
United States as of the date of execution and delivery of this Agreement.

            (viii) If the Buyer is a corporation or a partnership, the Buyer was
not (A) formed  principally  for the purpose of acquiring the Preferred Stock or
the  Shares,  or any other  securities  not  registered  under  the Act,  or (B)
organized or  incorporated  under the laws of any state or  jurisdiction  of the
United States.

            (ix)  The  Buyer is not  subscribing  for the  Preferred  Stock as a
result  of  or  subsequent  to  any  advertisement,  article,  notice  or  other
communication published in any newspaper, magazine or similar media or broadcast
over  television  or radio,  or  presented  at any  seminar or  meeting,  or any
solicitation  of a subscription  by person  previously not known to the Buyer in
connection with investment securities generally.

            (x) The Buyer is purchasing the Preferred  Stock for its own account
and/or for accounts over which the Buyer has discretionary authority, and not on
behalf of or for the  account  of any  person  or entity  who or which is a U.S.
Person  or  citizen  of the  United  States  and not  with a view to  resale  or
distribution  or any present  intention to resell or  distribute  the  Preferred
Stock or the Shares in violation of any  applicable  securities  laws.  Anything
herein  contained  to the  contrary  notwithstanding,  for the  purposes of this
Agreement, the term "Buyer" shall mean the undersigned,  and, if applicable, any
person or entity for whom or which the  undersigned is subscribing for Preferred
Stock pursuant to discretionary authority granted to the undersigned.

            (xi) The  Buyer  is not  purchasing  the  Preferred  Stock  with the
present intention of "distributing" the Preferred Stock on behalf of the Company
or on behalf of a  "distributor"  as  defined in  Regulation  S, or any of their
affiliates, in the United States or to a U.S. Person.

            (xii) The Buyer is not a "distributor" as defined in Regulation S.


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            (xiii)  To  the  knowledge  of  the  Buyer,  no  activity  has  been
undertaken by the Company or any person acting on its behalf for the purpose of,
or that could  reasonably  be expected to have the effect of,  conditioning  the
market for the Preferred Stock or the Shares in the United States.

            (xiv)  The  Buyer  understands  that,  except  as set  forth  in the
Registration  Rights  Agreement,  the Company is under no obligation to register
the  Preferred  Stock or the  Shares  under the Act,  or to assist  the Buyer in
complying with the Act or the securities  laws of any state of the United States
or of any foreign jurisdiction.

            (xv) The  Buyer  does not have a short  position  in the  Shares  or
otherwise  have a hedge against the risk of purchasing  the Preferred  Stock and
will not have a short  position  in the  Shares or  otherwise  hedge the risk of
holding  the  Preferred  Stock  at  any  time  prior  to the  expiration  of the
Restricted Period.

            (xvi) If at any time after the expiration of the  Restricted  Period
the Buyer wishes to transfer or attempts to transfer the Preferred  Stock or the
Shares to a U.S. Person,  the Buyer agrees to notify the Company if at such time
it is either an "underwriter,"  "dealer," distributor," or an "affiliate" of the
Company (as such terms are defined in the federal  securities laws of the United
States or the regulations promulgated hereunder,  including, but not limited to,
Regulation  S), or if such transfer is being made as part of a plan or scheme to
evade the registration provisions of the Act.

            (xvii) In the  event  that the  Buyer  desires  to offer or sell the
Preferred Stock or the Shares, such offer or sale shall at all times comply with
the Act and rules and regulations promulgated  thereunder,  including Regulation
S, and all other applicable state,  federal and foreign securities laws. Subject
to effective  registration  of the Shares,  the Buyer  agrees not,  prior to the
expiration of the Restricted Period, to sell the Preferred Stock or Shares to or
for the account or benefit of a U.S.  Person,  to a citizen of the United States
or in the United  States,  except in compliance  with the Act and the applicable
rules and regulations promulgated thereunder and thereafter the Buyer agrees not
to sell the Preferred  Stock or Shares in the United States except in compliance
with the Act and the applicable  rules and regulations  promulgated  thereunder,
including Regulation S, and all applicable state, federal and foreign securities
laws.

      c. 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.


