NETWORK EVENT THEATER, INC.
                                529 Fifth Avenue
                                    7th Floor
                            New York, New York 10011

                           PLACEMENT MANAGER AGREEMENT

                                                    December 24, 1997

Sunrise Securities Corp.
135 East 57th Street, 11th Floor
New York, New York 10022

Gentlemen:

      Network Event Theater Inc., a Delaware corporation (the "Company"), hereby
confirms its agreement with you (the  "Placement  Manager" and together with the
Company, the "Parties") as follows:

1.    Description of  Transaction.  The Company will make an offer in the United
      States (the  "Offering")  to sell up to 1,333,333  shares of the Company's
      common stock, par value $.01 per share (the "Common Stock", and the shares
      of Common  Stock to be  offered  or sold  pursuant  to the  Offering,  the
      "Shares") at a price of $4.50 per Share (the "Sales Price"). The number of
      Shares  referred  to in this  Section 1  includes  Shares to be offered to
      Warburg Pincus and its affiliates and Far West Capital.

2.    Appointment  of the Placement  Manager.  The Company  hereby  appoints the
      Placement Manager as its exclusive agent to offer and sell the Shares on a
      "best efforts" basis. The Placement  Manager may allocate a portion of the
      Shares to selected  dealers.  The Placement  Manager,  on the basis of the
      representations,  warranties,  covenants  and  agreements  of the  Company
      herein,  and subject to the  completion  of the  Placement  Manager's  due
      diligence  examination  of the documents  and records of the Company,  and
      further  subject to the conditions  herein,  accepts such  appointment and
      agrees that it will endeavor to sell the Shares on a best efforts basis.

3.    Purchase, Sale and Delivery of Shares. Subject to the terms and conditions
      set forth herein, the Company and the Placement Manager agree as follows:

            (a)  Regulation  D  Offering.  Neither  the  Offering  nor the  sale
      thereunder  of the Shares has been or will be  registered  with the United
      States  Securities and Exchange  

<PAGE>

      Commission (the "Commission") under the Securities Act of 1933, as amended
      (the "Securities  Act"). The Shares will be offered and sold in the United
      States only, in reliance upon and in compliance  with the exemptions  from
      registration  provided by Sections  3(b),  4(2) and 4(6) of the Securities
      Act and Rule 506 of  Regulation D  thereunder  ("Reg D"), and will only be
      sold to Qualified Institutional Buyers ("QIB's") or "accredited investors"
      as such terms are defined in Rule 144A  promulgated  under the  Securities
      Act and Reg D,  respectively.  The Shares will be offered for sale only in
      those states of the United States in which they will have full  compliance
      with  applicable  state  Blue Sky  laws.  The  Company  will  provide  the
      Placement  Manager,  for delivery to all offerees and purchasers and their
      representatives,  any  information,  documents and  instruments  which the
      Placement  Manager  deems  necessary to comply with the  statutes,  rules,
      regulations and judicial and administrative  interpretations applicable to
      the Offering.

            b)  Subscription  for Shares.  Subscriptions  for, and purchases of,
      Shares  shall  occur  by  execution  and  delivery  by a  subscriber  (the
      "Subscriber")  of two  copies of a Stock  Purchase  Agreement  in the form
      provided by the Company (the "Purchase Agreement"),  together with payment
      for such Shares and such other documents and instruments as the Company or
      the Placement Manager shall deem  appropriate.  The Company may reject any
      subscription in its sole discretion.

            (c) Payment of Funds.  Each Subscriber shall tender a check or money
      order payable to "Network Event Theater, Inc.", or wire transfer funds, in
      payment of the full purchase  price of the Shares   subscribed  for to the
      Company.

            (d) Closing; Termination of Offering. The Offering will terminate on
      January 15, 1998, unless it is extended by mutual agreement of the Company
      and the  Placement  Manager.  Any closing of the sale of Shares  under the
      Offering is hereinafter referred to as a "Closing".  The Placement Manager
      will use its best efforts to complete the initial  Closing of the Offering
      (the  "Initial  Closing")  prior to December 31,  1997.  After the Initial
      Closing,  the  Offering  may  continua  until the  Placement  Manager  has
      received  and the Company has  accepted  Subscription  Agreements  for the
      Maximum  Offering  or until  January  15,  1998 or until the  offering  is
      terminated by mutual consent of the parties hereto.  The date on which the
      Initial Closing occurs is hereinafter  called the "Initial  Closing Date",
      the date on which a subsequent  Closing  occurs is  hereinafter  called an
      "Additional  Closing Date",  and the date on which the last Closing occurs
      shall be  referred  to herein as the  "Final  Closing  Date."  Each of the
      Initial  Closing  Date  and  each  Additional  Closing  Date is  sometimes
      hereinafter  referred to generally as a "Closing Date".  The Company shall
      deliver to each Subscriber  within two trading days of a Closing Date, the
      certificates  representing the Shares being purchased by such Subscribers.
      If on or before January 15, 1998 the Company has not accepted any Purchase
      Agreements pursuant to the Offering, the Offering shall be terminated.  In
      the event of such termination of the Offering, all terms of this Agreement
      shall be automatically terminated


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<PAGE>

      and neither  Party shall have any  further  obligation  to the other Party
      under this Agreement  other than the Company's  obligation to pay expenses
      as set forth herein.

      4.  Compensation of Placement  Manager.  As compensation  for its services
rendered as Placement Manager under this Agreement, the Placement Manager or its
designees shall receive the following:

            (a) A sales  commission  (the  "Sales  Commission"),  which  will be
      payable in shares of Common Stock valued at the Sales Price,  equal to 10%
      of the Gross  Proceeds (as  hereinafter  defined) of the Offering,  except
      that the Placement Manager shall receive a Sales Commission on any sale of
      Shares to Warburg Pincus and its affiliates or to Far West Capital only to
      the extent that the gross  proceeds of the sale of Shares to such  persons
      exceeds $2 million. "Gross Proceeds" is defined as the total price paid by
      the  Subscribers  for the Shares.  Shares of Common  Stock  payable as the
      Placement Manager's  commission (the "Commission  Shares"),  all be issued
      within  two  trading  days  after  each  Closing.  The  Placement  Manager
      acknowledges  that the Commission  Shares will be "restricted  securities"
      within the  meaning of Rule 144 under the  Securities  Act and agrees that
      certificates   evidencing   such  shares  of  Common  Stock  may  bear  an
      appropriate  restrictive legend until such shares of Common Stock are sold
      pursuant to an effective  registration statement under the Securities Act,
      or until they may be resold  without  registration  under Rule 144(k),  or
      until the  Placement  Manager or holder  shall  deliver to the  Company an
      opinion of counsel  (which shall be  reasonably  acceptable to the Company
      both as to form and counsel) that the appropriate Commission Shares may be
      resold under the  Securities  Act in reliance  upon a specified  exemption
      other than Rule 144(k).

            (b) An accountable expense allowance not to exceed $10,000,  payable
      by deducting the  accountable  expense  allowance from the Gross Proceeds.
      Such  accountable  expense  allowance  may be paid,  at the  option of the
      Placement Manager, in whole or in part, in Commission Shares in accordance
      with the terms of Section 4(a).

