Exhibit 4.20

                          SECURITIES PURCHASE AGREEMENT

         SECURITIES  PURCHASE  AGREEMENT  dated  as of June  22,  2000,  between
Adatom.com,  Inc.,  a Delaware  corporation  with  principal  executive  offices
located at 920  Hillview  Court,  Suite  160,  Milpitas,  California  95035 (the
"Company"), and the persons signatory hereto (the "Buyers").

                              W I T N E S S E T H:

         WHEREAS,  Buyers desires to purchase from the Company,  and the Company
desires  to issue and sell to the  Buyers,  upon the terms  and  subject  to the
conditions of this Agreement, (i) 1,100 shares of Series A Convertible Preferred
Stock, $0.01 par value (the "Preferred Stock"),  having the rights,  preferences
and  privileges  set  forth  in  the  Certificate  of  Designations  of  Rights,
Preferences,  Privileges and  Restrictions  of Series A Preferred Stock attached
hereto as ANNEX I (the "Certificate of Designations"), (ii) warrants to purchase
an aggregate of 275,000 shares (the  "Warrants")  of the Company's  common stock
$0.01 par value (the  "Common  Stock"),  137,500  Warrants in the form  attached
hereto as Annex II-A  ("Class A  Warrants")  and  137,500  Warrants  in the form
attached hereto as Annex II-B ("Class B Warrants").

         WHEREAS,  upon the terms and subject to the conditions set forth in the
Certificate of  Designations,  the Preferred Stock is convertible into shares of
Common Stock;

         WHEREAS, the Warrants,  upon the terms and subject to the conditions in
the  Warrants,  will for a period of five (5) years be  exercisable  to purchase
275,000 shares of Common Stock;

         NOW  THEREFORE,  in  consideration  of  the  premises  and  the  mutual
covenants  contained herein, the parties hereto,  intending to be legally bound,
hereby agree as follows:

         I.  PURCHASE AND SALE OF PREFERRED STOCK AND WARRANTS

         A.  TRANSACTION. Each Buyer hereby agrees to purchase from the Company,
and the Company hereby agrees to issue and sell to each Buyer,  in a transaction
exempt  from  the  registration  and  prospectus  delivery  requirements  of the
Securities Act of 1933, as amended (the "Securities  Act"), the number of shares
of Preferred Stock and Warrants set forth on the signature page hereof.

         B.  PURCHASE  PRICE;  FORM  OF  PAYMENT.  The  purchase  price  for the
Preferred  Stock and Warrants to be purchased by Buyer  hereunder shall be equal
to one thousand  dollars  ($1,000) times the number of shares of Preferred Stock
purchased (the "Purchase Price"). Each Buyer shall pay the Purchase Price on the
date hereof by wire transfer of immediately  available funds to the escrow agent
(the "Escrow  Agent")  identified in those certain Escrow  Instructions  of even
date  herewith,  a copy of which is  attached  hereto as ANNEX III (the  "Escrow
Instructions").

         Simultaneously  against  receipt  by the Escrow  Agent of the  Purchase
Price,  the  Company  shall  deliver  one or more duly  authorized,  issued  and
executed

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certificates (I/N/O Buyer or, if the Company otherwise has been notified,  I/N/O
Buyer's  nominee)  evidencing  the  Securities,  to  the  Escrow  Agent  or  its
designated depository. By executing and delivering this Agreement, Buyer and the
Company  each hereby  agrees to observe the terms and  conditions  of the Escrow
Instructions,  all of which are incorporated herein by reference as if fully set
forth herein.

         C.  METHOD OF PAYMENT. Payment into escrow of the Purchase Price shall
be made by wire transfer of immediately available funds to:

         Sterling National Bank & Trust Company
         500 Seventh Avenue, 10th Floor
         New York, New York 10018
         ABA# 026007773
         Snow Becker Krauss IOLA Escrow Account
         Account# 13-133423-01

Simultaneously  with the  execution of this  Agreement,  the Buyer shall deposit
with the Escrow Agent the Purchase  Price and the Company shall deposit with the
Escrow Agent the Securities.

         II. BUYER'S REPRESENTATIONS, WARRANTIES; ACCESS TO INFORMATION; INDE-
PENDENT INVESTIGATION.

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

         A.  Buyer is purchasing the Preferred Stock,  the Warrants,  the Common
Stock  issuable upon  exercise of the Warrants  (the  "Warrant  Shares") and the
shares  of  Common  Stock  issuable  upon  conversion  of the  Preferred  Stock,
including  payment of the Additional  Amounts,  as defined in the Certificate of
Designations  (the  "Conversion  Shares" and,  collectively  with the  Preferred
Stock,  the  Warrants  and the Warrant  Shares,  the  "Securities")  for its own
account,  for  investment  purposes  only  and  not  with a view  towards  or in
connection  with the public sale or  distribution  thereof in  violation  of the
Securities Act.

         B.  Buyer is (i) an "accredited investor"  within  the meaning  of Rule
501 of  Regulation  D under  the  Securities  Act,  (ii)  experienced  in making
investments of the kind contemplated by this Agreement, (iii) capable, by reason
of its business and financial experience,  of evaluating the relative merits and
risks of an  investment in the  Securities,  and (iv) able to afford the loss of
its investment in the Securities.

         C.  Buyer understands that the Securities are being offered and sold by
the Company in reliance on an exemption from the  registration  requirements  of
the Securities Act and equivalent state securities and "blue sky" laws, and that
the  Company is relying  upon the  accuracy  of, and  Buyer's  compliance  with,
Buyer's representations, warranties and covenants set forth in this Agreement to
determine the  availability  of such  exemption and the  eligibility of Buyer to
purchase the Securities;

         D.  Buyer has been furnished  with or provided  access to all materials
relating to the  business,  financial  position and results of operations of the
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Company,  and all  other  materials  requested  by Buyer to enable it to make an
informed investment decision with respect to the Securities.

         E.  Buyer acknowledges that it has been furnished with,or had access to
through the EDGAR system of the Securities and Exchange  Commission (the "SEC"),
copies of the  Company's  Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1999 and all other  reports and documents  heretofore  filed by the
Company with the SEC pursuant to the Securities Act and the Securities  Exchange
Act  of  1934,  as  amended  (the  "Exchange  Act"),  since  December  31,  1999
(collectively the "SEC Filings").

         F.  Buyer acknowledges  that in making its  decision  to  purchase  the
Securities it has been given an  opportunity  to ask questions of and to receive
answers  from  the  Company's  executive  officers,   directors  and  management
personnel  concerning the terms and  conditions of the private  placement of the
Securities by the Company.

         G.  Buyer understands  that the  Securities  have not been  approved or
disapproved by the SEC or any state securities commission and that the foregoing
authorities  have not reviewed any documents or instruments  in connection  with
the offer and sale to it of the  Securities and have not confirmed or determined
the adequacy or accuracy of any such documents or instruments.

         H.  This Agreement has been duly and validly  authorized,  executed and
delivered  by Buyer and is a valid and binding  agreement  of Buyer  enforceable
against it in  accordance  with its terms,  subject  to  applicable  bankruptcy,
insolvency, fraudulent conveyance,  reorganization,  moratorium and similar laws
affecting creditors' rights and remedies generally.

         I.  Neither Buyer nor its  affiliates,  nor any person acting on its or
their behalf,  has the intention of entering,  or will enter into,  prior to the
closing, or has entered within the past 30 days, any put option,  short position
or other  similar  instrument  or position  with respect to the Common Stock and
neither Buyer nor any of its  affiliates,  nor any person acting on its or their
behalf,  will use at any time shares of Common Stock  acquired  pursuant to this
Agreement to settle any put option,  short position or other similar  instrument
or  position  that may have been  entered  into prior to the  execution  of this
Agreement.

