AUGMENT SYSTEMS, INC.

                             SUBSCRIPTION AGREEMENT












<PAGE>




                                  STATE NOTICES
                                  -------------

FOR CALIFORNIA  RESIDENTS:  THE  COMMISSIONER  OF  CORPORATIONS  OF THE STATE OF
CALIFORNIA DOES NOT RECOMMEND OR ENDORSE THE PURCHASE OF THE UNITS.

THE SALE OF THE SHARES PURSUANT TO THIS OFFERING HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH
UNITS OR THE PAYMENT OR RECEIPT OF ANY PART OF THE ISSUANCE OF SUCH UNITS OR THE
PAYMENT  OR  RECEIPT  OF ANY PART OF THE  CONSIDERATION  THEREFOR  PRIOR TO SUCH
QUALIFICATION  IS  UNLAWFUL,  UNLESS  THE  SALE OF  SHARES  IS  EXEMPT  FROM THE
QUALIFICATION REQUIREMENTS UNDER SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CODE.

FOR  CONNECTICUT  RESIDENTS:  THE UNITS HAVE NOT BEEN  REGISTERED  UNDER SECTION
36-485 OF THE CONNECTICUT UNIFORM SECURITIES ACT BUT WILL BE SOLD IN RELIANCE ON
AN EXEMPTION FROM SUCH REGISTRATION SET FORTH IN SECTION 36-490(b)(9)(A) OF SAID
ACT AND REGULATIONS PROMULGATED  THEREUNDER.  THE UNITS CANNOT BE RESOLD WITHOUT
REGISTRATION  UNDER SECTION 36-485 OF SAID ACT OR AN EXEMPTION FROM REGISTRATION
PURSUANT TO SECTION 36-490 OF SAID ACT.

FOR  FLORIDA  RESIDENTS:  THE UNITS IN THIS  OFFERING  WILL NOT BE SOLD TO,  AND
ACQUIRED BY, THE  SUBSCRIBER  IN A  TRANSACTION  EXEMPT UNDER  ss.517.061 OF THE
FLORIDA SECURITIES ACT. THE UNITS HAVE NOT BEEN REGISTERED UNDER SAID ACT IN THE
STATE OF FLORIDA.  ALL FLORIDA RESIDENTS SHALL HAVE THE PRIVILEGE OF VOIDING THE
PURCHASE WITHIN THREE DAYS AFTER THE FIRST TENDER OF  CONSIDERATION  IS MADE FOR
SUCH SHARES TO THE ISSUER, AN AGENT OF THE ISSUER, OR THE ESCROW AGENT OR WITHIN
THREE DAYS AFTER THE  AVAILABILITY  OF THAT  PRIVILEGE IS  COMMUNICATED  TO SUCH
PURCHASER, WITHEVER OCCURS LATER.

THE FLORIDA  DEPARTMENT OF BANKING AND FINANCE HAS NOT REVIEWED THIS OFFERING OR
THIS  SUBSCRIPTION  AGREEMENT  AND  THE  UNITS  OFFERED  HEREBY  HAVE  NOT  BEEN
REGISTERED UNDER THE FLORIDA SECURITIES AND INVESTOR  PROTECTION ACT. UNLESS THE
UNITS OFFERED  HEREBY ARE  REGISTERED,  THEY MAY NOT BE SOLD OR  TRANSFERRED  IN
FLORIDA EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THAT ACT.

FOR NEW JERSEY  RESIDENTS:  THE  OFFERING  DOCUMENS  HAVE NOT BEEN FILED WITH OR
REVIEWED BY THE NEW JERSEY  BUREAU OF  SECURITIES  OR THE  DEPARTMENT OF LAW AND
PUBLIC SAFETY OF THE STATE OF NEW JERSEY



                                       i

<PAGE>



PRIOR TO ITS ISSUANCE AND USE.  NEITHER THE ATTORNEY GENERAL OF THE STATE OF NEW
JERSEY NOR THE BUREAU OF SECURITIES  HAS PASSED ON OR ENDORSED THE MERITS OF THE
OFFERING DOCUMENTS. ANY REPRESENTATIONS TO THE CONTRARY ARE UNLAWFUL.

FOR NEW YORK  RESIDENTS:  THE  OFFERING  DOCUMENTS  HAVE NOT BEEN  FILED WITH OR
REVIEWED  BY THE  ATTORNEY  GENERAL  OF THE  STATE  OF NEW  YORK  PRIOR TO THEIR
ISSUANCE AND USE.  THE ATTORNEY  GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED
ON OR ENDORSED THE MERITS OF THIS OFFERING.  ANY REPRESENTATIONS TO THE CONTRARY
ARE  UNLAWFUL.  THE  OFFERING  DOCUMENTS  DO NOT CONTAIN AN UNTRUE  STATEMENT OF
MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT  NECESSARY TO MAKE THE STATEMENTS
MADE, IN LIGHT OF THE CIRCUMSTANCES  UNDER WHICH THEY WERE MADE, NOT MISLEADING.
IT CONTAINS A FAIR SUMMARY OF THE MATERIAL  TERMS AND DOCUMENTS  PURPORTED TO BE
SUMMARIZED HEREIN.





                                       ii
<PAGE>



Name of Purchaser:_____________________


                              AUGMENT SYSTEMS, INC.
                             SUBSCRIPTION AGREEMENT



Augment Systems, Inc.
2 Robbins Road
Westford, Massachusetts  01886-4113
Attention: Laurence S. Liebson, Chief Executive Officer

Gentlemen:

1.  SUBSCRIPTION.  The undersigned  (the  "Purchaser"),  intending to be legally
bound,  hereby  irrevocably  agrees to purchase from Augment Systems,  Inc. (the
"Company")  the number of units (the  "Units") set forth on the  signature  page
hereof, at a purchase price of $50,000 per Unit. Each Unit consists of a $50,000
principal amount 8% Convertible  Promissory Note (the "Notes") and warrants (the
"Warrants") to purchase up to 25,000 shares of the Company's common stock,  $.01
par value per share ("Common Stock").  The minimum  subscription is for one Unit
or $50,000  per  investor  (the  "Minimum  Investment").  The Company may accept
offers  to  purchase  less  than  Minimum  Investment  from  an  investor.  This
subscription  is submitted to the Company in accordance  with and subject to the
terms and conditions described in a certain Loan Agreement,  Secured Convertible
Promissory Note, and Security Agreement, each dated as of even date herewith, as
amended or supplemented from time to time, including all attachments,  schedules
and exhibits  thereto  (collectively,  the "Loan  Documents"),  relating to this
offering (the  "Offering")  by the Company of up to 30 Units on a "best efforts,
all or none" basis (the "Offering  Amount")  through Adolph  Komorsky  Hoffman &
Associates,  Ltd. ("AKH" or the "Placement  Agent"),  as Placement Agent for the
Company.  Forms of the Loan Agreement,  Promissory Note, and Security  Agreement
are attached hereto as Exhibit A, B and C, respectively.

         Certain  terms used but not  otherwise  defined  herein  shall have the
respective meanings provided in the Loan Documents.

2. PAYMENT OF PURCHASE  PRICE.  The  Purchaser  hereby  deposits  with  Republic
National Bank via check payable to "Augment Systems, Inc. - Marine Midland Bank,
as Escrow Agent" or via wire transfer an amount (the "Purchase  Price") equal to
the  number  of Units  subscribed  for  hereunder  multiplied  by  $50,000.  See
Subscription  Instructions  attached  hereto  as  EXHIBIT  D for  wire  transfer
instructions.  The Purchase Price shall be held in escrow by Marine Midland Bank
until the Minimum  Proceeds are  accepted by the Company and the Closing  occurs
(as defined in Section 3.2 below). Together with this Subscription Agreement and
the check for, or wire  transfer of, the full Purchase  Price,  the Purchaser is
delivering  a  completed  and  executed  signature  page to the Loan  Agreement,
attached hereto.



<PAGE>



3. ACCEPTANCE OF SUBSCRIPTION BY THE COMPANY.

3.1 Units  subscribed  for herein shall not be deemed  issued to or owned by the
  Purchaser  until  this  Subscription  Agreement  ("Subscription   Agreement"),
  together with the Accredited  Investor  Certificate set forth in Section 20 of
  this  Subscription  Agreement,   have  been  completed  and  executed  by  the
  Purchaser,  and  countersigned by the Company.  The Purchaser  understands and
  agrees  that the  Company  reserves  the right to accept or reject this or any
  other  subscription  for  Units,  in whole or in part,  notwithstanding  prior
  receipt by the  Purchaser of notice of acceptance  of this  subscription.  The
  Company shall have no obligation hereunder until the Company shall execute and
  deliver to the Purchaser an executed copy of this Subscription  Agreement.  If
  this  subscription is rejected in whole or the Offering is terminated prior to
  the Closing (as described in Section 3.2 below),  all funds  received from the
  Purchaser will be returned without  interest,  penalty,  expense or deduction,
  and this  Subscription  Agreement  shall  thereafter be of no further force or
  effect.  If this  subscription is rejected in part, the funds for the rejected
  portion of this  subscription  will be returned,  without  interest,  penalty,
  expense or deduction,  and this  Subscription  Agreement will continue in full
  force and effect to the extent this subscription was accepted.

3.2  Upon  receipt  by  Marine   Midland  Bank  on  behalf  of  the  Company  of
  subscriptions for 30 Units or $1,500,000 (the "Minimum  Proceeds") pursuant to
  Subscription  Agreements,  there  shall be a closing  (the  "Closing")  of the
  purchase  of the Units and the  Company  shall  deliver  to the  Purchaser  an
  accepted Subscription Agreement, the Loan Documents and the Warrants. Upon the
  Closing,  the Company will repay in full its  indebtedness to Fleet Bank under
  that certain Loan  Agreement,  dated August 4, 1997, as amended.  The Offering
  shall  terminate  on August 17, 1998,  unless  extended for up to 30 days upon
  mutual  agreement by and between the Company and AKH.  Upon the  Closing,  the
  Company shall deliver to the  Purchasers an accepted  Subscription  Agreement,
  the Loan Documents and the Warrant.

3.3  Purchaser  agrees that he will not  transfer  or assign  this  Subscription
  Agreement or any of  Purchaser's  interest  herein.  Purchaser may not cancel,
  terminate  or  revoke  this  Subscription  Agreement,  and  this  Subscription
  Agreement will be binding upon Purchaser's successors and assigns.

3.4 Purchaser  undertakes to execute and deliver to the Company  within five (5)
  days  after  receipt  of  the  Company's   request   therefor,   such  further
  designations,  powers of attorney and other  instruments  as the Company deems
  reasonably  necessary  or  appropriate  to carry  out the  provisions  of this
  Subscription Agreement.

4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.  The Purchaser  acknowledges
that the Company is offering  the Units in  reliance  upon the  representations,
warranties  and other  information  presented  by the  Purchaser  herein and the
Purchaser's  accredited investor certificate.  In order to induce the Company to
accept  the  subscription  made  hereby,  the  Purchaser  hereby   acknowledges,
represents and warrants to and agrees with the Company as follows:



                                       2

<PAGE>


4.1  RESTRICTED  SECURITIES.   None  of  the  Notes,  securities  issuable  upon
  conversion of the Notes, Warrants, or securities issuable upon exercise of the
  Warrants (collectively,  the "Securities") are registered under the Securities
  Act of 1933, as amended (the  "Securities  Act") or any state securities laws.
  The Purchaser  understands that the offering and sale of the Units is intended
  to be exempt from registration  under the Securities Act, by virtue of Section
  4(2)  thereof,  based,  in part,  upon  the  representations,  warranties  and
  agreements  of the Purchaser  contained in this  Subscription  Agreement.  The
  Company  is  relying  upon the  truth  and  accuracy  of the  representations,
  warranties, agreements, acknowledgments and understandings set forth herein in
  order to determine the  suitability  of Purchaser to subscribe for and acquire
  the Units.

