EXHIBIT 10.65

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                                V-ONE CORPORATION

             SERIES D CONVERTIBLE PREFERRED STOCK AND NON-DETACHABLE
                           WARRANT PURCHASE AGREEMENT












                               FEBRUARY 14, 2001



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<PAGE>



                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                    PAGE
                                                                                                    ----

<S> <C>                                                                                               <C>
1.         PURCHASE AND SALE OF SERIES D CONVERTIBLE PREFERRED STOCK..................................1
    1.1      AUTHORIZATION OF SERIES D CONVERTIBLE PREFERRED STOCK....................................1
    1.2      SALE AND ISSUANCE OF SERIES D CONVERTIBLE PREFERRED STOCK AND NON-DETACHABLE
    WARRANTS..........................................................................................1
    1.3      CLOSING..................................................................................2
    1.4      EARLY CLOSING............................................................................2
    1.5      SUBSEQUENT SALES OF SERIES D SHARES......................................................2

2.         REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............................................2
    2.1      ORGANIZATION, GOOD STANDING AND QUALIFICATION............................................3
    2.2      CAPITALIZATION...........................................................................3
    2.3      SUBSIDIARIES.............................................................................3
    2.4      AUTHORIZATION............................................................................4
    2.5      ISSUANCE OF PREFERRED STOCK, WARRANTS AND COMMON STOCK...................................4
    2.6      CONSENTS.................................................................................4
    2.7      LITIGATION...............................................................................5
    2.8      EMPLOYEES; EMPLOYEE COMPENSATION.........................................................5
    2.9      PATENTS AND TRADEMARKS...................................................................5
    2.10     COMPLIANCE WITH OTHER INSTRUMENTS........................................................6
    2.11     COMPLIANCE AND PERMITS...................................................................6
    2.12     ENVIRONMENTAL AND SAFETY LAWS............................................................6
    2.13     DISCLOSURE...............................................................................6
    2.14     REGISTRATION RIGHTS......................................................................7
    2.15     TITLE TO PROPERTY AND ASSETS.............................................................7
    2.16     AGREEMENTS; ACTION.......................................................................7
    2.17     SHAREHOLDER AGREEMENTS...................................................................8
    2.18     BROKERS OR FINDERS.......................................................................8
    2.19     CORPORATE DOCUMENTS......................................................................8
    2.20     EMPLOYEE BENEFIT PLANS...................................................................8
    2.21     RELATED-PARTY TRANSACTIONS...............................................................8
    2.22     FINANCIAL STATEMENTS.....................................................................8
    2.23     CHANGES..................................................................................9
    2.24     TAX RETURNS, PAYMENTS AND ELECTIONS.....................................................10
    2.25     INSURANCE...............................................................................11
    2.26     MERGER ARRANGEMENTS.....................................................................11
    2.27     YEAR 2000 COMPATIBILITY.................................................................11
    2.28     USE OF PROCEEDS.........................................................................11

3.         REPRESENTATIONS AND WARRANTIES OF THE INVESTORS...........................................11
    3.1      EXPERIENCE..............................................................................11
    3.2      INVESTMENT..............................................................................11




                                                  -i-
<PAGE>

    3.3      RULE 144................................................................................12
    3.4      PUBLIC MARKET...........................................................................12
    3.5      ACCESS TO DATA..........................................................................12
    3.6      ACCREDITED INVESTOR/QIB STATUS..........................................................13
    3.7      AUTHORIZATION...........................................................................13

4.         CONDITIONS OF INVESTOR'S OBLIGATIONS AT CLOSING...........................................13
    4.1      NO INJUNCTION, ETC......................................................................13
    4.2      REPRESENTATIONS AND WARRANTIES..........................................................13
    4.3      PERFORMANCE.............................................................................13
    4.4      COMPLIANCE CERTIFICATE..................................................................13
    4.5      LEGAL OPINION; BLUE SKY LETTER..........................................................13
    4.6      SECRETARY'S CERTIFICATE.................................................................14
    4.7      QUALIFICATIONS..........................................................................14
    4.8      PROCEEDINGS AND DOCUMENTS...............................................................14

5.         CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING........................................14
    5.1      REPRESENTATIONS AND WARRANTIES..........................................................14
    5.2      PERFORMANCE.............................................................................14
    5.3      SECURITIES LAW COMPLIANCE...............................................................14

6.         REGISTRATION RIGHTS.......................................................................14
    6.1      DEFINITIONS.............................................................................14
    6.2      REQUIRED REGISTRATION...................................................................15
    6.3      DEMAND REGISTRATION.....................................................................16
    6.4      PIGGY-BACK REGISTRATION.................................................................17
    6.5      REGISTRATION ON FORM S-3................................................................18
    6.6      HOLDBACK AGREEMENTS; DEFERRAL...........................................................19
    6.7      REGISTRATION PROCEDURES.................................................................20
    6.8      REGISTRATION EXPENSES...................................................................24
    6.9      INDEMNIFICATION; CONTRIBUTION...........................................................24
    6.10     PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.............................................27
    6.11     RULE 144................................................................................27
    6.12     TRANSFER OF REGISTRATION RIGHTS.........................................................27

7.         MISCELLANEOUS.............................................................................27
    7.1      SURVIVAL OF WARRANTIES..................................................................27
    7.2      GOVERNING LAW...........................................................................27
    7.3      SUCCESSORS AND ASSIGNS..................................................................27
    7.4      ENTIRE AGREEMENT; AMENDMENT.............................................................27
    7.5      NOTICES, ETC............................................................................28
    7.6      NO IMPLIED RIGHTS.......................................................................28
    7.7      DELAYS OR OMISSIONS.....................................................................28
    7.8      EXPENSES................................................................................28


                                                 -ii-
  <PAGE>

    7.9      FINDER'S FEE............................................................................28
    7.10     COUNTERPARTS............................................................................29
    7.11     SEVERABILITY............................................................................29

</TABLE>



                                                 -iii-
<PAGE>


EXHIBITS

Exhibit A  Schedule of Janney Investors
Exhibit B  Schedule of Other Investors
Exhibit C  Certificate of Designations of Series D Convertible Preferred Stock
Exhibit D  Form of Warrant
Exhibit E  Schedule of Exceptions
Exhibit F  Legal Opinion of Kirkpatrick & Lockhart LLP














                                      -iv-
<PAGE>


                                V-ONE CORPORATION

             SERIES D CONVERTIBLE PREFERRED STOCK AND NON-DETACHABLE
                           WARRANT PURCHASE AGREEMENT

                  This Series D Convertible  Preferred Stock and  Non-Detachable
Warrant  Purchase  Agreement  (the  "Agreement")  is made as of the  14th day of
February,  2001, by and among V-ONE  Corporation,  a Delaware  corporation  (the
"Company"),  with its principal  office at 20250 Century  Boulevard,  Suite 300,
Germantown,  Maryland 20874,  Janney  Montgomery Scott LLC ("Janney") as nominee
for those investors listed on EXHIBIT A hereto (the "Janney Investors"), and the
other investors  listed on EXHIBIT B hereto (the "Other  Investors" and together
with the Janney Investors, the "Investors").

THE PARTIES HEREBY AGREE AS FOLLOWS:

1.  PURCHASE AND SALE OF SERIES D CONVERTIBLE PREFERRED STOCK.

                  1.1 AUTHORIZATION OF SERIES D CONVERTIBLE PREFERRED STOCK. The
Company  shall duly adopt and file with the  Secretary  of State of the State of
Delaware the Certificate of  Designations of the Series D Convertible  Preferred
Stock of the Company in substantially the form attached hereto as EXHIBIT C (the
"Certificate  of  Designations"),  which  shall be  effective  on or before  the
Closing (as defined below).

                  1.2 SALE AND ISSUANCE OF SERIES D CONVERTIBLE  PREFERRED STOCK
AND  NON-DETACHABLE  WARRANTS.  Subject  to the  terms  and  conditions  of this
Agreement,  each Investor agrees,  severally, to purchase at the Closing and the
Company  agrees to sell and issue to each Investor at the Closing that number of
units (the "Units")  comprised of (i) five (5) shares of the Company's  Series D
Convertible  Preferred  Stock (the "Series D Shares") and (ii) a  non-detachable
warrant (each a Warrant, and collectively,  the "Warrants") in substantially the
form  attached  hereto as EXHIBIT D to purchase  one (1) share of the  Company's
common  stock,  par value  $0.001 per share (the "Common  Stock"),  as set forth
opposite such  Investor's name on EXHIBIT A or EXHIBIT B hereto (as the case may
be). The Units shall be purchased by the  Investors and sold by the Company at a
per Unit purchase price equal to $9.55.



<PAGE>


                  1.3  CLOSING.  The  purchase  and sale of the Units shall take
place in one Closing, with the Closing to take place at the offices of Janney at
10:00  a.m.,  on  February  14th,  2001,  or at such other time and place as the
Company and the Investors acquiring in the aggregate more than half of the Units
sold pursuant  hereto  mutually  agree upon orally or in writing (which time and
place are  designated  as the  "Closing").  At the  Closing,  the Company  shall
deliver to each  Investor (i) a certificate  or  certificates  representing  the
Series D Shares and (ii) the Warrants that such  Investor is purchasing  against
payment of the purchase price therefor by wire transfer of immediately available
U.S. funds in accordance with the following wire transfer instructions:

                               PNC Bank
                               Philadelphia, PA
                               ABA # 031000053

                               For Credit To:
                               Janney Montgomery Scott Escrow
                               Acct. # 8614963625

                               Further Credit to:

                  1.4 EARLY CLOSING.  Notwithstanding anything else contained in
this  Section 1, any  Investor  may meet its  obligations  under this  Section 1
earlier  than the date of the  Closing and may waive any  closing  condition  in
order to close as to all or a portion of such Investor's  obligations  hereunder
on such earlier date.  Such early closing date shall be deemed to be the date of
the Closing as to such Investor and the Units purchased by such Investor.

                  1.5 SUBSEQUENT  SALES OF SERIES D SHARES.  If less than all of
the Series D Shares reserved for issuance are sold at the Closing, then, subject
to the terms and  conditions  of this  Agreement,  the Company may sell,  within
ninety  (90) days  after the  Closing,  at an  additional  closing  or  closings
(hereinafter the "Additional  Closing") up to the balance of the Series D Shares
reserved for issuance but unissued (together with the Warrants relating thereto)
to such  persons or entities as the Company may  determine at the same price per
Unit as the Units  purchased and sold at the Closing.  Any such sale shall be on
the same terms and  conditions as those  contained  herein,  and such persons or
entities  shall become  parties to this Agreement and shall have the same rights
and  obligations  hereunder.  The  purchasers  of such Units upon delivery of an
additional  counterpart to this Agreement  shall be deemed  "Investors" and such
shares and  warrants  purchased  by them shall be deemed to be "Series D Shares"
and "Warrants" for purposes of this Agreement. The Additional Closing shall take
place at such time and place as the Company  and the  additional  Investors  may
agree. The Closing and the Additional  Closing are sometimes  referred to as the
"Closing" or the "Closings."

2.  REPRESENTATIONS  AND  WARRANTIES OF THE COMPANY.  Except as set forth in the
Schedule  of  Exceptions  attached  hereto  as  EXHIBIT  E, the  Company  hereby
represents  and warrants as follows as of the date  hereof,  except as otherwise
expressly set forth below:




                                      -2-
<PAGE>


                  2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the  State  of  Delaware  and  has all  requisite  corporate  power  and
authority  to own and  operate  its  properties  and  assets and to carry on its
business as currently conducted, to execute and deliver this Agreement, to issue
and sell (or  reserve  for  issuance)  the Series D Shares and the Common  Stock
issuable  upon  conversion  of the Series D Shares,  the Warrants and the Common
Stock  issuable upon exercise of the Warrants and to carry out the provisions of
this  Agreement  and  the  Certificate  of  Designations.  The  Company  is duly
qualified to transact  business and is in good standing in each  jurisdiction in
which the  failure to so qualify  would  have a material  adverse  effect on its
business,  properties or financial  condition.  True and accurate  copies of the
Company's Certificate of Incorporation,  the Certificate of Designations and the
Company's  Bylaws,  each as  amended  and in  effect at the  Closing,  have been
delivered to the Investors.