         III.COMPANY'S REPRESENTATIONS

         The Company  represents  and warrants to Buyer that except as disclosed
on Schedule III hereto:

         A.  CAPITALIZATION.  1. The  authorized  capital  stock of the  Company
consists of 50,000,000  shares of Common Stock, of which  16,146,499  shares are
outstanding  on the date hereof and  5,000,000  shares of preferred  stock,  par
value $0.01, none of which are outstanding on the date hereof. All of the issued
and  outstanding  shares of Common Stock have been duly  authorized  and validly
issued and are fully paid and non-assessable. As of the date hereof, the Company
has  outstanding  stock  options and  warrants to purchase  6,368,952  shares of
Common Stock as set forth on Schedule III.A.  The Conversion  Shares and Warrant
Shares have been duly and validly  authorized  and  reserved for issuance by the
Company,  and when issued by the Company upon conversion of the Preferred Shares

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(including  payment of the Additional  Amount),  or on exercise of the Warrants,
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.
There are no preemptive, subscription, "call" or other similar rights to acquire
the Common Stock (including the Conversion  Shares and Warrant Shares) that have
been issued or granted to any person.

         2.  The Company  does not  have  any  subsidiaries  and does not own or
control,  directly  or  indirectly,  any  interest  in  any  other  corporation,
partnership,  limited liability company,  unincorporated  business organization,
association, trust or other business entity.

         B.  ORGANIZATION; REPORTING COMPANY STATUS.

         1.  The Company is a corporation duly organized,validly existing and in
good standing under the laws of its  jurisdiction  of  organization  and is duly
qualified as a foreign  corporation in all jurisdictions in which the failure to
so qualify would have a material  adverse  effect on the  business,  properties,
prospects,  condition  (financial  or otherwise) or results of operations of the
Company or on the consummation of any of the  transactions  contemplated by this
Agreement (a "Material Adverse Effect").

         2.  The Company has  registered the Common Stock pursuant to Section 12
of the  Exchange  Act  and has  timely  filed  with  the  SEC  all  reports  and
information  required to be filed by it pursuant  to all  reporting  obligations
under  Section  13(a) or  15(d),  as  applicable,  of the  Exchange  Act for the
12-month  period  immediately  preceding  the date  hereof.  The Common Stock is
listed and traded on the NASDAQ SmallCap  Market  ("NASDAQ") and the Company has
not received any notice  regarding,  and to its knowledge there is no threat, of
the  termination or  discontinuance  of the  eligibility of the Common Stock for
such listing.

         C.  AUTHORIZED  SHARES. The Company has duly and validly authorized and
reserved  for  issuance  shares of Common  Stock  sufficient  in number  for the
conversion of the Preferred  Stock (assuming for purposes of this Section III.C.
a Conversion  Price (as defined in the Certificate of Designations) of $1.00 and
the exercise of the  Warrants.  The Company  understands  and  acknowledges  the
potentially  dilutive  effect  to  the  Common  Stock  of  the  issuance  of the
Conversion  Shares upon conversion of the Preferred Stock and the Warrant Shares
upon  exercise  of the  Warrants.  The  Company  further  acknowledges  that its
obligation to issue Conversion Shares upon conversion of the Preferred Stock and
Warrant  Shares upon exercise of the Warrants in accordance  with this Agreement
is  absolute  and  unconditional  regardless  of the  dilutive  effect that such
issuance  may  have on the  ownership  interests  of other  stockholders  of the
Company, 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 the
conversion of the Preferred Stock and the exercise of the Warrants.  The Company
agrees,  without cost or expense to the Buyer, to take or consent to any and all
action necessary to effectuate relief under 11 U.S.C. ss. 362.

         D.  AUTHORITY;  VALIDITY  AND  ENFORCEABILITY.   The  Company  has  the
requisite  corporate  power and  authority  to enter  into this  Agreement,  the
Certificate of  Designations,  the  Registration  Rights  Agreement of even date

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herewith  between the Company  and Buyer,  a copy of which is annexed  hereto as
Annex IV (the  "Registration  Rights Agreement") and the Warrants and to perform
all of its obligations  hereunder and thereunder  (including the issuance,  sale
and  delivery  to  Buyer  of  the  Securities).  The  execution,   delivery  and
performance by the Company of this Agreement,  the Certificate of  Designations,
the Warrants and the Registration Rights Agreement,  and the consummation by the
Company of the transactions contemplated hereby and thereby (the issuance of the
Preferred  Stock,  the Warrants and the issuance and reservation for issuance of
the  Conversion  Shares and Warrant  Shares),  has been duly  authorized  by all
necessary  corporate action on the part of the Company and no further consent or
authorization  of the  Company  or its Board of  Directors  or  stockholders  is
required,  except to the extent  stockholder  approval is required  under NASDAQ
rules. Each of this Agreement, the Certificate of Designations, the Warrants and
the  Registration  Rights Agreement has been duly validly executed and delivered
by the Company and each instrument constitutes a valid and binding obligation of
the Company  enforceable  against it in  accordance  with its terms,  subject to
applicable  bankruptcy,   insolvency,  fraudulent  conveyance,   reorganization,
moratorium and similar laws affecting creditors,  rights and remedies generally.
The Securities have been duly and validly authorized for issuance by the Company
and,  when  executed and  delivered  by the  Company,  will be valid and binding
obligations  of the  Company  enforceable  against it in  accordance  with their
terms,  subject to applicable  bankruptcy,  insolvency,  fraudulent  conveyance,
reorganization,  moratorium  and similar laws  affecting  creditors'  rights and
remedies generally.

         E.  NON-CONTRAVENTION.  The execution  and delivery  by the  Company of
this  Agreement,   the  Certificate  of  Designations,   the  Warrants  and  the
Registration  Rights  Agreement,  the  issuance  of  the  Securities,   and  the
consummation by the Company of the other  transactions  contemplated  hereby and
thereby,  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  (or an event
which, with notice, lapse of time or both, would constitute a default) under (i)
the Amended and Restated Certificate of Incorporation or by-laws of the Company,
(ii) except for such conflict, breach or default which would not have a Material
Adverse  Effect,  any  indenture,  mortgage,  deed of trust  or  other  material
agreement  or  instrument  to which  the  Company  is a party or by which  their
respective  properties or assets are bound, or (iii) any law, rule,  regulation,
decree,  judgment  or order of any  court or public  or  governmental  authority
having  jurisdiction  over the  Company or any of the  Company's  properties  or
assets,  nor is the Company  otherwise  in  violation  of,  conflict  with or in
default under any of the foregoing,  except for such conflict, breach or default
which would not have a Material Adverse Affect.

         F.  APPROVALS.  No authorization,  approval or  consent of any court or
public or  governmental  authority is required to be obtained by the Company for
the  issuance  and  sale of the  Preferred  Stock  and  the  Warrants  (and  the
Conversion  Shares  and  Warrant  Shares)  to  Buyer  as  contemplated  by  this
Agreement,  except such  authorizations,  approvals  and consents that have been
obtained by the Company prior to the date hereof.

         G.  SEC FILINGS.None of the SEC Filings 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 not  provided  to  Buyer  any  information  that,

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according to applicable  law,  rule or  regulation,  should have been  disclosed
publicly  prior to the date  hereof  by the  Company,  but which has not been so
disclosed.

         H.  ABSENCE OF CERTAIN CHANGES.  Except as disclosed in the SEC Filings
or the Financial  Statements  (as defined in Section III.L.  hereto),  since the
Balance  Sheet Date (as defined in Section  III.L.),  there has not occurred any
change, event or development in the business, financial condition,  prospects or
results of  operations  of the Company,  and there has not existed any condition
having or reasonably likely to have, a Material Adverse Effect.

         I.  FULL DISCLOSURE.  There is no fact known to the Company (other than
general economic or industry  conditions known to the public generally) that has
not been fully  disclosed in writing to the Buyer that (i)  reasonably  would be
expected to have a Material  Adverse Effect or (ii) reasonably would be expected
to  materially  and  adversely  affect the ability of the Company to perform its
obligations  pursuant to this Agreement,  the Certificate of  Designations,  the
Warrants or the Registration Rights Agreement.

         J.  ABSENCE OF LITIGATION. There is no action, suit, claim, proceeding,
inquiry or investigation pending or, to the Company's knowledge,  threatened, by
or before any court or public or  governmental  authority  which,  if determined
adversely to the Company, would have a Material Adverse Effect.

         K.  ABSENCE OF EVENTS OF DEFAULT.  No "Event of Default" (as defined in
any agreement or instrument to which the Company is a party) and no event which,
with notice,  lapse of time or both, would constitute an Event of Default (as so
defined),  has occurred and is continuing,  which could have a Material  Adverse
Effect.