            (c) The  Placement  Manager  and its  designees  shall have the same
      rights of  registration  under the  Securities  Act,  indemnification  and
      contribution,  with respect to the  Commission  Shares,  as a Purchaser of
      Shares would have under the form of Registration Rights Agreement attached
      as Exhibit B to this Agreement.

      5.  Representations and Warranties of the Company.  The Company represents
and warrants to the Placement Manager as follows:

            (a) Information  Package. As of the date filed with the Securities &
      Exchange  Commission,  the documents in the information package consisting
      of the documents  enumerated in paragraph (j)(i) herein (the  "Information
      Package"),  did not contain any untrue  statement of a material  fact,  or
      omit to state any material fact required to be stated therein or necessary
      to make the statements  therein,  in light of the  circumstances  in which
      they were made, not misleading.


                                      -3-
<PAGE>

            (b)  Organization  and Existence.  The Company is a corporation duly
      organized and validly existing under the laws of Delaware, with full power
      and  authority,  corporate  and  other,  to own or lease and  operate  its
      properties  and  to  conduct  its  business  as  currently  conducted  and
      described in the Information  Package. The Company is duly qualified to do
      business as a foreign corporation in each jurisdiction in which the nature
      of the Company's  business would require such  qualification  except where
      the failure so to qualify would not have a material  adverse effect on the
      financial  condition,  results of  operations,  businesses,  properties or
      prospects of the Company.

            (c)  Governmental  Authority.  Except for such  approvals  as may be
      required  under  applicable  state  securities  laws in the United  States
      ("Blue  Sky   laws"),   no   authorization,   approval   consent,   order,
      registration,  license  or permit of any court or  governmental  agency or
      body is required for the valid authorization,  issuance, sale and delivery
      of the Shares or the Commission Shares  (collectively,  the "Securities"),
      and the consummation by the Company of all the  transactions  contemplated
      by this Agreement,  the Purchase Agreements (the form of which is provided
      in Exhibit A to this Agreement) and the Registration Rights Agreement (the
      form of which is provided in Exhibit B to this  Agreement)  (collectively,
      the "Agreements").

            (d)  Corporate  Authorization.   The  Company  has  full  power  and
      authority,  corporate  and other,  to  execute,  deliver  and  perform the
      Agreements and to consummate the transactions  contemplated  thereby.  The
      execution,  delivery and performance of the Agreements by the Company, the
      consummation by the Company of the transactions therein contemplated,  and
      the compliance by the Company with the terms of the  Agreements  have been
      duly  authorized  by all  necessary  corporate  action  on the part of the
      Company. The Agreements will be duly executed and delivered by the Company
      and, assuming that they have been or will be duly authorized, executed and
      delivered by the parties  thereto other than the Company,  the  Agreements
      will be valid and binding  obligations of the Company  enforceable against
      it  in  accordance  with  their  respective   terms,   except  insofar  as
      enforcement   may  be  limited  by  applicable   bankruptcy,   insolvency,
      reorganization,   moratorium  and  other  laws  affecting  the  rights  of
      creditors  generally and by the discretion of courts in granting equitable
      remedies, and except that enforceability of the indemnification provisions
      and the  contribution  provisions  set forth  herein may be limited by the
      federal  securities laws of the United States or state  securities laws or
      the public  policy  underlying  such laws.  The  execution,  delivery  and
      performance  of the  Agreements by the Company,  the  consummation  by the
      Company of the transactions  therein  contemplated,  and the compliance by
      the Company with the terms of the Agreements do not, and will not, with or
      without the giving of notice or the lapse of time, or both,  (i) result in
      any  violation  of the  Certificate  of  Incorporation  and By-Laws of the
      Company,  (ii) result in a breach of or conflict  with any of the terms or
      provisions  of,  or  constitute  a  default   under,   or  result  in  the
      modification or termination of, or result in the creation or imposition of
      any material lien,  security  interest,  charge or encumbrance upon any of
      the  properties  or assets of the  Company  pursuant  to,  any  indenture,
      mortgage,  note, contract,  commitment or other agreement or instrument to
      which  the  Company  is a party  or by  which  the  Company  or any of its
      properties or assets are or may be bound or


                                      -4-
<PAGE>

      affected;  (iii) violate any existing  applicable  law, rule,  regulation,
      judgment, order or decree of any governmental agency or court, domestic or
      foreign,  having jurisdiction over the Company or any of its properties or
      its  business;  or (iv) have any  material  adverse  effect on any permit,
      certification,  registration,   approval, consent,  license  or  franchise
      necessary  for  the  Company  to  own  or  lease  and  operate  any of its
      properties and to conduct its business or the ability of t Company to make
      use thereof.

            (e) Capitalization.  All the outstanding shares of Common Stock have
      been  duly   authorized   and  validly  issued  and  are  fully  paid  and
      nonassessable.  Except as set forth in the Information Package,  there are
      no  outstanding  securities  convertible  into Common Stock  ("Convertible
      Securities")  or any  options,  warrants or other  rights to purchase  any
      shares  of  Common  Stock or  Convertible  Securities  (collectively,  the
      "Options")   except that the Company has  reserved  (a) 400,000  shares of
      Common Stock for issuance upon exercise of  outstanding  options under the
      Company's  1996 stock option plans at per share  exercise  prices  ranging
      from $3.00 to $5.00 and having a weighted  average exercise price of $4.05
      per share,  (b) 450,000  shares of Common Stock for issuance upon exercise
      of options  available  for future  grant  under the  Company's  1997 stock
      option  plans (no options  having yet been granted  under that plan),  (c)
      552,560  shares of Common  Stock for  issuance  upon  exercise  of options
      granted to The Fields & Hellman  Company at a per share  exercise price of
      $1.58, (d) up to 100,000 shares of Common Stock for issuance upon exercise
      of contingent  options granted to American Passage Media  Corporation at a
      per share exercise price of $2.627,  (e) 2,645,000  shares of Common Stock
      for issuance upon exercise of outstanding warrants at a per share exercise
      price of $5.00,  (1)  230,000  shares of Common  Stock for  issuance  upon
      exercise of outstanding Warrants issued to Whale Securities Co., L.P. at a
      per share  exercise  price of $8.25,  (g) 230,000  shares of Common  Stock
      reserved for issuance  upon  exercise of warrants  underlying  outstanding
      warrants  issued to Whale  Securities  Co.,  L.P. at a per share  exercise
      price of $8.25,  and (h) 150,000  shares of Common Stock for issuance upon
      exercise of outstanding  warrants issued to Whale Securities Co., L.P., at
      a per share exercise price of $4.50 and (i) 500,000 shares of Common Stock
      (400,000  of  which  are   contingent)   for  issuance  upon  exercise  of
      outstanding  warrants issued to an affiliate of the Placement Manager. The
      Company is currently  negotiating a  transaction  that could result in the
      issuance of additional Shares. All such outstanding Options constitute the
      valid and binding  obligations  of the  Company,  enforceable  against the
      Company in  accordance  with their  respective  terms,  except  insofar as
      enforcement   may  be  limited  by  applicable   bankruptcy,   insolvency,
      reorganization, moratorium or other laws affecting the rights of creditors
      generally, and by the discretion of courts in granting equitable remedies.
      None of the outstanding shares of Common Stock or Options have been issued
      in  violation  of  the  preemptive  rights  of any  securityholder  of the
      Company, and none of the holders of the outstanding shares of Common Stock
      or Options is subject to personal liability solely by reason of being such
      a holder.  The offer and sales of the  outstanding  shares of Common Stock
      and  Options  were at all  relevant  times  either  registered  under  the
      Securities  Act and the  applicable  Blue Sky  laws or  exempt  from  such
      registration  requirements,  and were in full  compliance with the laws of
      Delaware.