                  2.2  CAPITALIZATION.  The  authorized  capital  stock  of  the
Company immediately prior to the Closing consists of 50,000,000 shares of Common
Stock, of which 22,126,871  shares are issued and outstanding as of February 12,
2001,  and  13,333,333  shares of Preferred  Stock,  par value $0.001 per share,
1,287,554  of which are  designated  as shares of Series B Preferred  Stock,  of
which  1,287,554  shares are issued and  outstanding,  and  500,000 of which are
designated  as  Series C  Preferred  Stock,  54,714  of  which  are  issued  and
outstanding,  and  3,765,000  of which are  designated  as Series D  Convertible
Preferred  Stock,  none  of  which  are  issued  and  outstanding.  The  rights,
privileges  and  preferences  of  the  Series  D  Shares  are as  stated  in the
Certificate of  Designations.  All such issued and outstanding  shares have been
duly  authorized  and validly issued and are fully paid and  nonassessable.  The
Company has reserved  3,675,000  shares of Series D Convertible  Preferred Stock
for issuance hereunder.  The Company has reserved 735,000 shares of Common Stock
for issuance upon exercise of the Warrants, and 3,675,000 shares of Common Stock
for issuance upon the  conversion of the Series D Convertible  Preferred  Stock.
The Company has reserved an  aggregate  of 5,000,000  shares of Common Stock for
issuance  under the  Company's  Stock  Option  Plan (the "Stock  Option  Plan"),
3,702,939 shares of which are subject to options. Other than as set forth in the
Agreement, the Certificate of Designations,  conversion privileges of the Series
B Preferred  Stock,  rights of the holders of Series C Preferred Stock to tender
such stock to the Company to exercise the warrants attached thereto, warrants to
purchase  547,140 shares of Common Stock issued in connection  with the Series C
Preferred  Stock,  and warrants to otherwise  purchase  624,914 shares of Common
Stock,  and the Warrants and conversion  privileges to be issued pursuant to the
Agreement,  to our knowledge  there are no other  outstanding  rights,  options,
warrants,  preemptive rights,  rights of first refusal or similar rights for the
purchase or acquisition of any securities of the Company. All outstanding shares
have been issued in  compliance  with  applicable  state and federal  securities
laws.

                  2.3 SUBSIDIARIES.  Except for 10,000 shares of common stock of
Network Flight Recorder,  Inc.  representing a 9.9% ownership  interest therein,
the Company  does not  presently  own or control,  directly or  indirectly,  any
interest in any other  corporation,  association,  or other business entity. The
Company  is not a  participant  in any joint  venture,  partnership,  or similar
arrangement.




                                      -3-
<PAGE>


                  2.4  AUTHORIZATION.  All  corporate  action on the part of the
Company,   its   officers,   directors  and   shareholders   necessary  for  the
authorization,  execution and delivery of this  Agreement and the Warrants,  the
performance of all obligations of the Company hereunder and thereunder,  and the
authorization,  issuance (or reservation for issuance), sale and delivery of the
Series D Shares and the Common Stock  issuable  upon  conversion of the Series D
Shares and upon  exercise of the  Warrants has been taken or will be taken prior
to the Closing, and this Agreement and the Warrants constitute valid and legally
binding  obligations  of the  Company,  enforceable  in  accordance  with  their
respective terms.

                  2.5 ISSUANCE OF PREFERRED  STOCK,  WARRANTS AND COMMON  STOCK.
The Series D Shares,  when issued,  sold and  delivered in  accordance  with the
terms of this Agreement for the consideration  expressed herein will be duly and
validly issued, fully paid, and nonassessable, will have the rights, preferences
and privileges  described in the Certificate of Designations and will be free of
restrictions  on  transfer  other  than  restrictions  on  transfer  under  this
Agreement and under applicable state and federal  securities laws. The Warrants,
when issued,  sold and delivered in accordance  with the terms of this Agreement
for the  consideration  expressed  herein will be duly and validly  issued.  The
Common Stock  issuable upon  conversion of the Series D Shares and upon exercise
of the Warrants has been duly and validly  authorized  and reserved for issuance
and,  upon  issuance  following  the  conversion  of  Series D Shares  and/or in
accordance with the terms of the Warrants (as the case may be), will be duly and
validly issued,  fully paid, and  nonassessable and will be free of restrictions
on transfer other than  restrictions  on transfer under this Agreement and under
applicable  state and federal  securities  laws. The Company intends to take the
position  that the  issuance  and  redemption  of the  Series  D Shares  and the
conversion thereof into Common Stock and the issuance of the Warrants and Common
Stock issuable on the exercise thereof do not create constructive  distributions
under  Section  305 of the  Internal  Revenue  Code of 1986,  as amended and the
related  regulations  thereunder  (the "Code").  A holder of the Series D Shares
shall be bound by this  determination,  unless the holder  thereof  specifically
adopts a different  position and correctly notifies the Internal Revenue Service
thereof.

                  2.6 CONSENTS. No consent, approval, order or authorization of,
or  registration,  qualification,  designation,  declaration or filing with, any
federal,  state or local  governmental  authority  or with any  other  person or
entity on the part of the Company is required in connection with the offer, sale
or issuance of the Series D Shares,  the Warrants and the Common Stock  issuable
upon  conversion  of the  Series  D and upon  exercise  of the  Warrants  or the
consummation of any other transaction  contemplated hereby, except the filing of
the  Certificate of  Designations in the office of the Secretary of State of the
State of  Delaware,  which  shall be  filed  by the  Company  on or prior to the
Closing.  Based in part on the  representations  of the  Investors  set forth in
Section 3 below,  the offer,  sale and  issuance  of the Series D Shares and the
Warrants in conformity  with the terms of this Agreement and the issuance of the
Common Stock  issuable upon  conversion of the Series D Shares and upon exercise
of the Warrants, each are exempt from the registration requirements of Section 5
of the  Securities  Act of 1933,  as  amended  (the  "Securities  Act") and from
registration or  qualification  under  applicable  state  securities or blue sky
laws.


                                      -4-
<PAGE>


                  2.7  LITIGATION.  There  is no  action,  suit,  proceeding  or
investigation  pending  or, to the  Company's  knowledge,  currently  threatened
before any court,  administrative  agency or other governmental body against the
Company which  questions  the validity of this  Agreement or the Warrants or the
right  of  the  Company  to  enter  into  any  of  them,  or to  consummate  the
transactions  contemplated  hereby or  thereby,  or which could  result,  either
individually  or in  the  aggregate,  in  any  material  adverse  change  in the
condition (financial or other), business, property, assets or liabilities of the
Company.  The  Company is not a party or  subject  to, and none of its assets is
bound by, the provisions of any order, writ,  injunction,  judgment or decree of
any court or government  agency or  instrumentality.  There is no action,  suit,
proceeding or investigation by the Company currently pending or that the Company
intends to initiate.

                  2.8 EMPLOYEES;  EMPLOYEE COMPENSATION.  Except as described in
Section  2.20  hereof,  the Company is not a party to or bound by any  currently
effective  employment contract,  deferred  compensation  agreement,  bonus plan,
incentive  plan,  profit  sharing plan,  retirement  agreement or other employee
compensation  agreement or arrangement with any collective  bargaining agent. No
employees  of the Company are  represented  by any labor union or covered by any
collective  bargaining  agreement.  There is no  pending  or, to the best of the
Company's  knowledge,  threatened  labor  dispute  involving the Company and any
group of its  employees.  The  Company is not aware that any key  officer or key
employee  intends to terminate their  employment with the Company,  nor does the
Company  have a present  intention  to terminate  the  employment  of any of the
foregoing.  The  employment  of each  officer  and  employee  of the  Company is
terminable at the will of the Company.  The Company has complied in all material
respects with all applicable federal equal opportunity and other laws.

                  2.9 PATENTS AND TRADEMARKS.  Except for the security  interest
granted  to  Transamerica  Business  Credit  Corporation  as  described  in  the
Company's Form 8-K dated March 12, 1999,  the Company has  sufficient  title and
ownership of all patents,  trademarks,  service marks, trade names,  copyrights,
trade secrets, licenses, information, proprietary rights and processes and other
intellectual  property  rights  necessary  for  its  business  as now  conducted
without,  to  the  best  of  the  Company's  knowledge,  any  conflict  with  or
infringement  of  the  rights  of  others.  There  are no  outstanding  options,
licenses,  or  agreements  of any kind  relating  to the  foregoing,  nor is the
Company  bound by or a party to any options,  licenses or agreements of any kind
with respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets,  licenses,  information,  proprietary rights and processes of any
other person or entity. The Company has not received any communications alleging
that the Company has violated or, by conducting its business as proposed,  would
violate any of the patents, trademarks,  service marks, trade names, copyrights,
trade  secrets,   information,   proprietary   rights  and  processes  or  other
intellectual  property rights of any other person or entity.  The Company is not
aware that any of its  employees  is  obligated  under any  contract  (including
licenses, covenants or commitments of any nature) or other agreement, or subject
to any judgment,  decree or order of any court or  administrative  agency,  that
would interfere with the use of his or her best efforts to promote the interests
of the Company or that would conflict with the Company's business as proposed to
be conducted. Neither the execution nor delivery of this Agreement or the


                                      -5-
<PAGE>

Warrants,  nor the carrying on of the Company's business by the employees of the
Company,  nor the conduct of the  Company's  business as proposed,  will, to the
Company's  knowledge,  conflict  with  or  result  in a  breach  of  the  terms,
conditions  or  provisions  of, or  constitute a default  under,  any  contract,
covenant or instrument  under which any of such employees is now obligated.  The
Company does not believe it is necessary to utilize any inventions of any of its
employees  (or  people  it  currently  intends  to  hire)  made  prior  to their
employment by the Company.

                  2.10 COMPLIANCE WITH OTHER INSTRUMENTS.  The Company is not in
violation or default of any provision of its  Certificate  of  Incorporation  or
Bylaws,  each as amended and in effect on and as of the Closing.  The Company is
not in violation or default of any provision of any instrument,  mortgage,  deed
of trust, loan, contract,  commitment,  judgment, decree, order or obligation to
which it is a party or by which it or any of its properties or assets are bound,
which violation or default, individually or in the aggregate with all other such
violations  or  defaults,   would  materially  adversely  affect  the  condition
(financial or other), business,  property, assets or liabilities of the Company,
or of any provision of any federal, state or local statute, rule or governmental
regulation,  which  violation or default,  individually or in the aggregate with
all other such violations or defaults,  would  materially  adversely  affect the
condition (financial or otherwise), business, property, assets or liabilities of
the Company. The execution, delivery and performance of and compliance with this
Agreement and the Warrants, and the issuance and sale of the Series D Shares and
the  Warrants,  will not result in any such  violation,  be in conflict  with or
constitute,  with or without the passage of time or giving of notice,  a default
under any such provision, require any consent or waiver under any such provision
(other than any consents or waivers that have been  obtained),  or result in the
creation of any mortgage,  pledge,  lien,  encumbrance or charge upon any of the
properties or assets of the Company pursuant to any such provision.

                  2.11  COMPLIANCE AND PERMITS.  The Company has all franchises,
permits,  licenses,  and any similar authority  necessary for the conduct of its
business as now being  conducted by it, the lack of which could  materially  and
adversely affect the business,  properties,  prospects or financial condition of
the Company.  The Company is not in default in any material respect under any of
such franchises, permits, licenses, or other similar authority.

                  2.12  ENVIRONMENTAL  AND SAFETY LAWS.  To its  knowledge,  the
Company  is not  in  violation  of any  applicable  statute,  law or  regulation
relating to the  environment  or  occupational  health and  safety,  and, to its
knowledge,  no material  expenditures are currently  required in order to comply
with any such existing statute, law or regulation.

