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advice! Investment Services GmbH                              EXHIBIT 10.5
Schottenring 16
1010 Vienna, Austria




STRICTLY PRIVATE AND CONFIDENTIAL

The Pathways Group, Inc.
Attn: Carey F. Daly
President and CEO
1221 North Dutton Avenue
Santa Rosa, California 95401



                                                                  24 August 1999



Dear Sirs:

I. ENGAGEMENT

We are pleased to restate and confirm that Advice! Investment Services GmbH
("Advice!") will assist you and introduce you to investors, banks, syndicates or
underwriters for the following transactions:

     -   short term financing, which may be through the private placement of
         securities including the issuance of convertible securities, a bridge
         loan or any other form of financing in the short term or any
         combination thereof between the date hereof and the contemplated public
         offering (a "Short Term Transaction") which may include short term
         financing to be provided by Shoreline Pacific Institutional Finance
         ("Shoreline") (the "Shoreline Transaction"); and

     -   public offerings of common stock of The Pathways Group, Inc.
         ("Pathways") (an "Offering" and together with the Short Term
         Transaction and the Shoreline Transaction, the "Transactions") (such
         arrangements in connection with the Transactions hereafter referred to
         as the "Engagement").



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The Transactions may occur in two or more tranches. You should note that Advice!
will not be responsible for providing you with or obtaining or reviewing on your
behalf any accounting, tax, legal or other specialist advice, although we would
be happy to discuss with you the implications of any such advice you receive.

The Engagement contemplates that as Advice!, we will perform the following
tasks:

    -    Identify, present and evaluate various options for raising up to, but
         not limited to USD 100 million in net proceeds to Pathways through the
         Transactions, which may occur in two or more tranches;
    -    Assist Pathways in negotiating engagement letters with investors,
         banks, syndicates or underwriters;
    -    Recommend an offering structure/stock exchange that will also provide
         you with exposure in both the capital and smart card markets;
    -    Identify, present and recommend legal counsel as transaction counsel
         for the Transactions; and
    -    Assist you in the co-ordination of your other advisors, including the
         investor, bank, syndicate, underwriter, lawyers and accountants, as
         necessary.

II. FEES AND EXPENSES

  a.  You agree upon each closing of a Short Term Transaction, where Advice! has
      introduced you, directly or indirectly, to the investor, bank, syndicate
      or underwriter, out of the proceeds thereof:
      (i)     to pay Advice! an aggregate commission in an amount equal to 9 %
              of the aggregate amount of gross proceeds raised from such Short
              Term Transaction. This amount shall include up to an amount that
              is 8% of the aggregate amount of gross proceeds raised for the
              fees paid in cash (i.e. not paid in warrants or other securities)
              due to the investor, bank, syndicate or underwriter upon each
              closing of a Short Term Transaction for the tasks performed by
              them, such tasks being defined in the engagement letter to be
              entered into between Pathways and such investor, bank, syndicate
              or underwriter; and
      (ii)    to issue to Advice! or its nominee, upon each closing, the number
              of warrants, substantially in the form of the Warrant Certificate
              attached as Annex A hereto, equal to 9% of the aggregate amount of
              gross proceeds raised in such Short Term Transaction, with a
              strike price of the closing price of Pathways common stock as
              quoted on NASDAQ on the date prior to the respective closing date.
              This amount shall include the number of warrants due to be issued
              to an investor, bank, syndicate or underwriter upon closing for
              the tasks performed up to an amount that



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              is 8% of the aggregate amount of gross proceeds raised in such
              Short Term Transaction.

      Paragraphs (i) and (ii) notwithstanding, you agree, in the case of a
      Shoreline Transaction, upon each closing:
      (1)     to pay Advice! an aggregate commission in an amount equal to 4% of
              the aggregate amount of the gross proceeds raised in such
              Shoreline Transaction;
      (2)     to issue for the benefit of Advice!, or its nominee, 83,000
              warrants per each million of aggregate amount of gross proceeds
              raised with a strike price of the closing price of Pathways common
              stock as quoted on NASDAQ on the date prior to the closing date of
              a Shoreline Transaction, substantially in the form of the Warrant
              Certificate attached as Annex A hereto; and