                                      -5-
<PAGE>

            (f) Authorization of Securities. The issuance and sale of the Shares
      and the  Commission  Shares have been duly  authorized,  and when they are
      issued and paid for as  contemplated  by the  Agreements,  will be validly
      issued,  and all of the  shares  of  Common  Stock  which  are  among  the
      Securities will be fully paid and  nonassessable,  and the holders thereof
      will not be subject to personal  liability  solely by reason of being such
      holders.  The Securities  will not be subject to preemptive  rights of any
      securityholder of the Company.

            (g) No Anti-Dilution Adjustment.  The issuance of the Shares and the
      Commission  Shares  will not  result in any  adjustment  in the  number of
      shares of Common  Stock,  or the exercise  price or  conversion  ratio per
      share, under any of the Company's outstanding Options.

            (h) Violations and Defaults.  The Company is not in violation of, or
      in  default  under,  any  term  or  provision  of (i) its  Certificate  of
      Incorporation  and  By-Laws,  (ii)  any  indenture,   mortgage,  contract,
      commitment  or other  agreement or instrument to which it is a party or by
      which  it or any of its  properties  or  business  is or may be  bound  or
      subject,  except for such defaults, if any, that would not have a material
      adverse  effect  on the  condition  (financial  or  otherwise),  earnings,
      business  affairs  or  business  prospects  of the  Company,  or (iii) any
      existing applicable law, rule,  regulation,  judgment,  order or decree of
      any governmental  agency or court, having jurisdiction over the Company or
      of any of its  respective  properties  or  businesses.  The Company  owns,
      possesses or has obtained all  governmental  and other licenses,  permits,
      certifications,   registrations,   approvals   or   consents   and   other
      authorizations  necessary  to own or  lease,  as the case  may be,  and to
      operate its properties and to conduct its business as currently  conducted
      and described in the Information Package, and all such licenses,  permits,
      certifications,    registrations,    approvals,    consents    and   other
      authorizations  are  outstanding  and  in  good  standing.  There  are  no
      proceedings   pending  or,  to  the  best  of  the  Company's   knowledge,
      threatened,  nor is there any basis therefor, seeking to cancel, terminate
      or limit such licenses, permits, certifications,  registrations, approvals
      or consents or authorizations.

            (i)  Litigation.  Except  as set forth in the  Information  Package,
      there  are  no  claims,   actions,   suits,   proceedings,   arbitrations,
      investigations  or  inquiries  before any  governmental  agency,  court or
      tribunal, or before any private arbitration  tribunal,  pending or, to the
      best  of the  Company's  knowledge,  threatened  against  the  Company  or
      involving the properties or business of the Company  which,  if determined
      adversely to the Company, would, individually or in the aggregate,  result
      in any material  adverse change in the financial  position,  shareholders'
      equity,  results  of  operations,   properties,  business,  management  or
      prospects  of the  Company,  or which relate in any way to the validity of
      the capital stock of the Company or the validity of the Agreements,  or of
      any  action  taken  or to be  taken  by the  Company  pursuant  to,  or in
      connection  with,  the  Agreements  nor,  to the  best  of  the  Company's
      knowledge,   is  there  any  basis  for  any  such  claim,  action,  suit,
      proceeding,   arbitration,   investigation   or  inquiry.   There  are  no
      outstanding orders, judgments or decrees of any court, governmental agency
      or other  tribunal  specifically  naming the  Company  and  enjoining  the
      Company from taking,  or requiring the Company 


                                      -6-
<PAGE>

      to take, any action, or to which the Company or its properties or business
      is bound or subject.

            (j) Additional Information. The Company his filed in a timely manner
      all documents  that the Company was required to file under the  Securities
      Exchange Act of 934 (the  "Exchange  Act") during the 12 months  preceding
      the  date of this  Agreement.  The  following  documents  complied  in all
      material  respect  with the  requirements  of the Exchange Act as of their
      respective  filing dates, and the information  contained  therein was true
      and correct in all material respects as of the date of such documents, and
      each of the following  documents as of the date thereof did not contain an
      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 under which they were made, not misleading:

                  (i) The Company's  Annual Report on Form 10-KSB for the fiscal
            year ended June 30, 1997, Form 10-QSB for the period ended September
            30, 1997,  its Proxy  Statement  dated  October 23,  1997;   and its
            preliminary prospectus dated November 10, 1997; and

                  (ii) all other  documents,  if any,  filed by the Company with
            the  Commission  since the  filing of the  Quarterly  Report on Form
            10-QSB for the fiscal quarter ended September 30, 1997,  pursuant to
            the reporting requirements of the Exchange Act.

            (k) Financial  Statements.  Ernst & Young LLP  the  accountants  who
      have  rendered an audited  report  with  respect to certain of the audited
      financial  statements included in the Information Package, are independent
      public   accountants   within  the  meaning  of  the  Securities  Act  and
      regulations promulgated under the Securities Act (the  "Regulations"). The
      financial statements and notes thereto included in the Information Package
      present  fairly  the  financial  position  of the  Company as of the dates
      thereof and the results of operations and changes in financial position of
      the Company for the periods  indicated  therein,  all in  conformity  with
      generally  accepted  accounting  principles  applied on a consistent basis
      throughout the periods involved.

            (l)  Liabilities.  Except as and to the extent reflected or reserved
      against  in the  financial  statements  of  the  Company  included  in the
      Information Package, the Company as at September 30, 1997, had no material
      liabilities,  debts,  obligations or claims  asserted  against it, whether
      accrued,  absolute,  contingent or otherwise, and whether due or to become
      due, including, but not limited to, liabilities on account of taxes, other
      governmental charges or lawsuits brought subsequent to such date.

            (m) Taxes.  The  Company  has filed all tax  returns  required to be
      filed with the  appropriate  taxing  authorities,  including  all federal,
      state,  municipal and other local authorities (whether relating to income,
      sales, franchise, withholding or real or personal property taxes, or other
      types of taxes) or hag duly obtained extensions of time for the


                                      -7-
<PAGE>

      filing  thereof,  and has paid in full all taxes  which  have  become  due
      pursuant to such returns or claimed to be due by any such taxing authority
      or otherwise due and owing;  and the  provisions for income taxes payable,
      if any, shown on the consolidated  financial  statements  contained in the
      Information  Package are  sufficient  for all  accrued  and unpaid  taxes,
      whether or not disputed, and for all periods to and including the dates of
      such consolidated financial statements.  The Company believes that each of
      the tax returns  heretofore filed by the Company  correctly and accurately
      reflects  the amount of its tax  liability  thereunder.  The  Company  has
      withheld,  collected and paid all other levies, assessments,  license fees
      and taxes to the extent  required  and,  with respect to payments,  to the
      extent that the same have become due and  payable.  Except as disclosed in
      writing to the  Placement  Manager,  the Company has not executed or filed
      with  any  taxing  authority,  any  agreement  extending  the  period  for
      assessment  or  collection  of any income  taxes and is not a party to any
      pending  action or  proceeding  by any  foreign or  domestic  governmental
      agency for assessment or collection of taxes, and no claims for assessment
      or collection of taxes have been asserted against the Company.