                  2.13 DISCLOSURE.  The Company has fully provided each Investor
with all the  information  that  such  Investor  has  reasonably  requested  for
deciding  whether to purchase  the Series D Shares and the  Warrants.  As to any
projections  furnished to the Investors,  such projections were prepared in good
faith by the Company,  but the Company makes no  representation  that it will be
able to achieve such projections.  Neither this Agreement, the Warrants, nor any
other  statements or  certificates  made or delivered in connection  herewith or
therewith  contains any untrue  statement of a material fact or omits to state a
material fact necessary to make the statements herein or therein not misleading.
The  Confidential  Private  Placement  Memorandum  dated  February __, 2001,  as
amended or  supplemented  to date (the "PPM") provided to the Investors prior to
the date


                                      -6-
<PAGE>

hereof,  does not contain  any untrue  statement  of a material  fact or omit to
state a material fact necessary to make the statements  therein, in light of the
circumstances  under  which  they were made,  not  misleading.  As to  financial
projections,   market  forecasts,   business  or  customer  prospects,  proposed
schedules or any other  forward-looking  statements  contained in the PPM,  such
financial  projections,   market  forecasts,  business  or  customer  prospects,
proposed  schedules or other  forward-looking  statements  were prepared in good
faith by the Company,  but the Company makes no representation  and there can be
no assurance that it will be able to achieve such  projections,  that the market
will develop as  forecasted,  that it will convert such  prospects into business
agreements or customers,  that it will meet or attain such schedules or that any
other forward-looking statements will come about as stated.

                  2.14  REGISTRATION  RIGHTS.  Except as set forth  herein,  the
Company has not granted or agreed to grant any  registration  rights,  including
piggyback  rights,  to any  person  or entity  for the  public  offering  of its
securities.  The Company is not restricted from granting any registration rights
to the Investors.

                  2.15 TITLE TO PROPERTY AND ASSETS.  The Company has good title
to all of its properties  and assets free and clear of all mortgages,  liens and
encumbrances,  except liens for current  taxes and  assessments  not yet due and
possible minor liens and encumbrances which do not, in the aggregate, materially
detract from the value of the property subject thereto or materially  impair the
operations  of the  Company.  With respect to the property and assets it leases,
the Company is in compliance  with such leases in all material  respects and, to
its knowledge,  holds a valid  leasehold  interest free of all liens,  claims or
encumbrances.  The  Company's  properties  and assets are in good  condition and
repair in all material respects.

                  2.16 AGREEMENTS; ACTION.

                       (a) Except for agreements explicitly contemplated,  there
are no agreements,  understandings or proposed  transactions between the Company
and any of its officers, directors, affiliates, or any affiliate thereof.

                       (b) Except for agreements  listed in the Company's public
filings  with the  Securities  and  Exchange  Commission  and other  than in the
ordinary   course  of  business,   there  are  no  agreements,   understandings,
instruments,  contracts,  proposed  transactions,  judgments,  orders,  writs or
decrees to which the Company is a party or by which it is bound that may involve
(i)  obligations  (contingent  or  otherwise)  of, or payments to the Company in
excess of, $50,000, or (ii) the license of any material patent, copyright, trade
secret or other  proprietary  right to or from the Company,  or (iii) provisions
restricting  or  adversely  affecting  the  development,   commercialization  or
distribution of the Company's  products or services or (iv)  indemnification  by
the Company with respect to infringements of proprietary rights.

                       (c)  The  Company  has  not  (i)  declared  or  paid  any
dividends or  authorized  or made any  distribution  upon or with respect to any
class or series of its capital stock,  (ii) incurred any  indebtedness for money
borrowed or any other liabilities  (other than ordinary trade debt) individually
in excess of


                                      -7-
<PAGE>

$10,000 or, in the case of  indebtedness or liabilities  individually  less than
$10,000, in excess of $50,000 in the aggregate, (iii) made any loans or advances
to any person,  other than ordinary  advances for travel expenses which have not
been paid in full, or (iv) sold,  exchanged or otherwise  disposed of any of its
material assets or rights,  other than the sale of its inventory or licensing of
its software in the ordinary course of business.

                       (d) For the  purposes of  subsections  (b) and (c) above,
all  indebtedness,   liabilities,   agreements,   understandings,   instruments,
contracts  and  proposed  transactions  involving  the  same  person  or  entity
(including  persons or entities the Company has reason to believe are affiliated
therewith) shall be aggregated for the purpose of meeting the individual minimum
dollar amounts of such subsections.

                  2.17  SHAREHOLDER  AGREEMENTS.  Except as contemplated by this
Agreement,  there are no agreements between the Company and any of the Company's
shareholders,  or to  the  best  knowledge  of  the  Company,  among  any of the
Company's  shareholders,  relating to the Company or which in any way affect any
shareholder's  ability or right  freely to transfer or vote such shares  (except
restrictions designed to provide compliance with securities laws).

                  2.18 BROKERS OR FINDERS.

The Company  has  agreed not to incur, directly or indirectly, any liability for
brokerage or finders' fees,  agents'  commissions,  or other similar  charges in
connection with this Agreement or any of the transactions contemplated hereby.

                  2.19  CORPORATE  DOCUMENTS.  Except for the  amendments to the
Company's   Certificate  of  Incorporation  set  forth  in  the  Certificate  of
Designations,  the Certificate of Incorporation and Bylaws of the Company are in
the form previously provided to the Investors.

                  2.20 EMPLOYEE  BENEFIT PLANS.  Except for the Company's 401(k)
plan,  the Company  does not have any  Employee  Benefit  Plan as defined in the
Employee Retirement Income Security Act of 1974.

                  2.21  RELATED-PARTY  TRANSACTIONS.  No employee,  officer,  or
director of the Company, or member of his or her immediate family is indebted to
the Company,  nor is the Company  indebted (or committed to make loans or extend
or guarantee  credit) to any of them. To the Company's  knowledge,  none of such
persons has any direct or indirect ownership interest in any firm or corporation
with which the  Company is  affiliated  or with which the Company has a business
relationship,  or any firm or corporation that competes with the Company, except
that  employees,  officers,  or  directors  of the  Company and members of their
immediate  families may own stock in publicly traded  companies that may compete
with the Company.  No member of the immediate  family of any officer or director
of the Company is directly or  indirectly  interested  in any material  contract
with the Company.

                  2.22 FINANCIAL  STATEMENTS.  The Company's  audited  financial
statements  (balance  sheet and profit and loss  statement and statement of cash
flows, including notes thereto) at December 31, 1999 and 1998 and for the fiscal


                                      -8-
<PAGE>

years then ended,  and its unaudited  financial  statements  (balance  sheet and
profit and loss  statement) at and for the  three-month  periods ended March 31,
2000,  June 30,  2000 and  September  30,  2000  (collectively,  the  "Financial
Statements") have been prepared in accordance with generally accepted accounting
principles  applied on a consistent basis  throughout the periods  indicated and
with each other, except that unaudited Financial  Statements may not contain all
footnotes required by generally accepted  accounting  principles.  The Financial
Statements  fairly present the financial  condition and operating results of the
Company as of the dates, and for the periods,  indicated therein.  Except as set
forth in the  Financial  Statements,  the Company  has no material  liabilities,
contingent or  otherwise,  other than (i)  liabilities  incurred in the ordinary
course of business  subsequent to September 30, 2000 and (ii) obligations  under
contracts and  commitments  incurred in the ordinary  course of business and not
required under generally accepted  accounting  principles to be reflected in the
Financial Statements, which in both cases, individually or in the aggregate, are
not material to the  financial  condition  or operating  results of the Company.
Except as disclosed in the Financial Statements,  the Company is not a guarantor
or indemnitor of any indebtedness of any other person, firm or corporation.  The
Company  maintains and will continue to maintain a standard system of accounting
established and  administered in accordance with generally  accepted  accounting
principles.

                  2.23 CHANGES. Since September 30, 2000, except in the ordinary
course of business, there has not been:

                       (a) any  change  in the  assets,  liabilities,  financial
condition  or  operating  results  of the  Company  from that  reflected  in the
Financial  Statements,  except  changes in the ordinary  course of business that
have not been, in the aggregate, materially adverse;

                       (b) any  damage,  destruction  or  loss,  whether  or not
covered by insurance, materially and adversely affecting the assets, properties,
financial condition, operating results, prospects or business of the Company (as
such business is presently conducted and as it is proposed to be conducted);

                       (c) any waiver by the Company of a valuable right or of a
material debt owed to it;

                       (d) any  satisfaction or discharge of any lien,  claim or
encumbrance or payment of any obligation by the Company,  except in the ordinary
course of business or that is not material to the assets, properties,  financial
condition,  operating  results or business  of the Company (as such  business is
presently conducted);

                       (e)  any  material  change  or  amendment  to a  material
contract or  arrangement by which the Company or any of its assets or properties
is bound or subject;

                       (f) any material changes in any compensation  arrangement
or agreement with any employee;



                                      -9-
<PAGE>


                       (g) any sale,  assignment  or  transfer  of any  patents,
trademarks, copyrights, trade secrets or other intangible assets;

                       (h) any  resignation  or termination of employment of any
key officer of the Company; and the Company, to the best of its knowledge,  does
not know of the impending  resignation  or termination of employment of any such
officer;

                       (i)  receipt of notice  that there has been a loss of, or
material order cancellation by, any major customer of the Company;

                       (j) any mortgage, pledge, transfer of a security interest
in,  or lien,  created  by the  Company,  with  respect  to any of its  material
properties or assets, except liens for taxes not yet due or payable;

                       (k) any loans or guarantees made by the Company to or for
the benefit of its  employees,  officers or  directors,  or any members of their
immediate  families,  other than travel  advances and other advances made in the
ordinary course of its business;

                       (l) any  declaration,  setting  aside or payment or other
distribution in respect to any of the Company's  capital stock, or any direct or
indirect  redemption,  purchase or other acquisition of any of such stock by the
Company;

                       (m)  to the  Company's  knowledge,  any  other  event  or
condition  of any  character  that might  materially  and  adversely  affect the
assets,  properties,  financial condition,  operating results or business of the
Company (as such  business is  presently  conducted  and as it is proposed to be
conducted); or

                       (n) any  agreement or commitment by the Company to do any
of the things described in this Section 2.23.

                  2.24 TAX  RETURNS,  PAYMENTS  AND  ELECTIONS.  The Company has
filed all tax returns and reports as required by law.  These returns and reports
are true and correct in all  material  respects.  The Company has paid all taxes
and other  assessments  due. The  provision for taxes of the Company as shown in
the  Financial  Statements  is adequate  for taxes due or accrued as of the date
thereof.  The Company has not elected pursuant to the Code to be treated as an S
corporation or has made an election under Section 341(f) of the Code, nor has it
made any other elections  pursuant to the Code (other than elections that relate
solely to methods of accounting, depreciation or amortization) that would have a
material adverse effect on the Company, its financial condition, its business as
presently  conducted  or proposed to be conducted  or any of its  properties  or
material  assets.  The  Company  has never had any tax  deficiency  proposed  or
assessed  against  it  and  has  not  executed  any  waiver  of any  statute  of
limitations on the assessment or collection of any tax or  governmental  charge.
None of the Company's federal income tax returns and none of its state income or
franchise tax or sales or use tax returns have ever been audited by governmental
authorities.  Since the date of the Financial  Statements,  the Company has made
adequate  provisions  on its books of  account  for all taxes,  assessments  and


                                      -10-
<PAGE>

governmental charges with respect to its business, properties and operations for
such period.  The Company has  withheld or  collected  from each payment made to
each of its employees,  the amount of all taxes (including,  but not limited to,
federal  income  taxes,  Federal  Insurance  Contribution  Act taxes and Federal
Unemployment Tax Act taxes) required to be withheld or collected therefrom,  and
has  paid  the  same  to  the  proper  tax  receiving   officers  or  authorized
depositaries.

                  2.25 INSURANCE.  The Company has in full force and effect fire
and  casualty  insurance  policies,  which are,  in the  opinion of  management,
sufficient in amount (subject to reasonable  deductibles) to allow it to replace
any of its  properties  that might be damaged or  destroyed.  The Company has in
full force and effect  general  liability  insurance  in amounts  customary  for
companies similarly situated.