4.2 RISK FACTORS.  The  Purchaser  confirms  that he  understands  and has fully
  considered  the risks of an investment in the Units and  understands  that (i)
  this  investment  is  suitable  only for an  investor  who is able to bear the
  economic  consequences of losing his entire  investment,  (ii) the purchase of
  the Units is a speculative  investment and involves a high degree of risk, and
  (iii) there are substantial  restrictions on the transferability of, and there
  will be no immediate  public or private  market for, the Units,  or any of the
  Securities, and accordingly, it may not be possible for Purchaser to liquidate
  Purchaser's investment. The Purchaser hereby acknowledges and understands that
  an investment in the Company is subject,  but is not limited, to the following
  risks:

History of Losses and Accumulated  Deficit; No Assurance of Significant Revenues
or Operating Profit; Independent Certified Public Accountants' Qualified Report.
To date, the Company has recognized  limited revenues from product sales and has
experienced  significant operating losses since inception. As of March 31, 1998,
the Company had an accumulated  deficit of  approximately  $17,871,000,  working
capital of approximately  $2,674,000 and  stockholders'  equity of approximately
$3,188,000. The Company expects to incur substantial additional costs, including
costs  related to ongoing  research  and  development  activities,  resulting in
operating losses for at least the next 12 months following the completion of the
Offering. The Company's ability to achieve significant revenue and profitability
is dependent on  successful  marketing of its existing  products and  successful
completion  of  enhancements  to its existing  products and the  development  of
future products, of which there can be no assurance. The report of the Company's
independent   certified  public   accountants  with  respect  to  the  financial
statements  of the  Company  for the year ended  December  31,  1997  contains a
paragraph  expressing  doubt as to the Company's  ability to continue as a going
concern. Among the factors cited by the auditors as raising substantial doubt as
to the Company's  ability to continue as a going concern is that the Company has
incurred  recurring  operating  losses and is dependent on obtaining  additional
financing to continue its operations.

Delisting by NASDAQ.  On July 7, 1998, the Company's Common Stock ceased trading
on the NASDAQ  SmallCap  Market  because the  Company  failed to comply with the
continued  listing  requirements and criteria of that market.  As a result,  the
market for the Company's Common Stock is extremely limited, and no assurance can
be given that the  Company  will in the future be able to have its Common  Stock
listed on the NASDAQ Stock Market.

SUBSTANTIAL  AMOUNT OF  PROCEEDS  USED TO  SATISFY  INDEBTEDNESS:  Approximately
$750,000 of the proceeds  received by the Company from the Offering will be used
to repay  outstanding  indebtedness  and,  therefore,  will not be available for
future  operations.  The  remaining  proceeds  received by the Company  from the
Offering,  if any,  will be used  for  general  working  capital  purposes,  and
accordingly,  management will have broad discretion to use the proceeds from the
Offering.  As a result,  investors in the Offering  will not know in advance how
such proceeds will be used by the Company.


                                       3

<PAGE>


NEED FOR ADDITIONAL  CAPITAL.  The Company's  future capital  requirements  will
depend on many factors, including cash flow from operations,  continued progress
in its research and development  programs,  competing  technological  and market
developments and the Company's ability to market its products successfully.  The
Company anticipates that it will need to raise at least an additional $6,000,000
in the next 6 months to meet its capital  requirements  (including  repayment of
the Notes) and fund  operations  and  development  of products.  There can be no
assurance  that the Company will be able to obtain  additional  funding on terms
favorable to the Company, if at all. If adequate funds are not available,  there
would be a material  adverse  affect on the  Company's  ability to continue  its
operations.

NO  ASSURANCE  OF  SUCCESSFUL  PRODUCT  DEVELOPMENT;  RAPID  TECHNOLOGY  CHANGE;
TECHNOLOGICAL  OBSOLESCENCE;  INTRODUCTION  OF NEW  PRODUCTS.  The  Company  has
ongoing  research and  development  programs to develop new products and further
enhance its existing  products.  If the Company is unsuccessful in enhancing its
existing and developing future products, then the Company's sales and operations
will be adversely affected.  There can be no assurance that any of the Company's
existing and future  products will be  successfully  developed or, if developed,
will be successfully  marketed. The storage area network market is characterized
by extensive research and development and rapid  technological  change resulting
in product life cycles of 18 to 24 months.  The  Company's  future  success will
depend in large part on the Company's ability to develop and introduce  products
that keep pace with  technological  developments,  achieve market acceptance and
respond to customer  requirements that are constantly  evolving.  Development by
others of new or  improved  products,  processes  or  technologies  may make the
Company's  products  or proposed  products  obsolete  or less  competitive.  The
Company will be required to devote substantial  efforts and financial  resources
to enhance its existing products and to develop new products. Any failure by the
Company to anticipate or respond  adequately to  technological  developments and
customer  requirements  or any  significant  delays in  product  development  or
introduction  could result in a loss of  competitiveness or could materially and
adversely affect the Company's operating results.

SOFTWARE  AND HARDWARE  BUGS.  The  Company's  products  incorporate  internally
developed software and hardware  components and software and hardware components
purchased from third parties.  There is a substantial  risk that the integration
of internally  developed and externally  purchased components will have or could
develop  certain  errors,  omissions,  or bugs  that may  render  the  Company's
products  unfit for the  purpose for which they were  intended.  There can be no
assurance that such errors,  omissions,  or bugs do not currently  exist or will
not  develop  in the  Company's  current  or future  products.  Any such  error,
omission  or bug  found  in the  Company's  products  could  lead to  delays  in
shipments,  recalls of  previously  shipped  products,  damage to the  Company's
reputation,  and other  related  problems  which  would have a material  adverse
effect on the  Company.  Although  the Company  believes it will  resolve  these
integration  problems,  there can be no  assurance  that such  problems  will be
completely resolved and that delays in shipments,  recalls of previously shipped
products,  damage to the Company's  reputation,  and other related problems will
not occur.


                                       4

<PAGE>


NO ASSURANCE OF MARKET  ACCEPTANCE.  The Company's  current target market is the
electronic  printing and publishing  industry.  The Company's  initial products,
which were first shipped in February  1997,  are high speed storage area network
systems.  The  Company's  success is  dependent  upon its ability to gain market
acceptance of its products, which will depend upon the ability of the Company to
demonstrate  the  advantages  of its products over other  technology  offered by
other  companies.  The failure of the Company to  penetrate  its target  markets
would have a material adverse effect upon its operations and prospects.

COMPETITION. Many of the Company's competitors, including Sun Microsystems Inc.,
Hewlett-Packard  Co.,  International  Business  Machines Corp.,  Apple,  Digital
Equipment  Corporation  and Silicon  Graphics Inc., have  significantly  greater
market  recognition  and  greater  financial,  technical,  marketing  and  human
resources  than the  Company.  The  Company's  competitors  can be  expected  to
continue  to  improve  the  design  and  performance  of their  products  and to
introduce new products with  competitive  price-to-performance  characteristics.
Competitive  pressures often  necessitate  price reduction,  which can adversely
affect  operating  results.  Although the Company believes that it presently has
certain  technical and other advantages over its  competitors,  maintaining such
advantages  will require a continued  high level of investment by the Company in
research and development and sales and marketing. There can be no assurance that
the Company will have  sufficient  resources to continue to make such investment
or that the Company will be able to make the technological advances necessary to
maintain such competitive advantages. There can be no assurance that the Company
will  be  able to  compete  successfully  against  existing  competitors  or new
entrants to the marketplace.

DEPENDENCE ON PROPRIETARY  TECHNOLOGY OF OTHERS.  The Company's current products
incorporate  technology licensed from Radius, Inc.  ("Radius"),  a publicly-held
company  that  manufactures  Macintosh  controller  cards and  accessories.  The
Company has a  non-exclusive  license and Radius may license the  technology  to
other  parties.  In addition,  if the Company  fails to fulfill its  obligations
under the Radius  agreement,  including its obligation to pay royalties,  Radius
may  terminate  the license.  The Company's  current  products also  incorporate
certain   critical   technology   licensed  from  Polybus  Systems   Corporation
("Polybus").  If the Company fails to fulfill its obligations  under the Polybus
agreement,  including its obligation to pay  royalties,  Polybus may license the
technology to third parties in the publishing market.

DEPENDENCE  ON  PROPRIETARY  KNOW-HOW  AND  TRADE  SECRETS;   LACK  OF  PATENTED
TECHNOLOGY;  RISK OF INFRINGEMENT.  The Company relies on unpatented proprietary
know-how   and  trade   secrets,   and  employs   various   methods,   including
confidentiality  agreements with employees,  consultants and marketing partners,
to protect its trade secrets and know-how.  There can be no assurance,  however,
that the Company  will be able to  maintain  the  confidentiality  of any of its
proprietary  technology,  know-how  or trade  secrets,  or that  others will not
independently  develop  substantially  equivalent  technology.  The  failure  or
inability to protect  these rights could have a material  adverse  effect on the
Company's  results of operations.  Moreover,  there can be no assurance that the
Company's  proposed  products  will not  infringe  on the rights of others.  The
Company may be forced to expend substantial resources if the Company is required
to defend against any such infringement  claims.  The Company also may desire or
be required to obtain  licenses  from others in order to develop new products or
applications for its products. There can be no assurance that such licenses will
be  obtainable on  commercially  reasonable  terms,  if at all, that the patents
underlying  such licenses will be valid and  enforceable or that the proprietary
nature  of the  unpatented  technology  underlying  such  licenses  will  remain
proprietary.


                                       5

<PAGE>


RELATED  PARTY  TRANSACTIONS;  POSSIBLE  CONFLICTS OF INTEREST.  The Company has
engaged in certain transactions with certain of its directors, and is a party to
a consulting  agreement  with an affiliate of one of its  directors,  which will
continue  after  the  consummation  of  the  Offering.  Ownership  interests  of
directors  of the  Company in  entities  providing  services  to the  Company or
service as a director of both the Company and such  entities  could  create,  or
appear to create,  potential conflicts of interest. All transactions between the
Company and any of its officers, directors, principal stockholders or affiliates
are subject to the approval of a committee of the Board of Directors, a majority
of the members of which shall be independent directors,  or, if required by law,
a majority of disinterested directors, and must be on terms no less favorable to
the  Company  than  could  be  obtained  in  arm's  length   transactions   from
unaffiliated third parties.

DEPENDENCE  ON  QUALIFIED  PERSONNEL.  The ability to attract and retain  highly
competent  executives,  professionals,  sales  personnel and other  employees is
critical to the ongoing  success of the Company.  There can be no assurance that
the Company will be able to continue to attract and retain  qualified  executive
professionals, salespersons and other personnel.