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      d. All subsequent  offers and sales of the Preferred  Stock 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.

      e. The Buyer understands that the Securities 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 Preferred  Stock. In
particular,  the Buyer  understands  that the  Company  is  relying on the rules
governing offers and sales made outside the United States pursuant to Regulation
S. Rules 901 through 904 of Regulation S govern this transaction. The Buyer will
notify the Company immediately upon the occurrence of any material change in the
information regarding the Buyer contained herein occurring prior to the issuance
of Converted Shares.

      f. 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 Preferred Stock and the offer of
the Shares which have been requested by the Buyer,  including those set forth on
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, (2) Quarterly  Reports on Form 10-QSB for the fiscal quarters
ended March 31, June 30, 1999, and September 30, 1999, respectively, (3) Current
Reports on Form 8-K filed on January 25, 1999 and February 19, 1999,  as amended
as filed on May 5, 1999, (4)  Definitive  Proxy  Statement  filed on January 25,
1999,  and (5)  Registration  Statement on Form S-1/A filed on November 12, 1999
(collectively, the "Company's SEC Documents").

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

      h. 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.

      i,  The  Buyer  hereby  covenants  that it will  comply  with all laws and
regulations in each foreign jurisdiction in which it purchases, offers, sells or
delivers the  Securities,  or has in its possession or distributes  any offering
material.

      j. 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.


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      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 Company Disclosure  Materials attached hereto as Annex
V hereto:

      a. Concerning the Preferred Stock and the Shares.  The Preferred Stock has
been duly authorized,  and when issued and paid for in accordance with the terms
of  this  Agreement,   will  be  duly  and  validly   issued,   fully  paid  and
non-assessable  and will not  subject the holder  thereof to personal  liability
solely  by reason of  acquiring  the  Preferred  Stock  hereunder.  There are no
preemptive  rights of any  stockholder  of the Company,  as such, to acquire the
Preferred Stock, the Warrants or the Shares.

      b. Reporting Company Status.  The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida 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 is a "Reporting Issuer" as defined by
Rule 902 of Regulation S. The Company has  registered its stock and is obligated
to file  reports  pursuant  to Section 12 of the 1934 Act.  The Common  Stock is
listed and traded on The  NASDAQ/SmallCap  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) 50,000,000  shares of Common Stock,  $.001 par value per share,  of which
approximately  7,860,000  shares had been  issued as of the date hereof and (ii)
1,500,000  shares of Preferred Stock, par value $.001 per share, of which shares
have been issued as of the date  hereof as  provided in Annex V annexed  hereto.
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 dividends on, the Preferred Stock 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 each of the other Transaction Agreements,


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when  executed  and  delivered  by the  Company,  will be, a valid  and  binding
agreement 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 Preferred Stock 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 certificate 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,  condition (financial or otherwise), or results of
operations  of the Company  and its  subsidiaries,  taken as a whole,  or on the
transactions contemplated herein.

      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,  condition  (financial  or  otherwise),  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,


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<PAGE>


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,   condition  (financial  or  otherwise),  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,  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, condition (financial or otherwise), 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,  condition (financial or otherwise), or results of operations of the
Company and its subsidiaries, taken as a whole.

      l. Prior  Issues.  Except as disclosed  in the  Company's  SEC  Documents,
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 the date hereof are set forth in
Annex V.


                                       10

<PAGE>


      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,  condition
(financial  or  otherwise),  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,  condition
(financial or otherwise), 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  (other  than  the  transactions  contemplated  by the  Transaction
Agreements)  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.  Dilution.  The  number  of  Shares  issuable  upon  conversion  of the
Preferred Stock 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  Preferred  Stock.  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 and its shareholders.
The Company  specifically  acknowledges  that its obligation to issue the Shares
upon  conversion  of the  Preferred  Stock 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,  and the Company will honor every Notice of  Conversion  (as defined in
the  Certificate  of  Designations)  relating to the conversion of the Preferred
Stock and every  Notice  of  Exercise  Form (as  contemplated  by the  Warrants)
relating  to the  exercise of the  Warrants  unless the Company is subject to an
injunction  (which  injunction  was not sought by the Company)  prohibiting  the
Company from doing so.

      o. Offshore Transaction. The Company has not offered or sold the Preferred
Stock to any  person in the  United  States,  or, to the best  knowledge  of the
Company any identifiable  groups of U.S.  citizens abroad, or any U.S. Person as
that  term is  defined  in  Regulation  S. At the  time  the buy  order  for the
Preferred  Stock was  originated,  the  Company  and/or  its  agents  reasonably
believed the Buyer was outside the United States and was not a U.S. Person.

      p. No Directed Selling Efforts. In regard to this transaction, the Company
has not conducted any "direct  selling  efforts" as that term is defined in Rule
902 of  Regulation  S nor has the Company  conducted  any  general  solicitation
relating  to the offer and sale of the within  securities  to  persons  resident
within the United States or elsewhere.