         L.  FINANCIAL STATEMENTS;  NO UNDISCLOSED LIABILITIES.  The Company has
delivered or made  available  to Buyer true and  complete  copies of its audited
balance  sheet as at December  31, 1999 and the related  audited  statements  of
operations  and cash flows for the fiscal year ended December 31, 1999 including
the related notes and schedules thereto as well as the same unaudited  financial
statements  as  of  and  for  the  three  month  period  ended  March  31,  2000
(collectively,  the "Financial Statements"), and all management letters, if any,
from the  Company's  independent  auditors  relating  to the dates  and  periods
covered by the Financial  Statements.  Each of the Financial Statements has been
prepared in accordance with United States General Accepted Accounting Principles
("GAAP") (subject,  in the case of the interim Financial  Statements,  to normal
year end  adjustments  and the absence of footnotes) and in conformity  with the
practices  consistently  applied  by the  Company  without  modification  of the
accounting  principles used in the preparation  thereof, and fairly presents the
financial  position,  results of operations  and cash flows of the Company as at
the dates and for the  periods  indicated.  For  purposes  hereof,  the  audited
balance sheet of the Company as at December 31, 1999 is hereinafter  referred to
as the "Balance  Sheet" and December 31, 1999 is hereinafter  referred to as the
"Balance  Sheet  Date".  The  Company  has  no   indebtedness,   obligations  or
liabilities of any kind (whether accrued, absolute, contingent or otherwise, and
whether due or to become due) that would have been  required to be reflected in,
reserved  against or otherwise  described  in the Balance  Sheet or in the notes
thereto in accordance  with GAAP,  which was not fully  reflected  in,  reserved
against or otherwise  described in the Balance Sheet or the notes thereto or was

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not incurred in the ordinary  course of business  consistent  with the Company's
past practices since the Balance Sheet Date.

         M.  COMPLIANCE WITH LAWS; PERMITS.The Company is in compliance with all
laws, rules,  regulations,  codes, ordinances and statutes (collectively "Laws")
applicable  to  it  or  to  the  conduct  of  its  business,   except  for  such
non-compliance  which  would not have a Material  Adverse  Effect.  The  Company
possesses all permits,  approvals,  authorizations,  licenses,  certificates and
consents  from all public and  governmental  authorities  which are necessary to
conduct  its  business,  except for those the  absence of which would not have a
Material Adverse Effect.

         N.  RELATED  PARTY  TRANSACTIONS.  Neither  the  Company nor any of its
officers, directors or "Affiliates" (as such term is defined in Rule 12b-2 under
the  Exchange  Act)  has  borrowed  any  moneys  from  or  has  outstanding  any
indebtedness  or other similar  obligations to the Company.  Neither the Company
nor any of its officers, directors or Affiliates (i) owns any direct or indirect
interest  constituting  more  than  a one  percent  equity  (or  similar  profit
participation)  interest  in, or controls or is a  director,  officer,  partner,
member or employee of, or  consultant  to or lender to or borrower  from, or has
the right to  participate in the profits of, any person or entity which is (x) a
competitor,  supplier,  customer,  landlord,  tenant,  creditor or debtor of the
Company,  (y) engaged in a business  related to the business of the Company , or
(z) a participant in any transaction to which the Company is a party (other than
in the  ordinary  course of the  Company's  business)  or (ii) is a party to any
contract, agreement, commitment or other arrangement with the Company.

         O.  INSURANCE.  The Company  maintains  property and casualty,  general
liability  and  workers'  compensation,  insurance  with  financially  sound and
reputable insurers that is adequate in light of the Company's  historical claims
experience.  The Company has not received  notice from,  and has no knowledge of
any threat by, any insurer (that has issued any insurance policy to the Company)
that such insurer  intends to deny coverage under or cancel,  discontinue or not
renew any insurance policy presently in force.

         P.  SECURITIES LAW MATTERS.Based, in part, upon the representations and
warranties  of Buyer set forth in Section  II hereof,  the offer and sale by the
Company of the  Securities is exempt from (i) the  registration  and  prospectus
delivery requirements of the Securities Act and the rules and regulations of the
SEC thereunder and (ii) the registration and/or qualification  provisions of all
applicable  state  securities  and "blue sky" laws.  Other than  pursuant  to an
effective  registration  statement under the Securities Act, the Company has not
issued, offered or sold Preferred Stock or any shares of Common Stock (including
for this purpose any  securities of the same or a similar class as the Preferred
Stock or Common Stock,  or any securities  convertible  into or  exchangeable or
exercisable  for Preferred  Stock or Common Stock or any such other  securities)
within the six-month period next preceding the date hereof, except as previously
disclosed in writing to Buyer,  and the Company shall not directly or indirectly
take, and shall not permit any of its directors, officers or Affiliates directly
or indirectly to take, any action (including,  without limitation,  any offering
or sale to any person or entity of Preferred  Stock or shares of Common  Stock),
so as to make unavailable the exemption from Securities Act  registration  being
relied  upon by the  Company  for the offer  and sale to Buyer of the  Preferred
Stock (and the Conversion Shares) as contemplated by this Agreement.  No form of

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general  solicitation  or advertising has been used or authorized by the Company
or any of its officers,  directors or Affiliates in connection with the offer or
sale of the Preferred Stock (and the Conversion  Shares) as contemplated by this
Agreement or any other agreement to which the Company is a party.

         Q.  ENVIRONMENTAL  MATTERS.  1.  The  operations  of the Company are in
material  compliance  with all  applicable  Environmental  Laws and all  permits
issued pursuant to Environmental Laws or otherwise;

         2.  to its knowledge, the Company has obtained or applied for all mate-
rial permits  required  under all  applicable  Environmental  Laws  necessary to
operate their respective businesses;

         3.  to its knowledge, the Company is not the subject of any outstanding
written  order of and the  Company  is not a party to any  agreement  with,  any
governmental  authority  or  person  respecting  (i)  Environmental  Laws,  (ii)
Remedial  Action  or (iii)  any  Release  or  threatened  Release  of  Hazardous
Materials;

         4.  the Company has not received, since the October 14, 1999, any writ-
ten communication  alleging that it may be in violation of any Environmental Law
or any  permit  issued  pursuant  to any  Environmental  Law,  or may  have  any
liability under any Environmental Law;

         5.  to its  knowledge, the Company does not have any current contingent
liability in  connection  with any Release of any Hazardous  Materials  into the
indoor or outdoor environment (whether on-site or off-site);

         6.  to the Company's  knowledge,  there  are  no  investigations of the
business,  operations,  or currently  or  previously  owned,  operated or leased
property of the Company pending or threatened which could lead to the imposition
of any liability pursuant to any Environmental Law;

         7.  to its knowledge, there is not located at any of the properties of
the Company any (A) underground storage tanks, (B) asbestos-containing  material
or (C) equipment containing polychlorinated biphenyls; and,

         8.  the  Company  has  provided to Buyer  all  environmentally  related
audits, studies, reports, analyses, and results of investigations that have been
performed with respect to the currently or previously owned,  leased or operated
properties of the Company.

         For purposes of this Section III.Q.:

         "ENVIRONMENTAL LAW" means any federal, state or local statute, regula-
tion, ordinance,  or rule of common law as now or hereafter in effect in any way
relating  to the  protection  of human  health  and  safety  or the  environment
including,   without  limitation,  the  Comprehensive   Environmental  Response,
Compensation  and  Liability  Act (42  U.S.C.ss.9601  ET  SEQ.),  the  Hazardous
Materials  Transportation  Act (49 U.S.C.  App.ss.1801  ET SEG.),  the  Resource
Conservation  and Recovery Act (42  U.S.C.ss.6901  ET SEQ.), the Clean Water Act
(33  U.S.C.ss.1251 ET SEG.),  the Clean Air Act (42  U.S.C.ss.7401 ET SEG.), the
Toxic   Substances   Control  Act  (15   U.S.C.ss.2601  ET  SEG.),  the  Federal
Insecticide,  Fungicide,  and Rodenticide Act (7 U.S.C.ss.136 ET SEQ.),  and the

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Occupational   Safety  and  Health  Act  (29  U.S.C.ss.651  ET  SEG.),  and  the
regulations promulgated pursuant thereto.