                  2.26  MERGER  ARRANGEMENTS.  The  Company  has not reached any
understandings or entered into any arrangements  regarding (i) the consolidation
or merger of the Company with or into any corporation or corporations,  (ii) the
sale, conveyance or disposition of all or substantially all of the assets of the
Company or a transaction  or series of related  transactions  in which more than
fifty  percent (50%) of the voting power of the Company is disposed of, or (iii)
any other form of  acquisition,  liquidation,  dissolution  or winding up of the
Company.

                  2.27 YEAR 2000 COMPATIBILITY.  The Company's material products
(including  products currently under  development)  record,  store,  process and
calculate and present  calendar  dates falling on and after January 1, 2000, and
calculate  any  information  dependent  on or relating to such dates in the same
manner and with the same  functionality,  data integrity and  performance as the
products recorded, stored, processed, calculated and presented calendar dates on
or before  December 31, 1999,  or  calculated  any  information  dependent on or
relating  to  such  dates  (collectively  "Year  2000  Compliant").  All  of the
Company's material internal computer systems,  including without limitation, its
accounting systems, are Year 2000 Compliant.

                  2.28 USE OF PROCEEDS.  The Company  shall use the net proceeds
received by the Company from the sale of the Units for working capital  purposes
as determined by the Board of Directors of the Company (the "Board").

3.  REPRESENTATIONS  AND  WARRANTIES OF THE INVESTORS.  Each Investor and Janney
solely as  the nominee  for the Janney  Investors hereby represents and warrants
severally and not jointly that:

                  3.1  EXPERIENCE.  The Investor is  experienced  in  evaluating
companies  such as the  Company,  is able to  fend  for the  Investor's  self in
transactions such as the one contemplated by this Agreement,  has such knowledge
and experience in financial and business matters that the Investor is capable of
evaluating the merits and risks of the Investor's  prospective investment in the
Company, and has the ability to bear the economic risks of the investment.

                  3.2 INVESTMENT.  The Investor is acquiring the Series D Shares
and the Warrants (and the Common Stock issuable upon  conversion of the Series D
Shares and upon exercise of the Warrants) for investment, for the Investor's own


                                      -11-
<PAGE>

account  and not with the  view  to,  or for  resale  in  connection  with,  any
distribution  thereof. The Investor understands that the Series D Shares and the
Warrants (and the Common Stock  issuable upon  conversion of the Series D Shares
and upon exercise of the Warrants) have not been registered under the Securities
Act by reason of a specific  exemption from the  registration  provisions of the
Securities Act which depends upon,  among other things,  the bona fide nature of
the investment  intent as expressed  herein.  The Investor  understands that the
Warrants are  "non-detachable  warrants"  and, as such,  until the redemption or
conversion  in full of  such  Investor's  Series  D  Shares,  may not be sold or
transferred  other than in  connection  with the sale or  transfer  of shares of
Series D Shares. The Investor further represents that the Investor does not have
any contract,  undertaking,  agreement or  arrangement  with any person to sell,
transfer or grant  participation  to any third person with respect to any of the
Series D Shares (or any Common Stock  acquired upon the  conversion  thereof) or
Warrants (or any Common Stock acquired upon the exercise thereof), other than as
set forth. The Investor  understands and  acknowledges  that the offering of the
Series D Shares and any Common  Stock  issuable on the  exercise of the Warrants
and upon  conversion  of the Series D Shares  will not be  registered  under the
Securities  Act on the ground that the sale  provided for in this  Agreement and
the  issuance  of   securities   hereunder  is  exempt  from  the   registration
requirements of the Securities Act.

                  3.3 RULE 144.  The  Investor  acknowledges  that the  Series D
Shares (and the Common Stock issuable upon conversion of the Series D Shares and
upon exercise of the Warrants)  must be held  indefinitely  unless  subsequently
registered  under the Securities Act or an exemption from such  registration  is
available. The Investor is aware of the provisions of Rule 144 promulgated under
the Securities Act which permit limited resale of shares  purchased in a private
placement  subject to the  satisfaction  of  certain  conditions.  The  Investor
covenants that, in the absence of an effective  registration  statement covering
the stock in question, the Investor will sell, transfer, or otherwise dispose of
the Series D Shares (or any Common Stock acquired upon the  conversion  thereof)
and the Warrants (and any Common Stock issued on the exercise thereof) only in a
manner consistent with the Investor's representations and covenants set forth in
this Section 3. In  connection  therewith,  the Investor  acknowledges  that the
Company will make a notation on its stock books  regarding the  restrictions  on
transfers set forth in this Section 3 and will transfer  securities on the books
of the Company only to the extent not inconsistent therewith.

                  3.4 PUBLIC MARKET.  The Investor  acknowledges  that no public
market now exists  for the Series D Shares or the  Warrants,  and that no public
market may ever exist for the Series D Shares.

                  3.5 ACCESS TO DATA.  The  Investor  has  received and reviewed
information  about the Company and has had an  opportunity to review and discuss
the Company's business, management and financial affairs with its management and
to review the PPM. The Investor  understands that such  discussions,  as well as
any written  information  issued by the Company,  were  intended to describe the
aspects of the Company's business and prospects which the Company believes to be
material,  but were not  necessarily a thorough or exhaustive  description.  The


                                      -12-
<PAGE>

foregoing,  however, does not limit or modify the representations and warranties
of the Company in Section 2 of this  Agreement  or the right of the  Investor to
rely thereon.

                  3.6 ACCREDITED  INVESTOR/QIB STATUS Each Investor is either an
"accredited  investor" (within the meaning of Rule 501 under the Securities Act)
or a "qualified  institutional buyer" (within the meaning of Rule 144A under the
Securities Act).

                  3.7 AUTHORIZATION.  This Agreement when executed and delivered
by the Investor will  constitute a valid and legally  binding  obligation of the
Investor,  enforceable  in accordance  with its terms,  subject to: (i) judicial
principles  respecting  election of remedies or  limiting  the  availability  of
specific  performance,  injunctive relief and other equitable  remedies and (ii)
bankruptcy, insolvency, reorganization,  moratorium or other similar laws now or
hereafter in effect generally relating to or affecting creditors' rights.

4.  CONDITIONS OF INVESTOR'S  OBLIGATIONS  AT  CLOSING.  The obligations of each
Investor under Section 1 of this Agreement are subject to the  fulfillment on or
before the  Closing  of each of the  following  conditions,  any of which may be
waived by such Investor:

                  4.1 NO INJUNCTION, ETC. No preliminary or permanent injunction
or other  binding  order,  decree  or ruling  issued by a court or  governmental
agency  shall be in  effect  which  shall  have the  effect  of  preventing  the
consummation of the transactions contemplated by this Agreement.

                  4.2  REPRESENTATIONS  AND WARRANTIES.  The representations and
warranties  of the Company  contained  in Section 2 shall be true and correct on
and as of the Closing in all material respects.

                  4.3 PERFORMANCE. The Company shall have performed and complied
with all covenants,  agreements,  obligations  and conditions  contained in this
Agreement  that are required to be performed or complied with by it on or before
the Closing.

                  4.4 COMPLIANCE CERTIFICATE. The President of the Company shall
deliver  to  each  Investor  at the  Closing  a  certificate  stating  that  the
conditions  specified in Sections 4.2 and 4.3 have been fulfilled and that there
has been no material  adverse  change in the business,  operations,  properties,
assets or condition of the Company since the date of the Financial Statements.

                  4.5 LEGAL OPINION;  BLUE SKY LETTER.  Counsel for the Company,
Kirkpatrick & Lockhart LLP, shall deliver a legal opinion to each Investor as to
matters  relating  to the  issuance  and sale of the  Series  D  Shares  and the
Warrants hereunder,  federal compliance in connection therewith,  the compliance
by the  Company  with such  federal  securities  laws in  connection  with prior
offerings  by  the  Company,  and  other  matters  reasonably  requested  by the
Investors,  such  opinion to be in  substantially  the form  attached  hereto as
EXHIBIT  F as well as a Blue Sky  letter  concerning  the  offer and sale of the
Series D Shares and the Warrants and compliance  with state  securities  laws in
connection therewith.




                                      -13-
<PAGE>

                  4.6  SECRETARY'S  CERTIFICATE.  The  Secretary  of the Company
shall  deliver  to each  Investor  an  Secretary's  Certificate  in the form and
substance as reasonably requested by the Investor.

                  4.7 QUALIFICATIONS. All authorizations, approvals, or permits,
if any, of any governmental authority or regulatory body of the United States or
of any state that are required in connection  with the lawful  issuance and sale
of the Series D Shares and the Warrants pursuant to this Agreement shall be duly
obtained and effective as of the Closing.

                  4.8  PROCEEDINGS  AND  DOCUMENTS.   All  corporate  and  other
proceedings in connection with the transactions  contemplated at the Closing and
all documents  incident  thereto shall be  reasonably  satisfactory  in form and
substance to the  Investors,  and they shall have received all such  counterpart
original and certified or other copies of such  documents as they may reasonably
request.

5.  CONDITIONS OF THE COMPANY'S  OBLIGATIONS AT CLOSING.  The obligations of the
Company to the Investors  under this Agreement are subject to the fulfillment on
or before the Closing of each of the following conditions by the Investors:

                  5.1  REPRESENTATIONS  AND WARRANTIES.  The representations and
warranties of the Investors  contained in Section 3 shall be true and correct on
and as of the Closing.

                  5.2  PERFORMANCE.  The  Investors  shall  have  performed  and
complied with all covenants, agreements, obligations and conditions contained in
this  Agreement that are required to be performed or complied with by them on or
before the Closing.

                  5.3 SECURITIES LAW COMPLIANCE. The Company shall have obtained
all  necessary  permits  and  qualifications,  if any,  required by any state or
country or secured an exemption therefrom,  for the offer and sale of the Series
D Shares and the Warrants.

6.  REGISTRATION RIGHTS.

                  6.1 DEFINITIONS.

                  "BUSINESS  DAY"  means any day  except a  Saturday,  Sunday or
other day on which  commercial  banks in the State of Delaware are authorized by
law to close.

                  "HOLDER" means an Investor; provided, however that an Investor
shall cease to be a Holder if and when such  Investor  owns Common  Stock and/or
securities  exercisable or  convertible  into Common Stock  representing  in the
aggregate less than 5% percent of the outstanding Common Stock and such Investor
may dispose of all Registrable  Securities then owned by such Investor  pursuant
to Rule 144(k) (or any  successor  rule) under the  Securities  Act, and in such
case  the  Registrable  Securities  owned  by such  Investor  shall  cease to be
Registrable Securities.



                                      -14-
<PAGE>


                  "PERSON"   means  any   natural   person,   company,   limited
partnership,   general   partnership,   joint  stock  company,   joint  venture,
association,  trust,  bank trust company,  land trust,  business trust, or other
organization,  whether or not a legal  entity,  and any  government or agency or
political subdivision thereof.

                  "REGISTRABLE  SECURITIES"  means the  Common  Stock  issued or
issuable upon (i) the exercise of the Warrants or (ii) the  conversion of Series
D Shares pursuant to the Certificate of  Designations,  and any Common Stock and
any other  securities  issued or issuable with respect to such securities by way
of a stock  dividend  or stock  split or in  connection  with a  combination  of
shares,  recapitalization,  merger,  consolidation or reorganization;  PROVIDED,
that any Registrable Security will cease to be a Registrable Security when (a) a
registration  statement  covering  such  Registrable  Security has been declared
effective  by the SEC and it has been  disposed of  pursuant  to such  effective
registration  statement,  (b) it is sold under circumstances in which all of the
applicable  conditions  of Rule 144 (or any  similar  provisions  then in force)
under the  Securities  Act are met,  or (c) it has  ceased  to be a  Registrable
Security in accordance with the proviso to the definition of Holder provided for
herein.

                  "SEC" means the  Securities  and  Exchange  Commission  or any
successor governmental agency.

                  "SELLING  HOLDER"  means a Holder who is  selling  Registrable
Securities pursuant to a registration statement under the Securities Act.