            (n)  Conduct of  Business.  Since the  respective  dates as of which
      information is given in the Information  Package,  the Company has not (i)
      canceled,  without  payment  in full,  any  notes,  or  other  obligations
      receivable  or other debts or claims held by it other than in the ordinary
      course  of  business;   (ii)  sold,  assigned,   transferred,   abandoned,
      mortgaged, pledged or subjected to lien any of its properties, tangible or
      intangible,  or rights under any contract,  permit, license,  franchise or
      other  agreement  other  than  sales  or  other  dispositions  of goods or
      services in the ordinary  course of business at customary terms and prices
      (but  financing  transactions  are presently  being  negotiated  that will
      require the pledge of assets of the Company and its  subsidiaries);  (iii)
      increased the  compensation  payable to any of its officers,  directors or
      other employees  (including  salaries,  fringe benefits, pensions,  profit
      participation  and  payments  or benefits  of any kind  whatsoever);  (iv)
      entered into any line of business  other than that  conducted by it on due
      date or entered into any  transaction  not in the  ordinary  course of its
      business;  (v)  conducted  any line of  business  in any manner  except by
      transactions  customary  in the  operation of its business as conducted on
      such date;  or (vi)  declared,  made or paid or set aside for  payment any
      cash or non-cash distribution on any shares of its capital stock.

            (o)  Properties.  The Company has good and  marketable  title in fee
      simple  to all real  property,  and good  title to all  personal  property
      (tangible  and  intangible),  owned by it, free and clear of all  security
      interests,  charges,  mortgages,  liens,  encumbrances and defects, except
      such  as are  described  in the  Information  Package  or  such  as do not
      materially affect the value or transferability of such property and do not
      interfere with the use of such property made or proposed to be made by the
      Company,  but as noted in paragraph  (n),  this will change as a result of
      financing transactions currently being negotiated. The leases, licenses or
      other contracts or instruments under which the Company leases, holds or is
      entitled to use any property,  real or personal, are valid, subsisting and
      enforceable  only  with such  exceptions  as are not  material  and do not
      interfere  with the use of such  property  made or proposed to be made, by
      the  Company,  and all  rentals,  royalties  or  other  payments  accruing
      thereunder which became due prior to the


                                      -8-
<PAGE>

      date of this  Agreement  have been duly paid, and neither the Company nor,
      to the best of the  Company's  knowledge,  any other  party is in  default
      thereunder  and,  to the best of the  Company's  knowledge,  no event  has
      occurred which, with the passage of time or the giving of notice, or both,
      would constitute a default thereunder. The Company has not received notice
      of any violation of any applicable law,  ordinance,  regulation,  order or
      requirement relating to its owned or leased properties.

            (p)  Insurance.  The Company has  adequately  insured its properties
      against  loss or  damage  by fire or  other  casualty  and  maintains,  in
      adequate  amounts,  such other  insurance,  including  but not limited to,
      liability insurance,  as is usually maintained by companies engaged in the
      businesses similar to the Company's businesses.

            (q) Contracts.  Except as described in the Information  Package: (i)
      each contract or other instrument (however  characterized or described) to
      which the Company is a party, or to which its properties or businesses are
      or may be subject,  has been duly and validly  executed,  is in full force
      and effect in all material respects and is enforceable against the parties
      thereto  in  accordance  with its  terms,  and none of such  contracts  or
      instruments  has been assigned by the Company,  except to  subsidiaries of
      the Company; (ii) to the best of the Company's knowledge,  no party to any
      such  contract  or  instrument  other  than  the  Company  is  in  default
      thereunder; and (iii) to the best of the Company's knowledge, no event has
      occurred which,  with the lapse of time or the giving of notice,  or both,
      would  constitute  such  a  default  thereunder.   None  of  the  material
      provisions  of  such  contracts  or  instruments   violates  any  existing
      applicable  law,  rule,  regulation,   judgment/order  or  decree  of  any
      governmental  agency or court having  jurisdiction over the Company or any
      of its assets or businesses.

            (r) Benefit  Plans.  Except for the Company's 1996 Stock Option Plan
      and 1997 Stock Plan,  (the "Stock  Plans")  and the Company's  401(k) Plan
      and  various  employee  health,  life and  disability  insurance  plans as
      disclosed in the Information  Package, the Company has no employee benefit
      plan (including,  without  limitation,  profit sharing and welfare benefit
      plans) or deferred compensation arrangements.

            (s) Contributions.  The Company has not, directly or indirectly,  at
      any time made any  contributions  to any candidate for political office In
      the United States,  or failed to disclose fully any such  contribution  in
      violation  of  law.  The  Company's  internal   accounting   controls  and
      procedures are sufficient to comply in all material  respects with Section
      l3(b)(2) of the United States Securities  Exchange Act of 1934, as amended
      (the "Exchange Act").

            (t) Reg D Qualification.  Subject to the warranties and covenants of
      the  Placement  Manager in Sections  7(a) and (b) of this  Agreement,  the
      offer and sale of the Shares by the Company on each Closing Date will have
      satisfied all of the requirements of Rule 506 of Reg D, and the Company is
      not disqualified from any exemption wider Reg D by virtue of Rule 507.


                                      -9-
<PAGE>

            (u) Finder's  Fee. The Company has not incurred any  liability  for,
      and is unaware of any claim for, any finder's or broker's  fees or similar
      payments in connection  with the Offering.  This  paragraph does not apply
      with  respect  to  Shares  offered  or  sold  to  Warburg  Pincus  and its
      affiliates and Far West Capital.

            (v)  Intangibles.  The Company owns or possesses  adequate rights to
      use  all  patents,   patent  applications,   trademarks,   service  marks,
      copyrights, rights, trade secrets, confidential information, processes and
      formulations used or proposed to be used in the conduct of its business as
      currently   conducted   and   described   in   the   Information   Package
      (collectively, the "Intangibles"). To the best of the Company's knowledge,
      the Company has not infringed  upon, and is not infringed upon, the rights
      of  others  with  respect  to the  Intangibles,  and the  Company  has not
      received (i) any notice that it has or may have infringed or is infringing
      upon the rights of others  with  respect to the  Intangibles,  or (ii) any
      notice of conflict with the asserted  rights of others with respect to the
      Intangibles  which  could,  singly  or in the  aggregate,  materially  and
      adversely  affect its  business as presently  conducted or its  prospects,
      financial  condition  or results of  operations,  and the Company does not
      know of any basis  therefor.  To the best of the Company's  knowledge,  no
      others have infringed upon the Intangibles.