         "HAZARDOUS  MATERIAL"  means any substance,  material or waste which is
regulated  by the  United  States or any state or local  governmental  authority
including, without limitation, petroleum and its by-products,  asbestos, and any
material  or  substance  which is defined  as a  "hazardous  waste,"  "hazardous
substance,"  "hazardous  material,"  "restricted  hazardous waste,"  "industrial
waste,"  "solid  waste,"  "contaminant,"  "pollutant,"  "toxic  waste"  or toxic
substance" under any provision of any Environmental Law;

         "RELEASE"  means any release,  spill,  filtration,  emission,  leaking,
pumping, injection,  deposit, disposal,  discharge,  dispersal, or leaching into
the indoor or outdoor environment,  or into or out of any property, in each case
in violation of any Environmental law.

         "REMEDIAL  ACTION" means all actions to (x) clean up, remove,  treat or
in any other way address any Hazardous Material;  (y) prevent the Release of any
Hazardous Material in violation of any Environmental law so it does not endanger
or  threaten  to  endanger  public  health or  welfare  or the indoor or outdoor
environment;   or  (z)  perform   pre-remedial  studies  and  investigations  or
post-remedial monitoring and care.

         R.  LABOR  MATTERS. The Company is not party to any labor or collective
bargaining agreement and there are no labor or collective  bargaining agreements
which  pertain to  employees  of the  Company.  No  employees of the Company are
represented  by any labor  organization  and none of such  employees  has made a
pending demand for recognition,  and there are no representation  proceedings or
petitions  seeking a  representation  proceeding  presently  pending  or, to the
Company's knowledge,  threatened to be brought or filed, with the National Labor
Relations  Board or  other  labor  relations  tribunal.  There is no  organizing
activity  involving  the  Company  or  pending  or to the  Company's  knowledge,
threatened by any labor organization or group of employees of the Company. There
are no (i) strikes, work stoppages,  slowdowns, lockouts or arbitrations or (ii)
material  grievances or other labor disputes pending or, to the knowledge of the
Company,  threatened against or involving the Company. There are no unfair labor
practice charges,  grievances or complaints  pending or, to the knowledge of the
Company, threatened by or on behalf of any employee or group of employees of the
Company.

         S.  ERISA  MATTERS.  The  Company  and  its  ERISA  Affiliates  are  in
compliance in all material  respects with all provisions of ERISA  applicable to
it.  Neither  the  Company  nor  any  ERISA  Affiliate  maintains,  contributes,
maintained  or  contributed  to a plan subject to the  provisions of Title IV of
ERISA or Section 412 of the Internal Revenue Code.

         For purposes of this Section III.S.:

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, or
any  successor  statute,   together  with  the  final  regulations   promulgated
thereunder, as the same may be amended from time to time.

         "ERISA   AFFILIATE"  means  any  trade  or  business  (whether  or  not
incorporated)  that is a member of a group of which the  Company is a member and

                                       9

<PAGE>

which is treated as a single employer under ss. 414 of the Internal Revenue Code
of 1986, as amended (the "Internal Revenue Code").

         T.  TAX MATTERS. 1. The Company has filed  all Tax Returns  which it is
required to file under applicable  Laws,  except for such Tax Returns in respect
of which the  failure to so file does not and could not have a Material  Adverse
Effect;  all such Tax Returns are true and accurate in all material respects and
have been prepared in compliance with all applicable  Laws; the Company has paid
all Taxes due and owing by it  (whether  or not such  Taxes are  required  to be
shown on a Tax Return) and have withheld and paid over to the appropriate taxing
authorities  all Taxes which they are required to withhold  from amounts paid or
owing to any employee,  stockholder,  creditor or other third parties; and since
December 31, 1999, the charges,  accruals and reserves for Taxes with respect to
the Company  (including any provisions for deferred  income taxes)  reflected on
the  books of the  Company  are  adequate  to cover any Tax  liabilities  of the
Company if its current tax year were treated as ending on the date hereof.

         2. No claim has been made by a taxing authority in a jurisdiction where
the Company does not file tax returns that such corporation is or may be subject
to taxation  by that  jurisdiction.  To the  Company's  knowledge,  there are no
foreign,  federal,  state or local tax  audits  or  administrative  or  judicial
proceedings  pending  or  being  conducted  with  respect  to  the  Company;  no
information  related to Tax matters has been requested by any foreign,  federal,
state or local taxing  authority;  and,  except as disclosed  above,  no written
notice  indicating  an intent to open an audit or other review has been received
by the Company from any foreign,  federal,  state or local taxing authority.  To
the Company's  knowledge,  there are no material unresolved  questions or claims
concerning  the  Company's  Tax  liability.  The Company (A) has not executed or
entered into a closing  agreement  pursuant to ss. 7121 of the Internal  Revenue
Code or any  predecessor  provision  thereof or any similar  provision of state,
local or  foreign  law;  or (B) has not  agreed  to or is  required  to make any
adjustments  pursuant to ss. 481 (a) of the Internal Revenue Code or any similar
provision  of state,  local or foreign  law by reason of a change in  accounting
method  initiated by the Company or has any knowledge  that the IRS has proposed
any such  adjustment  or change in  accounting  method,  or has any  application
pending  with any taxing  authority  requesting  permission  for any  changes in
accounting methods that relate to the business or operations of the Company. The
Company has not been a United States real property  holding  corporation  within
the meaning of ss.  897(c)(2) of the Internal Revenue Code during the applicable
period specified in ss. 897(c)(1)(A)(ii) of the Internal Revenue Code.

         3.  The  Company  has not  made an  election  under  ss. 341(f)  of the
Internal Revenue Code. The Company is not liable for the Taxes of another person
that is not a subsidiary of the Company under (A) Treas.  Reg. ss.  1.1502-6 (or
comparable  provisions of state,  local or foreign law),  (B) as a transferee or
successor,  (C) by contract or indemnity or (D) otherwise.  The Company is not a
party to any tax sharing  agreement.  The Company has not made any payments,  is
obligated to make payments or is a party to an agreement  that could obligate it
to make any payments that would not be deductible under ss. 28OG of the Internal
Revenue Code.

         For purposes of this Section III.T.:

         "IRS" means the United States Internal Revenue Service.

                                       10

<PAGE>

         "TAX" or "TAXES" means federal, state, county, local, foreign, or other
income, gross receipts, ad valorem, franchise,  profits, sales or use, transfer,
registration, excise, utility, environmental,  communications,  real or personal
property,   capital  stock,   license,   payroll,  wage  or  other  withholding,
employment, social security, severance, stamp, occupation, alternative or add-on
minimum,  estimated and other taxes of any kind whatsoever  (including,  without
limitation, deficiencies, penalties, additions to tax, and interest attributable
thereto) whether disputed or not.

         "TAX  RETURN"  means any  return,  information  report  or filing  with
respect to Taxes,  including  any schedules  attached  thereto and including any
amendment thereof.

         U.  PROPERTY. The Company does not own any real property. The Company
has good and  marketable  title to all personal  property  owned by it, free and
clear of all liens,  encumbrances  and defects  except such as do not materially
affect the value of such property and do not  materially  interfere with the use
made and  proposed  to be made of such  property  by the  Company;  and any real
property  and  buildings  held under  lease by the  Company are held by it under
valid,  subsisting  and  enforceable  leases  with  such  exceptions  as are not
material and do not interfere  with the use made and proposed to be made of such
property and buildings by the Company.

         V.  INTELLECTUAL  PROPERTY.  The Company owns or possesses adequate and
enforceable  rights  to  use  all  patents,  patent  applications,   trademarks,
trademark  applications,  trade  names,  service  marks,  copyrights,  copyright
applications,  licenses,  know-how (including trade secrets and other unpatented
and/or  unpatentable  proprietary  or  confidential   information,   systems  or
procedures)  and other similar rights and proprietary  knowledge  (collectively,
"Intangibles") necessary for the conduct of its business as now being conducted.
To the Company's  knowledge,  the Company is not infringing  upon or in conflict
with any right of any other  person with respect to any  Intangibles.  No claims
have been asserted by any person to the ownership or use of any  Intangibles and
the Company has no knowledge of any basis for such claim.