                  "SUBSIDIARY"  means (i) any company or other entity a majority
of the capital stock of which having  ordinary  voting power to elect a majority
of the board of directors or other Persons  performing  similar  functions is at
the time owned,  directly or  indirectly,  with power to vote, by the Company or
any direct or indirect  Subsidiary of the Company or (ii) a partnership in which
the Company or any direct or indirect Subsidiary is a general partner.

                  "UNDERWRITER"  means a securities  dealer which  purchases any
Registrable   Securities   as  principal  and  not  as  part  of  such  dealer's
market-making activities.

                  6.2  REQUIRED REGISTRATION.

                       (a) Prior to the six month  anniversary  of the  Closing,
the Company  shall use its best efforts to file a  registration  statement  (the
"Required Registration Statement") on Form S-3 with the SEC registering for sale
under the Securities Act the Registrable Securities. If the Company is unable to
use Form S-3,  another form of  registration  statement for which the Company is
eligible  will be used.  Any  Holder  who does not wish to  include  Registrable
Securities  in the  Required  Registration  Statement to be filed by the Company
pursuant to this Section  6.2(a)  shall  provide  written  notice to the Company
prior to the date upon which such filing is made with the SEC.

                       (b) By executing this Agreement, each Holder acknowledges
that the Company's  obligation  under this Section 6.2 to register is limited to
one  registration  statement  which becomes  effective under the Securities Act,


                                      -15-
<PAGE>

and,  provided  that the  Company  complies  with  its  obligations  under  this
Agreement, no further registration statements (other than required amendments or
supplements  to the  original  registration  statement)  will be  filed  for the
benefit of the Holders pursuant to this Section 6.2.

                       (c) EFFECTIVENESS OF REGISTRATION STATEMENT.  The Company
shall use best  efforts to obtain  effectiveness  of the  Required  Registration
Statement as soon as  practicable  and shall continue to use its best efforts to
maintain such effectiveness for the registration for a period of one hundred and
eighty (180) days.  Any  registration  pursuant to this  Agreement  shall not be
deemed  to have  been  effected  unless it has  become  effective  with the SEC.
Notwithstanding  the foregoing,  a registration  statement will not be deemed to
have been effected if after it has become  effective  under the Securities  Act,
such  registration  is  interfered  with by any stop order,  injunction or other
order or requirement of the Commission or other governmental agency or any court
proceeding for any reason. The Company shall use its best efforts to prevent the
issuance  of  any  stop  order  or  other   suspension  of  effectiveness  of  a
registration  statement,  and,  if  such an  order  is  issued,  to  obtain  the
withdrawal  of such order at the  earliest  possible  moment and to notify  each
Holder  who holds  Registrable  Securities  being  sold (or,  in the event of an
underwritten  offering, the managing underwriters) of the issuance of such order
and the resolution thereof.

                       (d) ELIGIBILITY FOR FORM S-3. The Company  represents and
warrants  that it meets as of the date  hereof the  requirements  for the use of
Form S-3 for registration of the sale by a Holder of the Registrable Securities.

                  6.3  DEMAND REGISTRATION.

                       (a) REQUEST FOR REGISTRATION.

                           (i)  If,  at  any  time   following   the  six  month
anniversary of the Closing, Holders holding at least 30% in the aggregate of the
Registrable  Securities  request (a "Demand  Request")  that the Company  file a
Registration  Statement  pursuant to the Securities Act covering the sale of all
or part of their Registrable Securities (a "Demand  Registration"),  the Company
shall (i) promptly give written notice of the proposed  Demand  Registration  to
all other Holders,  (ii) use its best efforts to effect such Demand Registration
as soon as reasonably  practicable but in any event within  forty-five (45) days
after  receiving a Demand Request (the  "Required  Filing Date") so as to permit
the sale and  distribution of all or such portion of the Registrable  Securities
as are  specified in such Demand  Request,  together with all or such portion of
the  Registrable  Securities  of any  Holder or Holders  joining in such  Demand
Request as are  specified in a written  request  received by the Company  within
twenty (20) days after  receipt of such  written  notice from the  Company,  and
(iii) use its best efforts to cause the same to be declared effective by the SEC
as promptly as practicable after such filing.  Each Demand Request shall specify
the number of shares of Registrable Securities proposed to be sold.

                           (ii)  Subject to Section  6.3(b),  if the Company has
effected  two Demand  Registrations  in response to the request of the  Holders,
then  the  Company  shall  not  be  obligated  to  respond  to  further   Demand


                                      -16-
<PAGE>

Registrations  pursuant to this  Section.  The Company shall not be obligated to
effect more than one Demand Registration in any twelve-month period.

                       (b) EFFECTIVE  REGISTRATION AND EXPENSES.  A registration
will not count as a Demand Registration until it has become effective unless (i)
prior to such effective  time the Holders  requesting  such Demand  Registration
withdraw  all their  Registrable  Securities  for any reason  other than (A) the
inability  or  unreasonable  delay of the  Company in having  such  registration
statement become effective or (B) the disclosure of material adverse information
regarding  the Company  that was not known by the Holders at the time the Demand
Request was made and (ii) the Demand  Holder elects not to pay all the Company's
out-of-pocket   Registration   Expenses  in  connection   with  such   withdrawn
registration.  If, after such registration has become effective,  an offering of
Registrable Securities pursuant to a registration is interfered with by any stop
order, injunction or other order or requirement of the SEC or other governmental
agency or court, such registration will not count as a Demand Registration.

                       (c)   SELECTION   OF   UNDERWRITERS.   The   offering  of
Registrable Securities pursuant to a Demand Registration may be in the form of a
"firm  commitment"  underwritten  offering.  If the Selling Holders so indicate,
they shall select the managing  Underwriter and such additional  Underwriters to
be used in connection with the offering;  PROVIDED that such selections shall be
subject to the consent of the Company,  which consent shall not be  unreasonably
withheld.

                       (d) PRIORITY ON DEMAND REGISTRATIONS. No securities to be
sold for the account of any Person  (including  the Company) other than a Holder
shall be  included  in a Demand  Registration  if the  managing  Underwriter  or
Underwriters  shall advise the Selling  Holders that, in its or their  judgment,
the inclusion of such  securities  may adversely  affect the price or success of
the offering in any significant or material  respect (a  "Registration  Material
Adverse  Effect").  Furthermore,  in  the  event  the  managing  Underwriter  or
Underwriters  shall  advise the Demand  Holder that even after  exclusion of all
securities of other Persons pursuant to the immediately preceding sentence,  the
amount  of  Registrable  Securities  proposed  to be  included  in  such  Demand
Registration by Holders electing to participate is sufficiently large to cause a
Registration Material Adverse Effect, the Registrable Securities of such Holders
to be included in such Demand  Registration  shall be  allocated  PRO RATA among
such  Holders on the basis of the number of  outstanding  shares of Common Stock
requested to be included in such registration by each such Holder.

                  6.4  PIGGY-BACK REGISTRATION.

                       (a) Subject to the  provisions of the  Agreement,  if the
Company  proposes to file a registration  statement  under the  Securities  Act,
including  a Demand  Registration,  with  respect to an  offering  of any equity
securities  by the  Company for its own account or for the account of any of its
equity holders  (other than a  registration  statement on Form S-4 or S-8 or any
substitute  form that may be  adopted by the SEC or any  registration  statement
filed in connection  with an exchange offer or offering of securities  solely to
the Company's  existing security  holders),  then the Company shall give written
notice of such proposed filing to the Holders as soon as practicable  (but in no


                                      -17-
<PAGE>

event less than thirty (30) days before the  anticipated  initial filing date of
such  registration  statement),  and such notice  shall  offer such  Holders the
opportunity  to register  such  number of  Registrable  Securities  as each such
Holder  may  request (a  "Piggyback  Registration").  Subject to Section  6.4(b)
hereof,  the  Company  shall  include in each such  Piggyback  Registration  all
Registrable  Securities  requested to be included in the  registration  for such
offering;  provided, however, that the Company may at any time withdraw or cease
proceeding with such registration.  Each Holder of Registrable  Securities shall
be  permitted to withdraw all or part of such  Holder's  Registrable  Securities
from a Piggyback Registration at any time prior to the effective date thereof.

                       (b) The  Company  shall use all  commercially  reasonable
efforts  to  cause  the  managing  Underwriter  or  Underwriters  of a  proposed
underwritten  offering  to permit the  Registrable  Securities  requested  to be
included in the  registration  statement for such offering  under Section 6.4(a)
("Piggyback Securities"), to be included on the same terms and conditions as any
similar securities included therein.  Notwithstanding the foregoing, the Company
shall not be required  to include  any  Holder's  Piggyback  Securities  in such
offering  unless such Holder  accepts  the terms of the  underwriting  agreement
between the Company and the managing  Underwriter or Underwriters  and otherwise
complies with the provisions of Section 6.10 below. If such offering is a Demand
Registration  pursuant to Section 6.3(a),  then the provisions of Section 6.3(d)
shall  apply.  In all other  offerings  that are  underwritten,  if the managing
Underwriter or  Underwriters of such proposed  underwritten  offering advise the
Company  in  writing  that in their  opinion  the total  amount  of  securities,
including Piggyback Securities,  to be included in such offering is sufficiently
large to cause a Registration  Material  Adverse Effect,  then in such event the
securities  to be  included in such  offering  shall be  allocated  first to the
Company,  and then,  to the extent that any  additional  securities  can, in the
opinion of such managing  Underwriter or Underwriters,  be sold without any such
Registration  Material  Adverse Effect,  PRO RATA among the holders of Piggyback
Securities  on the basis of the  number of  outstanding  shares of Common  Stock
requested to be included in such registration by each such holder.

                  6.5  REGISTRATION ON FORM S-3.


                       (a) At any time  following the six month  anniversary  of
the  Closing,  the  Holders  shall each have the right to  request an  unlimited
number  of  registrations  on  Form  S-3  (or any  equivalent  successor  form),
provided,  however,  that such right shall be  suspended  for any period  during
which  there is an  effective  registration  statement  outstanding  pursuant to
Section 6.3 or 6.4 hereof.  Any such request shall be in writing,  shall specify
the  Registrable  Securities  intended  to be sold or disposed of by the Holders
thereof,  shall state the intended  method of  disposition  of such  Registrable
Securities by the Holder(s)  requesting  such  registration  and shall relate to
Registrable  Securities  having proposed gross cash offering  proceeds (prior to
deduction of  underwriters  commissions  and  expenses,  if any) of Five Hundred
Thousand  Dollars  ($500,000)  or more  for  all  Registrable  Securities  to be
included,  on the basis of a reasonable  (in light of the current  market price)
proposed per share offering price.


                                      -18-
<PAGE>


                       (b) Upon receipt of such  request,  the Company shall (i)
promptly give written notice of the proposed  registration to all other Holders,
and (ii) be obligated to effect such  registration or  registrations on Form S-3
as soon as practicable  after receipt of such a request so as to permit the sale
and  distribution  of all or such portion of the  Registrable  Securities as are
specified in such request,  together with all or such portion of the Registrable
Securities of any Holder or Holders  joining in such request as are specified in
a written request  received by the Company within twenty (20) days after receipt
of such written  notice from the Company;  provided,  however,  that the Company
shall not be obligated to effect the filing of a  registration  pursuant to this
Section 6.5 during the period  starting  with the date ninety (90) days prior to
the  Company's  estimated  date of filing of,  and ending on a date one  hundred
eighty (180) days  following the  effective  date of, a  registration  statement
pertaining to a public  offering of Common Stock for the account of the Company,
provided  that the Company is actively  employing  in good faith all  reasonable
efforts to cause such  registration  statement to become  effective and that, in
the  good  faith  judgment  of the  Company's  Underwriter  for an  underwritten
offering or of the Board for any other offering,  an offering pursuant to such a
registration  statement  would  interfere  in  any  material  respect  with  the
successful  marketing  (including pricing) of the Common Stock to be included in
the  Company's  proposed  registration  statement,  or (ii) if the  Board  shall
determine in good faith that such filing will interfere in any material  respect
with  a  pending   or   contemplated   financing,   merger,   sale  or   assets,
recapitalization  or other similar corporate action of the Company.  The Company
shall  be  entitled  to  exercise  only one (1) such  right of  deferral  in any
12-month period.  In the event the Company's  obligations are abated pursuant to
the foregoing  PROVISO,  and if any of the Holders on whose behalf the requested
registration  statement  would be filed  and who were  unable to have all of the
Registrable Securities included in the Company's registration statement pursuant
to Section 6.4 then want such  registration  statement to be filed,  the Company
shall use its best  efforts to file such  registration  statement as promptly as
practicable following (x) one hundred eighty (180) days after the effective date
of the registration statement with respect to the offering referred to in clause
(i) above, or (y) the date on which the transactions  referred to in clause (ii)
above shall have been completed or abandoned (as the case may be).