POSSIBLE  VOLATILITY OF STOCK PRICE. The price of the Company's Common Stock has
fallen  substantially  since its initial  public  offering  ("IPO") and NASDAQ's
decision to delist the Company's securities from the NASDAQ SmallCap Market. The
market  price of the  shares of the  Company's  Common  Stock,  like that of the
common  stock of many other high  technology  companies,  is likely to be highly
volatile. The Company's Common Stock is not heavily traded, which could increase
the volatility of such stock.  Factors such as  announcements  of  technological
innovations  or new  products  by the Company or its  competitors,  governmental
regulation, developments in patent or other proprietary rights of the Company or
its competitors,  litigation,  fluctuations in the Company's  operating results,
and  market  conditions  for high  technology  stocks in  general  could  have a
significant impact on the future price of the Common Stock.

COMMON STOCK ELIGIBLE FOR FUTURE SALE;  REGISTRATION  OBLIGATIONS.  Sales of the
Company's  Common  Stock in the public  market by existing  stockholders  and by
holders of outstanding  options and warrants could  adversely  affect the market
price  of  the  Common  Stock.  The  following  charts  reflect  the  number  of
outstanding shares of Common Stock,  shares of Common Stock underlying  warrants
issued by the Company,  and  warrants to purchase  Common Stock that the Company
has agreed to register for resale under the Securities Act:


                                       6


<PAGE>

                   SHARES OF ISSUED AND OUTSTANDING
                             COMMON STOCK                                Amount
                             ------------                              ---------
        By June 8, 1998 (1).....................................       7,185,630
        By June 11, 1998 (2)....................................       1,871,997
        Best  efforts to register  as part of any  registration
        of securities of the Company (3)(4)(5)..................
                                                                         227,085
                                                                       ---------

                 Total..........................................       9,284,712
                                                                       =========

(1)      Including 6,755,000 shares of Common Stock issued pursuant to a private
         placement  (the  "Sunrise  Placement")  commenced in December  1997 and
         completed in May 1998 through Sunrise Securities,  Inc. ("Sunrise") and
         430,632 shares of Common Stock issued to Sunrise.
(2)      Issued as part of a private  placement of convertible  promissory notes
         undertaken by the Company from October 1995 through April 1996.
(3)      Subject to the  discretion  of the  managing  underwriter,  if any,  to
         exclude such shares from  registration.
(4)      Including 47,808 shares of Common Stock issued pursuant to the exercise
         of warrants.
(5)      Of which  179,280  were  issued  in  connection  with the  issuance  of
         promissory notes in April 1997 and May 1997.

                         SHARES OF COMMON STOCK
                          UNDERLYING WARRANTS                            AMOUNT
                          -------------------                          ---------
        Best efforts to register as part of                              678,309
        any registration of securities of the Company (1)....
        By June 8, 1998 (2)..................................          1,468,563
        By June 11, 1998 ....................................             35,565
        Best efforts to register (3) ........................          2,474,271
                                                                       ---------

                   Total.....................................          4,656,708
                                                                       =========

(1)      These shares were required to be  registered by May 13, 1998,  but they
         have not been.  The  Company  is  required  to use its best  efforts to
         register these shares as part of any other  registration  of securities
         by the Company until November 30, 2002.
(2)      Of which,  13,599 were issued in the  conversion  of a promissory  note
         issued in a private  placement  of  promissory  notes and common  stock
         purchase warrants completed in December 1996 and February 1997.
(3)      Registration  of  1,724,271  of these  shares  underlying  warrants  is
         subject to the discretion of the managing underwriter, if any.


                                       7

<PAGE>


                      WARRANTS                                            AMOUNT
                      --------                                           -------
         Best efforts to register as part                                678,309
         of any registration of securities of the Company (1).
         Best efforts to register (2).........................            40,000
                                                                          ------

               Total..........................................           718,309
                                                                         =======

(1)      These warrants were required to be registered by May 13, 1998, but they
         have not been.  The  Company  is  required  to use its best  efforts to
         register these warrants as part of any other registration of securities
         by the Company until November 30, 2002.
(2)      Subject to the discretion of the managing underwriter, if any.

CONTINGENT ISSUANCES;  FUTURE DILUTION.  Prior to this Offering, the Company has
outstanding  warrants to  purchase an  aggregate  of up to  5,393,112  shares of
Common Stock.  This amount  includes  2,070,000  shares  underlying the warrants
issued  in  the  Company's  initial  public  offering  ("Public  Warrants")  and
3,323,110 shares  underlying other warrants  outstanding prior to this Offering,
with  exercise  prices  between  $1.00 per share and $5.33 per  share,  of which
warrants to purchase 3,283,110 shares are immediately exercisable and of which a
warrant to purchase  40,000 shares  becomes  exercisable  in September  1998. In
addition,  there will be  outstanding  stock  options  granted  pursuant  to the
Company's Stock Option Plan to purchase an aggregate of approximately  2,682,183
shares of Common Stock at exercise  prices  ranging from $.80 per share to $5.50
per share, of which 1,763,954 were granted to the Company's President and CEO in
May 1998.  The Company also issued to the  underwriters  for its initial  public
offering an option to acquire up to 180,000 shares of Common Stock for $9.08 per
share  and  180,000   Public   Warrants   for  $.25  per  Public   Warrant  (the
"Underwriters'  Option").  The exercise of any such outstanding Public Warrants,
other  warrants,  stock  options or the  Underwriters'  Option  will  dilute the
percentage ownership of the Company's stockholders,  and any sales in the public
market of Common Stock  underlying such Public Warrants,  other warrants,  stock
options and the  Underwriters'  Option may adversely  affect  prevailing  market
prices for the Common Stock.  Moreover, the terms upon which the Company will be
able to obtain  additional equity capital may be adversely  affected,  since the
holders of such  outstanding  securities  can be expected to exercise  them at a
time when the Company  would,  in all  likelihood,  be able to obtain any needed
capital on terms more  favorable  to the  Company  than those  provided  in such
Public Warrants,  other warrants, stock options and the Underwriters' Option. In
addition,  pursuant to the Sunrise Placement,  the Company is obligated to issue
3,592,815  shares if it does not meet certain  revenue  milestones in 1998.  The
Company  anticipates that these 3,592,815 shares,  will need to be issued, and a
request for such issuance has been made by Sunrise. To date, the Company has not
registered any of the foregoing shares.

POTENTIAL  ADVERSE  EFFECTS  OF  ISSUANCE  OF  PREFERRED  STOCK;   ANTI-TAKEOVER
PROVISIONS.  The  Company  is  authorized  to issue up to  2,000,000  shares  of
preferred  stock,  $.01 par value  ("Preferred  Stock").  Preferred Stock may be
issued in one or more series,  the terms of which may be  determined at the time
of issuance by the Board of Directors,  without further action by  stockholders,
and may  include  voting  rights  (including  the  right to vote as a series  on
particular


                                       8

<PAGE>

matters), preferences as to dividends and liquidation, conversion and redemption
rights and sinking fund provisions.  No Preferred Stock is currently outstanding
and the Company has no present plans for the issuance thereof.  Issuance of such
Preferred  Stock,  depending  upon  the  rights,  preferences  and  designations
thereof,  may have the effect of delaying,  deterring or  preventing a change in
control of the  Company,  or could result in the dilution of the voting power of
the Common  Stock  issuable  upon  conversion  of the notes or  exercise  of the
warrants  purchased  in this  Offering.  In  addition,  certain  "anti-takeover"
provisions of the Delaware  General  Corporation  Law,  among other things,  may
restrict  the  ability  of the  stockholders  to  effect  a merger  or  business
combination or to obtain control of the Company.

No Dividends. The Company has never paid any cash dividends on its Common Stock.
The Board of Directors anticipates that for the foreseeable future the Company's
earnings,  if any,  will be retained  for use in the  business  and that no cash
dividends will be paid on the Common Stock.

         4.3 LACK OF LIQUIDITY.  The  Purchaser  confirms that he is able (i) to
bear the economic  risk of this  investment,  and (ii) to hold the Units and the
Securities  underlying the Units for an indefinite period of time. The Purchaser
has  sufficient  liquid  assets  so  that  the  illiquidity  associated  with an
investment  in the Units  will not cause any  undue  financial  difficulties  or
affect the  Purchaser's  ability to provide for his current  needs and  possible
financial contingencies,  and that his commitment to all speculative investments
is reasonable in relation to his net worth and annual income.

         4.4 ACCESS TO INFORMATION.  The Purchaser and the Purchaser's attorney,
accountant and/or tax advisor, if any (collectively, the "Advisors"):

            (a)  have  received  the  Loan  Documents  and all  other  documents
requested by the  Purchaser,  have  carefully  reviewed them and  understand the
information contained therein;

            (b) have been furnished with the Company's Proxy Statement mailed to
Stockholders on June 15, 1998 ("Proxy Statement"),  annual report on Form 10-KSB
for the fiscal year ended December 31, 1997 ("10-KSB"), quarterly report on Form
10-QSB for the fiscal  quarter  ended March 31, 1998 ("First  Quarter  10-QSB"),
quarterly  report on Form  10-QSB for the  fiscal  quarter  ended June 30,  1998
("Second Quarter 10-QSB"),  and any documents which may have been made available
upon request,  and he or his Advisors have carefully read Proxy  Statement,  the
10-KSB,  First Quarter 10-QSB, and Second Quarter 10-QSB and understand and have
evaluated the risks of a purchase of Units,  including the risks set forth under
"Risk Factors" in Section 4.2 above;

            (c)  have  been  provided  an  opportunity   to  obtain   additional
information  concerning the Offering,  the Company and all other  information to
the extent the  Company  possesses  such  information  or can acquire it without
unreasonable effort or expense.  All documents,  records and books pertaining to
the investment in the Units (including,  without limitation, the Loan Documents)
have been made available for  inspection by such Purchaser and the Advisors,  if
any;


                                       9

<PAGE>


            (d) have been given the  opportunity to ask questions of and receive
answers from the Company  concerning any and all matters relating to the Company
and  this  investment,  and has  been  given  the  opportunity  to  obtain  such
additional  information  necessary  to verify the  accuracy  of the  information
provided in order to evaluate the merits and risks of purchase of the Units;

            (e) are satisfied that they have received adequate  information with
respect to all matters which they consider material to their decision to make an
investment in this Offering.

            (f) have not relied  upon any  representation  or other  information
(oral  or  written)  other  than  as  stated  in  the  Loan  Documents  or  this
Subscription  Agreement  or as contained in documents or answers to questions so
furnished to the Purchaser or the Advisors by the Company; and

            (g) have determined that the Units are a suitable investment for him
and that at this time he can bear a complete loss of his investment.

         4.5 INVESTMENT  INTENT. The Units are being acquired by the undersigned
solely for his own personal account,  for investment purposes only, and not with
a view to, or in  connection  with,  any  resale or  distribution  thereof.  The
Purchaser has no contract, undertaking, understanding, agreement or arrangement,
formal or  informal,  with any person to sell,  transfer or pledge to any person
the Units,  or any of the Securities  underlying the Units,  for which he hereby
subscribes,  or any part thereof, or any interest therein or any rights thereto.
The Purchaser has no present plans to enter into any such contract, undertaking,
agreement  or  arrangement.  The  Purchaser  must  bear  economic  risk  of  the
investment for an indefinite  period of time because neither the Units,  nor the
Securities  underlying the Units,  have been registered under the Securities Act
and applicable state securities laws and, therefore,  cannot be sold unless they
are  subsequently  registered  under the  Securities  Act and  applicable  state
securities laws or unless an exemption from such registration is available.