            (w) Labor  Relations.  No  general  labor  problem  exists  with the
      Company's employees or, to its knowledge, is imminent.

            (x) No Adverse Change. Since September 30, 1997, except as otherwise
      stated in the  Information  Package,  the Company has not (i) incurred any
      material  liability  or  obligation,  direct or  contingent  (other than a
      subordination  agreement  with Signet Bank),  or entered into any material
      transaction,  whether  or not in  the  ordinary  course  of  business,  or
      sustained any material loss or  interference  with its business from fire,
      storm,  explosion,  flood or other  casualty,  whether  or not  covered by
      insurance,  or from any labor  dispute  or court or  governmental  action,
      order or decree,  and (ii) there have not been any  changes in the capital
      stock or any material  increases in the  long-term  debt of the Company or
      any  material   adverse  change  in  or  affecting  the  general  affairs,
      management,   financial  condition,   shareholders'  equity,   results  of
      operations  or prospects of the  Company,  otherwise  than as set forth or
      contemplated in the Information Package or in this Agreement.

            (y) Listing.  The Company  shall use its best efforts to comply with
      all requirements of the National  Association of Securities Dealers,  Inc.
      (the  "NASD")  with respect to the issuance of the Shares and the issuance
      of the Shares on the Nasdaq SmallCap Market.

            (z) Registration Rights. The registration rights provided in Exhibit
      B to this  Agreement  are not  inconsistent  with,  and  will in no way be
      limited by,  registration  rights previously granted by the Company to its
      securityholders.

      In  addition,  any  certificate  signed by an officer of the  Company  and
delivered to the Placement  Manager,  or to counsel for the  Placement  Manager,
shall be deemed to be a


                                      -10-
<PAGE>

representation  and warranty by the Company to the  Placement  Manager as to the
matters covered thereby.

      6. Covenants of the Company.

            (a)  Information  Package.  The Company will  furnish the  Placement
      Manager,  without  charge,  during he Offering  with as many copies of the
      Information  Package as the Placement Manager may reasonably  request.  If
      during the  Offering  period  any event  occurs as the result of which the
      Information  Package,  as then amended or  supplemented,  would include an
      untrue  statement  of a material  fact,  or omit to state a material  fact
      necessary  in  order  to  make  the  statements  made,  in  light  of  the
      circumstances  in which they were made, not misleading,  or if it shall be
      necessary to amend or supplement  the  Information  Package to comply with
      applicable  law, the Company will forthwith  notify the Placement  Manager
      thereof and furnish to the Placement  Manager,  in such  quantities as the
      Placement  Manager may reasonably  request,  an amendment or supplement to
      the  Information  Package which  corrects such  statements or omissions or
      causes the Information  Package to comply with applicable law. Without the
      prior  written  consent  of  the  Placement  Manager,  no  copies  of  the
      Information  Package  or any other  material  prepared  by the  Company in
      connection  with the Offering will be given by the Company or its counsel,
      or by any employee,  director or agent of the Company, to any person not a
      party to this  Agreement,  unless such  person is a director,  Employee or
      principal shareholder of the Company.

            (b)  Additional  Information.  The  Company has  provided  and shall
      provide the Placement Manager with such other  information,  documents and
      instruments  as may be  required  for an offer made  solely to  accredited
      investors or QIB's under Section 3(b),  4(2) or 4(6) of the Securities Act
      and Rule 144A and Reg D thereunder.

            (c) State  Securities  Qualification.  The Company  will provide its
      counsel with all information which such counsel determines to be necessary
      and otherwise  cooperate with such counsel, to permit such counsel to take
      all necessary or appropriate  action under the Blue Sky laws of the states
      of the  United  States  in which  the  Placement  Manager  determines,  in
      consultation with Company  management,  that offers or sales will be made.
      The Company will promptly advise the Placement Manager:

                  (i)  Of any  order,  request  or  suggestion  by a  securities
            regulator of any state for any filed  materials,  or for  additional
            information; and

                  (ii) Of any  action  by a  securities  regulator  of any state
            suspending the  registration or  qualification of the Securities for
            offer or sale in such  state  or  denying  an  exemption  from  such
            registration or qualification, or of the initiation or threat of any
            proceeding  for  such  purpose,  and the  Company  will use its best
            efforts to prevent such action, or if such action shall be taken, to
            obtain the withdrawal thereof at the earliest practicable date.


                                      -11-
<PAGE>

      The Company will provide the Placement Manager any additional information,
      documents and instruments necessary to comply with the rules,  regulations
      and  judicial  and  administrative  interpretations  in those  states  and
      jurisdictions  where the Shares are to be  offered  for sale or sold.  The
      Company will file all post-Offering forms, documents or materials and take
      all  other  post-Offering  actions  required  by the  Blue Sky laws of the
      states in which the Shares have been offered or sold.

            (d) Use of  Proceeds.  The Company  will use the net proceeds of the
      Offering for corporate purposes, including working capital.

            (e)  Restriction  on  Issuance  of  Securities.  During  the  period
      commencing on the date hereof and terminating on the final Closing Date or
      (if no  Closing  occurs)  on the  termination  date of the  Offering,  the
      Company  will not,  without  the  prior  written consent of the  Placement
      Manager,  issue  shares  of  equity  securities,  other  than  Shares  and
      Commision  Shares,  or issue or grant  Options other than shares of Common
      Stock issuable pursuant to currently outstanding  convertible  securities,
      or Stock Plans,  and further,  the Company shall not, for a period of nine
      months  following the Final Closing Date,  or, if no Closing  occurs,  the
      termination  date of the  Offering,  without the consent of the  Placement
      Manager,  sell shares of Common  Stock  (other  than  pursuant to options,
      warrants or other rights, outstanding as of the date of this Agreement) at
      a price per share less than the lesser of (i) the Sales Price, or (ii) the
      30-day average closing price on the date proceeding such sale as quoted by
      Nasdaq; provided,  however, that the Company may enter into and consummate
      an arrangement pursuant to which Sirrom Capital Corporation will convert a
      note of the Company  held by it into  shares of Common  Stock and extend a
      loan in the principal  amount of  approximately $1 million to a subsidiary
      of the Company  (which may be  guaranteed  by the Company and secured by a
      pledge of the equity of such subsidiary) (the "Sirrom Arrangement").

            (f) Investment Banking Activity. Until January 15, 1998, the Company
      will not seek,  accept or consider any offer or proposal,  other than from
      the Placement  Manager,  relating to any  corporate  finance or investment
      banking activity involving the sale of the Company's shares.

            (g)  Registration  Rights.  The Company will register the Shares and
      the  Commission  Shares  under the  Securities  Act for the public  resale
      thereof in the United States in  accordance  with and will be bound by the
      provisions of, Exhibit B of this Agreement.

      7. Representations, Warranties and Covenants of the Placement Manager. The
Placement Manager  represents,  warrants and covenants that (a) it is registered
broker/dealer  under the Securities  Exchange Act of 1934, (b) it will comply in
all respects with the terms and  conditions of Rule 506 of Reg D and  applicable
Blue Sky laws with  respect to the  offering  and the sale of the shares only to
"accredited  investors" or "QIB's",  and not by any form of general solicitation
or general  advertising,  and (c) it will not make offers or sales of the Shares
in any


                                      -12-
<PAGE>

other jurisdiction in which the Shares have not been qualified or registered for
offer and sale, or are not exempt from such qualification or registration.