                       (c) The Company  shall not be obligated to file and cause
to become  effective  more than one (1)  registration  on Form S-3 in any twelve
(12)  month  period   pursuant  to  the  provisions  of  this  Section  6.5.  No
registration  pursuant to this Section 6.5 shall count as a Demand  Registration
pursuant to Section 6.3.

                  6.6  HOLDBACK AGREEMENTS; DEFERRAL.

                       (a)  RESTRICTIONS  ON  PUBLIC  SALE BY THE  COMPANY.  The
Company  agrees  not  to  effect  any  direct  or  indirect  (including  through
derivative transactions) sale or distribution of any securities similar to those
being  registered,  or  any  securities  convertible  into  or  exchangeable  or
exercisable  for such  securities,  during the fourteen  (14) days prior to, and
during  a  period  of up to  ninety  (90)  days  if  requested  by the  managing
underwriters  beginning on, the  effective  date of any  registration  statement
which  includes  Registrable  Securities  (unless such sale or  distribution  is
pursuant to such registration statement).



                                      -19-
<PAGE>

                       (b) DEFERRAL OF FILING.  The Company may defer the filing
(but not the  preparation) of a registration  statement  required by Section 6.3
until a date not later than  forty-five (45) days after the Required Filing Date
if (i) at the time the  Company  receives  the Demand  Request,  the  Company is
engaged in confidential  negotiations or other confidential business activities,
disclosure of which would be required in such registration  statement (but would
not be required if such  registration  statement were not filed),  and the Board
determines in good faith that such disclosure would be materially detrimental to
the Company and its stockholders, or (ii) prior to receiving the Demand Request,
the Board had determined to effect a registered  underwritten public offering of
the Company's  equity  securities for the Company's  account and the Company had
taken substantial  steps (including,  but not limited to, selecting the managing
Underwriter for such offering) and is proceeding  with  reasonable  diligence to
effect  such  offering.  A deferral  of the filing of a  registration  statement
pursuant to this Section 6.6(c) shall be lifted, and the requested  registration
statement shall be filed  forthwith,  if, in the case of a deferral  pursuant to
clause (i) of the preceding  sentence,  the negotiations or other activities are
disclosed or terminated,  or, in the case of a deferral  pursuant to clause (ii)
of the preceding sentence,  the proposed  registration for the Company's account
is abandoned.  In order to defer the filing of a registration statement pursuant
to this Section  6.6(c),  the Company shall promptly,  upon  determining to seek
such  deferral,  deliver  to the  Demand  Holder  a  certificate  signed  by the
President  of the  Company  stating  that the Company is  deferring  such filing
pursuant to this  Section  6.6(c) and the basis  therefor in  reasonable  detail
(subject to applicable confidentiality  requirements).  Within twenty days after
receiving  such  certificate,  the Demand  Holder may  withdraw  such request by
giving notice to the Company;  if withdrawn,  the Demand Request shall be deemed
not to have been made for all purposes of this Agreement.  The Company may defer
the filing of a  particular  registration  statement  pursuant  to this  Section
6.5(c) only once during any twelve-month period.

                  6.7 REGISTRATION  PROCEDURES.  Until the Company has fulfilled
its obligation to the Holders  pursuant to Section 6.2 herein,  and whenever the
Holders have requested that any Registrable Securities be registered pursuant to
any other  applicable  provision  of this  Section 6, the Company  will,  at its
expense,  use its best efforts to effect the  registration  of such  Registrable
Securities  under the Securities Act in accordance  with the intended  method of
disposition  thereof as quickly as practicable,  and in connection with any such
request, the Company will as expeditiously as practicable:

                       (a)  prepare  and  file  with  the  SEC  a   registration
statement on any form for which the Company then  qualifies or which counsel for
the Company  shall deem  appropriate  and which form shall be available  for the
sale of the  Registrable  Securities to be  registered  thereunder in accordance
with the  intended  method of  distribution  thereof,  and use all  commercially
reasonable  efforts and proceed diligently and in good faith to cause such filed
registration  statement to become  effective under the Securities Act;  provided
that before filing a  registration  statement or prospectus or any amendments or
supplements  thereto, the Company will furnish to all Selling Holders and to one
counsel  reasonably  acceptable to the Company  selected by the Selling Holders,
copies of all such  documents  proposed  to be filed,  which  documents  will be
subject to the  review of such  counsel;  provided,  that in  connection  with a




                                      -20-
<PAGE>

Demand  Registration,  the Company shall not file any registration  statement or
prospectus,  or any amendments or supplements thereto, if the Demand Holder, its
counsel, or the managing  Underwriters shall reasonably object, in writing, on a
timely basis.

                       (b)  prepare  and file with the SEC such  amendments  and
supplements to such registration statement and the prospectus used in connection
therewith  as may be  necessary to keep such  registration  statement  effective
pursuant to Section  6.2(c) or Section  6.3 for a period  (except as provided in
the last  paragraph  of this  Section  6.7) of not less than one hundred  eighty
(180)  consecutive  days  or,  if  shorter,  the  period  terminating  when  all
Registrable  Securities  covered by such  registration  statement have been sold
(but not before the expiration of the applicable  period  referred to in Section
4(3) of the Securities Act and Rule 174  thereunder,  if applicable)  and comply
with the provisions of the Securities Act with respect to the disposition of all
securities  covered  by  such  registration  statement  during  such  period  in
accordance  with the  intended  methods of  disposition  by the Selling  Holders
thereof set forth in such registration statement;

                       (c)  furnish to each such  Selling  Holder such number of
copies of such registration statement, each amendment and supplement thereto (in
each case  including  all exhibits  thereto),  the  prospectus  included in such
registration  statement  (including each preliminary  prospectus) and such other
documents as such Selling Holder may  reasonably  request in order to facilitate
the disposition of the Registrable Securities owned by such Selling Holder;

                       (d)  notify  the  Selling  Holders   promptly,   and  (if
requested  by any such  Person)  confirm  such  notice  in  writing,  (i) when a
prospectus or any  prospectus  supplement or  post-effective  amendment has been
filed,  and,  with respect to a  registration  statement  or any  post-effective
amendment,  when the same has become effective under the Securities Act and each
applicable  state law;  (ii) of any  request by the SEC or any other  federal or
state  governmental  authority for  amendments or  supplements to a registration
statement or related  prospectus  or for  additional  information;  (iii) of the
issuance  by  the  SEC of any  stop  order  suspending  the  effectiveness  of a
registration  statement or the initiation of any  proceedings  for that purpose;
(iv) if at any time the  representations  or warranties of the Company contained
in any agreement (including any underwriting  agreement) contemplated by Section
6.7(i)  below cease to be true and correct in any material  respect;  (v) of the
receipt by the Company of any notification with respect to the suspension of the
qualification  or  exemption  from  qualification  of  any  of  the  Registrable
Securities for sale in any  jurisdiction or the initiation or threatening of any
proceeding for such purpose;  (vi) of the happening of any event which makes any
statement  made in such  registration  statement  or related  prospectus  or any
document  incorporated or deemed to be incorporated  therein by reference untrue
in any  material  respect or that  requires  the  making of any  changes in such
registration  statement,  prospectus  or documents  so that,  in the case of the
registration  statement,  it will not contain any untrue statement of a material
fact or omit to state  any  material  fact  required  to be  stated  therein  or
necessary to make the statements therein not misleading, and that in the case of
the prospectus,  it will not contain any untrue  statement of a material fact or
omit to state any material  fact  required to be stated  therein or necessary to
make the statements therein, in light of the circumstances under which they were


                                      -21-
<PAGE>

made, not misleading, and (vii) of the Company's reasonable determination that a
post-effective amendment to a registration statement would be appropriate;

                       (e) use  commercially  reasonable  efforts  to obtain the
withdrawal  of  any  order  suspending  the   effectiveness  of  a  registration
statement,  or the lifting of any suspension of the  qualification (or exemption
from  qualification)  of any of  the  Registrable  Securities  for  sale  in any
jurisdiction, at the earliest practicable moment;

                       (f) cooperate  with the Selling  Holders and the managing
Underwriter or Underwriters to facilitate the timely preparation and delivery of
certificates  representing Registrable Securities to be sold, which certificates
shall  not bear any  restrictive  legends  and shall be in a form  eligible  for
deposit  with  The  Depositary  Trust  Company;   and  enable  such  Registrable
Securities  to be  registered  in such  names  as the  managing  Underwriter  or
Underwriters may request prior to any sale of Registrable Securities;

                       (g) use  commercially  reasonable  efforts to register or
qualify such Registrable  Securities as promptly as practicable under such other
securities  or blue sky laws of such  jurisdictions  as any  Selling  Holder  or
managing Underwriter  reasonably (in light of the intended plan of distribution)
requests  and do any and all  other  acts and  things  which  may be  reasonably
necessary or advisable to enable such Selling Holder or managing  Underwriter to
consummate the disposition in such  jurisdictions of the Registrable  Securities
owned by such Selling Holder;  provided that the Company will not be required to
(i) qualify  generally  to do business  in any  jurisdiction  where it would not
otherwise be required to qualify but for this paragraph (g); (ii) subject itself
to taxation in any such  jurisdiction;  or (iii)  consent to general  service of
process in any such jurisdiction;

                       (h) use  commercially  reasonable  efforts  to cause such
Registrable  Securities  to  be  registered  with  or  approved  by  such  other
governmental agencies or authorities of the Company to enable the Selling Holder
or Selling  Holders  thereof to consummate the  disposition of such  Registrable
Securities;

                       (i)  enter  into  customary   agreements   (including  an
underwriting  agreement  in customary  form) and take such other  actions as are
reasonably  required in order to expedite or facilitate the  disposition of such
Registrable Securities;

                       (j) make  available for  inspection by any Selling Holder
of such Registrable Securities, any Underwriter participating in any disposition
pursuant to such  registration  statement and any attorney,  accountant or other
professional  retained by any such Selling Holder or Underwriter  (collectively,
the  "Inspectors'),   all  financial  and  other  records,  pertinent  corporate
documents and properties of the Company  (collectively,  the "Records") as shall
be  reasonably  necessary  to  enable  them  to  exercise  their  due  diligence
responsibility,  and cause the  Company's  officers,  directors and employees to
supply all information reasonably requested by any such Inspectors in connection
with such  registration  statement.  Each  Selling  Holder  of such  Registrable
Securities  agrees  that  information  obtained  by  it  as  a  result  of  such
inspections  shall be  deemed  confidential  and  shall not be used by it as the


                                      -22-
<PAGE>

basis for any  market  transactions  in the  securities  of the  Company  or its
affiliates unless and until such is made generally available to the public;

                       (k) use  commercially  reasonable  efforts  to  obtain  a
comfort  letter  or  comfort  letters  from  the  Company's  independent  public
accountants in customary form and covering such matters of the type  customarily
covered by comfort letters as the Selling Holders of a majority of the shares of
Registrable  Securities  being sold or the managing  Underwriter or Underwriters
reasonably requests;

                       (l)  otherwise  use  commercially  reasonable  efforts to
comply with all applicable  rules and regulations of the SEC, and make available
to its  security  holders,  as  soon  as  reasonably  practicable,  an  earnings
statement  covering a period of twelve  months,  beginning  within  three months
after the effective date of the registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act;

                       (m) use commercially reasonable efforts to cause all such
Registrable Securities to be listed on each securities exchange on which similar
securities  issued by the Company are then listed or quoted on any  inter-dealer
quotation  system on which  similar  securities  issued by the  Company are then
quoted;

                       (n) if any event contemplated by Section 6.7(d)(vi) above
shall occur,  as promptly as  practicable  prepare a supplement  or amendment or
post-effective   amendment  to  such  registration   statement  or  the  related
prospectus  or any document  incorporated  therein by reference or promptly file
any other required  document so that, as thereafter  delivered to the purchasers
of the  Registrable  Securities,  the  prospectus  will not  contain  an  untrue
statement of a material  fact or omit to state any material  fact required to be
stated therein or necessary to make the statements therein not misleading; and

                       (o)  cooperate  and assist in any filing  required  to be
made with the  National  Association  of  Securities  Dealers,  Inc.  and in the
performance of any due diligence investigation by any underwriter, including any
"qualified independent underwriter," or any Selling Holder.