         4.6 FEDERAL AND STATE SECURITIES  APPROVAL.  Neither the Securities and
Exchange Commission ("SEC") nor any state securities commission has approved the
Units,  or passed upon or endorsed the merits of the  Offering or confirmed  the
accuracy or determined the adequacy of this  Subscription  Agreement or the Loan
Documents or made any finding or  determination  as to the fairness of the Units
for  investment.  Neither  this  Subscription  Agreement,  nor  any of the  Loan
Documents,  have  been  reviewed  by any  Federal,  state  or  other  regulatory
authority.

         4.7 NO GENERAL  SOLICITATION.  The  Purchaser  is unaware of, is no way
relying on, and did not become aware of the offering of the Units  through or as
a result of, any form of general solicitation or general advertising, including,
without limitation,  any article,  notice,  advertisement or other communication
published  in any  newspaper,  magazine  or  similar  media  or  broadcast  over
television or radio, in connection with this Offering and is not subscribing for
Units and did not  become  aware of the  Offering  through or as a result of any
seminar or meeting to which the Purchaser was invited by, or any solicitation of
a subscription  by, a person not previously known to the Purchaser in connection
with investments in securities generally.


                                       10

<PAGE>


         4.8 INVESTMENT EXPERIENCE.  The Purchaser,  together with the Advisors,
has such knowledge and experience in financial, tax and business matters and, in
particular,  investments  in  securities,  so as to enable  them to utilize  the
information  made available to them in connection  with the Offering to evaluate
the merits and risks of an  investment  in the  Company  and to make an informed
investment  decision with respect thereto.  The Purchaser has significant  prior
investment experience,  including investment in non-registered  securities.  The
Purchaser has a sufficient net worth to sustain a loss of its entire  investment
in the  Company in the event  such a loss  should  occur.  The  investment  is a
suitable one for the Purchaser.

         4.9 RELIANCE ON PURCHASER'S  ADVISORS.  The Purchaser is not relying on
the Company,  the Placement Agent or any of their respective employees or agents
with  respect to the legal,  tax,  economic  and  related  considerations  of an
investment  in the Units,  and the Purchaser has relied on the advice of, or has
consulted with, only his own Advisors.

         4.10  NONTRANSFERABILITY  OF UNITS AND  SECURITIES.  The Purchaser must
bear the substantial  economic risks of the investment in the Units indefinitely
because none of the Units or the  Securities  underlying  the Units may be sold,
hypothecated or otherwise disposed of unless  subsequently  registered under the
Securities Act and applicable  state  securities  laws or an exemption from such
registration is available.  Legends shall be placed on the Securities underlying
the Units to the effect that they have not been registered  under the Securities
Act or applicable state securities laws, and appropriate  notations thereof will
be made in the Company's stock books. Stop transfer  instructions will be placed
with the  transfer  agent of the  Securities  underlying  the  Units.  It is not
anticipated  that  there  will  be any  market  for  resale  of  the  Securities
underlying the Units, and such Securities will not be freely transferable at any
time in the foreseeable future.

         4.11 ACCREDITED  INVESTOR STATUS.  The Purchaser meets the requirements
of at least one of the suitability standards for an "accredited investor" as set
forth on the  Accredited  Investor  Certificate  contained in Section 20 of this
Subscription Agreement.

         4.12 AUTHORITY OF PURCHASER.  The Purchaser:  (i) if a natural  person,
represents  that the  Purchaser has reached the age of 21 and has full power and
authority  to execute  and deliver  this  Subscription  Agreement  and all other
related  agreements or certificates  and to carry out the provisions  hereof and
thereof and this Subscription  Agreement  constitutes a legal, valid and binding
obligation  of  the  Purchaser;  (ii)  if a  corporation,  partnership,  limited
liability  company or  partnership,  association,  joint stock  company,  trust,
unincorporated organization or other entity, represents that such entity was not
formed for the specific  purposes of  subscribing  for and  acquiring the Units,
such entity is duly organized,  validly  existing and in good standing under the
laws of the state of its  organization,  the  consummation  of the  transactions
contemplated  hereby is  authorized  by, and will not result in a  violation  of
state law or its charter or other organizational documents, such entity has full
power and authority to execute and deliver this  Subscription  Agreement and all
other related  agreements or certificates and to carry out the provisions hereof
and thereof and to purchase and hold the Units,  and the  Securities  underlying
the Units, the execution and delivery of this  Subscription  Agreement have been
duly authorized by all necessary actions,  this Subscription  Agreement has been
duly executed and  delivered on behalf of such entity and is a legal,  valid and
binding  obligation  of such entity;  and (iii) if executing  this  Subscription
Agreement in a representative or fiduciary capacity, represents that it has full
power and authority to execute and deliver this  Subscription  Agreement in such
capacity and on behalf of the subscribing individual,


                                       11

<PAGE>


ward,  partnership,  trust,  estate,  corporation,  limited liability company or
partnership,   or  other  entity  for  whom  the  Purchaser  is  executing  this
Subscription Agreement and such individual,  ward,  partnership,  trust, estate,
corporation, limited liability company or partnership, or other entity, has full
right and power to perform pursuant to this  Subscription  Agreement and make an
investment in the Company,  and that this Subscription  Agreement  constitutes a
legal,  valid and binding  obligation of such entity. The execution and delivery
of this Subscription Agreement and the purchase of the Units will not violate or
be in conflict with any order,  judgment,  injunction,  agreement or controlling
document  to which  the  Purchaser  is a party  or by  which it is bound  and is
legally permitted by all laws and regulations to which the Purchaser is subject.
All consents,  approvals,  authorizations  of or  designations,  declarations or
filings that are necessary to be obtained by the  Purchaser in  connection  with
the valid execution and delivery of this Subscription Agreement by the Purchaser
or the  purchase  of the Units by the  Purchaser  have been  obtained or will be
obtained.

         4.13  ACCURACY OF  INFORMATION  FURNISHED BY  PURCHASER.  The Purchaser
represents  to  the  Company  that  any  information  which  the  Purchaser  has
heretofore furnished or furnishes herewith to the Company or the Placement Agent
is complete and  accurate  and may be relied upon by the Company in  determining
the  availability  of an exemption  from  registration  under  Federal and state
securities  laws  in  connection  with  the  Offering.   The  Purchaser  further
represents and warrants that it will notify and supply corrective information to
the Company and the  Placement  Agent  immediately  upon the  occurrence  of any
change therein occurring prior to the Company's issuance of the Units.

         4.14 COMMISSIONS.  The Purchaser is not aware that any person,  and has
been advised that no person, will receive from the Company any compensation as a
broker, finder, adviser or in any other capacity in connection with the purchase
of Units; provided, however, that the Purchaser understands and agrees that AKH,
or its designees, shall be entitled to receive (a) (i) a commission equal to ten
percent  (10%)  of the  gross  proceeds  of the  Units  offered  and sold in the
Offering,  (ii) a non-accountable expense allowance equal to one percent (1%) of
the gross  proceeds  of the Units  offered and sold in the  Offering,  and (iii)
five-year  warrants to purchase  1,000,000 shares of Common Stock at an exercise
price  of $.40 per  share  (the  "AKH  Warrants")  if 30  Units  are sold in the
Offering (with a pro-rata  reduction to the extent less than 30 Units are sold);
and (b) financial  advisory fees of $5,000 per month for a  twelve-month  period
commencing  the date of the  Initial  Closing.  The  Company  has also agreed to
indemnify AKH against certain liabilities under the Federal securities laws.

         4.15  FURTHER  ASSURANCES.  Within  five (5) days  after  receipt  of a
request from the Company or the Placement Agent, the Purchaser will provide such
information  and deliver such documents as may reasonably be necessary to comply
with any and all laws and ordinances to which the Company or the Placement Agent
is subject.

         4.16 RESTRICTED  SECURITIES.  NEITHER THE UNITS OFFERED HEREBY, NOR THE
SECURITIES  UNDERLYING  THE UNITS HAVE BEEN  REGISTERED  WITH THE UNITED  STATES
SECURITES AND EXCHANGE  COMMISSION  UNDER THE SECURITIES  ACT, OR THE SECURITIES


                                       12

<PAGE>


COMMISSION  OF ANY STATE  UNDER ANY STATE  SECURITIES  LAW.  THE UNITS ARE BEING
OFFERED PURSUANT TO AN EXEMPTION FROM  REGISTRATION  PURSUANT TO SECTION 4(2) OF
THE  SECURITIES  ACT. THE UNITS,  AND THE SECURITIES  UNDERLYING THE UNITS,  ARE
SUBJECT TO  RESTRICTIONS ON  TRANSFERABILITY  AND RESALE AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE  TRANSFERRED  EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND
SUCH STATE  SECURITIES  LAWS  PURSUANT TO  REGISTRATION  OR EXEMPTION  THEREFROM
WHICH,  IN THE OPINION OF COUNSEL FOR THE HOLDER,  WHICH COUNSEL AND OPINION ARE
REASONABLY  SATISFACTORY TO COUNSEL FOR THE COMPANY,  IS AVAILABLE.  NEITHER THE
UNITS,  NOR  THE  SECURITIES   UNDERLYING  THE  UNITS,  HAVE  BEEN  APPROVED  OR
DISAPPROVED  BY THE  SECURITIES AND EXCHANGE  COMMISSION,  ANY STATE  SECURITIES
COMMISSION  OR ANY OTHER  REGULATORY  AUTHORITY,  NOR HAVE ANY OF THE  FOREGOING
AUTHORITIES  PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY
OR  ADEQUACY  OF THE LOAN  DOCUMENTS.  ANY  REPRESENTATION  TO THE  CONTRARY  IS
UNLAWFUL.

         5.  REPRESENTATIONS  AND WARRANTIES OF THE COMPANY.  The Company hereby
represents and warrants to the Purchaser as follows:

            5.1  CORPORATE  EXISTENCE  AND  QUALIFICATION.   The  Company  is  a
corporation  duly organized and validly  existing under the laws of the State of
Delaware and has the requisite power and authority to own, lease and operate its
assets and  properties  and to carry on its  business  as now  conducted  and as
proposed to be conducted. The Company is qualified or licensed to do business in
each jurisdiction in which the properties owned, leased or operated by it or the
nature of the business  conducted by it makes such  qualifications  or licensing
necessary,  except  where the failure to be so  qualified  will not,  when taken
together  with all other such  failures,  have  material  adverse  effect on the
business of the Company.

            5.2 AUTHORITY; APPROVALS; NON-CONTRAVENTION.

               (a) The Company has full  corporate  power and  authority and has
taken all corporate action necessary to enter into this  Subscription  Agreement
and the Loan Documents to which it is a party and to consummate the transactions
contemplated hereby and thereby.  This Subscription  Agreement has been, and the
Loan Documents  will be, duly and validly  executed and delivered by the Company
and this Subscription  Agreement,  and the Loan Documents,  constitute valid and
binding agreements of the Company  enforceable against the Company in accordance
with their respective terms,  except insofar as enforceability may be limited by
general  equitable  principles  and to bankruptcy,  insolvency,  reorganization,
moratorium,  or similar  laws of general  application  affecting  the rights and
remedies of creditors.

               (b)  No  consent,   approval,   order  or  authorization  of,  or
registration,  declaration or filing with any governmental authority is required
to be obtained or made by or with respect to the Company in connection  with the
execution and delivery of this  Subscription  Agreement or the Loan Documents by
the Company or the performance by the Company of the  transactions  contemplated
hereby or thereby, except for those obtained or made.