  b.  You agree upon each closing of an Offering, where Advice! has introduced
      you, directly or indirectly, to the bank, syndicate or underwriter, out of
      the proceeds thereof:
      (i)     to pay Advice! an aggregate commission in an amount equal to 10 %
              of the aggregate amount of gross proceeds raised in such Offering.
              This amount shall include up to an amount that is 9% of the
              aggregate amount of gross proceeds raised for the fees paid in
              cash (i.e. not paid in warrants or other securities) due to the
              investor, bank, syndicate or underwriter upon each closing of an
              Offering for the tasks performed by them, such tasks being defined
              in the engagement letter to be entered into between Pathways and
              such bank, syndicate or underwriter; and
      (ii)    to issue to Advice! or its nominee, the number of warrants,
              substantially in the form of the Warrant Certificate attached as
              Annex A hereto, equal to 4% of the aggregate amount of gross
              proceeds raised in such Offering. Half of this amount shall be
              issued upon signing of an engagement letter with an investor,
              bank, syndicate or underwriter, based on estimated gross proceeds
              of such Offering of USD 100 million, with a strike price of the
              closing price of Pathways common stock as quoted on NASDAQ on the
              date prior to the respective signing date. The remainder shall be
              issued on each closing date of such Offering, based upon the
              actual gross proceeds, with a strike price of the closing price of
              Pathways common stock as quoted on NASDAQ on the date prior to the
              respective closing date.

  c.  You shall be responsible for all printing costs for the prospectus and
      research reports, filing fees, rating agency expenses, if any, and other
      expenses customarily borne by issuers, including all roadshow expenses,
      reasonable travel and out-of-pocket expenses of the bank and Advice!,
      costs associated



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      with PR activities, lawyers' (including the transaction counsel),
      accountants' and other professionals' fees, but excluding all of Advice!'s
      legal expenses subject to the provisions of paragraph d of this section.

  d.  If the Transactions are not completed because of either (i) termination of
      this letter agreement by you or (ii) any other determination by you not to
      proceed with the Transactions, you will reimburse Advice! for all expenses
      reasonably incurred by it in connection with the proposed Transactions,
      including Advice!'s legal expenses. The previous sentence not
      withstanding, if Pathways should decide not to accept or to terminate a
      Shoreline Transaction, then Pathways will pay to Advice 50% of the
      commission agreed in paragraph a above based upon a USD 5 million
      commitment from Shoreline. If a closing on a Transaction occurs where
      Advice! has introduced you, directly or indirectly, to the bank, syndicate
      or underwriter, then the commissions in paragraphs a and b above shall
      still be due and payable despite the termination of this agreement.

  e.  You agree that all amounts payable hereby shall be paid in US dollars and
      free and clear of, and without any deduction or withholding for or on
      account of, any current or future taxes (excluding current and future
      income taxes provided that this exclusion shall not apply to any
      value-added tax), levies, imposts, duties, charges or other deductions or
      withholdings levied in any jurisdiction from or through which payment is
      made, unless such deduction or withholding is required by applicable law,
      in which event you will pay additional amounts so that the persons
      entitled to such payments will receive the amount that such persons would
      otherwise have received but for such deduction or withholding. You agree
      to pay all fees and expenses payable to Advice! within 14 days after
      Advice! issues its invoice.


  III. INDEMNITY

  It is possible that, during the course of the Engagement or afterward, a third
  party may bring a claim against any Indemnified Person mentioned below, or
  that such Indemnified Person may incur a loss or liability, directly or
  indirectly, arising out of or in connection with the Engagement or a
  transaction to which the Engagement relates.

  Accordingly, you agree to the provisions of this Section III for the benefit
  of Advice! and in trust and as agent for the other Indemnified Persons
  mentioned below:

  a.  You will indemnify and hold harmless any Indemnified Person from and
      against any and all actions, claims, demands, proceedings or judgments
      (collectively



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      "Claims") and any and all losses, liabilities, damages, costs, charges and
      expenses, joint or several (collectively "Losses"), of whatever nature and
      in whichever jurisdiction, which may be instituted, made or alleged
      against, or which is suffered or incurred by, any Indemnified Person and
      which relate to or arise from, directly or indirectly, the Engagement
      including any costs, charges and expenses (including legals fees) involved
      in investigating, preparing for or defending the relevant Claim
      ("Proceedings") whether or not in connection with pending or threatened
      litigation in which any Indemnified Person is a party and which are not
      fully judicially determined to have arisen out of the gross negligence or
      willful misconduct of any Indemnified Person. If for any reason the
      foregoing indemnification is unavailable to any Indemnified Person or
      insufficient to hold it harmless, then you shall contribute to the amount
      paid or payable by any Indemnified Person as a result of such Losses,
      Claims or in such proportion as is appropriate to reflect not only the
      relative benefits received by you on the one hand, and such Indemnified
      Person, on the other hand, but also your relative fault, on the one hand,
      and the relative fault of any Indemnified Person on the other hand, as
      well as any relevant equitable considerations. It is hereby agreed that
      the relative benefits to you, on the one hand, and all Indemnified
      Persons, on the other hand, shall be deemed to be in the same proportion
      as (i) the total value received or proposed to be received by you pursuant
      to any transaction (whether or not consummated) bears to (ii) the fee paid
      or proposed to be paid to Advice! in connection which such sale. The
      indemnity, reimbursement and any contribution obligations to the
      Indemnifying Person under this Section III shall be in addition to any
      liability which you may otherwise have to an Indemnified Party and shall
      be binding upon and inure to the benefit of any successors, assigns, heirs
      and personal representatives of you and any Indemnified Person.