                                       11

<PAGE>

      q. Brokers, Finders. 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(q)  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 Preferred
Stock 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  person is under any
obligation to register the Securities (other than to the extent  contemplated by
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
Preferred  Stock 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 or an
applicable  exemption  from  registration,  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,   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  COMPANY  THAT  SUCH  REGISTRATION  IS NOT
         REQUIRED.


                                       12

<PAGE>


The legend set forth  above  shall be promptly  removed,  and the Company  shall
issue a  certificate  without  such legend to the holder of any such  Securities
upon which such legend is stamped,  if, unless otherwise  required by federal or
state  securities  laws, (i) such Securities are registered for resale under the
Securities  Act  and are  sold in  accordance  with  an  effective  Registration
Statement,  or (ii) such holder provides the Company with reasonable  assurances
that such Securities can be sold pursuant to Rule 144(k)  promulgated  under the
Securities  Act. The Company shall bear the cost of the removal of any legend as
anticipated by this Section 4.

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

      d. Filings.  (i) 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.

      (ii) Subject to the conditions of the immediately following sentence,  the
Company  undertakes and agrees to take all steps necessary to have a meeting and
vote of the  stockholders  of the  Company  no later than the  Meeting  Date (as
defined below) regarding  authorization of the Company's issuance to the holders
of the  Preferred  Stock and  Warrants  of  shares of Common  Stock in excess of
twenty  percent (20%) of the  outstanding  shares of Common Stock on the date of
this  Agreement  in  accordance  with  NASDAQ  Rule  4310(c)(25)(H)(i)  or  Rule
4460(i)(1),  as may be applicable.  The term "Meeting Date" means the date which
is the earlier of (x) seventy-five (75) days after the date on which the Company
has issued,  after the date of this Agreement,  shares of Common Stock which, in
the  aggregate  equal or exceed ten percent (10%) of the  outstanding  shares of
Common  Stock on the date hereof or (y) the date on which the Company  holds its
next regular or special stockholders  meeting. The Company will recommend to the
stockholders  that such  authorization  be granted  and will seek  proxies  from
stockholders  not  attending  the  meeting  naming a director  or officer of the
Company as such  stockholder's  proxy and directing the proxy to vote, or giving
the proxy the authority to vote, in favor of such authorization.

      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/SmallCap  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/SmallCap Market.

      f. Use of Proceeds. The Company will use the proceeds from the sale of the
Preferred Stock (excluding amounts paid by the Company for legal fees,  finder's
fees and escrow fees in  connection  with the sale of the  Preferred  Stock) for
internal working capital purposes, and, unless


                                       13

<PAGE>


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

      g. 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 the aggregate of (i) one hundred fifty percent (150%) of the
number of shares of Common Stock  issuable at  conversion  as may be required to
satisfy the conversion  rights of the Buyer pursuant to the terms and conditions
of the Certificate of  Designations or to represent  payment of dividends on the
Preferred  Stock and (ii) the number of shares  issuable upon exercise as may be
required to satisfy the exercise  rights of the Buyer  pursuant to the terms and
conditions of the Warrants.

      h. Warrants.  The Company agrees to issue to the Buyer on the Closing Date
transferable warrants (the "Warrants") for the purchase of a number of shares of
Common  Stock  equal  to(x)  twenty  percent  (20%) of the  Purchase  Price,  as
indicated on the Buyer's  signature page to this Agreement,  divided by (y) 110%
of the closing bid price of the Common Stock (as reported by  Bloomberg,  LP) on
the trading day immediately  before the Closing Date. The Warrants shall bear an
exercise  price per share  equal to 110% of the  closing bid price of the Common
Stock (as reported by Bloomberg,  LP) on the trading day immediately  before the
Closing Date (subject to  adjustment  as provided in the Warrant).  The Warrants
will expire on the last day of the calendar month in which the fifth anniversary
of the 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.