                                       13

<PAGE>


               (c) The execution and delivery of this Subscription Agreement and
each of the Loan  Documents  by the  Company  do not,  and the  consummation  by
Company of the transactions  contemplated hereby and thereby,  will not, and the
performance of the Company of the  transactions  contemplated  hereby or thereby
will not violate,  conflict  with or result in a breach of any  provision of, or
constitute default (or result in any event that, with notice or lapse of time or
both,  would  constitute a default)  under,  or result in the termination of, or
accelerate the  performance  required by, or result in a right of termination or
acceleration under any terms, conditions or provisions of (i) the Certificate of
Incorporation, as amended to date, or by-laws of the Company, (ii) any judgment,
decree order or award of any governmental  authority  applicable to the Company,
or any law,  rule or  regulation  applicable  to the Company or any note,  bond,
mortgage,  indenture,  deed, trust, permit, lease, agreement or other instrument
to  which  the  Company  is now a party or by which  the  Company  or any of its
properties or assets may be bound or subject.

            5.3 Title to Properties;  Encumbrances.  The Company has good, valid
and marketable title to all of its properties and assets (personal, tangible and
intangible);  in each case free and clear of all  encumbrances,  liens,  claims,
charges or other restrictions of whatever kind or character, except as set forth
on Schedule 3(b) attached to the Loan Agreement.

            5.4 SEC  Documents.  The  Company  has filed all  required  periodic
reports  and proxy  statements  with the SEC since its initial  public  offering
completed in May, 1997 (the "SEC Documents"). As of their respective dates, none
of the SEC  Documents  contained  any untrue  statement  of a  material  fact or
omitted to state a material fact  required to be stated  therein or necessary in
order to make statements therein, in light of the circumstances under which they
were  made,  not  misleading.  As  of  their  respective  dates,  the  financial
statements of the Company  included in the SEC Documents  complied as to form in
all material  respects with  applicable  accounting  requirements  and published
rules and  regulations  of the SEC with respect  thereto,  have been prepared in
accordance with GAAP applied in a consistent  basis during the periods  involved
(except as  otherwise  disclosed  therein),  and fairly  present  the  financial
position  of the Company as of the dates  thereof and the results of  operations
and cash flows for the periods then ended.

         6. REGISTRATION RIGHTS. The Company hereby covenants with the Purchaser
as follows:


            6.1 DEFINITIONS. For the purposes of this Subscription Agreement:

               (a) The terms "register,"  "registered" and "registration"  refer
to a registration  effected by preparing and filing a registration  statement or
statements or similar  documents in compliance  with the Securities Act, and the
declaration  or ordering of  effectiveness  of such  registration  statement  or
document by the SEC.

               (b) The term "Registrable Securities" means (i) the shares of the
Company's  Common Stock issuable upon conversion of the Notes or exercise of the
Warrants (the "Purchasers' Shares"),  (ii) shares of the Company's Common Stock,
if any, issued to Sunrise or AKH

                                       14


<PAGE>


in  connection  with prior  private  offerings of the Company or this  Offering,
respectively,  (iii) any  shares of the  Company's  Common  Stock  issued as (or
issuable upon the conversion or exercise of any convertible  security,  warrant,
right or other  security  which is issued as) a dividend  or other  distribution
with respect to, or in exchange for or in replacement of the Shares,  including,
but not limited to, the shares underlying the AKH Warrants, and excluding in all
cases, however, any Registrable  Securities sold by a Purchaser in a transaction
in which its registration  rights under this Agreement are not assigned pursuant
to Section  6.8 of this  Subscription  Agreement,  and (iv) any other  shares or
securities  of the Company that are subject to  registration  rights  previously
granted by the Company  (identified  in Section 4.2,  Common Stock  Eligible for
Future Sale; Registration Obligations).

               (c) The term  "Purchaser"  includes  (i) each  Purchaser  in this
Offering,  and (ii) each person who is a permitted transferee or assignee of the
Purchasers' Shares pursuant to Section 6.8 of this Subscription Agreement.

           6.2      DEMAND REGISTRATION.

               (a) REQUEST FOR REGISTRATION ON FORM OTHER THAN FORM S-3. Subject
to the terms of this Agreement, in the event that the Company shall receive from
the  holders of at least  fifty  percent  (50%) of the  Purchasers'  Shares (the
"Initiating  Holders"),  at any time  after the  earlier  of (i) three (3) years
after the Closing of this Offering, or (ii) ninety (90) days after the effective
date of any  public  offering  under  the  Securities  Act of the  Shares by the
Company for its account  (the  "Public  Offering"),  a written  request that the
Company effect any registration with respect to all or a part of the Registrable
Securities  on an  applicable  Securities  Act form  other  than Form S-3 for an
offering covering the registration of Registrable Securities having a reasonably
anticipated  aggregate  offering  price to the  public in excess of One  million
dollars ($1,000,000),  the Company shall (A) promptly give written notice of the
proposed  registration to all other holders of the Registrable  Securities,  and
(B) as soon as practicable,  and in any event within ninety (90) days after such
request,  use  its  best  efforts  to  effect  registration  of the  Registrable
Securities specified in such request,  together with any Registrable  Securities
of any holder  thereof  joining in such  request as are  specified  in a written
request given within twenty (20) days after written notice from the Company. The
Company  shall  not  be  obligated  to  take  any  action  to  effect  any  such
registration  pursuant to this Section  6.2(a):  (i) within six (6) months after
the effective date of a registration of the Shares initiated by the Company;  or
(ii) after the  Company has  effected  two such  registrations  pursuant to this
Section 6.2(a) and such  registrations  have been declared  effective by the SEC
and, if underwritten, have closed.

               (b) RIGHT OF  DEFERRAL  OF  REGISTRATION  ON FORM OTHER THAN FORM
S-3. If the Company shall furnish to all the holders of  Registrable  Securities
who joined in the request for  registration  pursuant to Section  6.2(a) above a
certificate  signed by the  President of the Company  stating  that, in the good
faith  judgment of the Board of Directors of the Company,  it would be seriously
detrimental  to the Company  for any  registration  to be effected as  requested
under Section 6.2(a),  then the Company shall have the right to defer the filing
of a  registration  statement  under the  Securities  Act with  respect  to such
requested  offering for a period of not more than ninety (90) days from delivery
of the request of the Initiating Holders;  provided,  however,  that the Company
may not utilize this right more than once in any twelve-month period.


                                       15

<PAGE>


               (c) REQUEST FOR REGISTRATION ON FORM S-3. Subject to the terms of
this Agreement,  if the Company receives from holders of a majority  interest of
the  Purchasers'  Shares,  at a time when the  Company is  eligible  to register
securities for a secondary  offering by its  stockholders  on SEC Securities Act
Form S-3 (or any successor form to Form S-3,  regardless of its designation),  a
written  request that the Company  effect any  registration  on Form S-3 (or any
successor form to Form S-3,  regardless of its  designation)  for an offering of
Registrable  Securities the reasonably  anticipated  aggregate offering price to
the public of which would exceed  $500,000,  then the Company will promptly give
written  notice of the proposed  registration  to all the holders of Registrable
Securities  specified in such request,  together with all or such portion of the
Registrable Securities of any holder joining in such request as are specified in
a written request delivered to the Company within twenty (20) days after written
notice from the Company of the proposed registration.

               (d) REGISTRATION OF OTHER SECURITIES IN DEMAND REGISTRATION.  Any
registration  statement filed pursuant to the request of the Initiating  Holders
under this Section 6.2 may, subject to the provisions of Sections  6.2(e),  (f),
(g),  (h) and (i),  include  securities  of the Company  other than  Registrable
Securities.

               (e) NOTICE OF UNDERWRITING.  If the Initiating  Holders intend to
distribute the  Registrable  Securities  covered by their request by means of an
underwriting,  they shall so advise the Company as a part of their  request made
pursuant to this Section 6.2, and the Company shall include such  information in
the written  notice  referred to in Section  6.2(a).  The right of any holder to
registration  pursuant to Section 6.2(a) shall be conditioned upon such holder's
agreement to participate in such underwriting and the inclusion of such holder's
Registrable  Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such holder with respect to
such participation and inclusion).

               (f)  INCLUSION OF OTHER  HOLDERS IN DEMAND  REGISTRATION.  If the
Company,  officers  or  directors  of the  Company  holding  Shares  other  than
Registrable  Securities  or  holders of  securities  of the  Company  other than
Registrable  Securities shall request inclusion in such  registration,  then, on
behalf of all holders of Registrable  Securities,  the Initiating  Holders shall
offer (to the extent they deem advisable and  consistent  with the goals of such
registration  and subject to the allocation  provisions of Section 6.3(b) below)
to any or all of the Company,  such  officers or  directors  and such holders of
other  securities,  to include such securities held thereby in the underwriting.
The  Initiating  Holders  may  condition  such offer on the  acceptance  by such
persons of the terms of this Section 6.2.

               (g) SELECTION OF UNDERWRITING IN DEMAND REGISTRATION. The Company
shall  (together  with all holders  proposing  to  distribute  their  securities
through  such  underwriting)  enter into and  perform its  obligations  under an
underwriting  agreement in usual and customary form with the  representative  of
the underwriter or underwriters (the  "Underwriter's  Representative")  selected
for such underwriting by the holders of a majority of the Registrable Securities
being  registered  by the  Initiating  Holders and  consented  to by the Company
(which consent shall not be unreasonably withheld).

(H) MARKETING LIMITATION IN DEMAND REGISTRATION.  In the event the Underwriter's
Representative advises the Initiating Holders in writing that the market factors


                                       16

<PAGE>


(including,  without limitation,  the aggregate number of Shares requested to be
registered,  the general condition of the market,  and the status of the persons
proposing to sell securities pursuant to the registration)  require a limitation
of the number of shares to be underwritten, then the Initiating Holders shall so
advise  all  holders  of  Registrable  Securities,  and the  number of shares of
Registrable Securities that may be included in the registration and underwriting
shall be allocated among all holders in proportion, as nearly as practicable, to
the  number of shares  proposed  to be  included  in such  registration  by such
holders;  provided,  however,  that the number of Purchasers' Shares included in
the  aggregate  of the  Registrable  Securities  to be so included  shall not be
reduced unless all other Registrable  Securities or other securities (other than
those  to be  sold  by  the  Company)  are  first  entirely  excluded  from  the
underwriting.  No Registrable  Securities or other securities  excluded from the
underwriting  by  reason  of this  Section  6.2(h)  shall  be  included  in such
Registration Statement.

               (i) Right of Withdrawal in Demand Registration.  If any holder of
Registrable Securities,  or a holder of other securities entitled (upon request)
to  be  included  in  such  registration,   disapproves  of  the  terms  of  the
underwriting,  such person may elect to withdraw  therefrom by written notice to
the Company, the underwriter and the Initiating Holders delivered at least seven
(7) business days prior to the effective date of the registration statement. The
securities so withdrawn shall also be withdrawn from the Registration Statement.

           6.3      PIGGYBACK REGISTRATION.

               (a) NOTICE OF PIGGYBACK REGISTRATION AND INCLUSION OF REGISTRABLE
SECURITIES.  In the event the Company  decides to register  any of its shares of
Common Stock (either for its own account or the account of a security  holder or
holders [other than in connection with a registration being effected pursuant to
Section 6.2  hereof]) on an SEC form that would be suitable  for a  registration
involving  solely  Registrable  Securities,  the Company will: (i) promptly give
each holder of  Registrable  Securities  written  notice  thereof  (which  shall
include a list of the jurisdictions in which the Company intends to qualify such
securities  under the applicable  Blue Sky or other state  securities  laws) and
(ii) include in such registration (and in any related  qualification  under Blue
Sky laws or other  state  securities  laws),  and in any  underwriting  involved
therein, all the Registrable Securities specified in a written request delivered
to the Company by any holder or Registrable  Securities  within twenty (20) days
after delivery of such written notice from the Company.