  b.  It follows that no such claim will be made by you or any company within
      your Group or any of its or their respective directors, officers,
      employees or agents and that no Indemnified Person shall be liable
      (whether directly or indirectly in contract, tort or otherwise) to you or
      any company within the Group or any of its or their respective directors,
      officers, employees or agents, for or in connection with the Engagement
      except as a result of the willful misconduct or gross negligence of any
      Indemnified Person or as a result of any breach by Advice! of its
      obligations to Pathways in connection with the Engagement.

  c.  Promptly after receipt by an Indemnified Person of notice of the
      commencement of any Proceedings, such Indemnified Person will, if a claim
      in respect thereof is to be made against you, notify you in writing of the
      commencement thereof, PROVIDED that (i) the omission so to notify you will
      not relieve you from any liability which you may have hereunder except to
      the extent you have been materially prejudiced by such failure and (ii)
      the omission so to notify you will


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      not relieve you from any liability which you may have to an Indemnified
      Person otherwise than on account of this indemnity agreement. In case any
      such Proceedings are brought against any Indemnified Person and it
      notifies you of the commencement thereof, you will be entitled to
      participate therein, and, to the extent that you may elect by written
      notice delivered to such Indemnified Person, to assume the defense
      thereof, with counsel reasonably satisfactory to such Indemnified Person,
      PROVIDED that if the defendants in any such Proceedings include both such
      Indemnified Person and you, and such Indemnified Person shall have
      concluded that there may be legal defenses available to it which are
      different from or additional to those available to you, such Indemnified
      Person shall have the right to select separate counsel to assert such
      legal defenses and to otherwise participate in the defense of such
      Proceedings on behalf of such Indemnified Person. Upon receipt of notice
      from you to such Indemnified Person of your election so to assume the
      defense of such Proceedings and approval by such Indemnified Person of
      counsel, the Indemnifying Party shall not be liable to such Indemnified
      Person for expenses incurred by such Indemnified Person in connection with
      the defense thereof (other than reasonable costs of investigation) unless
      (i) such Indemnified Person shall have employed separate counsel in
      connection with the assertion of legal defenses in accordance with the
      proviso to the next preceding sentence (it being understood, however, that
      you shall not be liable for the expenses of more than one separate
      counsel, approved by Advice!, representing the Indemnified Persons who are
      parties to such Proceedings), (ii) you shall not have employed counsel
      reasonably satisfactory to such Indemnified Person to represent such
      Indemnified Person within a reasonable time after notice of commencement
      of the Proceedings or (iii) you shall have authorized in writing the
      employment of counsel for such Indemnified Person; and except that, if
      clause (i) or (iii) is applicable, such liability shall be only in respect
      of the counsel referred to in such clause (i) or (iii).

  d.  References to "Indemnified Persons" are to Advice! and each of its
      respective partners, directors, officers, employees and agents,
      controlling persons and any successor of any such persons.

  e.  These paragraphs (a) to (e) inclusive shall survive any termination of the
      arrangement contained in this letter and are in addition to any rights
      which any Indemnified Person may have at common law or otherwise
      including, but not limited to, any right of contribution.


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  IV. CONFIDENTIALITY

      All confidential information which Advice! receives from Pathways will be
      held in strict confidence unless and until such time as (i) the Company
      specially consents to the disclosure of that confidential information or
      (ii) such information becomes publicly available other than by reason of
      disclosure by Advice! or any connected person. In addition to any other
      right or obligation by virtue of which Advice! or any connected person may
      be bound by law to disclose information, Advice! will be entitled, upon
      prior written notice to Pathways, if requested or required to do so, to
      disclose any information known to Advice! or any connected person, and/or
      to produce any documents, relating to Pathways's business or affairs to
      any governmental or regulatory agency or authority.