      i.  Limitation on Issuance of Shares.  If  applicable to the Company,  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) or Rule 4460(i)(1),  as may be applicable  (collectively,  the
"Cap Regulations"). Without limiting the other provisions thereof, the Preferred
Stock  shall  provide  that  (i) the  Company  will  take all  steps  reasonably
necessary to be in a position to issue shares of Common Stock on  conversion  of
the Preferred  Stock 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 share of Preferred Stock
which  can not be  converted  as result  of the Cap  Regulations  after all such
shares of Preferred Stock which can be converted under the Cap Regulations  have
been converted (each such share, an "Unconverted  Share") 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


                                       14

<PAGE>


      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  such  Unconverted  Share for an
      amount (the "Cap Limitation  Redemption  Amount"),  payable in cash, equal
      to:

                        V                    x            M
                     ------
                       CP

      where:

            "V" means the liquidation  preference of the Unconverted  Share plus
      any accrued but unpaid dividends 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 Share 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 Cap Limitation Redemption Amount.

A holder of more than one Unconverted  Share may elect one of the above remedies
with  respect  to some of such  Unconverted  Shares  and the other  remedy  with
respect  to other  Unconverted  Shares.  The Cap  Limitation  Redemption  Amount
payable under the provisions of this Section 4(i) shall be payable within thirty
(30) days of the Redemption Date. The Certificate of Designations  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
Certificate of Designations.

      j. Right of First Refusal,  Special Dilution  Protection.  (i) The Company
covenants and agrees that, if during the period from the date hereof through and
including  the date which is two hundred  forty  (240) days after the  Effective
Date,  the  Company  offers  to  enter  into  any  transaction   other  than  an
underwritten  public offering (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 third  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


                                       15

<PAGE>


on the terms specified in the New  Transaction  Offer within twenty (20) 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  Section  4(j) 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 Section 4(j) 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.

      (v) In the event the New  Transaction is  consummated  for the sale of New
Common  Stock or the issuance of warrants or other rights to purchase New Common
Stock with such third party at any time prior to the  expiration  of two hundred
forty (240) days after the  Effective  Date on terms  providing 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  Certificate  of  Designations  for
determining  the  Conversion  Rate or a lower  Fixed  Price (as  defined  in the
Certificate  of  Designations,  but  howsoever  defined or  computed  in the New
Transaction  documents) and/or (y) the issuance of warrants at an exercise price
lower than that provided in the Warrants  and/or for a greater  number of shares
per dollar paid or invested by such third party to or in the Company,  the terms
of the Certificate of Designations (or other  documentation  affecting the terms
of the  Preferred  Stock) and the Warrants  (whether  previously  issued  and/or
converted or not) shall be modified to (i) reduce the relevant  Conversion Rate,
Fixed Price or Warrant  exercise price and/or (ii) increase the number of shares
covered by the  Warrants,  in each  instance to be equal to that provided in the
New  Transaction  as so  consummated  (provided,  however,  that such  increased
Warrants  shall have the same  exercise  price  formula  as the New  Transaction
warrants).

      k.  Reimbursement.  If (i) any  Buyer,  other  than by reason of its gross
negligence  or willful  misconduct,  becomes  involved  in any  capacity  in any
action,  proceeding or investigation  brought by any stockholder of the Company,
in  connection  with or as a  result  of the  consummation  of the  transactions
contemplated by the Transaction Agreements, or if such Buyer is impleaded in any
such action, proceeding or investigation by any Person, or (ii) any Buyer, other
than by reason of its gross negligence or willful misconduct or by reason of its
trading  of the  Common  Stock in a manner  that is  illegal  under the  federal
securities laws,  becomes involved in any capacity in any action,  proceeding or
investigation  brought  by the  SEC  against  or  involving  the  Company  or in
connection  with  or  as a  result  of  the  consummation  of  the  transactions
contemplated by the