         W.  INTERNAL  CONTROLS AND  PROCEDURES. The  Company maintains accurate
books and records and internal  accounting  controls  which  provide  reasonable
assurance that (i) all  transactions to which the Company is a party or by which
its properties are bound are executed with management's authorization;  (ii) the
reported accountability of the Company's assets is compared with existing assets
at regular intervals;  (iii) access to the Company's assets is permitted only in
accordance with management's  authorization;  and (iv) all transactions to which
the  Company is a party or by which its  properties  are bound are  recorded  as
necessary to permit  preparation  of the financial  statements of the Company in
accordance with U.S. generally accepted accounting principles.

         X.  PAYMENTS  AND  CONTRIBUTIONS.  Neither  the  Company nor any of its
directors,  officers  or, to its  knowledge,  other  employees  has (i) used any
Company funds for any unlawful contribution, endorsement, gift, entertainment or
other unlawful expense relating to political  activity;  (ii) made any direct or
indirect unlawful payment of Company funds to any foreign or domestic government
official or employee;  (iii) violated or is in violation of any provision of the
Foreign  Corrupt  Practices  Act of 1977,  as  amended;  or (iv) made any bribe,

                                       11

<PAGE>

rebate,  payoff,  influence  payment,  kickback or other similar  payment to any
person with respect to Company matters.

         Y.  NO MISREPRESENTATION. No representation or warranty of the Company
contained  in this  Agreement,  any  schedule,  annex or  exhibit  hereto or any
agreement,  instrument or certificate furnished by the Company to Buyer pursuant
to this Agreement,  contains any untrue statement of a material fact or omits to
state a material  fact  required to be stated  therein or  necessary to make the
statements  therein,  in light of the circumstances  under which they were made,
not misleading.

         Z.  RIGHT OF FIRST REFUSAL. Except as provided in Section IV.K., the
Company has not granted any right of first refusal to any person with respect to
the issuance of the Preferred Stock, Common Stock or securities convertible into
Common Stock.

         IV. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

         A.  RESTRICTIVE LEGEND.  Buyer acknowledges and agrees that, upon issu-
ance pursuant to this Agreement,  the Securities (and any shares of Common Stock
issued upon  conversion of the Preferred Stock or upon exercise of the Warrants)
shall have endorsed thereon a legend in substantially  the following form (and a
stop-transfer  order may be placed against  transfer of the Preferred  Stock and
the Conversion Shares:

         "THESE  SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE  "SECURITIES  ACT"),  OR THE SECURITIES LAWS OF ANY STATE,
AND ARE BEING  OFFERED AND SOLD PURSUANT TO AN EXEMPTION  FROM THE  REGISTRATION
REQUIREMENTS  OF THE SECURITIES ACT AND SUCH LAWS.  THESE  SECURITIES MAY NOT BE
SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE  EXEMPTION FROM THE  REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR SUCH OTHER LAWS."

         B.  FILINGS. The Company shall make all necessary SEC and "blue sky"
filings  required to be made by the Company in  connection  with the sale of the
Securities to the Buyer as required by all applicable  Laws, and shall provide a
copy thereof to the Buyer promptly after such filing.

         C.  REPORTING STATUS. So long as the Buyer beneficially owns any of the
Securities,  the Company shall use its best efforts to file all reports required
to be filed by it with the SEC  pursuant to Section 13 or 15(d) of the  Exchange
Act.

         D.  LISTING.  So long as the Buyer beneficially owns any of the Securi-
ties,  except to the extent the Company  lists its Common  Stock on The New York
Stock  Exchange,  the Company shall use its best efforts to maintain its listing
of the Common Stock on the NASDAQ.

         E.  RESERVED  CONVERSION  SHARES.   Subject  to  Section  5.11  of  the
Certificate  of  Designations,  the Company at all times from and after the date
hereof shall have a sufficient number of shares of Common Stock duly and validly
authorized and reserved for issuance to satisfy the conversion,  in full, of the
Preferred  Stock,  including  payment of the  Additional  Amount  (assuming  for
purposes of this  Section  IV.E.,  a  Conversion  Price of $1.00),  and upon the

                                       12

<PAGE>

exercise  of the  Warrants.  In the event the  average of the Market  Prices (as
defined in the Registration  Rights  Agreement) for any ten consecutive  Trading
Days (as  defined in the  Certificate  of  Designations)  is $1.00 or less,  the
Company  shall,  within 10 days of the  occurrence of such event,  authorize and
reserve for issuance such additional shares of Common Stock sufficient in number
for the conversion,  in full, of the Preferred  Stock,  assuming for purposes of
this Section  IV.E. a  Conversion  Price of $0.50 per share,  subject to Section
5.11 of the Certificate of Designations.

         F.  REGISTRATION RIGHTS AGREEMENT. The Company shall cause the Regis-
tration  Rights  Agreement  to remain in full force and  effect and the  Company
shall comply in all material respects with the terms thereof.

         G.  NOTICE OF CERTAIN EVENTS AFFECTING  REGISTRATION.  The Company will
immediately  notify the Buyer upon the occurrence of any of the following events
in respect of a  registration  statement or related  prospectus in respect of an
offering  of  the  Securities;   (i)  receipt  of  any  request  for  additional
information  by the SEC or any other  federal  or state  governmental  authority
during the period of effectiveness of the Registration  Statement to be supplied
by  amendments  or  supplements  to  the   registration   statement  or  related
prospectus;  (ii)  the  issuance  by the  SEC  or any  other  federal  or  state
governmental  authority of any stop order  suspending the  effectiveness  of the
Registration  Statement or the initiation of any  proceedings  for that purpose;
(iii)  receipt  of  any  notification  with  respect  to the  suspension  of the
qualification or exemption from  qualification of any of the Securities for sale
in any  jurisdiction or the initiation or threatening of any proceeding for such
purpose;  (iv) the happening of any event that makes any  statement  made in the
Registration  Statement or related  prospectus or any document  incorporated  or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in the Registration  Statement,  related
prospectus or documents so that, in the case of the Registration  Statement,  it
will not contain any untrue  statement  of a material  fact or omit to state any
material fact required to be stated  therein or necessary to make the statements
therein not misleading,  and that in the case of the related prospectus, it will
not  contain  any  untrue  statement  of a  material  fact or omit to state  any
material fact required to be stated  therein or necessary to make the statements
therein,  in the light of the  circumstances  under  which they were  made,  not
misleading; and (v) the Company's reasonable determination that a post-effective
amendment to the  Registration  Statement would be appropriate;  and the Company
will  promptly make  available to Buyer any such  supplement or amendment to the
related prospectus.

         H.  CONSOLIDATION; MERGER. The Company shall not, at any time after the
date hereof,  effect any merger or consolidation of the Company with or into, or
a transfer of all or substantially  all of the assets of the Company to, another
entity (a  "Consolidation  Event")  unless the resulting  successor or acquiring
entity (if not the Company) assumes by written instrument or by operation of law
the  obligation  to deliver to Buyer such shares of stock and/or  securities  as
Buyer is entitled to receive pursuant to this Agreement.

         I.  ISSUANCE OF PREFERRED  SHARES AND WARRANT  SHARES.  The sale of the
Preferred  Stock and the issuance of the Warrant Shares  pursuant to exercise of
the Warrant and the  Conversion  Shares upon  conversion of the Preferred  Stock
shall be made in accordance with the provisions and requirements of Section 4(2)

                                       13

<PAGE>

of Regulation D and any applicable  state securities law. The Company shall make
all necessary  SEC and "blue sky" filings  required to be made by the Company in
connection  with  the  sale  of the  Securities  to  Buyer  as  required  by all
applicable  Laws,  and shall provide a copy thereof to Buyer promptly after such
filing.

         J.  LIMITATION ON FUTURE FINANCING. The Company agrees that it will not
enter  into any  financing  at a  discount  to Market  Price (as  defined in the
Certificate  of  Designations)  which  contains  dividend,   interest,  payment,
liquidation,  redemption,  exchange,  conversion  or similar  terms which may be
calculated  by  formulas  based  in  part on the  varying  market  price  of the
Company's  securities (a "Variable Rate Financing"),  other than under a private
equity line of credit  with J. E.  Matthews,  LLC for not less than  $5,000,000,
which provides for the issuance of convertible exchangeable term notes and other
than any  equity  line of  credit  with any  other  investor  for not less  than
$5,000,000 (an "Equity Line Financing"), until (i) six months from the effective
date of the  Registration  Statement,  or (ii) Buyer gives written  approval for
such additional financing; provided, however, anything to the contrary appearing
herein  notwithstanding,  neither  this Section nor any other  provision  hereof
shall be construed to restrict or prohibit the Company's  right to  restructure,
amend or modify any financing facility existing on the date hereof.