      8(a). Conditions to Placement Manager Obligations.  The sale of Shares and
the other  obligations  of the Placement  Manager  hereunder on any Closing Date
will he  subject  to the  performance  by the  Company  of all  its  obligations
hereunder and to the following additional condition:

            (i) Representations and Warranties Accurate. The representations and
      warranties of the Company set forth in Section 5 of this  Agreement  shall
      be in all material  respects  true and in full force and effect as of such
      Closing  Date,  provided,  however,  that (A) if the Company  prior to the
      losing Date enters into a secured term loan facility with First Union Bank
      in the  principal  amount of  approximately  $4 million  (the "First Union
      Facility")  then the  representations  and  warranties  of the Company set
      forth in  Section 5 of this  Agreement  shall be deemed  to  include  such
      exceptions  to  subsections  (n),  (o) and (x) of  Section  5 as  shall be
      appropriate to reflect the terms of such facility;  and (B) if the Company
      prior to the Closing  Date enters  into the Sirrom  Arrangement,  then the
      representations  and  warranties  of the Company set forth in Section 5 of
      this Agreement  shall be deemed to include such  exceptions to subsections
      (e), (o) and (x) of Section 5 as shall be appropriate to reflect the terms
      of the Sirrom  Arrangement.  The Company  shall not have any  liability to
      Sunrise or to any prospective purchaser of shares if any of the conditions
      in Section 8(a) is not  satisfied or as a result of the  occurrence of any
      event or circumstance after the date of this agreement that results in any
      of the  representations and warranties of the Company not being true as of
      any date subsequent to the date of this agreement.

            (ii) Absence of Government  Action. No order suspending the offer or
      sale of the  Securities  will have been  issued by the  Commission  or any
      other governmental authority, and no proceeding for that purpose will have
      been initiated or threatened;

            (iii) No Material Misstatements. The Placement Manager will not have
      notified the Company that any Blue Sky law filing, the Information Package
      or any amendment or supplement  thereto  contains an untrue statement of a
      fact which in the  Placement  Manager's  opinion is material,  or omits to
      state a fact which in its opinion is material and is required to be stated
      therein or is necessary to make the statements therein not misleading;

            (iv) President  Certificate.  The Company will have delivered to the
      Placement  Manager a certificate of the Company's CEO or President,  dated
      as of such Closing  Date, to the effect that all the  representations  and
      warranties  of the  Company set forth in Section 5 of this  Agreement  are
      true and in all  material  respects  as of such  Closing  Date;  provided,
      however,  that (A) if the Company prior to the Closing Date enter into the
      First Union Facility, then such certificate


                                      -13-
<PAGE>

      may include such exceptions to subsection (n), (o) and (x) of Section 5 as
      shall be appropriate to reflect the terms of such facility; and (B) if the
      Company prior to the Closing Date enters into the Sirrom  Agreement,  then
      such  certificate may include such exceptions to subsections  (e), (n) and
      (x) of  Section  5 as shall be  appropriate  to  reflect  the terms of the
      Sirrom Arrangement.

            (v) Opinion of Counsel.  The  Placement  Manager will have  received
      from Proskauer Rose LLP,  counsel to the Company, a signed opinion,  dated
      as of such  Closing  Date,  substantially  in the  form  agreed  to by the
      parties hereto;

            (vi) Compliance with Agreement.  The Company will have complied with
      all agreements and satisfied all conditions on its part to be performed or
      satisfied hereunder at or prior to the Closing Date;

            (vii)  Corporate  Action.  The Company will have taken all necessary
      corporate action, including,  without limitation obtaining the approval of
      the  Company's  board of directors  for the execution and delivery of this
      Agreement, the performance by the Company of its obligations hereunder and
      the commencement of the offering contemplated hereby;

            (viii) Agreement of Harlan Peltz.  The Placement  Manager shall have
      received an enforceable  agreement executed by Harlan Peltz,  stating that
      without the written consent of the Placement  Manager he will not sell any
      securities  of the  Company  for a  period  of  eighteen  months  from the
      Effective Date of the  Registration  Statement  covering the resale of the
      Shares and the Commission Shares.

            (ix)  Agreement  of Nathan Low. The Company  shall have  received an
      enforceable  agreement  executed by Nathan Low,  stating  that without the
      written  consent  of the  Company he will not sell any  securities  of the
      Company acquired by him in connection with the proposed private  placement
      for a period of nine months from the  Effective  Date of the  Registration
      Statement covering the resale of the Shares and the Commission Shares.

      (b)  Conditions  of the  Company's  Obligations.  The  obligations  of the
Company  hereunder  on any Closing  Date will be subject to the  accuracy of the
representations  and warranties of the Placement  Manager contained herein as of
the date hereof and as of such Closing Date, to the performance by the Placement
Manager of its obligations hereunder and to the following additional conditions:

            (i) Absence of Government  Action.  No order suspending the offer or
      sale of the  Shares and  Commission  Shares  will have been  issued by the
      Commission or any other governmental authority, and no proceeding for that
      purpose will have been initiated or threatened; and


                                      -14-
<PAGE>

            (ii) No Material  Misstatements.  The Company will not have notified
      the  Placement  Manager  that  any Blue Sky law  filing,  the  Information
      Package or any supplement  thereto  contains an untrue statement of a fact
      which in the Company's opinion is material, or omits to state a fact which
      in its  opinion is material  and is  required  to be stated  therein or is
      necessary to make the statements therein not misleading, in each case only
      with respect to  information  contained  therein  concerning the Placement
      Manager.

      9. Expenses of Sale. In addition to those items  referred to in Sections 4
hereof, the Company will pay or cause to be paid all costs and expenses incident
to  the  Offering,  whether  or  not  it  is  consummated,   including,  without
limitation, all taxes, if any, payable as a result of the issuance of the Shares
and  Commission  Shares  and the fees,  disbursements  and  expenses  of (a) the
Company's  counsel  and  accountants,  (b) the  preparation,  printing  or other
reproduction and the mailing of the Information Package and other documents (all
in such quantities as the Placement  Manager may require),  and (c) all required
Blue Sky law filings as provided in Section 6(c), including, but not limited to,
the fees, expenses and disbursements, if any, of the Placement Manager's counsel
in connection with such filings.