                                       16

<PAGE>


Transaction  Agreements,  or if such  Buyer is  impleaded  in any  such  action,
proceeding or  investigation  by any Person,  then in any such case, the Company
will reimburse such Buyer for its reasonable legal and other expenses (including
the cost of any investigation and preparation) incurred in connection therewith,
as such  expenses are incurred.  The  reimbursement  obligations  of the Company
under this paragraph shall be in addition to any liability which the Company may
otherwise  have,  shall  extend  upon  the  same  terms  and  conditions  to any
Affiliates  of the Buyers who are actually  named in such action,  proceeding or
investigation,  and  partners,  directors,  agents,  employees  and  controlling
persons (if any), as the case may be, of the Buyers and any such Affiliate,  and
shall be binding upon and inure to the benefit of any successors, assigns, heirs
and personal  representatives of the Company,  the Buyers and any such Affiliate
and any such Person. The Company also agrees that neither any Buyer nor any such
Affiliate,  partners,  directors, agents, employees or controlling persons shall
have any liability to the Company or any person asserting claims on behalf of or
in right of the Company in connection with or as a result of the consummation of
the  Transaction  Agreements  except  to the  extent  that any  losses,  claims,
damages,  liabilities or expenses  incurred by the Company result from the gross
negligence or willful misconduct of such Buyer.

      5. TRANSFER AGENT INSTRUCTIONS.

      a. The Company  warrants that, with respect to the Securities,  other than
the stop transfer  instructions  to give effect to Section 4(a) hereof,  it will
give its transfer agent no instructions  inconsistent with instructions to issue
Common Stock from time to time upon  conversion of the  Preferred  Stock 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 Preferred  Stock.  Except as so provided,
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 denominations as specified by the Buyer.

      b. Subject to the  provisions of this  Agreement,  the Company will permit
the Buyer to  exercise  its right to convert the  Preferred  Stock in the manner
contemplated by the Certificate of Designations.

      c. The Company  understands  that a delay in the issuance of the Shares of
Common  Stock  beyond  the  Delivery  Date (as  defined  in the  Certificate  of
Designations) could result


                                       17

<PAGE>


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  three (3) business
days from the Delivery Date):

                                         Late Payment For Each $10,000
                                         of Liquidation Preference or Dividend
   No. Business Days Late                Amount Being Converted
   ----------------------                -------------------------------------
             1                           $100
             2                           $200
             3                           $300
             4                           $400
             5                           $500
             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.  For purposes of this Section  5(c), in connection
with a Mandatory Conversion (as defined in the Certificate of Designations), the
term  "Delivery  Date"  shall  refer to the  earlier  of (i) the  Delivery  Date
determined in relation to a Notice of Conversion actually submitted by the Buyer
to the Company or (ii) the fourth or sixth  business  date,  as the case may be,
after written  notice from the Buyer that the delivery of shares to the Buyer in
connection with the Mandatory Conversion has not been accomplished.  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 three (3) 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  Preferred  Stock and after
such  Delivery  Date,  the holder of the  Preferred  Stock  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 Converting Holder
shall have the right, to require the Company to pay to the Converting Holder, in
addition to the amounts contemplated in other provisions of the


                                       18

<PAGE>


Transaction  Agreements,  and not in lieu of any such other amounts,  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
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. If, at any time the Company challenges, disputes or denies the right of
a holder of Preferred  Stock to effect a conversion of the Preferred  Stock into
Common Stock or otherwise  dishonors or rejects any Conversion  Notice delivered
in  accordance   with  the  terms  of  this  Agreement  or  the  Certificate  of
Designations  or any  exercise  of any  Warrant  in  accordance  with its  terms
("Warrant  Exercise"),  then such holder shall have the right, by written notice
to the Company,  to require the Company to promptly  redeem the Preferred  Stock
for cash at a redemption  price (the "Mandatory  Purchase  Amount") equal to (x)
one hundred  forty-five  percent  (145%) of the  liquidation  preference  of the
unconverted  Preferred Stock held by such holder plus (y) all accrued but unpaid
dividends on the  Preferred  Stock  through the date of payment of the Mandatory
Purchase  Amount.  Under any of the  circumstances  set forth above, the Company
shall be  responsible  for the payment of all costs and expenses of such holder,
including,  but not necessarily  limited to, reasonable legal fees and expenses,
as and when incurred in connection with such holder's  disputing any such action
or pursuing such holder's rights hereunder (in addition to any other rights such
holder may have hereunder or otherwise).  The Mandatory  Purchase Amount will be
payable to such holder in cash within five (5) business  days from the date such
holder gives the Company  written  notice that it is exercising its rights under
this paragraph.