         K.  RIGHT OF FIRST  REFUSAL. Except for Variable  Rate  Financings  and
Equity Line  Financings,  the Company  shall not enter into any  financing  at a
discount  to Market  Price with  Persons  other  than the Buyers (a  "Restricted
Financing")  during  the  period  commencing  on the date  hereof and ending six
months  after the  effective  date of the  Registration  Statement,  unless  the
Company shall first have satisfied its obligations under this Section IV.K.

             (a)  If the  Company  receives  a  written  offer  from any
                  Person or group of Persons other than the Buyers,  the
                  Company shall give the Buyers a written notice of such
                  offer stating the type,  terms,  and purchase price of
                  the  securities  offered  as part  of such  Restricted
                  Financing and the other  material terms and conditions
                  of the proposed  Restricted  Financing and attaching a
                  copy of the  offer  signed by the  Person  or  Persons
                  making such offer.

             (b)  The Buyers shall have the right to purchase all or any
                  part of the securities offered as part of such Restricted
                  Financing on the same terms and conditions as are set forth
                  in the Company's written notice.  Each Buyer may exercise
                  its right to purchase such securities by giving a written
                  notice of exercise to the Company within three Trading
                  Days after such Buyer's receipt of the Company's notice.
                  Each Buyer shall have the right to purchase such securities
                  pro rata in accordance with their investment in the
                  Company as a result of their purchase of Preferred Stock
                  under this Agreement.  Each Buyer may also notify the Company
                  that it will purchase its pro rata share of any such
                  securities not purchased by the other Buyers.

                                       14

<PAGE>

             (c)  If the Buyers shall not have exercised their rights to
                  purchase  all of such  securities,  then  the  Company
                  shall  have  the  right  to sell  all  securities  not
                  subscribed  by  the  Buyers  on  the  same  terms  and
                  conditions as those set forth in the Company's notice.
                  If the Company shall not have sold all such securities
                  within  30 days  after  the  expiration  of the  three
                  Trading Day period in  paragraph  (b) above,  then the
                  Company shall not sell any such  securities  unless it
                  first offers to sell such  securities to the Buyers in
                  accordance  with  the  procedures  set  forth  in this
                  Section IV.K.

         V.  TRANSFER AGENT INSTRUCTIONS.

         A.  The Company undertakes and agrees that no instruction other than
the  instructions  referred to in this  Section V and  customary  stop  transfer
instructions  prior to the registration and sale of the Common Stock pursuant to
an effective Securities Act registration statement will be given to its transfer
agent for the Common Stock and that the Common Stock issuable upon conversion of
the Preferred Stock,  including the payment of the Additional  Amount,  and upon
exercise of the Warrants otherwise shall 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  contained in this
Section V.A. shall affect in any way Buyer's obligations and agreement to comply
with all applicable securities laws upon resale of such Common Stock. If, at any
time,  Buyer  provides  the  Company  with  an  opinion  of  counsel  reasonably
satisfactory  to the Company  that  registration  of the resale by Buyer of such
Common Stock is not required  under the  Securities  Act and that the removal of
restrictive  legends is permitted under applicable law, the Company shall permit
the transfer of such Common Stock and, promptly instruct the Company's  transfer
agent to issue one or more certificates for Common Stock without any restrictive
legends endorsed thereon.

         B.  The Company shall permit Buyer to exercise its right to convert the
Preferred Stock by telecopying an executed and completed Notice of Conversion to
the Company.  Each date on which a Notice of  Conversion  is  telecopied  to and
received by the Company in accordance with the provisions hereof shall be deemed
a Conversion  Date. The Company shall transmit the  certificates  evidencing the
shares of Common Stock issuable upon conversion of any Preferred Stock (together
with  certificates  evidencing  any  Preferred  Stock not being so converted) to
Buyer via express  courier,  by electronic  transfer or otherwise,  within three
business  days after  receipt by the  Company of the Notice of  Conversion  (the
"Delivery  Date").  Within 30 days after Buyer delivers the Notice of Conversion
to the Company,  Buyer shall  deliver to the Company the  Preferred  Stock being
converted. Buyer shall indemnify the Company for any damages to third parties as
a result of a claim by such third  party to  ownership  of the  Preferred  Stock
converted prior to receipt of the Preferred Stock by the Company.

         C.  The Company shall  permit  Buyer to exercise  its right to purchase
shares of Common Stock  pursuant to exercise of the Warrants in accordance  with
its applicable terms of the Warrants. The last date that the Company may deliver
shares of Common  Stock  issuable  upon any  exercise of Warrants is referred to
herein as the "Warrant Delivery Date."

                                       15

<PAGE>

         D.  The Company understands  that a delay in the issuance of the shares
of Common Stock issuable upon the conversion of the Preferred  Stock  (including
the payment of the  Additional  Amount) or upon exercise of the Warrants  beyond
the applicable  Delivery Date or Warrant  Delivery Date could result in economic
loss to Buyer.  As  compensation  to Buyer for such loss (and not as a penalty),
the Company  agrees to pay to Buyer for late  issuance of Common Stock  issuable
upon conversion of the Preferred Stock or exercise of the Warrants in accordance
with the following  schedule (where "No. Business Days" is defined as the number
of business  days beyond  three (3) days from the  Delivery  Date or the Warrant
Delivery Date, as applicable):

                                                        Compensation For Each
                                                        5 Shares of Preferred
                                                         Stock Not Converted
                                                     Timely or Shares of Common
                                                    Stock Issuable Upon Exercise
                                                        of Each 250 Warrants
         No. Business Days                                Not Issued Timely
         -----------------                                -----------------

                   1                                          $ 100
                   2                                          $ 200
                   3                                          $ 300
                   4                                          $ 400
                   5                                          $ 500
                   6                                          $ 600
                   7                                          $ 700
                   8                                          $ 800
                   9                                          $ 900
                   10                                         $1000
         more than 10                                         $ 200 for each
                                                              Business Day Late
                                                              beyond 10 days

The Company shall pay to Buyer the compensation  described above by the transfer
of immediately  available funds upon Buyer's demand.  Nothing herein shall limit
Buyer's  right to pursue actual  damages for the Company's  failure to issue and
deliver  Common Stock to Buyer  (which  actual  damages  shall be reduced by the
amount  of any  compensation  paid by the  Company  as  described  above in this
Section  V.D.),  and in addition to any other remedies which may be available to
Buyer,  in the event the Company fails for any reason to effect delivery of such
shares of Common Stock  within five  business  days after the relevant  Delivery
Date or the Warrant  Delivery  Date, as  applicable,  Buyer shall be entitled to
rescind the relevant  Notice of Conversion or exercise of Warrants by delivering
a notice to such  effect to the  Company  whereupon  the Company and Buyer shall
each be restored to their respective  original  positions  immediately  prior to
delivery  of such  Notice of  Conversion  on  delivery.  The Company may pay the
compensation described above in additional shares of Common Stock based upon the
Market Price (as defined in the  Certificate of  Designations)  as determined on
the date of payment.

         E.  Upon the execution and delivery  hereof,  the Company is issuing to
the transfer  agent for its Common Stock (and to any  substitute or  replacement
transfer  agent for its Common Stock upon the Company's  appointment of any such
substitute  or  replacement   transfer  agent)  instructions   relating  to  the

                                       16

<PAGE>

Securities. Such instructions shall be irrevocable by the Company from and after
the date hereof or from and after the issuance thereof to any such substitute or
replacement  transfer agent,  as the case may be, except as otherwise  expressly
provided in the Registration  Rights Agreement.  It is the intent and purpose of
such instructions,  to require the transfer agent for the Common Stock from time
to time upon transfer of Securities  by Buyer to issue  certificates  evidencing
such  Registrable  Securities  free of legends and without  consultation  by the
transfer  agent with the  Company or its  counsel  and  without the need for any
further advice or instruction or  documentation to the transfer agent by or from
the Company or its counsel or Buyer.