      10. Indemnification and Contribution.

            (a) Indemnification by the Company.  The Company agrees to indemnify
      and hold  harmless  the  Placement  Manager and each  person,  if any, who
      controls the Placement  Manager within the meaning of the Securities  Act,
      against  any  losses,  claims,  damages or  liabilities,  joint or several
      (including any reasonable investigation,  legal or other expenses incurred
      in connection with, and any amount paid in settlement of, any action, suit
      or proceeding or any claim asserted) to which the Placement Manager or any
      such  controlling  person may become subject,  under the Securities Act or
      otherwise,  insofar as such losses,  claims,  damages or  liabilities  (or
      actions in respect  thereof) arise out of or are based upon (i) any untrue
      statement or alleged untrue  statement of a material fact contained (A) in
      the Information Package and SEC Filings, or (B) in any Blue Sky law filing
      to the extent such  statement  was based on  information  furnished by the
      Company,  or (ii)  the  omission  or  alleged  omission  to  state  in the
      Information  Package,  the SEC  Filings  or in any Blue  Sky law  filing a
      material fact required to be stated  therein or necessary in order to make
      the statements therein, in the light of the circumstances under which they
      were made, not  misleading;  and will reimburse the Placement  Manager and
      each such  controlling  person for any legal or other expenses  reasonably
      incurred by the Placement Manager or such controlling person in connection
      with investigating or defending any such loss, claim, damage, liability or
      action;  provided  that the Company will not be liable in any such case to
      the extent that any such loss, claim, damage or liability arises out of or
      is based upon an untrue  statement or alleged untrue statement or omission
      or alleged  omission made in the Information  Package in reliance upon and
      in  conformity  with written  information  furnished to the Company by the
      Placement Manager specifically for use in the Information Package.


                                      -15-
<PAGE>

            (b) Indemnification by the Placement Manager.  The Placement Manager
      agrees to indemnify and hold harmless the Company and each person, if any,
      who controls the Company  within the meaning of the Securities Act against
      any losses, claims, damages or liabilities, joint or several, to which the
      Company  or  such  controlling  person  may  become  subject,   under  the
      Securities Act or otherwise,  insofar as such losses,  claims,  damages or
      liabilities (or actions in respect thereof) arise out of or are based upon
      (i) any untrue  statement or alleged  untrue  statement of a material fact
      contained (A) in the Information Package, or (B) in any Blue Sky filing to
      the extent such statement relates solely to the Placement Manager, or (ii)
      the omission or alleged  omission to state a material  fact required to be
      stated in the Information Package or (to the extent such omission was of a
      material  fact relating  solely to the Placement  Manager) in any Blue Sky
      law filing,  or necessary in order to make the statement  therein,  in the
      light of the  circumstances  under which they were made,  not  misleading;
      provided that the Placement  Manager will be liable in any such case based
      on the Information  Package only to the extent that such untrue  statement
      or  alleged  untrue  statement  or  omission  or alleged  omission  in the
      Information  Package  was made in  reliance  upon and in  conformity  with
      written  information  furnish  to the  Company  by the  Placement  Manager
      specifically for use in the Information Package.

            (c) Procedure.  Promptly after receipt by an indemnified party under
      this  Section  10 of  notice  of  the  commencement  of any  action,  such
      indemnified  party  will,  if a claim  in  respect  thereof  is to be made
      against any  indemnifying  party under this Section 10,  notify in writing
      the indemnifying  party of the commencement  thereof;  and the omission to
      notify the  indemnifying  party will relieve it from any  liability  under
      this Section 10 as to the  particular  item for which  indemnification  is
      then being sought,  but not from any other  liability which it may have to
      any  indemnified  party.  In case any such  action is brought  against any
      indemnified   party,  and  it  notifies  an  indemnifying   party  of  the
      commencement   thereof,   the  indemnifying  party  will  be  entitled  to
      participate  therein, and to the extent that it may wish, jointly with any
      other  indemnifying  party,  similarly  notified,  to assume  the  defense
      thereof, with counsel who shall be to the reasonable  satisfaction of such
      indemnifying  party, and after notice from the indemnifying  party to such
      indemnified  party of its election so to assume the defense  thereof,  the
      indemnifying party will not be liable to such indemnified party under this
      Section 10 for any legal or other  expense  subsequently  incurred by such
      indemnified  party in  connection  with the  defense  thereof  other  than
      reasonable  costs of  investigation;  provided that if, in the  reasonable
      judgment of the  indemnified  party,  it is advisable for the  indemnified
      party to be represented by separate  counsel,  the indemnified party shall
      have the to employ a single counsel in each  jurisdiction to represent the
      indemnified  parties  who may be subject to  liability  arising out of any
      clause in  respect  of which  indemnity  may be sought by the  indemnified
      parties  thereof against the  indemnifying  party, in which event the fees
      and expenses of such separate  counsel shall be borne by the  indemnifying
      party.  Any  such  indemnifying  party  shall  not be  liable  to any such
      indemnified  party on  account  of any  settlement  of any claim or action
      effected  without the consent of such  indemnifying  party,  which consent
      shall not be unreasonably withheld.


                                      -16-
<PAGE>

            (d)  Contribution.  If the  indemnification  provided  for  in  this
      Section  10 is  unavailable  to any  indemnified  party in  respect to any
      losses, claims, damages, liabilities or expenses referred to therein, then
      the indemnifying  party, in lieu of indemnifying such indemnifying  party,
      will contribute to the amount paid or payable by such  indemnified  party,
      as a result of such losses, claims,  damages,  liabilities or expenses (i)
      in such  proportion  as is  appropriate  to reflect the relative  benefits
      received by the Company on the one hand, and the Placement  Manager on the
      other  hand,  from the  Offering,  or (ii) if the  allocation  provided by
      clause (i) above is not permitted by applicable law, in such proportion as
      is  appropriate to reflect not only the relative  benefits  referred to in
      clause (i) above but also the  relative  result of the  Company on the one
      hand, and of the Placement  Manager on the other hand, in connection  with
      the  statements  or  omissions  which  resulted  in such  losses,  claims,
      damages,  liabilities or expenses as well as any other relevant  equitable
      considerations.  The relative  benefits received by the Company on the one
      hand, and the Placement  Manager on the other hand,  shall be deemed to be
      in the same  proportion as the total  proceeds  from the Offering  (before
      deducting expenses) received by the Company,  bear to the initial value of
      the Sales  Commission  and Commission  Shares as  established  pursuant to
      paragraphs  4(a) and 4(b) of this  Agreement.  The  relative  fault of the
      Company on the one hand, and the Placement Manager on the other hand, will
      be determined with reference to, among other things, whether the untrue or
      alleged  untrue  statement  of a material  fact or the omission to state a
      material  fact relates to  information  supplied by the  Company,  and its
      relative  intent,  knowledge,  access to  information  and  opportunity to
      correct or prevent such  statement or  omission.  The amount  payable by a
      party as a result of the losses, claims, damages,  liabilities or expenses
      referred to above will be deemed to include any reasonable  legal or other
      fees or  expenses  reasonably  incurred by such party in  connection  with
      investigating  or  defending  any  action or claim.  The  Company  and the
      Placement  Manager  agree  that it  would  not be just  and  equitable  if
      contribution  pursuant  to this  Section  10 were  determined  by pro rata
      allocation or by any other method of  allocation  which does not take into
      account the equitable considerations referred to in this paragraph 10(d).

      11. Representations and Covenants to Survive Delivery. All representation,
warranties and covenants of the Company and of the Placement Manager herein will
survive the delivery and execution hereof and shall remain operative and in full
force and effect until after the Final Closing,  regardless of any investigation
made by or on behalf of the  Placement  Manager or any person who  controls  the
Placement Manager within the meaning of the Securities Act, or by the Company or
any person who controls the Company within the meaning of the Securities Act.