      Nothing herein will prevent Advice from disclosing such information to
      banks who may act as underwriter of the Transactions or to purchasers or
      prospective purchasers in connection with the Transactions.

      You agree that after completion of the Transactions, Advice! may, at its
      option and expense, publish an announcement in such periodicals,
      newspapers and other publications as it may elect describing the terms of
      the Transactions and the participation of Advice! therein.

      You agree not to disclose this letter agreement or its contents or the
      other activities of Advice! as contemplated herein to any person without
      the specific consent of Advice except to your officers, employees,
      attorneys, affiliates and advisors on a confidential, need-to-know basis
      and as required by applicable law or compulsory legal process.

  V. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS OF PATHWAYS

  Pathways hereby represents and warrants to Advice! that:

      a.      No person other than Advice! has been appointed, maintained or
              mandated as finder in connection with the Transactions
              contemplated in this letter agreement;

      b.      It and each of its subsidiaries has been duly organized and is
              validly existing as corporations in good standing under the laws
              of the state of its respective organization and is duly qualified
              to transact business and in good standing in all other
              jurisdictions where so required by the laws



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              thereof, except where the failure to be so qualified does not
              amount to a material liability or disability to Pathways or its
              subsidiaries taken as a whole;

      c.      It is able to validly issue, sell and have registered the
              securities in the Transactions and Warrants and Warrant Shares (as
              defined in Annex A hereto) as contemplated by this letter
              agreement;

      d.      All corporate action necessary to validly issue, sell and have
              registered the securities in the Transactions, including any
              over-allotment option, as well as the Warrants and Warrant Shares,
              as contemplated by this letter agreement, has or will have taken
              place;

      e.      Its common stock is quoted on NASDAQ; and

      f.      It has duly authorized the execution and delivery of this letter
              agreement and this letter agreement has been duly executed and
              delivered and is enforceable against Pathways in accordance with
              the terms hereof.

      Pathways also undertakes to provide Advice! full access to the officers
      and staff of Pathways and any of its subsidiaries and to any other
      advisors, information and data necessary to consummate the Transactions
      contemplated by this letter agreement.

      Additionally, Pathways undertakes to keep Advice! informed of any material
      developments or proposal in relation to the business operations of
      Pathways and its subsidiaries, in particular where these may have an
      effect on the Transactions and the related documentation.

      Pathways undertakes to issue the number of shares of its common stock or
      other securities required for the Transactions, including any shares or
      other securities for the exercise of an over-allotment option of up to 15%
      of any offering.

      Pathways undertakes, if so requested by Advice or the bank or so required
      by applicable law, to simultaneously file the appropriate Registration
      Statement under the Securities Act of 1933, as amended with respect to the
      securities being placed in the Transactions contemplated herein.

      During the period from the date hereof through the December 31, 1999,
      Pathways will not, and will not cause its affiliates to initiate, solicit
      or enter into any discussions or negotiations looking towards the
      issuance, offering or sale of securities to any third parties in Europe
      except through Advice!.



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      Pathways agrees to provide Advice! with a power of attorney in order for
      Advice! to negotiate with banks, potential underwriters and potential
      investors.

  VI. GOVERNING LAW AND SUBMISSION TO JURISDICTION

      This letter agreement shall be governed by and construed in accordance
      with the laws of the State of New York, United States of America, without
      regard to any applicable principles of conflicts of law. YOU AND ADVICE!
      IRREVOCABLY AGREE TO WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM
      OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY PARTY RELATED TO OR ARISING
      OUT OF THIS LETTER AGREEMENT OR THE PERFORMANCE OF SERVICES HEREUNDER.

      You irrevocably agree that any state or federal court sitting in the City
      of New York shall have jurisdiction to hear and determine any suit, action
      or proceeding and to settle any dispute arising out of or relating to this
      letter agreement and, for such purposes, irrevocably submit to the
      jurisdiction of such courts. You hereby appoint The CT Corporation System
      at 1633 Broadway, New York, NY 10019, as your agent for service of
      process, and agree that service of any process, summons, notice or
      document upon such agent, by hand delivery or registered mail, shall be
      effective service of process for any suit action or proceeding brought in
      any court.

      You irrevocably and unconditionally waive any objection to the laying of
      venue of any such suit, action or proceeding has been brought in any such
      court and any claim that any such suit, action or proceeding has been
      brought in an inconvenient forum. A final judgment in any such suit,
      action or proceeding brought in any such court may be enforced in any
      other courts to whose jurisdiction you are or may be subject, by suit upon
      judgment. Nothing herein shall affect Advice!'s right to effect service of
      process in any other manner permitted by law or the right to bring action,
      suit or proceeding (including a proceeding for enforcement of a judgement)
      in any other court or jurisdiction in accordance with applicable law.