         VI. DELIVERY INSTRUCTIONS.

         The   Securities   shall   be   delivered   by   the   Company   on   a
"delivery-against-payment basis" at the Closing.

         VII. CLOSING DATE.

         The date and time of the issuance and sale of the Preferred Shares (the
"Closing  Date")  shall be the date  hereof or such  other as shall be  mutually
agreed upon in writing.  The issuance and sale of the Securities  shall occur on
the Closing Date at the offices of the Escrow Agent.

         VIII. CONDITIONS TO THE COMPANY'S OBLIGATIONS.

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

         A.  Delivery by Buyer of the Purchase Price;

         B.  The accuracy in all  material  respects on the Closing  Date of the
representations  and warranties of Buyer  contained in this Agreement as if made
on the Closing Date (except for  representations  and warranties which, by their
express  terms,  speak as of and relate to a specified  date, in which case such
accuracy  shall be measured as of such  specified  date) and the  performance by
Buyer in all material  respects on or before the Closing  Date of all  covenants
and  agreements  of  Buyer  required  to be  performed  by it  pursuant  to this
Agreement on or before the Closing Date;

         C.  There shall not be in effect any Law or order, ruling,  judgment or
writ of any court or public or governmental authority restraining,  enjoining or
otherwise prohibiting any of the transactions contemplated by this Agreement.

         IX. CONDITIONS TO BUYER'S OBLIGATIONS.

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

         A.  Delivery by the Company of one or more certificates (I/N/O Buyer)
evidencing the Securities to be purchased by Buyer pursuant to this Agreement;

         B.  The accuracy in all  material  respects on the Closing  Date of the
representations  and warranties of the Company contained in this Agreement as if

                                       17

<PAGE>

made on the Closing Date (except for  representations  and warranties  which, by
their express terms,  speak as of and relate to a specified  date, in which case
such accuracy shall be measured as of such specified  date) and the  performance
by the Company in all  material  respects  on or before the Closing  Date of all
covenants and agreements of the Company  required to be performed by it pursuant
to this Agreement on or before the Closing Date;

         C.  Buyer having received an opinion of counsel for the Company, dated
the Closing Date, in form,  scope and substance  reasonably  satisfactory to the
Buyer.

         D.  There not having occurred (i) any general suspension of trading in,
or  limitation  on prices  listed for, the Common Stock on the NASDAQ,  (ii) the
declaration of a banking  moratorium or any suspension of payments in respect of
banks in the United States,  (iii) the commencement of a war, armed  hostilities
or other international or national calamity directly or indirectly involving the
United States or any of its territories,  protectorates or possessions,  or (iv)
in the case of the foregoing existing at the date of this Agreement,  a material
acceleration or worsening thereof.

         E.  There not having occurred any event or development, and there being
in existence no condition, having or which reasonably and foreseeably would have
a Material Adverse Effect.

         F.  The Company shall have delivered to Buyer reimbursement  of Buyer's
out-of-pocket  costs and expenses  incurred in connection with the  transactions
contemplated by the Preferred  Stock and this Agreement  (including the fees and
disbursements  of legal  counsel,  which is being  held in escrow by the  Escrow
Agent).

         G.  There shall not be in effect any Law or order, ruling,  judgment or
writ of any court or public or governmental authority restraining,  enjoining or
otherwise prohibiting any of the transactions contemplated by this Agreement.

         H.  Delivery of Irrevocable Instructions to the Transfer Agent.

         X.  TERMINATION.

         A.  TERMINATION BY MUTUAL WRITTEN CONSENT. This Agreement may be termi-
nated and the transactions  contemplated hereby may be abandoned, for any reason
and at any time prior to the Closing Date, by the mutual written  consent of the
Company and Buyer.

         B.  TERMINATION  BY  THE  COMPANY  OR  BUYER.  This  Agreement  may  be
terminated and the transactions  contemplated  hereby may be abandoned by action
of the Company or Buyer if (i) the Closing  shall not have  occurred at or prior
to 5:00 p.m., New York City time, on June 30, 2000; PROVIDED,  HOWEVER, that the
right to terminate this  Agreement  pursuant to this Article X.B(i) shall not be
available  to any party whose  failure to fulfill any of its  obligations  under
this  Agreement  has been the cause of or resulted in the failure of the Closing
to occur  at or  before  such  time and  date or (ii)  any  court or  public  or
governmental authority shall have issued an order, ruling,  judgment or writ, or
there  shall  be  in  effect  any  Law,  restraining,   enjoining  or  otherwise

                                       18

<PAGE>

prohibiting  the  consummation of any of the  transactions  contemplated by this
Agreement.

         C.  TERMINATION  BY BUYER.  This  Agreement may be  terminated  and the
transactions  contemplated hereby may be abandoned by Buyer at any time prior to
the Closing Date, if (i) the Company shall have failed to comply in any material
respect with any of its  covenants or  agreements  contained in this  Agreement,
(ii)  there  shall  have  been a  breach  by the  Company  with  respect  to any
representation  or warranty made by it in this  Agreement,  or (iii) there shall
have  occurred  any event or  development,  or there shall be in  existence  any
condition,  having or  reasonably  and  foreseeably  likely  to have a  Material
Adverse Effect.

         D.  TERMINATION BY THE COMPANY.This Agreement may be terminated and the
transactions  contemplated  hereby may be  abandoned  by the Company at any time
prior to the  Closing  Date,  if (i) Buyer  shall  have  failed to comply in any
material  respect  with any of its  covenants  or  agreements  contained in this
Agreement  or (ii) there  shall have been a breach by Buyer with  respect to any
representation or warranty made by it in this Agreement.

         XI. SURVIVAL; INDEMNIFICATION.

         A.  The representations,  warranties  and covenants made by each of the
Company and Buyer in this Agreement, the annexes,  schedules and exhibits hereto
and in each instrument,  agreement and certificate entered into and delivered by
them pursuant to this Agreement,  shall survive the Closing and the consummation
of the transactions  contemplated  hereby. In the event of a breach or violation
of any of such representations,  warranties or covenants, the party to whom such
representations,  warranties  or covenants  have been made shall have all rights
and remedies for such breach or violation  available to it under the  provisions
of this Agreement or otherwise, whether at law or in equity, irrespective of any
investigation  made by or on  behalf  of such  party on or prior to the  Closing
Date.

         B.  The Company hereby agrees to indemnify and hold harmless the Buyer,
its Affiliates and their respective  officers,  directors,  partners and members
(collectively,  the "Buyer  Indemnitees"),  from and against any and all losses,
claims,   damages,   judgments,   penalties,    liabilities   and   deficiencies
(collectively,  "Losses"), and agrees to reimburse the Buyer Indemnitees for all
out-of-pocket  expenses  (including  the  reasonable  fees and expenses of legal
counsel),  in each case promptly as incurred by the Buyer Indemnitees and to the
extent arising out of or in connection with:

             1.     any misrepresentation, omission of fact or breach of any of
         the Company's representations or warranties contained in this Agree-
         ment, the annexes, schedules or exhibits hereto or any instrument,
         agreement or certificate entered into or delivered by the Company
         pursuant to this Agreement; or

             2.     any  failure by the  Company  to  perform  in any  material
         respect any of its covenants,  agreements,  undertakings or obligations
         set forth in this Agreement, the annexes,  schedules or exhibits hereto
         or any instrument,  agreement or certificate  entered into or delivered
         by the Company pursuant to this Agreement.

                                       19

<PAGE>

         C.  Buyer hereby agrees to indemnify and hold harmless the Company, its
Affiliates  and their  respective  officers,  directors,  partners  and  members
(collectively, the "Company Indemnitees"),  from and against any and all Losses,
and agrees to reimburse the Company  Indemnitees for all out-of-pocket  expenses
(including  the  reasonable  fees and expenses of legal  counsel),  in each case
promptly as incurred by the Company Indemnitees and to the extent arising out of
or in connection with:

             1.     any misrepresentation, omission of fact, or breach of any of
         Buyer's representations or warranties contained in this Agreement, the
         annexes, schedules or exhibits hereto or any instrument, agreement or
         certificate entered into or delivered by Buyer pursuant to this Agree-
         ment; or

             2.     any failure by Buyer to perform in any material respect any
         of its covenants, agreements,  undertakings or obligations set forth in
         this Agreement or any instrument, certificate or agreement entered into
         or delivered by Buyer pursuant to this Agreement.