               (b) NOTICE OF  UNDERWRITING  IN  PIGGYBACK  REGISTRATION.  If the
registration of which the Company gives notice pursuant to Section 6.3(a) is for
a registered public offering  involving an underwriting,  then the Company shall
so advise the holders of Registrable  Securities as a part of the written notice
given pursuant to Section 6.3(a). In such event, the right of any such holder to
registration  shall be conditioned  upon such  underwriting and the inclusion of
such holder's  Registrable  Securities  proposing to distribute their securities
through such underwriting shall (together with the Company and the other holders
distributing  their  securities   through  such  underwriting)   enter  into  an
underwriting agreement with the Underwriter's  Representative for such offering;
provided  that such  holders of  Registrable  Securities  shall have no right to
participate  in the selection of the  underwriters  for an offering  pursuant to
this Section 6.3(b)



                                       17


<PAGE>


               (c) MARKETING LIMITATION IN PIGGYBACK REGISTRATION.  In the event
the  Underwriter's  Representative  advises the holders seeking  registration of
Registrable Securities pursuant to Section 6.3(b) in writing that market factors
(including,  without limitation,  the aggregate number of shares of Common Stock
requested to be registered,  the general condition of the market, and the status
of the  persons  proposing  to sell  securities  pursuant  to the  registration)
require  a  limitation  of  the  number  of  shares  to  be  underwritten,   the
Underwriter's  Representative  may  limit the  number  of shares of  Registrable
Securities to be included in such registration and underwriting.  In either such
event,  the  Underwriter's  Representative  shall so advise  all  holders of the
number of shares of Registrable  Securities (if any) that may be included in the
registration and underwriting.  The number of Purchasers' Shares included in the
aggregate of the  Registrable  Securities to be so included shall not be reduced
unless all other Registrable Securities or other securities (other than those to
be sold by the Company) are first entirely  excluded from the  underwriting.  No
Registrable  Securities or other  securities  excluded from the  underwriting by
reason of this Section 6.3(c) shall be included in the  applicable  Registration
Statement.

               (d)  WITHDRAWAL  IN  PIGGYBACK  REGISTRATION.  If any  holder  of
Registrable  Securities,  or a holder of other  securities  (upon request) to be
included  in  such   registration,   disapproves   of  the  terms  of  any  such
underwriting, then such holder may elect to withdraw therefrom by written notice
to the Company and the  underwriter  delivered at least seven (7) business  days
prior to the  effective  date of the  registration  statement.  Any  Registrable
Securities  or other  securities  excluded or withdrawn  from such  underwriting
shall be withdrawn from such registration.

            6.4 OBLIGATIONS OF THE COMPANY.  When the Company is required by the
provisions  of Section  6.2 or Section  6.3 to effect  the  registration  of the
Registrable Securities under the Securities Act, the Company will:

               (a) prepare and file with the SEC a  registration  statement (the
"Registration  Statement")  with  respect to such  securities,  and use its best
efforts  to cause the  Registration  Statement  to become  effective  as soon as
reasonably  possible  after such filing,  and, with respect to any  registration
that  does not  involve  an  underwriting,  to keep the  Registration  Statement
effective pursuant to Rule 415 under the Securities Act for a period of at least
two years after the close of this Offering, or such shorter period as prescribed
by Rule 144  promulgated  under the  Securities Act ("Rule 144") or during which
the Registrable Securities are sold, which Registration Statement (including any
amendments or supplements thereto and prospectuses  contained therein) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated  therein or  necessary to make the  statements  therein in
light of the circumstances in which they were made, not misleading;

               (b)  prepare  and file  with the SEC such  amendments  (including
post-effective amendments) and supplements to the Registration Statement and any
prospectus  contained  therein  as may be  necessary  to keep  the  Registration
Statement effective (i) for such period as may be required by the Securities Act
with respect to an  underwritten  offering and (ii) for at least two years after
the close of the  Offering,  or such shorter  period as  prescribed by Rule 144,
with respect to a non-underwritten  offering,  and during such periods to comply
with the provisions of the Securities Act with respect to the disposition of all
securities covered by the Registration Statement;

               (c) furnish to each Purchaser  whose  Registrable  Securities are
included in the  Registration  Statement such  reasonable  number of copies of a
prospectus,   including  a  preliminary  prospectus,   and  all  amendments  and


                                       18


<PAGE>


supplements  thereto,  and such other documents as such Purchaser may reasonably
request in order to facilitate  the  disposition of the  Registrable  Securities
owned by such Purchaser;

               (d) use  its  reasonable  efforts  to  register  or  qualify  the
Registrable  Securities  covered by the Registration  Statement under such other
state  securities or Blue Sky laws of such  jurisdictions as shall be reasonably
requested by the Purchasers  who hold a majority in interest of the  Purchasers'
Shares   covered  by  the   Registration   Statement  and,  with  respect  to  a
non-underwritten   offering,  prepare  and  file  in  those  jurisdictions  such
amendments  (including  post-effective  amendments)  and supplements and to take
such  other  actions as may be  necessary  to  maintain  such  registration  and
qualification  in effect  at all times for a period of at least two years  after
the close of the Offering,  or such shorter  period as prescribed by Rule 144 or
during which the Registrable  Securities are sold, and to take all other actions
necessary or  advisable to enable the  disposition  of such  securities  in such
jurisdictions;  provided,  however,  that the  Company  shall not be required in
connection  therewith  or as a condition  thereto to (i) qualify to do business,
file a general  consent to  service  of  process  or  subject  itself to general
taxation in any such states or  jurisdictions or (ii) provide any undertaking or
make any change in its Certificate of Incorporation or by-laws;

               (e) If the  Registration  Statement  relates  to an  underwritten
offering,   enter  into  and  perform  its  obligations  under  an  underwriting
agreement, in usual and customary form, including without limitation,  customary
indemnification   and   contribution   obligations,   with   the   Underwriter's
Representative.

               (f) Notify Purchasers who hold Registrable  Securities being sold
(or in the event of an underwritten offering, the Underwriter's Representative),
at any time when a prospectus relating to Registrable  Securities covered by the
Registration  Statement is required to be delivered under the Securities Act, of
the happening of any event as a result of which the  prospectus  included in the
Registration  Statement,  as then in effect,  includes an 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  not  misleading  in  light  of the
circumstances then existing.  The Company shall use its best efforts promptly to
amend or  supplement  the  Registration  Statement  to correct  any such  untrue
statement or omission.

               (g) Notify the Purchasers who hold  Registrable  Securities being
sold  (or  in  the  event  of  an  underwritten   offering,   the  Underwriter's
Representative)  of the  issuance  by the SEC of any stop order  suspending  the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose.  The Company will make every reasonable  effort to prevent the
issuance  of any stock  order and,  if any stop  order is issued,  to obtain the
lifting thereof at the earliest possible time.

(h) Permit a single firm of counsel, designated as selling shareholders' counsel
by the holders of a majority in interest of the  Purchasers'  Shares being sold,


                                       19

<PAGE>


to review the Registration  Statement and all amendments and supplements thereto
a  reasonable  period  of time  prior to their  filing,  and  shall not file any
document in a form to which such counsel reasonably objects.

               (i) Make generally  available to its security  holders as soon as
practicable,  but not later  than  forty  five (45) days  after the close of the
period  covered  thereby,  an earnings  statement  (in form  complying  with the
provisions of Rule 158 under the Securities Act) covering a twelve-month  period
beginning  not later than the first day of the  Company's  fiscal  quarter  next
following the effective date of the Registration Statement.

               (j) At the  request  of the  Purchasers  who hold a  majority  in
interest of the Purchasers' Shares being sold,  furnish to the underwriters,  if
any, on the date that  Registrable  Securities are delivered to the underwriters
for sale in connection  with a  registration  pursuant to this  Agreement (i) an
opinion,  dated such date,  of the  counsel  representing  the  Company  for the
purposes of such registration,  in form and substance as is customarily given to
underwriters in an underwritten public offering,  addressed to the underwriters,
and (ii) a letter,  dated  such  date,  from the  independent  certified  public
accountants  of the Company,  in form and substance as is  customarily  given by
independent  certified  public  accountants to  underwriters  in an underwritten
public offering, addressed to the underwriters.

               (k)  Make   available   for   inspection   by  any   underwriters
participating  in the  offering  and the  counsel,  accountants  or other agents
retained  by such  underwriter,  all  pertinent  financial  and  other  records,
corporate  documents  and  properties  of the Company,  and cause the  Company's
officers, directors and employees to supply all information reasonably requested
by such underwriters in connection with the Registration Statement.

               (l) Take all  actions  reasonably  necessary  to  facilitate  the
timely  preparation  and delivery of  certificates  (not bearing any restrictive
legend)   representing   the   Registrable   Securities  sold  pursuant  to  the
Registration   Statement  and  to  enable  such   certificates  to  be  in  such
denominations  as registered in such names as the Purchasers or any underwriters
may reasonably request;

               (m) Take all other actions  reasonably  necessary to expedite and
facilitate  disposition by the Purchasers of the Registrable Securities pursuant
to the Registration Statement; and

               (n) Notwithstanding anything contained in this Section 6.4 to the
contrary,  the Company  shall have no obligation  pursuant to this  Subscription
Agreement for the  registration of Registrable  Securities held by any Purchaser
(i) where such  Purchaser  would then be  entitled to sell under Rule 144 within
any three-month period (or such other period prescribed under Rule 144 or as may
be provided by amendment thereof) all of the Registrable Securities then held by
such Purchaser, and (ii) where the number of Registrable Securities held by such
Purchaser  is within  the volume  limitations  under  paragraph  (e) of Rule 144
(calculated  as if such  Purchaser  were an affiliate of the Company  within the
meaning of Rule 144).



                                       20

<PAGE>


            6.5   OBLIGATIONS  OF  THE   PURCHASERS.   In  connection  with  the
registration  of  the  Registrable  Securities  pursuant  to  this  Subscription
Agreement, the Purchaser shall have the following obligations:

               (a) It shall be a condition  precedent to the  obligations of the
Company to take any  action  pursuant  to this  Agreement  with  respect to each
Purchaser  that such  Purchaser  shall  furnish to the Company such  information
regarding  itself,  the  Registrable  Securities  held by it,  and the  intended
methods of  disposition  of such  securities as shall be reasonably  required to
effect the  registration  of the  Registrable  Securities and shall execute such
documents in connection  with such  registration  as the Company may  reasonably
request. At least thirty (30) days prior to the first anticipated filing date of
the  Registration  Statement,  the Company  shall  notify each  Purchaser of the
information  the  Company  requires  from each such  Purchaser  (the  "Requested
Information") if it elects to have any of his Registrable Securities included in
the Registration Statement. If within seven (7) business days of the filing date
the Company has not  received  the  Requested  Information  from a Purchaser  (a
"Non-Responsive  Purchaser"),   then  the  Company  may  file  the  Registration
Statement  without including the Registrable  Securities of such  Non-Responsive
Purchaser.

               (b)  Each  Purchaser  by  his   acceptance  of  the   Registrable
Securities  agrees  to  cooperate  with  the  Company  in  connection  with  the
preparation  and filing of any  Registration  Statement  hereunder,  unless such
Purchaser  has notified the Company in writing of its election to exclude all of
its Registrable Securities from the Registration Statement.