  VII. TERMINATION

      Advice!'s services in relation to this letter agreement may be terminated
      by Advice! or by Pathways upon 15 days notice.


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  VIII. MISCELLANEOUS

      This letter agreement contains the entire agreement between the parties
      relating to the Transactions and supersedes all oral statements and prior
      writings with respect to the transaction contemplated herein. This letter
      agreement may not be amended or modified except by a writing executed by
      each of the parties hereto. Paragraph headings herein are for convenience
      only and are not a part of this letter agreement. This letter agreement is
      solely for the benefit of you and Advice!, and no other person (except
      Indemnified Persons, to the extent set forth in Section III above, and the
      nominee with respect to the Warrants) shall acquire or have any rights
      under or by virtue of this letter agreement. This letter agreement may not
      be assigned by you or Advice! without the written consent of the other
      party hereto.

      If any term, provision, covenant or restriction contained in this letter
      agreement is held by a court of competent jurisdiction to be invalid, void
      or unenforceable or against public policy, the remainder of the terms,
      provisions, covenants and restrictions contained herein shall remain in
      full force and effect and shall in no way be affected, impaired or
      invalidated. You and Advice! shall endeavor in good faith negotiations to
      replace the invalid, void or unenforceable provisions with valid
      provisions the economic effect of which comes as close as possible to that
      of the invalid, void or unenforceable provisions.

      This letter agreement may be executed in counterparts, each of which will
      be deemed as original, but all of which taken together will constitute one
      and the same instrument. Delivery of an executed signature page of this
      letter agreement by facsimile transmission shall be as effective as
      delivery of manually executed counterpart hereof.

      For avoidance of doubt, this letter agreement, dated August 24, 1999, is
      restated and supercedes any previous engagement agreements, commitment
      agreements and other understandings between Advice! and Pathways,
      including but not limited to the Engagement Letter dated April 15, 1999,
      as amended.


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  Please indicate your agreement to the foregoing by signing and returning the
  enclosed duplicate of this letter.



                               We are, dear Sirs,
                                Yours faithfully,
                              For and on behalf of



  Advice! Investment Services GmbH



  By:    /s/ RAINER GOERITZ
      ----------------------------
      Rainer Goeritz
      Managing Director


  We agree to the foregoing.
  The Pathways Group, Inc.


  By:    /s/ CAREY F. DALY, II
      ----------------------------
      Carey F. Daly
      President and CEO



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  ANNEX A


                             THE PATHWAYS GROUP INC.
                                (NAME OF COMPANY)

                    FORM OF WARRANT CERTIFICATE FOR PURCHASE
                            OF SHARES OF COMMON STOCK

                     THIS WARRANT CERTIFICATE IS VOID AFTER
                _____ __.M., ________ TIME, ON ___________, ____

  Number of Warrants:                                      Warrant No._________
                                                           CUSIP No.


         This Warrant Certificate certifies that, for value received,

                 -----------------------------------------------

is the registered holder of the number of Warrants (the "Warrants") set forth
above. Each Warrant entitles the holder thereof to purchase from The Pathways
Group Inc., a Delaware corporation ("Company"), at any time or from time to time
after a date three months after the closing date, and on or before __.m.,
________ Time on a date five years after the closing date ("Expiration Date"),
one (1) share of fully paid and nonassessable ____________ Stock ("Common
Stock"), of the Company at an exercise price of $____ per share, subject to
adjustment as provided herein ("Exercise Price"), on the terms set forth herein.
As used herein, the term "Warrant Issuance Date" shall mean the closing date.

         1. EXERCISE OF WARRANTS. (a) At any time after the Warrant Issuance
Date and prior to the Expiration Date, the Warrants evidenced by this Warrant
Certificate may be exercised in whole or in part by presentation and surrender
of this Warrant Certificate at the office of the Company with the within
contained Subscription Form duly completed and executed and accompanied by
payment of the Exercise Price as then in effect by bank draft or cashier's check
payable in lawful money of the United States of America for the number of
Warrants being exercised. [No adjustment shall be made for any cash dividends,
whether paid or declared, on any securities issuable upon the exercise of a
Warrant.]