         D.  Promptly   after   receipt   by  either   party   hereto   seeking
indemnification  pursuant to this Section XI (an "Indemnified Party") of written
notice of any  investigation,  claim,  proceeding  or other action in respect of
which  indemnification is being sought (each, a "Claim"),  the Indemnified Party
promptly  shall notify the party against whom  indemnification  pursuant to this
Section  XI is being  sought  (the  "Indemnifying  Party")  of the  commencement
thereof;  but the omission to so notify the Indemnifying Party shall not relieve
it from any  liability  that it  otherwise  may have to the  Indemnified  Party,
except to the extent that the  Indemnifying  Party is materially  prejudiced and
forfeits  substantive  rights  and  defenses  by  reason  of  such  failure.  In
connection with any Claim,  the  Indemnifying  Party shall be entitled to assume
the defense thereof.  Notwithstanding the assumption of the defense of any Claim
by the Indemnifying  Party, the Indemnified Party shall have the right to employ
separate  legal  counsel  (together  with  appropriate  local  counsel)  and  to
participate in the defense of such Claim, and the Indemnifying  Party shall bear
the  reasonable  fees,  out-of-pocket  costs and expenses of such separate legal
counsel to the Indemnified  Party if (and only if): (x) the  Indemnifying  Party
shall have agreed to pay such fees,  out-of-pocket  costs and expenses,  (y) the
Indemnified  Party and the  Indemnifying  Party  reasonably shall have concluded
that  representation of the Indemnified Party and the Indemnifying  Party by the
same   legal   counsel   would  not  be   appropriate   due  to  actual  or,  as
reasonably-determined by legal counsel to the Indemnified Party, (i) potentially
differing  interests  between such parties in the conduct of the defense of such
Claim, or (ii) if there may be legal defenses available to the Indemnified Party
that are in addition to or disparate  from those  available to the  Indemnifying
Party and which can not be presented by counsel to the  Indemnifying  Party,  or
(z) the Indemnifying  Party shall have failed to employ legal counsel reasonably
satisfactory to the Indemnified  Party within a reasonable  period of time after
notice of the  commencement  of such Claim.  If the  Indemnified  Party  employs
separate legal counsel in circumstances  other than as described in clauses (x),
(y) or (z) above,  the fees,  costs and expenses of such legal  counsel shall be
borne  exclusively  by the  Indemnified  Party.  Except as provided  above,  the
Indemnifying  Party  shall  not,  in  connection  with  any  Claim  in the  same
Jurisdiction, be liable for the fees and expenses of more than one firm of legal

                                       20

<PAGE>

counsel for the Indemnified Party (together with appropriate local counsel). The
Indemnifying  Party  shall  not,  without  the  prior  written  consent  of  the
Indemnified Party (which consent shall not unreasonably be withheld),  settle or
compromise  any  Claim or  consent  to the entry of any  judgment  that does not
include an unconditional  release of the Indemnified  Party from all liabilities
with respect to such Claim or judgment.

         E.  In  the  event  one  party  hereunder   should  have  a  claim  for
indemnification  that does not  involve a claim or demand  being  asserted  by a
third party,  the Indemnified  Party promptly shall deliver notice of such claim
to the  Indemnifying  Party. If the Indemnified  Party disputes the claim,  such
dispute shall be resolved by mutual  agreement of the Indemnified  Party and the
Indemnifying  Party  or by  binding  arbitration  in San  Francisco,  California
conducted in accordance with the commercial procedures and rules of the American
Arbitration Association. Judgment upon any award rendered by any arbitrators may
be entered in any court having competent jurisdiction thereof.

         XII. GOVERNING LAW: MISCELLANEOUS.

         This Agreement  shall be governed by and interpreted in accordance with
the laws of the State of  California,  without  regard to the  conflicts  of law
principles of such state.  Each of the parties  consents to the  jurisdiction of
the  federal  courts  whose  districts  encompass  any  part of the  City of San
Francisco or the state courts of the State of California  sitting in the City of
San Francisco 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.  A  facsimile  transmission  of this  signed
Agreement shall be legal and binding on all parties  hereto.  This Agreement may
be  signed  in one or more  counterparts,  each of  which  shall  be  deemed  an
original.  The headings of this  Agreement are for  convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.  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.  This Agreement may
be amended only by an  instrument  in writing  signed by the party to be charged
with   enforcement.   This  Agreement   supersedes  all  prior   agreements  and
understandings  among the  parties  hereto with  respect to the  subject  matter
hereof.

         XIII. NOTICES. Except as may be otherwise provided herein, any notice
or other  communication or delivery required or permitted  hereunder shall be in
writing and shall be delivered  personally  or sent by certified  mail,  postage
prepaid, or by a nationally  recognized  overnight courier service, and shall be
deemed given when so delivered  personally or by overnight courier service,  or,
if mailed,  three (3) days after the date of deposit in the United States mails,
as follows:

         (1)      if to the Company, to:

                  Adatom.com, Inc.
                  920 Hillview Court, Suite 160
                  Milpitas, California 95305

                                       21

<PAGE>

                  Attention: Richard Barton

                  with a copy to:

                  Henry D. Evans, Jr., Esq.
                  McCutchen, Doyle, Brown & Enersen, LLP
                  3 Embarcadero Center
                  San Francisco, California 94111-4067

         (2)      if to Buyer, to the address set forth on the signature page
         hereof.

         with a copy to:

         Snow Becker Krauss P.C.
         605 Third Avenue
         New York, New York 10158
         Attention: Mark Orenstein, Esq.

The Company or Buyer may change the foregoing  address by notice given  pursuant
to this Section XVIII.

         XIV. CONFIDENTIALITY. Each of the Company and Buyer agrees to keep
confidential  and not to  disclose  to or use for the benefit of any third party
the  terms  of this  Agreement  or any  other  information  which at any time is
communicated by the other party as being confidential  without the prior written
approval of the other party;  provided,  however,  that this provision shall not
apply to information  which,  at the time of disclosure,  is already part of the
public domain  (except by breach of this  Agreement)  and  information  which is
required to be disclosed by law (including, without limitation, pursuant to Item
10 of Rule 601 of Regulation S-K under the Securities Act and the Exchange Act).

         XV. ASSIGNMENT. This Agreement shall not be assignable by either of the
parties  hereto prior to the Closing  without the prior  written  consent of the
other party,  and any attempted  assignment  contrary to the  provisions  hereby
shall be null and void; PROVIDED,  HOWEVER, that Buyer may assign its rights and
obligations  hereunder,  in whole  or in part,  to any  affiliate  of Buyer  who
furnishes to the Company the representations and warranties set forth in Section
II hereof and otherwise agrees to be bound by the terms of this Agreement.

         XVI. BROKERS.  Each of the parties hereto represents that it has had no
dealings in connection with this  transaction with any finder or broker who will
demand payment of any fee or commission  from the other party,  except for Astor
Capital  who is the  agent of the  Company  and  whose  fee shall be paid by the
Company.  The Company on the one hand,  and Buyer,  on the other hand,  agree to
indemnify  the  other  against  and hold  the  other  harmless  from any and all
liabilities  to any person  claiming  brokerage  commissions or finder's fees on
account  of  services   purported  to  have  been  rendered  on  behalf  of  the
indemnifying  party  in  connection  with  this  Agreement  or the  transactions
contemplated hereby.

                                       22

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the date first above written.

                                   ADATOM.COM, INC.

                                   By: /s/RICHARD S. BARTON
                                       ---------------------------
                                          Name:  Richard S. Barton
                                          Title: President & CEO

                                   BUYER

                                   Name:  Alborz Select Opportunities Fund
                                   By:    Jacques Tizabi
                                          Investment Manager


                                   BUYER

                                   Name:  Yasser Hosny Moustafa


                                   BUYER

                                   Name:  Robert DelGuercio


                                   BUYER

                                   Name:   Pietro Gattini

                                       23