      12. Termination by Placement Manager.  The Placement Manager will have the
to terminate this Agreement by giving written notice as herein specified, at any
time:

            (a) If the Company  shall have  failed,  refused,  or been unable to
      perform any of its obligations hereunder;

            (b) If any other  condition of the Placement  Manager's  obligations
      hereunder is not fulfilled, or


                                      -17-
<PAGE>

            (c) If there has occurred an event materially or adversely affecting
      the value of the Shares.

      If the Placement  Manager elects to terminate  this Agreement  pursuant to
this  Section 12, the  Company  will be notified  promptly  in  accordance  with
Section 13 hereof. If this Agreement is terminated prior to a Final Closing,  as
provided in Section 4(b), the Company will  reimburse the Placement  Manager for
up  to  $10,000  of  the   out-of-pocket   disbursements   (including  fees  and
disbursements  of the  Placement  Manager's  counsel)  actually  incurred by the
Placement  Manager in connection with the Offering.  In the event of termination
pursuant to this Section 12, Section 6(e) shall be null and void.

      Notwithstanding the foregoing,  nothing contained in this Section 12 shall
imply that the  Placement  Manager has  undertaken  any  commitment  to sell the
Shares other than to use its best efforts.

      13.  Termination  by the Company.  The Company may, at any time during the
Offering,  terminate  this  Agreement,  provided,  however,  that if the Company
terminates  the Offering prior to its  termination  by the Placement  Manager in
accordance  with the terms of Section 14 of this  Agreement and prior to January
15, 1998, and, within six months after  termination by the Company in accordance
with the terms of this Section 13, the Company sells,  offers for sale or enters
into an  agreement  with a third  party  for the sale or  offer  for sale of any
equity  securities  of the Company (the  "Actions"),  the Company  shall pay the
Placement  Manager  10% of the Gross  Proceeds  of the sale  resulting  from the
Actions.  Notwithstanding  the foregoing,  the  restrictions  of this Section 13
shall  not  apply to any  issuances  of  equity  securities  of the  Company  in
conjunction  with any joint  venture,  strategic  corporate  alliance or similar
arrangement  that the  Company  may  undertake,  or to any  issuances  of equity
securities  by the  Company  in  connection  with any  Stock  Plans or  warrants
currently outstanding or contemplated.

      14.  Notices.  Any  notice  hereunder  shall be in  writing  and  shall be
effective  when  delivered  in person  or by  facsimile  transmission,  or seven
business  days after being  mailed by  certified  or  registered  mail,  postage
prepaid,  return receipt requested,  to the appropriate party or parties, at the
following  addresses:  if to the Placement Manager, to Sunrise Securities Corp.,
135  East  57th  Street,  11th  Floor,  New  York,  New  York  10022  (facsimile
212-421-5924),  Attention:  Mr.  Nathan Low,  President,  with a copy to Carter,
Ledyard & Milburm, 2 Wall Street, New York, New York 10005, Attention: Steven J.
Glusband,  Esq.  (facsimile  212-732-3232);  if to the Company, to Network Event
Theater, Inc., 529 Fifth Avenue, New York, New York 10017,  Attention:  Chairman
(facsimile 212-779-9190),  with a copy to Proskauer Rose LLP, 1583 Broadway, New
York,  New York 10036,  (facsimile  212-969-2900)  Attention:  Bertram A. Abrams
(Facsimile 212-969-2900); or, in each case, to such other address as the parties
may hereinafter designate by like notice.

      15.  Parties.  This  Agreement will inure to the benefit of and be binding
upon the Placement  Manager,  the Company and their  respective  successors  and
assigns. This Agreement (including,  but not limited to, the representations and
warranties) is intended to be, and is for the sole and exclusive  benefit of the
Parties hereto and the other indemnified  parties described in 


                                      -18-
<PAGE>

subsections 10(a) and 10(b) hereof, and their respective successors and assigns,
and for the benefit of no other person,  and no other person will have any legal
or  equitable,  remedy or claim  under,  or in  respect  of this  Agreement.  No
purchaser of any of the Shares will be  construed as successor or assign  merely
by reason of such purchase.

      16. Amendment and/or Modification. Neither this Agreement, nor any term or
provision  hereof,  may be changed,  waived,  discharged,  amended,  modified or
terminated  or in any manner other than by an  instrument  in writing  signed by
each of the Parties hereto.

      17. Further Assurances.  Each Party to this Agreement will perform any and
all acts and execute any and all  documents as may be necessary and proper under
the  circumstances  in order to  accomplish  the  intent  and  purposes  of this
Agreement and to carry out its provisions.

      18.  Validity.  In case any term of this  Agreement  will be held invalid,
illegal or unenforceable,  in whole or in part, the validity of any of the other
term of this Agreement will not in any way be affected thereby.

      19.  Waiver of  Breach.  The  failure of any Party  hereto to insist  upon
strict  performance of any of the covenants and agreements herein contained,  or
to exercise any option or herein  conferred in any one or more  instances,  will
not be construed to be a waiver or  relinquishment  of any such option or, or of
any other covenants or agreements, and the same will be and remain in full force
and effect.

      20. Entire  Agreement.  This Agreement  contains the entire  agreement and
understanding  of the Parties with respect to the entire  subject matter hereof,
and there are no representations,  inducements,  promises or agreements, oral or
otherwise,  not embodied herein.  Any and all prior  discussions,  negotiations,
commitments and understanding  relating thereto,  including without  limitation,
that certain  letter of intent  dated May 14, 1997,  between the Company and the
Placement Manager,  are superseded hereby.  There are no conditions precedent to
the  effectiveness of this Agreement other than as stated herein,  and there are
no related  collateral  agreements  existing  between the  Parties  that are not
referred to herein.

      21. Counterparts.  This Agreement may be executed in counterparts and each
of such counterparts will for all purposes be deemed to be an original, and such
counterparts will together constitute one and the same instrument.

      22. Law. This  Agreement will be deemed to have been made and delivered in
New York City and will be governed as to validity, interpretation, construction,
effect and in all other  respects by the internal laws of the State of New York.
The Company (a) agrees that any legal suit, action or proceeding  arising out of
or relating to this letter will be instituted  exclusively  in the Supreme Court
of the State of New York,  County of New York, or in the United States  District
Court for the Southern  District of New York, (b) waives any objection which the
Company  may have now or  hereafter  to the  venue of any such  suit,  action or
proceeding,  and (c)  irrevocably  consents to the  jurisdiction  of the Supreme
Court of the  State of New  York,  County of New  York,  and the  United  States
District Court for the Southern District of New York in any 


                                      -19-
<PAGE>

such suit, action or proceeding.

      If the  foregoing  correctly  sets  forth  our  understanding,  please  so
indicate in the space  provided  below for that purpose,  whereupon  this letter
will constitute a binding agreement between us.

                                           NETWORK EVENT THEATER, INC.

                                           By: /s/ HARLAN D. PELTZ
                                              ----------------------------------
                                              Name:  HARLAN D. PELTZ
                                              Title: Chairman and CEO

CONFIRMED AND ACCEPTED:

SUNRISE SECURITIES CORP.

By: /s/ NATHAN LOW
   --------------------------------
   Name:  NATHAN LOW
   Title: President


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