                  Each Selling Holder shall  promptly  furnish in writing to the
Company  such   information   regarding  the  distribution  of  the  Registrable
Securities  as the  Company  may from time to time  reasonably  request and such
other   information  as  may  be  legally   required  in  connection  with  such
registration.

                  Each Selling  Holder  agrees that,  upon receipt of any notice
from the Company of the happening of any event of the kind  described in Section
6.7(d)(vi) hereof, such Selling Holder will forthwith discontinue disposition of
Registrable  Securities  pursuant to the  registration  statement  covering such
Registrable  Securities until such Selling Holder's receipt of the copies of the
supplemented or amended prospectus  contemplated by Section 6.7(n) hereof,  and,
if so directed by the Company,  such Selling  Holder will deliver to the Company
all copies,  other than  permanent  file copies,  then in such Selling  Holder's
possession,  of the most recent prospectus covering such Registrable  Securities


                                      -23-
<PAGE>

at the time of receipt of such notice.  In the event the Company shall give such
notice,  the Company  shall  extend the period  during  which such  registration
statement  shall be maintained  effective  (including the period  referred to in
Section  6.7(b)  hereof)  by the  number  of days  during  the  period  from and
including the date of the giving of notice pursuant to Section 6.7(d)(vi) hereof
to the date when the Company  shall make  available  to the  Selling  Holders of
Registrable  Securities  covered by such  registration  statement  a  prospectus
supplemented  or amended  to conform  with the  requirements  of Section  6.7(n)
hereof.

                  6.8  REGISTRATION  EXPENSES.  Subject  to  the  provisions  in
Section 6.3(b) above with respect to a Demand  Registration,  in connection with
the Company's  Obligations to register Registrable  Securities under Section 6.2
or any Demand  Registration  or Piggyback  Registration  hereunder,  the Company
shall pay the following registration expenses (the "Registration Expenses"): (a)
all registration and filing fees (including, without limitation, with respect to
filings to be made with the National  Association of Securities Dealers,  Inc.),
(b) fees and expenses of compliance  with securities or blue sky laws (including
reasonable  fees and  disbursements  of  counsel  in  connection  with  blue sky
qualifications  of the  Registrable  Securities),  (c)  printing  expenses,  (d)
internal  expenses  (including  all  salaries  and  expenses of its officers and
employees  performing  legal or  accounting  duties),  (e) the fees and expenses
incurred in  connection  with the listing of the  Registrable  Securities  on an
exchange or the  quotation  of the  Registrable  Securities  on an  inter-dealer
quotation  system,  (f)  reasonable  fees and  disbursements  of counsel for the
Company  and  customary  fees and  expenses  for  independent  certified  public
accountants  retained  by the  Company  (including  the  expenses of any comfort
letters  requested  pursuant to Section 6.7(k) hereof),  (g) the reasonable fees
and expenses of any special  experts  retained by the Company in connection with
such registration,  and (h) reasonable fees and expenses, up to $15,000 and upon
the submission to the Company of reasonably  detailed  invoices,  of one counsel
reasonably acceptable to the Company selected by the Selling Holders incurred in
connection with the  registration of such Registrable  Securities  hereunder and
(i)  fees and  expenses  of any  "qualified  independent  underwriter"  or other
independent  appraiser  participating in any offering  pursuant to Schedule E to
the By-laws of the National Association of Securities Dealers,  Inc. The Company
shall  not have any  obligation  to pay any  underwriting  fees,  discounts,  or
commissions  attributable  to the sale of  Registrable  Securities or, except as
provided  by clause (b),  (h) or (i) above,  any  out-of-pocket  expenses of the
Holders (or the agents who manage their accounts) or the fees and  disbursements
of counsel for any Underwriter.

                  6.9  INDEMNIFICATION; CONTRIBUTION.

                       (a) INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify  and hold  harmless  each Selling  Holder,  each  Person,  if any, who
controls such Selling  Holder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange  Act,  and the  officers,  directors,  agents,
general and limited partners, and employees of each Selling Holder and each such
controlling  person  from  and  against  any and all  losses,  claims,  damages,
liabilities,  and expenses (including reasonable costs of investigation) arising
out of or based  upon any untrue  statement  or alleged  untrue  statement  of a
material fact contained in any registration  statement or prospectus relating to


                                      -24-
<PAGE>

the Registrable  Securities or in any amendment or supplement  thereto or in any
preliminary prospectus,  or arising out of or based upon any omission or alleged
omission  to state  therein a material  fact  required  to be stated  therein or
necessary to make the statements therein not misleading,  except insofar as such
losses,  claims,  damages,  liabilities  or expenses  arise out of, or are based
upon,  any such untrue  statement or omission or  allegation  thereof based upon
information  furnished  in writing to the Company by such  Selling  Holder or on
such Selling Holder's behalf expressly for use therein.  The Company also agrees
to indemnify any Underwriters of the Registrable Securities,  their officers and
directors and each Person who controls such  Underwriters on  substantially  the
same basis as that of the  indemnification  of the Selling  Holders  provided in
this Section 6.9(a).

                       (b) INDEMNIFICATION BY HOLDER OF REGISTRABLE  SECURITIES.
Each Selling  Holder,  severally  and not jointly,  agrees to indemnify and hold
harmless the Company,  and each Person,  if any, who controls the Company within
the  meaning  of either  Section 15 of the  Securities  Act or Section 20 of the
Exchange Act and the  officers,  directors,  agents and employees of the Company
and each such controlling  Person to the same extent as the foregoing  indemnity
from the Company to such Selling  Holder,  but only with respect to  information
furnished in writing by such Selling Holder or on such Selling  Holder's  behalf
expressly for use in any  registration  statement or prospectus  relating to the
Registrable  Securities.  The liability of any Selling Holder under this Section
6.9(b)  shall be limited to the  aggregate  cash and  property  received by such
Selling Holder  pursuant to the sale of Registrable  Securities  covered by such
registration statement or prospectus.

                       (c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any action
or proceeding  (including any  governmental  investigation)  shall be brought or
asserted against any Person entitled to indemnification  under Section 6.9(a) or
6.9(b)  above (an  "Indemnified  Party") in respect  of which  indemnity  may be
sought  from any party who has  agreed to  provide  such  indemnification  under
Section 6.9(a) or 6.9(b) above (an "Indemnifying  Party"), the Indemnified Party
shall give prompt notice to the Indemnifying  Party and the  Indemnifying  Party
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory  to such  Indemnified  Party,  and shall  assume the payment of all
reasonable expenses of such defense. Such Indemnified Party shall have the right
to employ  separate  counsel in any such action or proceeding and to participate
in the defense  thereof,  but the fees and expenses of such counsel  shall be at
the expense of such  Indemnified  Party  unless (i) the  Indemnifying  Party has
agreed  to pay such  fees and  expenses  or (ii) the  Indemnifying  Party  fails
promptly to assume the defense of such action or  proceeding  or fails to employ
counsel  reasonably  satisfactory to such  Indemnified  Party or (iii) the named
parties to any such  action or  proceeding  (including  any  impleaded  parties)
include both such Indemnified  Party and Indemnifying  Party (or an affiliate of
the Indemnifying  Party),  and such Indemnified Party shall have been advised by
counsel that there is a conflict of interest on the part of counsel  employed by
the Indemnifying  Party to represent such  Indemnified  Party (in which case, if
such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ  separate  counsel  at the  expense  of the  Indemnifying  Party,  the
Indemnifying Party shall not have the right to assume the defense of such action
or  proceeding  on  behalf  of  such  Indemnified  Party).  Notwithstanding  the
foregoing,  the  Indemnifying  Party shall not, in connection  with any one such
action or proceeding or separate but  substantially  similar  related actions or


                                      -25-
<PAGE>

proceedings in the same jurisdiction arising out of the same general allegations
or  circumstances,  be liable at any time for the fees and expenses of more than
one separate  firm of attorneys  (together in each case with  appropriate  local
counsel).  The Indemnifying  Party shall not be liable for any settlement of any
such action or proceeding  effected  without its written  consent (which consent
will not be unreasonably withheld),  but if settled with its written consent, or
if there be a final judgment for the plaintiff in any such action of proceeding,
the Indemnifying  Party shall indemnify and hold harmless such Indemnified Party
from and against any loss or liability (to the extent stated above) by reason of
such settlement or judgment.  The Indemnifying  Party shall not consent to entry
of any  judgment  or enter  into any  settlement  that  does not  include  as an
unconditional  term  thereof  the giving by the  claimant or  plaintiff  to such
Indemnified  Party of a  release,  in form  and  substance  satisfactory  to the
Indemnified  Party,  from all  liability in respect of such action or proceeding
for which such Indemnified Party would be entitled to indemnification hereunder.

                       (d) CONTRIBUTION.  If the indemnification provided for in
this Section 6.9 is  unavailable  to the  Indemnified  Parties in respect of any
losses, claims, damages,  liabilities or judgments referred to herein, then each
such Indemnifying  Party, in lieu of indemnifying such Indemnified  Party, shall
contribute to the amount paid or payable by such  Indemnified  Party as a result
of such  losses,  claims,  damages,  liabilities  and  judgments  as between the
Company on the one hand and each Selling Holder on the other, in such proportion
as is  appropriate  to reflect  the  relative  fault of the  Company and of each
Selling Holder in connection  with the statements or omissions which resulted in
such losses,  claims,  damages,  liabilities or judgments,  as well as any other
relevant equitable considerations.  The relative fault of the Company on the one
hand and of each Selling  Holder on the other shall be  determined  by reference
to,  among other  things,  whether the untrue or alleged  untrue  statement of a
material  fact or the  omission  or alleged  omission  to state a material  fact
relates to information supplied by such party, and the parties' relative intent,
knowledge,  access to  information  and  opportunity  to correct or prevent such
statement or omission.  The Company and the Selling  Holders agree that it would
not be just and equitable if  contribution  pursuant to this Section 6.9(d) were
determined by pro rata  allocation  or by any other method of  allocation  which
does not take account of the equitable  considerations  referred to in the first
two  sentences  of  this  Section  6.8(d).  The  amount  paid or  payable  by an
Indemnified  Party as a result of the losses,  claims,  damages,  liabilities or
judgments  referred to in Sections  6.8(a) and 6.8(b)  hereof shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably  incurred by such Indemnified Party in connection with  investigating
or defending any such action or claim.  Notwithstanding  the  provisions of this
Section 6.8(d),  no Selling Holder shall be required to contribute any amount in
excess  of the  amount  by  which  the  total  price at  which  the  Registrable
Securities of such Selling  Holder were offered to the public exceeds the amount
of any damages which such Selling  Holder has otherwise  been required to pay by
reason of such  untrue or  alleged  untrue  statement  or  omission  or  alleged
omission. No Person guilty of fraudulent  misrepresentation  (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to  contribution  from
any Person who was not guilty of such fraudulent misrepresentation.