                  (b) Upon receipt of this Warrant Certificate, with the within
contained Subscription Form duly completed and executed, accompanied by payment
of the Exercise Price of the Warrants being exercised, the Company shall deliver
to or upon the order of the registered holder of this Warrant Certificate, in


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such name or names as such registered holder may designate, a certificate or
certificates for the number of full shares of the securities to be purchased,
together with any cash due in respect of any fraction of a share of such
securities otherwise issuable upon such exercise in accordance with Section 2
hereof. If the Warrant is exercisable to purchase property other than
securities, the Company shall take appropriate steps to cause such property to
be delivered to or upon the order of the registered holder of this Warrant
Certificate.

                  (c) Each person in whose name any certificate for securities
is issued upon the exercise of Warrants shall for all purposes be deemed to have
become the holder of record of the securities represented thereby as of, and
such certificate shall be dated, the date upon the Warrant Certificate was duly
surrendered in proper form and payment of the Exercise Price was made whether or
not the stock transfer books shall be closed on such date.

                  (d) If the holder of this Warrant Certificate at any time
exercises less than all the Warrants evidenced by this Warrant Certificate, the
Company shall issue to such holder a warrant certificate identical in form to
this Warrant Certificate, but evidencing a number of Warrants equal to the
number of Warrants originally represented by this Warrant Certificate less the
number of Warrants previously exercised. Likewise, upon the presentation and
surrender of this Warrant Certificate at the office of the Company and at the
request of the holder, the Company will, at the option of the holder, issue to
the holder in substitution for this Warrant Certificate one or more warrant
certificates in identical form and for an aggregate number of Warrants equal to
the number of Warrants evidenced by this Warrant Certificate.

                  (e) To the extent that the Warrants evidenced by this Warrant
Certificate have not been exercised on or before ______ __.m., _________ Time,
on ___________, ____, such Warrants shall expire and the rights of the holder
shall become void and of no effect.

         2. FRACTIONAL INTERESTS. The Company shall not be required to issue any
Warrant Certificate evidencing a fraction of a Warrant or to issue fractions of
shares of securities on the exercise of the Warrants. If any fraction of a
Warrant or a share of securities would, except for the provisions of this
Section, be issuable on the exercise of any Warrant, the Company shall purchase
such fraction for an amount in cash equal to the current value of such fraction
computed on the basis of the greater of (i) the closing market price, if any (as
quoted on National Association of Securities Dealers' Inc. National Market
System or similar system), on the trading day immediately preceding the day upon
which such Warrant Certificate was surrendered for exercise in accordance with
Section 1 hereof, or (ii) the Exercise Price. By accepting a Warrant
Certificate, the holder thereof expressly waives any




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right to receive a Warrant Certificate evidencing any fraction of a Warrant or
to receive any fractional share of securities upon exercise of a Warrant.

         3. ANTIDILUTIVE ADJUSTMENT. The shares of __________ Stock purchasable
on exercise of the Warrants evidenced by this Warrant Certificate are shares of
___________ Stock of the Company as constituted as of the Warrant Issuance Date.
The number and kind of securities purchasable on the exercise of the Warrants
evidenced by this Warrant Certificate, and the Exercise Price, shall be subject
to adjustment from time to time upon the happening of certain events, as
follows:

                  (a) MERGERS, CONSOLIDATIONS AND RECLASSIFICATIONS. In case of
any reclassification or change of outstanding securities issuable upon exercise
of the Warrants evidenced by this Warrant Certificate at any time after the
Warrant Issuance Date (other than a change in par value, or from par value to no
par value, or from no par value to par value or as a result of a subdivision or
combination to which subsection 3(b) applies), or in case of any consolidation
or merger of the Company with or into another corporation (other than a merger
with another corporation in which the Company is the surviving corporation and
which does not result in any reclassification or change (other than a change in
par value, or from par value to no par value, or from no par value to par value,
or as a result of a subdivision or combination to which subsection 3(b) applies)
of outstanding securities issuable upon exercise of this Warrant), the holder of
the Warrants evidenced by this Warrant Certificate shall be deemed to have
exercised the Warrants evidenced by this Warrant Certificate immediately prior
to such reclassification, change, consolidation or merger if no notice of
exercise of the Warrants is received from the Warrant holder.