               (c) In the event Purchasers holding a majority in interest of the
Purchasers' Shares select  underwriters for the offering,  each Purchaser agrees
to enter into and perform its obligations  under an underwriting  agreement,  in
usual   and   customary   form,   including,   without   limitation,   customary
indemnification and contribution  obligations and market stand-off  obligations,
with the managing underwriter of such offering and to take such other actions as
are reasonably  required in order to expedite or facilitate  the  disposition of
the  Registrable  Securities,  unless such Purchaser has notified the Company in
writing of its election to exclude all of his  Registrable  Securities  from the
Registration Statement.

               (d) Each Purchaser  agrees that,  upon receipt of any notice from
the  Company  of the  happening  of any event of any kind  described  in Section
6.3(f), such Purchaser will immediately  discontinue  disposition of Registrable
Securities  pursuant to the  Registration  Statement  covering such  Registrable
Securities until such  Purchaser's  receipt of the copies of the supplemented or
amended  prospectus  contemplated  by Section  6.3(f)  and, if so desired by the
Company,  such  Purchaser  shall  deliver to the  Company (at the expense of the
Company)  or  destroy  (and  deliver  to  the  Company  a  certificate  of  such
destruction)  all  copies,  other than the  permanent  file  copies then in such
Purchaser's  possession,  of the prospectus covering such Registrable Securities
current at the time of receipt of such notice.

               (e) No Purchaser may participate in any underwritten registration
hereunder unless such Purchaser (i) agrees to sell such Purchaser's  Registrable
Securities on the basis provided in any  underwriting  arrangements  approved by
the Purchasers  entitled hereunder to approve such arrangements,  (ii) completes
and executes all questionnaires,  powers of attorney, indemnities,  underwriting
agreements  and  other  documents  reasonably  required  under the terms of such
underwriting  arrangements,  and (iii) agrees to pay such  Purchaser's  pro rata
portion of all underwriting discounts and commissions.


                                       21

<PAGE>



            6.6 EXPENSES OF REGISTRATION.  With respect to the registration, all
fees,  costs and  expenses of and  incidental  to such  registration  and public
offering (as  specified  below) in  connection  therewith  shall be borne by the
Company,  provided,  however,  that any security  holders  participating in such
registration  shall bear their pro rata share of the  underwriting  discount and
commission and transfer taxes.  The fees,  costs and expenses of registration to
be borne by the Company as provided above shall include, without limitation, all
registration, filing and NASD fees, printing expenses, fees and disbursements of
counsel and accountants for the Company,  fees and  disbursements of one counsel
and one  accountant  for the selling  security  holders,  and all legal fees and
disbursements  and other expenses of complying with state securities or blue sky
laws of any  jurisdictions  in which  the  securities  to be  offered  are to be
registered and qualified.  Fees and  disbursements  of more than one counsel and
one accountant for the selling security holders, and any other expenses incurred
by the selling security  holders not expressly  included above shall be borne by
the selling security holders.

            6.7  INDEMNIFICATION.  In the event any  Registrable  Securities are
included in a Registration Statement:

               (a) To the extent  permitted by law,  the Company will  indemnify
and hold harmless each Purchaser,  the directors, if any, of such Purchaser, the
officers,  if any, of such Purchaser who sign the Registration  Statement,  each
person, if any, who controls such Purchaser,  any underwriter (as defined in the
Securities  Act) for the  Purchasers  and each person,  if any, who controls any
such  underwriter  within the meaning of the  Securities  Act or the  Securities
Exchange  Act of 1934,  as amended  (the  "Exchange  Act"),  against any losses,
claims, damages, expenses or liabilities, joint or several) to which any of them
may become subject under the Securities  Act, the Exchange Act, other federal or
state law or otherwise,  insofar as such losses,  claims,  damages,  expenses or
liabilities  (or actions or  proceedings,  whether  commenced or threatened,  in
respect thereof, arise out of or are based upon any of the following statements,
omissions or violations (collectively,  a "Violation"): (i) any untrue statement
or alleged  untrue  statement of material  fact  contained  in the  Registration
Statement,  including any preliminary  prospectus or final prospectus  contained
therein or any amendments or supplements  thereto,  (ii) the omission or alleged
omission  to state  therein a material  fact  required  to be stated  therein or
necessary to make the statements therein, in light of the circumstances in which
they were made,  not  misleading or (iii) any violation or alleged  violation by
the Company of the Securities Act, the Exchange Act, any state securities law or
any rule or regulation promulgated under the Securities Act, the Exchange Act or
any state  securities  law.  Subject  to the  restrictions  set forth in Section
6.7(c) with respect to the number of legal  counsel,  the Company will reimburse
the Purchasers,  directors,  officers,  and each such underwriter or controlling
person,  promptly as such expenses are incurred, for any legal or other expenses
reasonably  incurred by them in connection with  investigating  or defending any
such loss,  claim,  damage,  liability,  action or  proceeding.  Notwithstanding
anything  contained in this Agreement to the contrary,  the indemnity  agreement
contained  above in this  Section  6.7(a) (I) shall not apply to amounts paid in
settlement  of any  such  loss,  claim,  damage,  liability  or  action  if such
settlement is effected  without the prior written consent of the Company,  which
consent  shall not be  unreasonably  withheld,  (II) shall not apply to any such
case for any such loss,  claim,  damage,  liability or action  arising out of or
based upon a Violation  which  occurs in reliance  upon and in



                                       22

<PAGE>


conformity with written  information  furnished  expressly for use in connection
with such  registration by the Purchasers or any such underwriter or controlling
person,  as the  case  may  be,  and  (III)  with  respect  to  any  preliminary
prospectus,  shall not inure to the  benefit of any person  from whom the person
asserting  any such claim  purchased  the  Registrable  Securities  that are the
subject thereof (or to the benefit of any person controlling such person) if the
untrue  statement  or omission of material  fact  contained  in the  preliminary
prospectus  was corrected in the  prospectus,  as then amended or  supplemented.
Such  indemnity  shall  remain  in  full  force  and  effect  regardless  of any
investigation  made by or on behalf of the Purchasers or any such underwriter or
controlling person and shall survive the transfer of the Registrable  Securities
by a Purchaser pursuant to Section 6.9.

               (b) To the extent permitted by law, each Purchaser, severally and
not jointly,  will  indemnity and hold  harmless,  to the same extent and in the
same manner set forth in Section  6.7(a),  the Company,  each of its  directors,
each of its officers who have signed the Registration Statement, each person, if
any, who controls the Company  within the meaning of the  Securities  Act or the
Exchange  Act, any  underwriter  and any other  stockholder  selling  securities
pursuant to the  Registration  Statement or any of its  directors or officers or
any person who controls such holder or underwriter,  against any losses, claims,
damages  or  liabilities  (joint or  several),  to which any of them may  become
subject,  under the Securities Act, the Exchange Act, other federal or state law
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect  thereof) arise out of or are based upon any Violation,  in each case
to the extent (and only to the extent)  that such  Violation  occurs in reliance
upon and in  conformity  with written  information  furnished by such  Purchaser
expressly for use in connection with such registration;  and such Purchaser will
reimburse  any legal or other  expenses  reasonably  incurred  by any of them in
connection  with  investigating  or  defending  any such  loss,  claim,  damage,
liability or action; provided, however, that the Purchaser shall be liable under
this  Section  6.7(b)  for only  that  amount of  losses,  claims,  damages  and
liabilities  as does not exceed the  proceeds  received by such  Purchaser  as a
result of the sale of Registrable Securities pursuant to such registration. Such
indemnity shall remain in full force and effect  regardless of any investigation
made by or on behalf of such indemnified party and shall survive the transfer of
the Registrable Securities by the Purchasers pursuant to Section 6.9 The Company
shall be entitled to receive  indemnities  from  underwriters,  selling brokers,
dealer managers and similar securities industry  professionals  participating in
the  distribution,  to the same  extent  as  provided  above,  with  respect  to
information  about such  persons so  furnished  in writing by such  persons  for
inclusion in the Registration Statement.

               (c) Promptly  after  receipt by an  indemnified  party under this
Section  6.7  of  notice  of  the  commencement  of any  action  (including  any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying  party under this Section 6.7, deliver to
the  indemnifying  party a written notice of the commencement  thereof,  and the
indemnifying  party shall have the right to  participate  in, and, to the extent
the indemnifying  party so desires,  jointly with any other  indemnifying  party
similarly  noticed,  to assume  control  of the  defense  thereof  with  counsel
satisfactory to the indemnifying party;  provided,  however, that an indemnified
party shall have the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying  party, if, in the reasonable  opinion of counsel
for the indemnifying  party,  representation  of such  indemnified  party by the
counsel retained by the indemnifying  party would be inappropriate due to actual
or potential  differing  interests  between such indemnified party and any other
party represented by such counsel in such proceeding.


                                       23

<PAGE>



The Company shall pay for only one legal counsel for the Purchasers.  Such legal
counsel  shall be selected by the  Purchasers  holding a majority in interest of
the  Purchasers'   Shares.   The  failure  to  deliver  written  notice  to  the
indemnifying  party within a  reasonable  time of the  commencement  of any such
action shall relieve such indemnifying party of any liability to the indemnified
party under this  Section 6.7 only to the extent  prejudicial  to its ability to
defend  such  action,  but the  omission  so to  deliver  written  notice to the
indemnifying  party will not relieve it of any liability that it may have to any
indemnified party otherwise than under Section 6.7. The indemnification required
by this  Section  6.7 shall be made by periodic  payments of the amount  thereof
during the course of the  investigation  or defense,  promptly as such  expense,
loss, damage or liability is incurred and is due and payable.

               (d) To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying  party agrees to make the maximum
contribution  with respect to any amounts for which it would otherwise be liable
under this Section 6.7 to the extent permitted by law; provided,  however,  that
(i) no contribution shall be made under  circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in this
Section  6.7,  (ii) no seller of  Registrable  Securities  guilty of  fraudulent
misrepresentation (within the meaning of Section 11 of the Securities Act) shall
be entitled to  contribution  from any seller of Registrable  Securities who was
not guilty of such fraudulent  misrepresentation,  and (iii) contribution by any
seller of Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable Securities.

            6.8 Reports Under the Exchange Act. With a view to making  available
to the  Purchasers  the benefits of Rule 144 and any other rule or regulation of
the SEC that may at any time permit Purchasers to sell securities of the Company
to the public without registration, the Company agrees to:

               (a) File with the SEC in a timely  manner all  reports  and other
documents required of the Company under the Securities Act and the Exchange Act.

               (b) Furnish to each Purchaser, so long as such Purchaser owns any
Registrable  Securities,  forthwith upon request (i) a written  statement by the
Company that it has complied with the reporting requirements of Rule 144 (at any
time after 90 days after the effective date of the first registration  statement
filed by the Company),  the  Securities Act and the Exchange Act, (ii) a copy of
the most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company,  and (iii) such other  information as may
be reasonably  requested in availing the Purchasers of any rule or regulation of
the SEC which permits the selling of any such securities without registration.