                                      -26-
<PAGE>


                  6.10  PARTICIPATION IN UNDERWRITTEN  REGISTRATIONS.  No Holder
may participate in any  underwritten  registration  hereunder unless such Holder
(a) agrees to sell such Holder's Registrable Securities on the basis provided in
any  underwriting  arrangements  approved by the Person  entitled  hereunder  to
approve such  arrangements,  and (b) completes and executes all  questionnaires,
powers of attorney,  indemnities,  underwriting  agreements and other  documents
reasonably  required under the terms of such underwriting  arrangements and this
Agreement.

                  6.11 RULE 144. The Company shall file all reports  required to
be filed by it under the  Securities  Act and the Exchange Act and the rules and
regulations  adopted by the SEC thereunder,  to the extent required from time to
time to enable such Holder to sell Registrable  Securities without  registration
under the Securities Act within the limitation of the exemptions provided by (i)
Rule 144 under the  Securities  Act,  as such Rule may be  amended  from time to
time, or (ii) any similar rule or regulation  hereafter adopted by the SEC. Upon
the request of any Holder of Registrable Securities, the Company will deliver to
such  Holder a  written  statement  as to  whether  it has  complied  with  such
information and requirements.

                  6.12 TRANSFER OF REGISTRATION  RIGHTS. The rights set forth in
Sections 6.2, 6.3, 6.4 and 6.5 hereof (and all rights  relating  thereto) may be
assigned by any Investor to an affiliate thereof.

7.  MISCELLANEOUS.

                  7.1 SURVIVAL OF WARRANTIES.  The  warranties,  representations
and covenants of the Company and Investors contained in or made pursuant to this
Agreement  shall survive the  execution  and delivery of this  Agreement and the
Closing for one year from the date hereof and shall in no way be affected by any
investigation  of  the  subject  matter  thereof  made  by or on  behalf  of the
Investors or the Company.

                  7.2  GOVERNING  LAW. This  Agreement  shall be governed in all
respects by the laws of the State of Delaware as applied to  agreements  entered
into and performed entirely in the State of Delaware by residents thereof.

                  7.3  SUCCESSORS  AND  ASSIGNS.  Except as  otherwise  provided
herein,  the  provisions  hereof  shall  inure to the benefit of, and be binding
upon,  the  successors,  assigns,  heirs,  executors and  administrators  of the
parties hereto; PROVIDED,  HOWEVER, that the rights of the Investors to purchase
Series D Shares and the Warrants to be issued in connection  therewith  (but not
the Common Stock  underlying  either such security,  which shall not require the
prior consent of the Company to transfer)  shall not be  assignable  without the
prior written consent of the Company.

                  7.4 ENTIRE AGREEMENT;  AMENDMENT. This Agreement and the other
documents delivered pursuant hereto constitute the full and entire understanding
and agreement  among the parties with regard to the subjects hereof and thereof.
Any term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively  or  prospectively),  only with the written consent of the Company
and the holders of at least a majority of the Series D Shares.  Any amendment or


                                      -27-
<PAGE>

waiver  effected in  accordance  with this  Section  shall be binding  upon each
holder of any securities  purchased under this Agreement at the time outstanding
(including  securities into which such securities are convertible),  each future
holder of all such securities, and the Company.

                  7.5  NOTICES,   ETC.  All  notices  and  other  communications
required or  permitted  hereunder  shall be in writing and be sent (a) if to the
Investors,  at the Investors' address set forth opposite each Investor's name on
EXHIBIT A or  EXHIBIT B hereto  (as the case may be) or as such  Investor  shall
have  furnished to the Company in writing,  or (b) if to any other holder of any
Series D Shares, at such address as such holder shall have furnished the Company
in writing,  or,  until any such holder so  furnishes an address to the Company,
then to and at the address of the last holder of such Series D Shares who has so
furnished  an address to the Company,  or (c) if to the Company,  at its address
set forth on the first page of this Agreement  addressed to the attention of the
Corporate  Secretary,  or at  such  other  address  as the  Company  shall  have
furnished to the Investors. All notices and other communications shall be deemed
effectively  given on the  earliest of (i) when  received,  (ii) when  delivered
personally,  (iii) one (1) business day after being delivered by facsimile (with
receipt of  appropriate  confirmation),  (iv) one (1)  business  day after being
deposited  with an  overnight  courier  service or (v) four (4) days after being
deposited in the U.S. mail, First Class with postage  prepaid,  and addressed to
the parties at the addresses  provided to the Company  (which the Company agrees
to disclose to the other  parties upon request) or such other address as a party
may request by notifying the other in writing.

                  7.6 NO IMPLIED RIGHTS.  Nothing herein express or implied,  is
intended to or shall be  construed  to confer upon or give to any person,  firm,
corporation or legal entity, other than the parties hereto and their affiliates,
any  interests,  rights,  remedies  or  other  benefits  with  respect  to or in
connection  with any  agreement or provision  contained  herein or  contemplated
hereby.

                  7.7 DELAYS OR OMISSIONS.  No delay or omission to exercise any
right,  power or remedy  accruing to the Investors upon any breach or default of
the Company under this Agreement shall impair any such right, power or remedy of
the  Investors,  nor shall it be  construed to be a waiver of any such breach or
default,  or an acquiescence  therein, or of or in any similar breach or default
thereafter  occurring;  nor shall any waiver of any single  breach or default be
deemed a waiver  of any  other  breach  or  default  theretofore  or  thereafter
occurring.

                  7.8 EXPENSES. The Company shall pay its own expenses and legal
fees incurred on its behalf with respect to this Agreement and the  transactions
contemplated  hereby.  The Company shall pay the  reasonable  expenses and legal
fees  incurred  on behalf of  Janney  with  respect  to this  Agreement  and the
transactions  contemplated  hereby up to $50,000  and  subject  to a  reasonably
detailed invoice.

                  7.9  FINDER'S  FEE.  The  Company  and  each  Investor   shall
indemnify and hold the other  harmless from any liability for any  commission or
compensation in the nature of a finder's fee (including the costs,  expenses and
legal fees of defending  against such  liability)  for which the Company or each


                                      -28-
<PAGE>

Investor, or any of their respective partners, employees, or representatives, as
the case may be, is responsible.

                  7.10   COUNTERPARTS.   This   Agreement  may  be  executed  in
counterparts,  each of which shall be  enforceable  against  the party  actually
executing  the  counterpart,  and all of which  together  shall  constitute  one
instrument.

                  7.11  SEVERABILITY.  In the event that any  provision  of this
Agreement  becomes or is declared  by a court of  competent  jurisdiction  to be
illegal,  unenforceable or void, this Agreement shall continue in full force and
effect  without said  provision;  PROVIDED  that no such  severability  shall be
effective if it materially changes the economic benefit of this Agreement to any
party.


                                      -29-
<PAGE>


                  IN WITNESS  WHEREOF,  the parties have  executed this Series D
Convertible Preferred Stock and Non-Detachable Warrant  Purchase Agreement as of
the date first above written.

                                 V-ONE CORPORATION

                                 BY:   /s/  Margaret E. Grayson
                                       ------------------------
                                       TITLE: President and CEO


                                 JANNEY MONTGOMERY SCOTT LLC, AS
                                 NOMINEE FOR THOSE INVESTORS LISTED ON EXHIBIT A
                                 ATTACHED HERETO

                                 BY:   /s/ William L. Rulon-Miller
                                       ----------------------------
                                       TITLE: Senior Vice President
                                              Co-Director Investment Banking




                                      -30-
<PAGE>

                                    EXHIBIT A

                          SCHEDULE OF JANNEY INVESTORS






                                      A-1
<PAGE>


                                    EXHIBIT B

                           SCHEDULE OF OTHER INVESTORS






                                       B-1

<PAGE>


                                    EXHIBIT C

                         CERTIFICATE OF DESIGNATIONS OF
                      SERIES D CONVERTIBLE PREFERRED STOCK








                                       C-1


<PAGE>

                                    EXHIBIT D

                                 FORM OF WARRANT




                                       D-1

<PAGE>

                                    EXHIBIT E

                             SCHEDULE OF EXCEPTIONS

SECTIONS 2.16 AND 2.21

In  order  to  assist  the  Company  in  focusing  its  sales  efforts  on large
enterprises,  in particular a selected  group of large network  integrators  and
Internet service  providers,  the Company recently  retained  MindSquared,  LLC.
Clint Heiden, a Senior Consultant at MindSquared,  LLC, is primarily responsible
for  assisting the Company in its  marketing  efforts.  Mr. Heiden is the son of
Heidi  Heiden,  a Director  of V-ONE and a partner in  MindSquared,  LLC.  James
McManus, a director of V-ONE, is also a partner in MindSquared, LLC.

The Company's consulting  agreement with MindSquared,  LLC commenced on November
27, 2000,  terminates on March 31, 2001, and may be extended by agreement of the
parties.  It provides  for a maximum  payment of  $200,000  over the term of the
agreement.  The  agreement  also  provides  for  the  issuance  of  warrants  to
MindSquared,  LLC to purchase the  Company's  common stock upon the execution of
the  agreement  and for the  issuance of  additional  warrants  to purchase  the
Company's  common stock upon the  achievement of various  marketing  goals.  The
purchase  price for all such  warrants is the fair market value of the Company's
common stock on the date the warrants are issued.  No  additional  warrants have
been issued to MindSquared,  LLC and no amount is payable to MindSquared, LLC in
connection with the Series D offering.

SECTIONS 2.8 AND 2.23

1. The Company is currently  party to an employment  agreement  with Margaret E.
Grayson dated July 1, 1999 whereby the Company  employs Ms. Grayson as President
and Chief Executive Officer.  The agreement is terminable upon written notice to
Ms.  Grayson by the Board of  Directors.  Ms.  Grayson is a  participant  in the
Company's stock option plan.


2. The  Company  is  currently  party to an  employment  agreement  with John F.
Nesline dated October 18, 2000 whereby the Company  employs Mr. Nesline as Chief
Financial Officer.  The agreement terminates on October 17, 2001. Mr. Nesline is
a participant in the Company's stock option plan.


3. The Company is currently party to an employment agreement with Jieh-Shan Wang
dated October 18, 2000 whereby the Company employs Mr. Wang as Chief  Scientist.
The agreement  terminates on October 17, 2001.  Mr. Wang is a participant in the
Company's stock option plan.




                                      E-1

<PAGE>

4. The Company is currently  party to an employment  agreement with  Christopher
Brook  dated  October 18, 2000  whereby the Company  employs Mr.  Brook as Chief
Technical Officer.  The agreement terminates on October 17, 2001. Mr. Brook is a
participant in the Company's stock option plan.


5. The Company is currently  party to an employment  agreement  with James Boyle
dated October 18, 2000 whereby the Company  employs Mr. Boyle as Vice  President
of  Engineering.  The agreement  terminates on October 17, 2001.  Mr. Boyle is a
participant in the Company's stock option plan.


6. The Company is currently  party to an employment  agreement with Douglas Hurt
dated  October  18, 2000  whereby  the  Company  employs Mr. Hurt as Director of
Government  Sales.  The agreement  terminates on October 17, 2001. Mr. Hurt is a
participant in the Company's stock option plan.


7. The  Company  is  currently  party to an  employment  agreement  with  Martha
Bjelland  dated  October 18, 2000  whereby the Company  employs Ms.  Bjelland as
Director of Investor  Relations.  The agreement  terminates on October 17, 2001.
Ms. Bjelland is a participant in the Company's stock option plan.


Section 2.18
------------

The Company is party to an engagement  letter with Janney  Montgomery  Scott LLC
("Janney") dated February 12, 2001 whereby the Company engaged Janney to provide
certain  financial  advisory and investment  banking services in relation to the
Series D  offering.  Pursuant to the  engagement  letter,  the Company  will pay
Janney a  financial  advisory  fee equal to 5.0% of any capital  raised  through
private  equity funds and 7.0% of any capital  raised  through  Janney's  retail
system. The arrangement is terminable thirty days after written notice by either
party.




                                       E-2
<PAGE>



                                    EXHIBIT F

                                LEGAL OPINION OF
                           KIRKPATRICK & LOCKHART LLP

















                                       F-1