                  (b) SUBDIVISIONS AND COMBINATIONS. If the Company, at any time
after the Warrant Issuance Date, shall subdivide its shares of _________ Stock
into a greater number of shares, the Exercise Price in effect immediately prior
to such subdivision shall be proportionately reduced, and the number of shares
of __________ Stock purchasable upon exercise of the Warrants evidenced by this
Warrant Certificate shall be proportionately increased, as at the effective date
of such subdivision, or if the Company shall take a record of holders of its
_________ Stock for the purpose of so subdividing, as at such record date,
whichever is earlier. If the Company, at any time after the Warrant Issuance
Date, shall combine its shares of __________ Stock into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination shall
be proportionately increased, and the number of shares of ________ Stock
purchasable upon exercise of the Warrants evidenced by this Warrant Certificate
shall be proportionately reduced, as at the effective date of such combination,
or if the Company shall take a record of holders



                                       14
<PAGE>

of its ________ Stock for purposes of such combination, as at such record date,
whichever is earlier.

                  (c) DIVIDENDS AND DISTRIBUTIONS. If the Company at any time
after the Warrant Issuance Date shall declare a dividend on its _________ Stock
payable in stock or other securities of the Company to the holders of its
_________ Stock, the holder of a Warrant evidenced by this Warrant Certificate
shall exercise such Warrants prior to the record date for such dividend (or, if
no record date shall have been established, the payment date for such dividend)
in order to be eligible to receive such dividend.

                  (d) CALCULATION OF WARRANT EXERCISE PRICE. The Warrant
Exercise Price in effect from time to time shall be calculated to four decimal
places and rounded to the nearest thousandth.

         4. NOTICE OF ADJUSTMENT TO EXERCISE PRICE. Whenever the Warrant
Exercise Price is required to be adjusted as provided in Section 3, the Company
shall forthwith compute the adjusted Warrant Exercise Price and shall prepare
and mail to the holder hereof a certificate setting forth such adjusted Warrant
Exercise Price and showing in reasonable detail the facts upon which such
adjustment is based.

         5. NOTICES TO WARRANT HOLDER. In the event:

                  (a) of any consolidation or merger to which the Company is a
party and for which approval of any stockholders of the Company is required, or
of the conveyance or sale of all or substantially all of the assets of the
Company, or of any reclassification or change of the __________ Stock or other
securities issuable upon exercise of the Warrants (other than a change in par
value, or from par value to no par value, or from no par value to par value or
as a result of a subdivision or combination), or a tender offer or exchange
offer for shares of ________ Stock (or other securities issuable upon the
exercise of the Warrants); or

                  (b) the Company shall declare any dividend (or any other
distribution) on the __________ Stock, other than regular cash dividends; or

                  (c) the Company shall authorize the granting to the holders of
________ Stock of rights or warrants to subscribe for or purchase any shares of
any class or series of capital stock; or

                  (d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;



                                       15
<PAGE>

then the Company shall cause to be sent to the holder of this Warrant
Certificate, at least 30 days prior to the applicable record date hereinafter
specified, or promptly in the case of events for which there is no record date,
a written notice stating (x) the date for the determination of the holders of
record of shares of ____________ Stock (or other securities issuable upon the
exercise of the Warrants) entitled to receive any such dividends or other
distribution, (y) the initial expiration date set forth in any tender offer or
exchange offer for shares of _________ Stock (or other securities issuable upon
the exercise of the Warrants), or (z) the date on which any such consolidation,
merger, conveyance, transfer, dissolution, liquidation or winding up is expected
to become effective or consummated, and the date as of which it is expected that
holders of record of shares of ____________ Stock (or other securities issuable
upon the exercise of the Warrants) shall be entitled to exchange such shares for
securities or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up.

         6. REPORTS TO HOLDERS. The Company will cause to be delivered, by
first-class mail, postage prepaid, to the holder at such holder's address
appearing hereon, or such other address as the holder shall specify, a copy of
any reports delivered by the Company to the holders of __________ Stock.

         7. COVENANTS OF THE COMPANY. The Company covenants and agrees that:

                  (a) During the period within which the Warrants evidenced by
this Warrant Certificate may be exercised, the Company shall at all times
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued _________ Stock, for the purpose of enabling it to
satisfy any obligation to issue shares of _________ Stock upon the exercise of
the Warrants evidenced by this Warrant Certificate, the number of shares of
_________ Stock issuable upon the exercise of such Warrants.

                  (b) The Company shall pay all expenses, taxes (other than
stock transfer taxes or charges) and other charges payable in connection with
the preparation, issuance and delivery of new warrant certificates on transfer
of the Warrants evidenced by this Warrant Certificate.

                  (c) All __________ Stock which may be issued upon exercise of
the Warrants evidenced by this Warrant Certificate shall upon issuance be
validly issued, fully paid, non-assessable and free from all taxes, liens and
charges with respect to the issuance thereof.