            6.9  Assignment  of  Registration  Rights.  The  rights  to have the
Company  register  securities  pursuant to this Agreement may be assigned by the
Purchasers to transferees or assignees of such securities  provided that (i) the
Company is, within a reasonable time after such transfer, furnished with written
notice of the name and address of such transferee or assignee and the securities
with respect to which such  registration  rights are being  assigned,  (ii) such
assignment is in accordance with and permitted by all other  agreements  between
the Company and the transferor or assignor,  and (ii) such assignments  shall be
effective only if immediately following such transfer the further disposition of
such securities by the transferee or assignee is restricted under the Securities
Act. The term "Purchasers" as used in Section 6 of this  Subscription  Agreement
shall include permitted assignees.


                                       24

<PAGE>

         7.  IRREVOCABILITY;  BINDING EFFECT. The Purchaser hereby  acknowledges
and agrees that the  subscription  hereunder is  irrevocable  by the  Purchaser,
except as required by applicable law, and that this Subscription Agreement shall
survive the death or  disability  of the Purchaser and shall be binding upon and
inure to the benefit of the parties and their heirs, executors,  administrators,
successors,  legal  representatives,  and permitted assigns. If the Purchaser is
more than one person, the obligations of the Purchaser  hereunder shall be joint
and several and the agreements, representations,  warranties and acknowledgments
herein  shall be deemed to be made by and be binding  upon each such  person and
each  such  person's  heirs,  executors,   administrators,   successors,   legal
representatives and permitted assigns.

         8. MODIFICATION.  This Subscription  Agreement shall not be modified or
waived except by an  instrument in writing  signed by the party against whom any
such modification or waiver is sought.

         9. NOTICES. Any notice or other communication  required or permitted to
be given  hereunder  shall be in writing and shall be mailed by certified  mail,
return receipt  requested,  by Federal Express,  or delivered against receipt to
the party to whom it is to be given (a) if to the  Company,  at the  address set
forth  above,  or (b) if to the  Purchaser,  at the  address  set  forth  on the
signature  page hereof (or, in either case,  to such other  address as the party
shall have  furnished  in  writing in  accordance  with the  provisions  of this
Section 9). Any notice or other  communication  given by certified mail shall be
deemed given at the time of certification thereof,  except for a notice changing
a party's address which shall be deemed given a the time of receipt thereof.

         10. ASSIGNABILITY. This Subscription Agreement and the rights, interest
and obligations  hereunder are not  transferable or assignable by the Purchaser,
and the transfer or assignment of the Units,  or the  Securities  underlying the
Units, shall be made only in accordance with all applicable laws.

         11.  APPLICABLE LAW. This  Subscription  Agreement shall be governed by
and construed in  accordance  with the laws of the State of New York relating to
contracts  entered  into and to be  performed  wholly  within  such  State.  The
Purchaser and the Company each hereby irrevocably submits to the jurisdiction of
any New York State  court or United  States  Federal  court  sitting in New York
County  over  any  action  or  proceeding  arising  out of or  relating  to this
Subscription  Agreement or any agreement  contemplated hereby, and the Purchaser
and the  Company  each hereby  irrevocably  agrees that all claims in respect of
such actions or proceeding may be heard and determined in such New York State or
Federal  court.  The Purchaser and the Company  further  waives any objection to
venue in such State and any  obligation to an action or proceeding in such State
on the basis of a non-convenient  forum.  The Purchaser  further agrees that any
action or proceeding brought against the Company or the Placement Agent shall be
brought only in New York State or United States  Federal  courts  sitting in New
York County.

12. BLUE SKY  QUALIFICATION.  The purchase of the Units under this  Subscription
Agreement is expressly  conditioned upon the exemption from qualification of the
offer and sale of the Units from applicable  Federal and state  securities laws.


                                       25

<PAGE>


The  Company  shall not be  required  to  qualify  this  transaction,  under the
securities laws of any jurisdiction and, should qualification be necessary,  the
Company  shall be released from any and all  obligations  to maintain its offer,
and may rescind any sale contracted, in the jurisdiction.

         13. USE OF  PRONOUNS.  All  pronouns  and any  variations  thereof used
herein shall be deemed to refer to the masculine,  feminine, neuter, singular or
plural as the identify of the person or persons referred to may require.

         14.  CONFIDENTIALITY.  The Purchaser  acknowledges  and agrees that any
information  or data it has  acquired  from or about the Company  not  otherwise
properly in the public domain, was received in confidence.  The Purchaser agrees
not to divulge, communicate or disclose, except as may be required by law or for
the performance of this Subscription  Agreement,  or use to the detriment of the
Company or for the benefit of any other person or persons, or misuse in any way,
any  confidential   information  of  the  Company,   including  any  scientific,
technical,  trade  or  business  secrets  of the  Company  and  any  scientific,
technical,  trade or  business  materials  that are  treated  by the  Company as
confidential or proprietary,  including, but not limited to, ideas, discoveries,
inventions,   developments  and  improvements   belonging  to  the  Company  and
confidential  information obtained by or given to the Company about or belonging
to third parties.

         15. ENTIRE AGREEMENT.  This Subscription  Agreement,  together with the
Loan Documents,  constitutes the entire agreement  between the Purchaser and the
Company with respect to the subject  matter hereof and supersedes all prior oral
or written agreements and understandings, if any, relating to the subject matter
hereof.  The terms and provisions of this Subscription  Agreement may be waived,
or consent  for the  departure  therefrom  granted,  only by a written  document
executed by the party entitled to the benefits of such terms or provisions.

         16. FEES AND  EXPENSES.  Each of the parties  hereto  shall pay its own
fees and expenses (including the fees of any attorneys, accountants,  appraisers
or others engaged by such party) in connection with this Subscription  Agreement
and the  transactions  contemplated  hereby,  whether  or not  the  transactions
contemplated hereby are consummated.

         17. COUNTERPARTS. This Subscription Agreement may be executed in one or
more counterparts,  each of which shall be deemed an original,  but all of which
shall together constitute one and the same instrument.

         18. SEPARABLE PROVISIONS. Each provision of this Subscription Agreement
shall be considered  separable and if for any reason any provision or provisions
hereof  are  determined  to be invalid  or  contrary  to  applicable  law,  such
invalidity  or  illegality  shall not  impair  the  operation  of or affect  the
remaining portions of this Subscription Agreement.

         19. HEADINGS.  Paragraph  titles are for descriptive  purposes only and
shall not control or alter the  meaning of this  Subscription  Agreement  as set
forth in the text.

         20. ACCREDITED INVESTOR STATUS.  The Purchaser certifies that  he is an
"accredited  investor"  as that term is defined in Rule 501(a) of  Regulation  D
adopted pursuant to the Securities Act. The Purchaser  further certifies that he
is a "sophisticated  investor" as that term is defined in Rule  506(b)(2)(ii) of
Regulation D adopted pursuant to the Securities Act in that the undersigned is a
natural  person or entity with such  knowledge  and  experience in financial and
business  matters  that such  investor is capable of  evaluating  the merits and
risks  of the  prospective  investment.  The  Purchaser  represents  that he has
completed the Accredited Investor Certificate below, and that the information is
true and correct.

                                       26

<PAGE>


                         Accredited Investor Certificate

         The   specific   category  or   categories   of   accredited   investor
qualification applicable to the Purchaser are checked below:

_____             a natural  person  whose  individual  net worth,  or joint net
                  worth with that  person's  spouse, exceeds $1,000,000;

_____             a  natural  person  who had  individual  income in  excess  of
                  $200,000  in 1996 or 1997 or who  had joint  income  with that
                  person's spouse in excess of  $300,000  in each of those years
                  and who reasonably expects to reach that income level in 1998;

_____             a bank as defined in Section 3(a)(2) of the Securities Act; or
                  a savings and loan association or other institution as defined
                  in Section  3(a)(5)(A) of the Securities Act whether acting in
                  its  individual  or  fiduciary  capacity;  or a broker  dealer
                  registered  pursuant to Section 15 of the Exchange  Act; or an
                  insurance   company  as  defined  in  Section   2(13)  of  the
                  Securities Act; or an investment  company registered under the
                  Investment  Company  Act of 1940;  or a  business  development
                  company  as  defined in  Section  2(a)(48)  of the  Investment
                  Company Act of 1940; or a small  business  investment  company
                  licensed  by the  U.S.  Small  Business  Administration  under
                  Section 301(c) or (d) of the Small Business  Investment Act of
                  1958; or a plan  established  and  maintained by a state,  its
                  political  subdivisions or any agency or  instrumentality of a
                  state or its  political  subdivisions  for the  benefit of its
                  employees,  if  such  plan  has  total  assets  in  excess  of
                  $5,000,000;  or an employee benefit plan within the meaning of
                  the Employee  Retirement  Income  Security Act of 1974, if the
                  investment decision is made by a plan fiduciary, as defined in
                  Section 3(21) of such 1974 Act, that is either a bank, savings
                  and  loan   association,   insurance   company  or  registered
                  investment  adviser, or if the employee benefit plan has total
                  assets in excess of $5,000,000  or, if a  self-directed  plan,
                  with  investment  decisions  made  solely by persons  that are
                  accredited investors.

_____             a private business development company  as defined in  Section
                  202(a)(22)  of the  Investment Advisors Act of 1940;

_____             an organization described in Section 501(c)(3) of the Internal
                  Revenue  Code,  a  corporation,  a  Massachusetts  or  similar
                  business  trust or  partnership,  not formed  for the specific
                  purpose  of  acquiring  the securities offered, with assets in
                  excess of $5,000,000;

_____             a trust, which trust has total assets in excess of $5,000,000,
                  which is not formed for the specific  purpose of acquiring the
                  Units  offered  hereby and whose  purchase  is  directed  by a
                  sophisticated  person  as  described  in  Rule  506(b)(ii)  of
                  Regulation  D and who has such  knowledge  and  experience  in
                  financial   and  business   matters  that  he  is  capable  of
                  evaluating the risks and merits of an investment in the Units;

_____             a natural  person who is  a director or  executive  officer of
                  Augment Systems, Inc.; or

_____             an  entity in  which  all  the  equity  owners are  accredited
                  investors.


                                       27

<PAGE>


Dated:   August ___, 1998                            PURCHASER:



_______________________________                     ____________________________
Number of Units being Purchased




If the Purchaser is an INDIVIDUAL, and if purchased as JOINT TENANTS, as TENANTS
IN COMMON, or as COMMUNITY PROPERTY:



_______________________________                     ____________________________
Print Name(s)                                       Social Security Number(s)



_______________________________                     ____________________________
Signature(s) of Purchaser(s)


_______________________________                     ____________________________
Date                                                Address




If the  Purchaser  is  PARTNERSHIP, CORPORATION,  LIMITED  LIABILITY  COMPANY or
TRUST:



________________________________            ____________________________________
Name of Partnership, Corporation            Federal Taxpayer
Limited Liability Company                   Identification Number
or Trust


______________________________
Date

By:
   ___________________________              ____________________________________
     Name:                                  State of Organization


Title:________________________              ____________________________________
                                            Address


                                       28


<PAGE>


                             COMPANY SIGNATURE PAGE



SUBSCRIPTION ACCEPTED AND AGREED TO this _____ day of _________, 1998.


AUGMENT SYSTEMS, INC.



By:_________________________________                



















                                       29

<PAGE>




                                 LOAN AGREEMENT

                           COUNTERPART SIGNATURE PAGE

     IN WITNESS WHEREOF, the undersigned have executed this Loan Agreement as of
this _____ day of August, 1998.


                                   LENDER:


                                   _____________________________________________
                                   Print Name


                                   _____________________________________________
                                   Signature



                                   AUGMENT SYSTEMS, INC.



                                   By:__________________________________________





                                       30