      g. The holder of any  Preferred  Stock shall be  entitled to exercise  its
conversion  privilege with respect to the Preferred  Stock  notwithstanding  the
commencement of any case under 11 U.S.C. ss.101 et seq. (the "Bankruptcy Code").
In the event the  Company is a debtor  under the  Bankruptcy  Code,  the Company
hereby waives, to the fullest extent permitted, any rights to relief it may have
under 11 U.S.C.  ss.362 in respect of such holder's  conversion  privilege.  The
Company hereby waives, to the fullest extent permitted,  any rights to relief it
may have under 11 U.S.C. ss.362


                                       19

<PAGE>


in respect of the conversion of the Preferred Stock. The Company agrees, without
cost or  expense  to such  holder,  to take or to  consent to any and all action
necessary to effectuate relief under 11 U.S.C. ss.362.

      h. The Company  will  authorize  its  transfer  agent to give  information
relating  to the Company  directly  to the Buyer or the Buyer's  representatives
upon the  request of the Buyer or any such  representative  , to the extent such
information  relates  to (i) the  status of shares  of  Common  Stock  issued or
claimed to be issued to the Buyer in connection with a Notice of Conversion,  or
(ii) the number of outstanding  shares of Common Stock of all stockholders as of
a current or other  specified  date.  The Company  will provide the Buyer with a
copy of the authorization so given to the transfer agent.

      6. CLOSING DATES.

      a. The  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. The closing of the purchase and issuance of Preferred Stock shall occur
on the 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.

      c.  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  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 Preferred
Stock to the Buyer pursuant to this Agreement on the Closing Date is conditioned
upon:

      a. The Buyer's  execution  and  delivery of this  Agreement  and the other
Transaction Agreements contemplated to be signed 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  Preferred  Stock in
accordance with this Agreement;

      c. The accuracy on the 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;


                                       20

<PAGE>


      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; and

      e. From and after the date hereof to and including  the 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 NASDAQ/SmallCap Market shall not have
been  suspended  or  limited,  nor shall  minimum  prices been  established  for
securities traded on The NASDAQ/SmallCap 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 Company makes it impracticable or inadvisable to sell the Preferred Stock.

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

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

      a. The  adoption  of the  Certificate  of  Designations  by all  necessary
corporate  action of the  Company  and the filing of all  filings  necessary  to
effectuate the Certificate of Designations as a part of the charter documents of
the Company;

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

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

      d. The  accuracy  in all  material  respects  on the  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;

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

      f. On the  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;

      g. 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;

      h. From and after the date hereof to and including  the 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 NASDAQ/SmallCap Market shall not have
been suspended or limited,


                                       21

<PAGE>


nor  shall  minimum  prices  been  established  for  securities  traded  on  The
NASDAQ/SmallCap  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 Preferred Stock.

      9. GOVERNING LAW: MISCELLANEOUS.

      a. This Agreement  shall be governed by and interpreted in accordance with
the laws of the State of New York 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 New York or the state courts
of the State of New York sitting in the City of New York 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.

      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.


                                       22

<PAGE>


      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 domestic  or  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:          Natural Health Trends Corp.
                  380 Lashley Street
                  Longmont, CO 80501
                  Attn: Mark Woodburn
                  Telephone No.: (303) 682-4637
                  Telecopier No.: (303) 682-4236

                  with a copy to:

                  Silverman, Collura & Chernis, P.C.
                  381 Park Avenue South, Suite 1601
                  New York, NY 10016
                  Attn:  Martin C.  Licht, Esq.
                  Telephone No.: (212) 779-8600
                  Telecopier No.: (212) 779-8858

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.
                  Telephone No.: (212) 363-2900
                  Telecopier No.  (212) 363-2999


                                       23

<PAGE>


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.]


                                       24

<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.

LIQUIDATION PREFERENCE OF PREFERRED STOCK:       $
                                                  --------------------

PURCHASE PRICE OF PREFERRED STOCK:               $
                                                  --------------------

                             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 _________, 2000.

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

--------------------------------            By:
                                               ---------------------------------
Telecopier No.                              (Signature of Authorized Person)
              ------------------
                                            ------------------------------------

--------------------------------            ------------------------------------
Jurisdiction of Incorporation               Printed Name and Title
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.

NATURAL HEALTH TRENDS CORP.

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

Title:
      ----------------------------

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