                  (d) All original issue taxes payable in respect of the
issuance of shares of __________ Stock to the registered holder hereof upon the
exercise of the



                                       16
<PAGE>

Warrants evidenced by this Warrant Certificate shall be borne by the Company;
PROVIDED, that the Company shall not be required to pay any tax or charge
imposed in connection with any transfer involved in the issuance of any
certificate representing shares of _________ Stock in any name other than that
of the registered holder hereof, and in such case the Company shall not be
required to issue or deliver any certificate representing shares of _________
Stock until such tax or other charge has been paid or it has been established to
the Company's satisfaction that no such tax or charge is due.

         8. NO RIGHTS AS STOCKHOLDER. The holder of the Warrants evidenced by
this Warrant Certificate shall not, by virtue of holding such Warrants, be
entitled to any rights of a stockholder of the Company either at law or in
equity, and the rights of the holder of the Warrants evidenced by this Warrant
Certificate are limited to those expressed herein.

         9. TRANSFER RESTRICTIONS. This Warrant Certificate will be
transferrable in accordance with applicable provisions of the Securities Act of
1933, as amended (the "1933 Act"), any other binding laws or regulations, and
the requirements of any stock exchanges on which the Company's Common Stock is
then listed.

         10. REGISTRATION RIGHTS. (a) In the event the Company files a
Registration Statement pursuant to the 1933 Act (other than a Registration on
Form S-4 or Form S-8) at any time before the Expiration Date, the Company shall,
at its sole expense, offer to the holder of the Warrants, the opportunity to
register their respective unregistered ______ Stock, if any. In the event the
Company's underwriter(s) in connection with such future offerings object to the
inclusion of the _____ Stock sought to be included, the Company will undertake
to file at its sole expense a Registration Statement relating to the stock with
respect to which such "piggyback" registration rights are sought to be exercised
within 6 months of the conclusion of such future Offerings.

         (b) The Company hereby agrees to indemnify and hold harmless each
holder of any Warrants and each person, if any, who controls such holder within
the meaning of Section 15 of the 1933 Act, from and against any and all losses,
claims, damages, expenses and liabilities caused by any untrue statement of a
material fact contained in any registration statement or any prospectus
furnished under the 1933 Act with respect to such stock or by any omission to
make a statement necessary to make the statements contained therein not
misleading.

         IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be executed this _____ day of ___________________, _____ by its President and
Secretary, thereunto duly authorized.



                                       17
<PAGE>



                                                     ________________________



                                                     By:_____________________
                                                            President



                                                     By:_____________________
                                                            Secretary





                                       18
<PAGE>


                                SUBSCRIPTION FORM
         [To be executed on exercise of the Warrants evidenced by this Warrant
          Certificate]


TO:      ______________________
         (NAME OF COMPANY)

         The undersigned, the holder of the Warrants evidenced by the attached
Warrant Certificate, hereby irrevocably elects to exercise the purchase right
evidenced by such Warrant Certificate for, and to purchase thereunder,________
shares of __________ Stock of ______________________ and herewith makes payment
of____________________________($               ) for those shares, and requests
that the certificate representing those shares be issued in the name of_________
and delivered to ________________, whose address is_____________________________


Dated:_________________                     ____________________________________

                                            ____________________________________
                                            Signature(s) of Registered Holder(s)
                                            NOTE:  THE ABOVE SIGNATURE(S) MUST
                                                   CORRESPOND WITH THE NAME AS
                                                   WRITTEN ON THE FACE OF THIS
                                                   WARRANT CERTIFICATE IN EVERY
                                                   PARTICULAR, WITHOUT
                                                   ALTERATION OR ENLARGEMENT OR
                                                   ANY CHANGE WHATSOEVER.


--------------------------------------------------------------------------------
                                  TRANSFER FORM

         [To be executed only upon transfer of the Warrants evidenced by this
          Warrant Certificate]

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto __________________ the Warrants represented by the within Warrant
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint __________________________
Attorney-in-Fact, to transfer same on the books of the Company with full power
of substitution in the premises.


Dated:_________________                     ____________________________________

                                            ____________________________________
                                            Signature(s) of Registered Holder(s)
                                            NOTE:  THE ABOVE SIGNATURE(S) MUST
                                                   CORRESPOND WITH THE NAME AS
                                                   WRITTEN ON THE FACE OF THIS
                                                   WARRANT CERTIFICATE IN EVERY
                                                   PARTICULAR, WITHOUT
                                                   ALTERATION OR ENLARGEMENT OR
                                                   ANY CHANGE WHATSOEVER.



WITNESS: