SECURITIES PURCHASE AGREEMENT

         SECURITIES PURCHASE AGREEMENT (this "Agreement"),  dated as of July 28,
1997, by and among Network Imaging  Corporation,  a corporation  organized under
the laws of the State of Delaware (the "Company"),  with headquarters located at
500 Huntmar Park Drive, Herndon,  Virginia 20170 and each of the purchasers (the
"Purchasers") set forth on the execution pages hereof (the "Execution Pages").

         WHEREAS:

         A. The Company and each  Purchaser are executing  and  delivering  this
Agreement in reliance upon the exemption from securities  registration  afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the United
States  Securities and Exchange  Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act");

         B. Each  Purchaser  desires to purchase,  upon the terms and conditions
stated in this Agreement, units (the "Units") consisting of (i) one (1) share of
the Company's  Series K Convertible  Preferred Stock, par value $.0001 per share
(the "Preferred  Shares"),  convertible  into its common stock, par value $.0001
per  share,  of  the  Company  (the  "Common  Stock")  and  (ii)  warrants  (the
"Warrants"),  in the form attached hereto as Exhibit B, to acquire  seventy-five
(75) shares of Common  Stock.  The rights,  preferences  and  privileges  of the
Preferred  Shares,  including  the terms upon which  such  Preferred  Shares are
convertible into shares of Common Stock are set forth in the form of Certificate
of  Designations,  Preferences  and  Rights  attached  hereto as  Exhibit A (the
"Certificate  of  Designation").  The  shares  of  Common  Stock  issuable  upon
conversion of the Preferred  Shares or otherwise  pursuant to the Certificate of
Designation are referred to herein as the "Conversion  Shares" and the shares of
Common Stock issuable upon exercise of or otherwise pursuant to the Warrants are
referred to as the  "Warrant  Shares".  The Units,  the  Preferred  Shares,  the
Conversion Shares and the Warrant Shares are collectively  referred to herein as
the "Securities."

         C.  Contemporaneous  with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement,
in the form attached hereto as Exhibit C (the "Registration  Rights Agreement"),
pursuant to which the Company has agreed to provide certain  registration rights
under the Securities Act and the rules and regulations  promulgated  thereunder,
and applicable state securities laws;

         NOW, THEREFORE, the Company and the Purchasers hereby agree as follows:

1.       PURCHASE AND SALE OF UNITS.

         a.  Purchase of Units.  The  issuance,  sale and  purchase of the Units
shall  take  place  in  three  (3)  separate  closings,  the  first  of which is
hereinafter  referred  to as  the  "First  Closing,"  the  second  of  which  is
hereinafter  referred  to as the  "Second  Closing"  and the  third  of which is
hereinafter  referred  to as  the  "Third  Closing."  The  purchase  price  (the
"Purchase  Price") per Unit shall be equal to One Thousand Dollars  ($1,000.00).
Each Purchaser's obligation to purchase Units hereunder is distinct and separate
from each other Purchaser's  obligation to purchase Units and no Purchaser shall
be  required to  purchase  hereunder  more than the number of Units set forth on
such Purchaser's Execution Page hereto  notwithstanding any failure by any other
Purchaser to purchase Units hereunder.

                  (i)  On  the  date  of  the  First  Closing,  subject  to  the
satisfaction  (or waiver) of the conditions set forth in Section 6 and Section 7

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below,  the Company shall issue and sell to each  Purchaser  and each  Purchaser
severally  agrees to purchase  from the Company,  such number of Units as is set
forth on such Purchaser's  Execution Page as being purchasable by such Purchaser
at the First Closing.

                  (ii)  On  the  date  of the  Second  Closing,  subject  to the
satisfaction  (or waiver) of the conditions set forth in Section 6 and Section 7
below,  the Company shall issue and sell to each  Purchaser  and each  Purchaser
severally agrees to purchase from the Company (a) such number of Units as is set
forth on such Purchaser's  Execution Page as being purchasable by such Purchaser
at the Second  Closing plus (b) such number of  additional  Units (not to exceed
545 Units in the case of Zanett Lombardier, Ltd. ("Lombardier") and 455 Units in
the case of  Capital  Ventures  International  ("CVI"))  as such  Purchaser  may
hereafter  designate in a written notice  delivered to the Company no later than
the second business day immediately  preceding the day of the Second Closing. If
a Purchaser  shall fail to designate  that it will purchase  Units at the Second
Closing pursuant to clause (b) of the preceding  sentence,  such Purchaser shall
not be obligated to purchase any additional  Units pursuant to clause (b) of the
preceding sentence.

                  (iii)  On  the  date  of the  Third  Closing,  subject  to the
satisfaction  (or waiver) of the conditions set forth in Section 6 and Section 7
below,  the Company shall issue and sell to each  Purchaser  and each  Purchaser
severally  agrees to  purchase  from the  Company  such  number of Units (not to
exceed 2,018 Units in the case of Lombardier and 1,682 Units in the case of CVI)
as such Purchaser may hereafter  designate in a written notice  delivered to the
Company  no later  than the  second  business  day  following  the  later of (x)
delivery by the Company to each Purchaser of evidence reasonably satisfactory to
the  Purchasers  that the conditions to the Third Closing set forth in Section 7
below have been  satisfied and (y) March 1, 1997.  If a Purchaser  shall fail to
designate  that it will purchase any Units at the Third  Closing,  the Purchaser
shall not be obligated to purchase any Units at such closing.

                  (iv)  Notwithstanding  anything  contained in subsection  (ii)
above,  if on or before  November  15,  1997 (a) the Company  delivers  evidence
reasonably  satisfactory  to  Lombardier  that the Company has met its cash flow
projections delivered to The Zanett Securities  Corporation by the Company prior
to the date hereof in connection with the transactions  contemplated  hereby and
(b) the NASDAQ National  Market  notifies the Company that the Company's  Common
Stock shall be removed  from  quotation on the NASDAQ  National  Market due to a
failure  to  have  sufficient  net  assets  and the  purchase  of 700  Units  by
Lombardier  hereunder  will  prevent  such  removal,  the  Company  may  require
Lombardier  to  purchase  700 Units at a closing  to be held prior to the Second
Closing.  Lombardier's  obligation  to purchase  Units at such closing  shall be
subject to the Company's  satisfaction  of the  conditions  contained in Section
7(b)  hereof on or prior to the  Closing.  Any  Units  purchased  by  Lombardier
hereunder  shall reduce the number of Units  Lombardier is obligated to puchase,
and the Company is obligated to sell,  under Section  1(a)(ii)(a)  at the Second
Closing.

         b. Form of Payment. At each closing hereunder, each Purchaser shall pay
the aggregate  Purchase Price for the Units being purchased by such Purchaser at
such closing  hereunder by wire transfer to the Company,  in accordance with the
Company's  written  wiring  instructions,  against  delivery  of  duly  executed
certificates  representing  the Preferred Shares and Warrants being purchased by
such  Purchaser at such closing  hereunder  and the Company  shall  deliver such
certificates against delivery of such aggregate Purchase Price.

         c.  Closing  Date.  Subject  to the  satisfaction  (or  waiver)  of the
conditions thereto set forth in Section 6 and Section 7 below, the date and time
of the issuance and sale of the Units pursuant to this Agreement shall be (i) in
the case of the First Closing,  12:00 noon Eastern Daylight Savings Time on July
28, 1997; (ii) in the case of the Second Closing, 12:00 noon Eastern Time on the
fifth (5th) trading day following  notification of  satisfaction  (or waiver) of

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<PAGE>

the conditions to such closing set forth in Section 7(b) hereof and (iii) in the
case of the Third  Closing,  12:00 noon Eastern Time on the fifth (5th)  trading
day  following the later of (x) receipt by the Company of the last notice from a
Purchaser  under  Section  1(a)(iii) and  (y)notification  of  satisfaction  (or
waiver) of the  conditions  to such  closing  set forth in Section  7(b)  hereof
(subject,  in the case of each of the First Closing,  the Second Closing and the
Third Closing,  to a two (2) business day grace period at either party's option,
but in any event not later than July 31, 1997 in the case of the First  Closing,
not later than November 30, 1997 in the case of the Second Closing and not later
than March 1, 1998 in the case of the Third Closing),  or in the case of each of
the First  Closing,  the Second Closing and the Third Closing such other time as
may be mutually agreed upon by the Company and the Purchasers  purchasing  Units
in such  closing.  The closings  shall occur at the offices of Klehr,  Harrison,
Harvey,  Branzburg & Ellers,  1401  Walnut  Street,  Philadelphia,  Pennsylvania
19102.

2.       PURCHASERS' REPRESENTATIONS AND WARRANTIES

         Each Purchaser severally represents and warrants to the Company that:

         a.  Investment   Purpose.   Purchaser   is  purchasing  the  Units  for
Purchaser's  own account for investment only and not with a present view towards
the public  sale or  distribution  thereof,  except  pursuant  to sales that are
exempt from the  registration  requirements  of the  Securities Act and/or sales
registered under the Securities Act.  Purchaser  understands that Purchaser must
bear the economic risk of this  investment  indefinitely,  unless the Securities
are  registered  pursuant  to  the  Securities  Act  and  any  applicable  state
securities or blue sky laws or an exemption from such registration is available,
and that the Company has no present intention of registering any such Securities
other than as contemplated by the Registration Rights Agreement. Notwithstanding
anything in this Section  2(a) to the  contrary,  by making the  representations
herein,  the Purchaser  does not agree to hold the Securities for any minimum or
other  specific term and reserves the right to dispose of the  Securities at any
time,  however,  Purchaser agrees that any and all such disposal(s)  shall be in
accordance  with or pursuant to a registration  statement or an exemption  under
the Securities Act.

         b.  Accredited Investor Status.  Purchaser is an "Accredited  Investor"
as that term is defined in Rule 501(a) of Regulation D.

         c.  Reliance on  Exemptions.  Purchaser understands  that the Units are
being offered and sold to Purchaser in reliance upon  specific  exemptions  from
the registration requirements of United States federal and state securities laws
and that the Company is relying upon the truth and accuracy of, and  Purchaser's
compliance with, the representations,  warranties,  agreements,  acknowledgments
and  understandings  of Purchaser  set forth  herein in order to  determine  the
availability  of such exemptions and the eligibility of Purchaser to acquire the
Units.

         d. Information.  Purchaser and its counsel, if any, have been furnished
all materials  relating to the business,  finances and operations of the Company
and  materials  relating  to the  offer and sale of the  Units  which  have been
specifically  requested by Purchaser or its counsel.  Purchaser and its counsel,

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<PAGE>

if any, have been afforded the  opportunity  to ask questions of the Company and
have received what  Purchaser  believes to be  satisfactory  answers to any such
inquiries.  Neither such  inquiries  nor any other due  diligence  investigation
conducted  by  Purchaser  or its  counsel  or any of its  representatives  shall
modify,   amend  or  affect   Purchaser's   right  to  rely  on  the   Company's
representations  and  warranties   contained  in  Section  3  below.   Purchaser
understands that Purchaser's investment in the Securities involves a high degree
of risk.

         e.  Governmental  Review.  Purchaser understands that no United  States
federal  or state  agency or any other  government  or  governmental  agency has
passed upon or made any recommendation or endorsement of the Securities.

         f.  Transfer  or  Resale.  Purchaser  understands  that (i)  except  as
provided in the Registration Rights Agreement,  the Securities have not been and
are not being  registered under the Securities Act or any state securities laws,
and may not be transferred unless (a) subsequently registered thereunder, or (b)
Purchaser  shall have  delivered  to the  Company  an opinion of counsel  (which
opinion shall be in form,  substance and scope customary for opinions of counsel
in  comparable  transactions)  to the effect that the  Securities  to be sold or
transferred  may be sold or  transferred  pursuant  to an  exemption  from  such
registration or (c) sold pursuant to Rule 144  promulgated  under the Securities
Act (or a successor rule) ("Rule 144"); (ii) any sale of such Securities made in
reliance on Rule 144 may be made only in accordance  with the terms of said Rule
and further, if said Rule is not applicable, any resale of such Securities under
circumstances  in which the seller (or the person through whom the sale is made)
may be deemed to be an  underwriter  (as that term is defined in the  Securities
Act) may require  compliance  with some other exemption under the Securities Act
or the rules and  regulations  of the SEC  thereunder;  and  (iii)  neither  the
Company nor any other person is under any obligation to register such Securities
under the  Securities  Act or any state  securities  laws or to comply  with the
terms and  conditions  of any  exemption  thereunder  (in each case,  other than
pursuant to the Registration Rights Agreement).

         g.  Legends.  Purchaser  understands  that  the  Preferred  Shares  and
Warrants and, until such time as the  Conversion  Shares and Warrant Shares have
been registered  under the Securities Act as  contemplated  by the  Registration
Rights Agreement or otherwise may be sold by Purchaser pursuant to Rule 144, the
certificates  for the Securities may bear a restrictive  legend in substantially
the following form:

         The securities represented by this certificate have not been registered
         under the Securities Act of 1933, as amended.  The securities have been
         acquired for investment and may not be sold, transferred or assigned in
         the absence of an effective  registration  statement for the securities
         under said Act, or an opinion of counsel, in form,  substance and scope
         customary  for  opinions of counsel in  comparable  transactions,  that
         registration  is not required under said Act or unless sold pursuant to
         Rule 144 under said Act.

         The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by state securities laws, (a) the sale of

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<PAGE>

such  Security  is  registered  under the  Securities  Act,  or (b) such  holder
provides the Company with an opinion of counsel,  in form,  substance  and scope
customary for opinions of counsel in comparable transactions, to the effect that
a public sale or  transfer of such  Security  may be made  without  registration
under the Securities Act or (c) such holder provides the Company with reasonable
assurances that such Security can be sold pursuant to Rule 144. Purchaser agrees
to sell all Securities,  including those  represented by a  certificate(s)  from
which  the  legend  has been  removed,  pursuant  to an  effective  registration
statement or in compliance with an exemption from the registration  requirements
of the  Securities  Act.  In the  event the above  legend  is  removed  from any
Security and thereafter the effectiveness of a registration  statement  covering
such  Security is  suspended  or the Company  determines  that a  supplement  or
amendment  thereto  is  required  by  applicable   securities  laws,  then  upon
reasonable  advance  notice to Purchaser  the Company may require that the above
legend be placed on any such  Security  that cannot then be sold  pursuant to an
effective  registration  statement or Rule 144 and Purchaser  shall cooperate in
the prompt  replacement  of such legend.  Such legend shall be removed when such
Security  may be sold  pursuant to an effective  registration  statement or Rule
144.

         h.  Authorization;  Enforcement.  This  Agreement and the  Registration
Rights Agreement have been duly and validly  authorized,  executed and delivered
on  behalf  of  Purchaser  and are valid and  binding  agreements  of  Purchaser
enforceable in accordance with their terms.

         i.  Residency.  Purchaser is a resident of the  jurisdiction  set forth
under such  Purchaser's  name on the  Execution  Page  hereto  executed  by such
Purchaser.

         j.  Acknowledgments  Regarding Placement Agent.  Purchaser acknowledges
that The  Zanett  Securities  Corporation  is acting  as  placement  agent  (the
"Placement  Agent")  for  the  Securities  being  offered  hereby  and  will  be
compensated  by the  Company  for  acting in such  capacity.  Purchaser  further
acknowledges  that the  Placement  Agent has acted solely as placement  agent in
connection  with  the  offering  of the  Securities  by the  Company,  that  the
information  and data provided to Purchaser  and referred to in  subsection  (d)
above or otherwise in connection with the transactions  contemplated hereby have
not been subjected to independent  verification by the Placement Agent, and that
the  Placement  Agent makes no  representation  or warranty  with respect to the
accuracy or completeness of such information,  data or other related  disclosure
material.  Purchaser  further  acknowledges that in making its decision to enter
into  this  Agreement  and  purchase  the  Securities  it has  relied on its own
examination of the Company and the terms of, and consequences,  of holding,  the
Securities.  Purchaser further  acknowledges that the provisions of this Section
2(j) are for the benefit of, and may be enforced by, the Placement Agent.

3.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company represents and warrants to each Purchaser that:

         a.  Organization  and  Qualification.  The  Company  and  each  of  its
subsidiaries is a corporation duly organized and existing in good standing under
the laws of the jurisdiction in which it is incorporated,  and has the requisite
corporate  power to own its properties and to carry on its business as now being
conducted.  The  Company and each of its  subsidiaries  is duly  qualified  as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the  business  conducted  by it makes such  qualification
necessary  and where the  failure  so to qualify  would have a Material  Adverse
Effect.  "Material  Adverse Effect" means any material adverse effect on (i) the
Securities;  (ii)  the  ability  of  the  Company  to  perform  its  obligations
hereunder,  the  Certificate of  Designation,  the Warrants or the  Registration
Rights  Agreement or (iii) the business,  operations,  properties,  prospects or
financial condition of the Company and its subsidiaries, taken as a whole.

         b.  Authorization;  Enforcement.  (i) The  Company  has  the  requisite
corporate  power and  authority  to enter into and perform this  Agreement,  the
Warrants and the  Registration  Rights  Agreement,  to issue and sell the Units,

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<PAGE>

Preferred Shares and Warrants in accordance with the terms hereof,  and to issue
the Conversion  Shares upon  conversion of the Preferred  Shares and the Warrant
Shares  upon  exercise  of the  Warrants  in  accordance  with the  terms of the
Certificate of Designation  and the Warrants;  (ii) the execution,  delivery and
performance  of  this  Agreement,  the  Warrants  and  the  Registration  Rights
Agreement  by  the  Company  and  the  consummation  by it of  the  transactions
contemplated  hereby and thereby  (including  without limitation the issuance of
the  Preferred  Shares and the  issuance  and  reservation  for  issuance of the
Conversion Shares and Warrant Shares) have been duly authorized by the Company's
Board of Directors and, no further consent or authorization of the Company,  its
Board  or  Directors,  or its  stockholders  is  required  (under  Rule  4460(i)
promulgated  by the National  Association  of Securities  Dealers or otherwise);
(iii) this  Agreement has been duly  executed and delivered by the Company;  and
(iv) this Agreement constitutes, and, upon execution and delivery by the Company
of  the  Registration  Rights  Agreement  and  Warrants,  such  agreements  will
constitute, valid and binding obligations of the Company enforceable against the
Company in accordance with their terms.

         c.  Capitalization.  The  capitalization  of the Company as of the date
hereof,  including the authorized capital stock, the number of shares issued and
outstanding, the number of shares issuable and reserved for issuance pursuant to
the Company's stock option plans, the number of shares issuable and reserved for
issuance  pursuant to securities  (other than the Preferred Shares and Warrants)
exercisable  for, or convertible  into or exchangeable  for any shares of Common
Stock and the number of shares to be reserved for issuance  upon  conversion  of
the Preferred Shares and exercise of the Warrants is set forth on Schedule 3(c).
All of such outstanding shares of capital stock have been, or upon issuance will
be, validly issued, fully paid and nonassessable.  No shares of capital stock of
the Company  (including  the Preferred  Shares,  the  Conversion  Shares and the
Warrant Shares) are subject to preemptive  rights or any other similar rights of
the  stockholders  of the Company or any liens or  encumbrances.  Except for the
Securities and as set forth on Schedule 3(c), as of the date of this  Agreement,
(i) there are no outstanding options,  warrants,  scrip, rights to subscribe to,
calls or commitments of any character  whatsoever  relating to, or securities or
rights  convertible  into or  exercisable  or  exchangeable  for,  any shares of
capital  stock of the Company or any of its  subsidiaries,  or  arrangements  by
which the  Company or any of its  subsidiaries  is or may become  bound to issue
additional  shares of capital  stock of the Company or any of its  subsidiaries,
and (ii) there are no agreements or arrangements  under which the Company or any
of its  subsidiaries  is  obligated  to register the sale of any of its or their
securities under the Securities Act (except the Registration  Rights Agreement).
Except as set forth on Schedule  3(c),  there are no securities  or  instruments
containing  antidilution  or similar  provisions  that will be  triggered by the
issuance of the Securities in accordance with the terms of this  Agreement,  the
Certificate of  Designation  or the Warrants.  The Company has furnished to each
Purchaser true and correct copies of the Company's  Certificate of Incorporation
as in effect on the date hereof ("Certificate of Incorporation"),  the Company's
By-laws  as in  effect  on the  date  hereof  (the  "By-laws"),  and  all  other
instruments and agreements governing securities  convertible into or exercisable
or exchangeable for Common Stock of the Company. The Certificate of Designation,
in the form attached hereto,  has been duly filed with the Secretary of State of
the  State of  Delaware  and,  upon the  issuance  of the  Preferred  Shares  in
accordance with the terms hereof, each Purchaser shall be entitled to the rights
set forth  therein.  The Company  shall  provide each  Purchaser  with a written
update of this representation signed by the Company's Chief Executive Officer on
behalf of the Company as of the date of each closing hereunder. The only changes
to such  schedule  after the date  hereof  shall be the result of  issuances  of
capital  stock  not in  violation  of any of the  provisions  of this  Agreement
(including the schedules hereto).

         d.  Issuance of Shares.  The Preferred Shares are duly  authorized and,
upon issuance in accordance  with the terms of this  Agreement,  will be validly

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issued,  fully paid and  non-assessable,  and free from all taxes, liens, claims
and encumbrances  and will not be subject to preemptive  rights or other similar
rights of stockholders of the Company and will not impose personal  liability on
the  holders  thereof.  The  Conversion  Shares  and  Warrant  Shares  are  duly
authorized  and reserved for  issuance,  and,  upon  conversion of the Preferred
Shares and exercise of the Warrants in accordance  with the terms thereof,  will
be  validly  issued,  fully  paid and  non-assessable,  and free from all taxes,
liens,  claims and encumbrances and will not be subject to preemptive  rights or
other similar rights of stockholders of the Company and will not impose personal
liability upon the holder thereof.

         e.  No Conflicts.  The  execution,  delivery  and  performance  of this
Agreement,  the Warrants and the  Registration  Rights Agreement by the Company,
the  performance  by the Company of its  obligations  under the  Certificate  of
Designation,   and  the   consummation  by  the  Company  of  the   transactions
contemplated hereby and thereby (including, without limitation, the issuance and
reservation  for issuance,  as applicable,  of the Preferred  Shares,  Warrants,
Conversion  Shares and Warrant Shares) will not (i) result in a violation of the
Certificate of  Incorporation  or By-laws or (ii) conflict with, or constitute a
default (or an event  which with notice or lapse of time or both would  become a
default)  under,  or  give to  others  any  rights  of  termination,  amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its  subsidiaries  is a party, or result in a violation of
any law, rule, regulation, order, judgment or decree (including U.S. federal and
state securities laws and  regulations)  applicable to the Company or any of its
subsidiaries  or by which any  property  or asset of the  Company  or any of its
subsidiaries is bound or affected (except, with respect to clause (ii), for such
conflicts, defaults, terminations, amendments, accelerations,  cancellations and
violations  as would  not,  individually  or in the  aggregate,  have a Material
Adverse Effect).  Except as set forth on Schedule 3(e),  neither the Company nor
any of its  subsidiaries  is in violation of its  Certificate of  Incorporation,
By-laws or other organizational documents and neither the Company nor any of its
subsidiaries  is in default  (and no event has  occurred  which,  with notice or
lapse of time or both,  would  put the  Company  or any of its  subsidiaries  in
default)  under,  nor has there occurred any event giving others (with notice or
lapse of time or both) any rights of  termination,  amendment,  acceleration  or
cancellation of, any agreement,  indenture or instrument to which the Company or
any of its  subsidiaries is a party,  except for possible  defaults or rights as
would not, individually or in the aggregate, have a Material Adverse Effect. The
businesses  of the Company and its  subsidiaries  are not being  conducted,  and
shall not be conducted  so long as a Purchaser  owns any of the  Securities,  in
violation of any law, ordinance or regulation of any governmental entity, except
for  possible  violations  the  sanctions  for  which  either  singly  or in the
aggregate  would not have a  Material  Adverse  Effect.  Except as  specifically
contemplated  by this  Agreement  and the  Registration  Rights  Agreement,  the
Company is not  required to obtain any  consent,  authorization  or order of, or
make any filing or registration  with, any court or  governmental  agency or any
regulatory  or self  regulatory  agency in order for it to  execute,  deliver or
perform  any of its  obligations  under  this  Agreement,  the  Warrants  or the
Registration   Rights  Agreement  or  to  perform  its  obligations   under  the
Certificate of Designation,  in each case in accordance with the terms hereof or
thereof.  Except as set forth on Schedule  3(e), the Company is not in violation
of the listing  requirements of the NASDAQ  National Market  ("NASDAQ") and does
not reasonably  anticipate  that the Common Stock will be delisted by NASDAQ for
the foreseeable future.

         f.  SEC Documents,  Financial Statements.  Since December 31, 1993, the
Company has timely filed all reports,  schedules,  forms,  statements  and other
documents  required  to be filed by it with the SEC  pursuant  to the  reporting
requirements  of the Securities  Exchange Act of 1934, as amended (the "Exchange
Act") (all of the  foregoing,  filed prior to the date hereof and after December
31,  1993,  and all  exhibits  included  therein and  financial  statements  and
schedules thereto and documents (other than exhibits)  incorporated by reference

                                      -7-
<PAGE>

therein,  being  hereinafter  referred  to herein as the "SEC  Documents").  The
Company has  delivered to each  Purchaser  true and  complete  copies of the SEC
Documents, except for such exhibits, schedules and incorporated documents. As of
their respective dates, the SEC Documents complied in all material respects with
the  requirements  of the Exchange Act and the rules and  regulations of the SEC
promulgated  thereunder  applicable  to the SEC  Documents,  and none of the SEC
Documents,  at the time they  were  filed  with the SEC,  contained  any  untrue
statement of a material  fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the  circumstances  under  which they were  made,  not  misleading.  As of their
respective  dates,  the financial  statements of the Company included in the SEC
Documents  complied  as  to  form  in  all  material  respects  with  applicable
accounting  requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
U.S. generally accepted accounting principles,  consistently applied, during the
periods  involved  (except (i) as may be otherwise  indicated in such  financial
statements  or the  notes  thereto,  or (ii) in the  case of  unaudited  interim
statements,  to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material respects the consolidated
financial  position of the Company and its  consolidated  subsidiaries as of the
dates thereof and the  consolidated  results of their  operations and cash flows
for the periods then ended  (subject,  in the case of unaudited  statements,  to
normal  year-end  audit  adjustments).  Except  as set  forth  in the  financial
statements of the Company  included in the SEC Documents filed prior to the date
hereof, the Company has no liabilities,  contingent or otherwise, other than (i)
liabilities  incurred in the ordinary course of business  subsequent to the date
of  such  financial   statements  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 such  financial
statements,  which  liabilities and  obligations  referred to in clauses (i) and
(ii)  individually  or in the  aggregate,  are  not  material  to the  financial
condition or operating results of the Company.  Without limiting the accuracy of
the representations  contained in this Section 3(f), the Purchasers  acknowledge
that the Company has disclosed to the Purchasers the items set forth on Schedule
3(f).

         g. Absence of Certain Changes.  Since December 31, 1996, there has been
no material adverse change and no material adverse  development in the business,
properties,  operations, prospects, financial condition or results of operations
of the Company  except as  disclosed  in Schedule  3(g) or in the SEC  Documents
filed prior to the date hereof.

         h. Absence of  Litigation.  Except as  disclosed  in the SEC  Documents
filed prior to the date hereof, there is no action, suit, proceeding, inquiry or
investigation  before  or  by  any  court,  public  board,   government  agency,
self-regulatory organization or body pending or, to the knowledge of the Company
or any of its subsidiaries,  threatened against or affecting the Company, any of
its  subsidiaries,  or any of their  respective  directors  or officers in their
capacities as such.

         i. Intellectual Property. Except as set forth on Schedule 3(i), each of
the Company and its subsidiaries owns or is licensed to use all patents,  patent
applications,  trademarks,  trademark applications,  trade names, service marks,
copyrights, copyright applications, licenses, permits, know-how (including trade
secrets and other  unpatented  and/or  unpatentable  proprietary or confidential
information,  systems or procedures)  and other similar  rights and  proprietary
knowledge  (collectively,  "Intangibles")  necessary  for  the  conduct  of  its
business as now being conducted and as described in the Company's  Annual Report
on Form 10-K for the fiscal year ended  December 31, 1996. To the best knowledge
of the Company,  neither the Company nor any subsidiary of the Company infringes
or is in  conflict  with any  right of any  other  person  with  respect  to any
Intangibles  which,  individually  or in the  aggregate,  if the  subject  of an

                                      -8-
<PAGE>

unfavorable decision,  ruling or finding,  would have a Material Adverse Effect.
Neither the Company nor any of its  subsidiaries  has received written notice of
any pending  conflict with or  infringement  upon such third party  Intangibles.
Neither the Company nor any of its  subsidiaries  has entered  into any consent,
indemnification, forbearance to sue or settlement agreements with respect to the
validity of the  Company's  or its  subsidiaries'  ownership or right to use its
Intangibles  and, to the best  knowledge of the Company,  there is no reasonable
basis for any such claim to be successful. Except as set forth on Schedule 3(i),
the Intangibles are valid and enforceable and no registration  relating  thereto
has  lapsed,  expired  or been  abandoned  or  cancelled  or is the  subject  of
cancellation or other adversarial proceedings, and all applications therefor are
pending  and  are in good  standing.  The  Company  and  its  subsidiaries  have
complied, in all material respects,  with its respective contractual obligations
relating to the protection of the Intangibles used pursuant to licenses.  To the
best  knowledge  of the Company,  no person is  infringing  on or violating  the
Intangibles owned or used by the Company or its subsidiaries.

         j.  Foreign  Corrupt  Practices.  Neither the  Company,  nor any of its
subsidiaries,  nor any director, officer, agent, employee or other person acting
on behalf of the  Company or any  subsidiary  has,  in the course of his actions
for, or on behalf of, the  Company,  used any  corporate  funds for any unlawful
contribution,  gift,  entertainment  or  other  unlawful  expenses  relating  to
political activity;  made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977;
or made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee.

         k.  Disclosure.  All information  relating to or concerning the Company
set forth in this  Agreement or provided to the  Purchasers  pursuant to Section
2(d) hereof and  otherwise  in  connection  with the  transactions  contemplated
hereby is true and  correct in all  material  respects  and the  Company has not
omitted to state any material  fact  necessary  in order to make the  statements
made  herein or  therein,  in light of the  circumstances  under which they were
made,  not  misleading.  No event or  circumstance  has  occurred or exists with
respect  to  Company  or  its  subsidiaries  or  their  respective   businesses,
properties,  prospects,  operations or financial conditions,  which has not been
publicly  disclosed but,  under  applicable  law, rule or  regulation,  would be
required to be disclosed by the Company in a registration statement filed on the
date hereof by the Company under the  Securities Act with respect to the primary
issuance of the Company's securities.

         l.  Acknowledgment  Regarding  Purchasers'  Purchase of the Units.  The
Company  acknowledges  and agrees that none of the  Purchasers  or the Placement
Agent are acting as a financial  advisor or  fiduciary of the Company (or in any
similar   capacity)  with  respect  to  this   Agreement  or  the   transactions
contemplated  hereby,  and any advice given by any  Purchaser  or the  Placement
Agent,  or any of their  representatives  or  agents,  in  connection  with this
Agreement and the transactions  contemplated hereby is merely incidental to each
Purchaser's  purchase  of Units or such  Placement's  Agent role as a  placement
agent and has not been relied upon the Company in any way.  The Company  further
represents  to each  Purchaser  that the  Company's  decision to enter into this
Agreement has been based solely on an independent  evaluation by the Company and
its representatives.

         m.  [Intentionally Omitted]

         n.  No General Solicitation.  Neither the  Company nor any  distributor
participating on the Company's behalf in the  transactions  contemplated  hereby
(if any) nor any person  acting for the Company,  or any such  distributor,  has
conducted any "general  solicitation,"  as such term is defined in Regulation D,
with respect to any of the Securities being offered hereby.

                                      -9-
<PAGE>

         o.  No  Integrated Offering.  Except  as set  forth on  Schedule  3(o),
neither the Company, nor any of its affiliates,  nor any person acting on its or
their  behalf,  has  directly  or  indirectly  made any  offers  or sales of any
security or solicited any offerers to buy any security under  circumstances that
would require  registration  of the  Securities  being offered  hereby under the
Securities  Act or cause this offering of  Securities to be integrated  with any
prior  offering  of  the  Company  for  purposes  of the  Securities  Act or any
applicable stockholder approval provisions.

         p. No Brokers. The Company has taken no action which would give rise to
any claim by any  person for  brokerage  commissions,  finder's  fees or similar
payments  by any  Purchaser  relating  to  this  Agreement  or the  transactions
contemplated  hereby,  except  for  dealings  with  the  Placement  Agent  whose
commissions and fees will be paid for by the Company.

         q. Acknowledgment of Dilution. The number of Conversion Shares issuable
upon conversion of the Preferred  Shares may increase in certain  circumstances,
including  the  circumstance  wherein  the  trading  price of the  Common  Stock
declines.  The Company  acknowledges  that its  obligation  to issue  Conversion
Shares  upon  conversion  of  the  Preferred   Shares  in  accordance  with  the
Certificate  of  Designation  is absolute and  unconditional,  regardless of the
dilution  that  such  issuance  may  have on the  ownership  interests  of other
stockholders.  Taking  the  foregoing  into  account,  the  Company's  Board  of
Directors  has  determined  that the  issuance  of the Units  hereunder  and the
consummation  of the  other  transactions  contemplated  hereby  are in the best
interests of the Company and its stockholders.

         r. Title.  The Company and its  subsidiaries  have good and  marketable
title in fee simple to all real  property and good and  marketable  title to all
personal property owned by them which is material to the business of the Company
and its subsidiaries, in each case free and clear of all liens, encumbrances and
defects  except  such  as are  described  in  Schedule  3(r)  or  such as do not
materially  affect the value of such  property and do not  materially  interfere
with the use made and  proposed  to be made of such  property by the Company and
its  subsidiaries.  Any real  property  and  facilities  held under lease by the
Company  and its  subsidiaries  are held by them  under  valid,  subsisting  and
enforceable  leases  with  such  exceptions  as  are  not  material  and  do not
materially  interfere with the use made and proposed to be made of such property
and buildings by the Company and its subsidiaries.


         s. Tax Status.  Except as set forth on Schedule  3(s),  the Company and
each of its  subsidiaries has made or filed all federal and state income and all
other tax returns,  reports and  declarations  required by any  jurisdiction  to
which it is subject  (unless and only to the extent that the Company and each of
its subsidiaries has set aside on its books provisions  reasonably  adequate for
the payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental  assessments  and charges  that are  material  in amount,  shown or
determined to be due on such  returns,  reports and  declarations,  except those
being  contested  in good  faith  and  has  set  aside  on its  books  provision
reasonably  adequate for the payment of all taxes for periods  subsequent to the
periods  to which such  returns,  reports or  declarations  apply.  There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction,  and the officers of the Company know of no basis for any such
claim.

4.       COVENANTS.

         a.  Best Efforts.  The  parties shall use their best efforts timely  to
satisfy each of the conditions described in Section 6 and 7 of this Agreement.

         b.  Form D:  Blue Sky Laws.  The  Company  agrees to file a Form D with
respect to the Securities as required  under  Regulation D and to provide a copy
thereof to each Purchaser  promptly after such filing.  The Company shall, on or

                                      -10-
<PAGE>

before  the date of the First  Closing  take such  action as the  Company  shall
reasonably  determine  is necessary  to qualify the  Securities  for sale to the
Purchasers pursuant to this Agreement under applicable  securities or "blue sky"
laws of the states of the United States or obtain exemption therefrom, and shall
provide  evidence of any such action so taken to the  Purchasers  on or prior to
the date of the First Closing.

         c.  Reporting Status. So long as any Purchaser beneficially owns any of
the Securities,  the Company shall timely file all reports  required to be filed
with the SEC pursuant to the Exchange  Act, and the Company  shall not terminate
its status as an issuer  required to file reports under the Exchange Act even if
the  Exchange  Act or the rules and  regulations  thereunder  would  permit such
termination.

         d. Use of Proceeds. The Company shall use the proceeds from the sale of
the Units as set forth in Schedule  4(d).  None of the proceeds from the sale of
the Units shall be used to redeem or otherwise  acquire,  or to pay any dividend
or make any  distribution  with respect to, any of the  Company's  capital stock
(including,  without limitation, to satisfy any obligation which the Company may
have in connection with the  transactions  contemplated by that certain Purchase
Agreement   dated  December  31,  1997  by  and  between  the  Company  and  CDR
Enterprises).

         e. Right of First  Offer.  The  Company  agrees  that during the period
beginning  on the date  hereof and ending two  hundred  and  seventy  (270) days
following  the date of the last closing  which occurs  hereunder  (the  "Lock-Up
Period"),  the Company will not, without the prior written consent of Purchasers
holding  two-thirds of the Preferred Shares then outstanding,  contract with any
party to obtain  additional  equity financing  (including debt financing with an
equity  component)  in any form (a "Future  Offering")  unless the Company shall
have first  delivered to each Purchaser at least five (5) business days prior to
the closing of such Future  Offering,  written  notice  describing  the proposed
Future Offering,  including the terms and conditions thereof, and providing each
Purchaser and its affiliates,  an option during the five (5) business day period
following  delivery of such notice to  purchase  the lower of (x) the  aggregate
purchase price of all Units  purchased by such Purchaser  hereunder and (y) such
Purchaser's pro rata portion (based on the aggregate purchase price of all Units
purchased by such Purchaser  hereunder  compared to the aggregate purchase price
of all Units purchased  hereunder) of the securities being offered in the Future
Offering  on the same  terms  as  contemplated  by such  Future  Offering,  (the
limitation  referred to in this sentence is referred to as the "Capital  Raising
Limitation").  The Capital Raising Limitation shall not apply to any transaction
involving  issuances of securities as consideration for a merger,  consolidation
or acquisition  of assets,  or in connection  with any strategic  partnership or
joint venture (the primary purpose of which is not to raise equity capital),  or
as  consideration  for the acquisition of a business,  product or license by the
Company or exercise of options by employees or  directors.  The Capital  Raising
Limitation also shall not apply to (i) the issuance of securities pursuant to an
underwritten public offering,  (ii) the issuance of securities to holders of the
Company's Series A Cumulative Convertible Preferred Stock in connection with the
restructuring  of such  capital  stock,  (iii) the issuance of  securities  upon
exercise or conversion of the Company's  options,  warrants or other convertible
securities  outstanding  as of the date  hereof or (iv) the grant of  additional
options or warrants, or the issuance of additional securities, under any Company
stock option or restricted stock plan for the benefit of the Company's employees
or directors.  Notwithstanding the foregoing, no Purchaser shall have any rights
under  this  Section  7(e) at any time  that it no longer  holds  any  Preferred
Shares.

         f.  Expenses.  Except  as  otherwise  provided  in  Section  5  of  the
Registration  Rights  Agreement,  each party hereto shall be responsible for its
own  expenses   incurred  in  connection  with  the  negotiation,   preparation,
execution,  delivery and performance of this Agreement and the other  agreements

                                      -11-
<PAGE>

to be executed in connection herewith.

         g.  Financial  Information.  The Company  agrees to send the  following
reports to each Purchaser until such Purchaser  transfers,  assigns or sells all
of its  Securities:  (i) within  ten (10) days after the filing  with the SEC, a
copy of its Annual Report on Form 10-K, its Quarterly  Reports on Form 10-Q, its
proxy  statements  and any Current  Reports on Form 8-K; and (ii) within one (1)
day after release,  copies of all press releases issued by the Company or any of
its subsidiaries.

         h.  Reservation  of  Shares.  The  Company  shall  at  all  times  have
authorized  and  reserved  for the  purpose of issuance a  sufficient  number of
shares of Common  Stock to provide for the full  conversion  of the  outstanding
Preferred Shares and issuance of the Conversion  Shares in connection  therewith
and the full exercise of the Warrants and the issuance of the Warrant  Shares in
connection therewith and as otherwise required by the Certificate of Designation
and the Warrants.  Moreover,  upon approval by its stockholders of the proposals
contemplated  by Section 4(n),  the Company shall  increase the number of shares
reserved for issuance upon conversion and exercise of the outstanding  Preferred
Shares  and  Warrants  to an amount  equal to 200% of the  number of  Conversion
Shares  issuable  upon the full  conversion  of the then  outstanding  Preferred
Shares plus 100% of the Warrant  Shares  issuable  upon the full exercise of the
then outstanding  Warrants (based on the conversion and exercises prices thereof
then in effect).  The Company shall not reduce the number of shares reserved for
issuance upon  conversion  of the Preferred  Shares and the full exercise of the
Warrants  without the consent of Purchasers  holding a majority of the Preferred
Shares then held by all Purchasers.

         i.  Listing.  The  Company  shall  promptly  secure the  listing of the
Conversion Shares and Warrant Shares upon each national  securities  exchange or
automated  quotation  system, if any, upon which shares of Common Stock are then
listed (subject to official  notice of issuance) and shall maintain,  so long as
any  other  shares of Common  Stock  shall be so  listed,  such  listing  of all
Conversion  Shares from time to time issuable  upon  conversion of the Preferred
Shares and  Warrant  Shares  from time to time  issuable  upon  exercise  of the
Warrants.  The Company will not take any action  adverse to the  continued,  and
will use all commercially  reasonable and lawful efforts to continue the listing
and  trading  of its Common  Stock on the  NASDAQ,  the NASDAQ  Small Cap Market
("SmallCap"),  the New  York  Stock  Exchange  ("NYSE")  or the  American  Stock
Exchange ("AMEX") and will comply in all respects with the Company's  reporting,
filing  and  other  obligations  under  the  bylaws  or  rules  of the  National
Association of Securities  Dealers  ("NASD") and such exchanges,  as applicable.
The Company shall promptly  provide to each holder of Preferred Shares copies of
any notices it receives regarding the continued  eligibility of the Common Stock
for trading in the  over-the-counter  market or, if  applicable,  any securities
exchange  (including the NASDAQ) on which securities of the same class or series
issued by the Company are then listed or quoted, if any.

         j.  Corporate Existence.  So long as a Purchaser  beneficially owns any
Preferred  Shares  or  Warrants,   the  Company  shall  maintain  its  corporate
existence,  and in the  event  of a  merger,  consolidation  or  sale  of all or
substantially all of the Company's assets, the Corporation shall ensure that the
surviving  or  successor  entity  in  such  transaction  assumes  the  Company's
obligations  hereunder and under the agreements and instruments  entered into in
connection  herewith  regardless  of whether or not the Company would have had a
sufficient  number of  shares  of Common  Stock  authorized  and  available  for
issuance in order to effect the conversion of all Preferred  Shares and exercise
in full of all Warrants outstanding as of the date of such transaction.

         k.  No Integrated  Offerings.  The Company shall not make any offers or
sales of any security (other than the Securities) under circumstances that would
require registration of the Securities being offered or sold hereunder under the
Securities  Act or cause this offering of  Securities to be integrated  with any

                                      -12-
<PAGE>

other offering of securities by the Company for purposes of NASDAQ Rule 4460(i).

         l.  Transfer Agent  Instructions.  No later than the tenth business day
following  the date of the  First  Closing  the  Company  shall  have  delivered
evidence  reasonably  satisfactory to the Purchasers that the Company's transfer
agent has agreed to act in accordance with irrevocable  instructions in the form
attached hereto as Exhibit E.

         m.  Compliance  with  Certificate  of  Designation.  The Company  shall
comply with all of the provisions contained in the Certificate of Designation.

         n.  Stockholder  Approval.  The Company shall hold a special meeting of
its  stockholders  no later than  December  31, 1997 and use its best efforts to
obtain at such meeting (i) such approvals of the Company's  stockholders  as may
be required to issue all of the shares of Common Stock issuable upon  conversion
of, or otherwise with respect to, the Preferred  Shares and the shares of Common
Stock  issuable  upon  exercise of, or  otherwise  with respect to, the Warrants
without  violating  NASD Rule 4460(i) (or any  successor  rule thereto which may
then be in effect) and (ii) an increase in its authorized shares of Common Stock
so that it can reserve 200% of the number of Conversion Shares issuable upon the
full conversion of the Preferred Shares then outstanding and issuable  hereunder
plus 100% of the Warrant Shares  issuable upon the full exercise of the Warrants
then  outstanding and issuable  hereunder (based on the conversion and exercises
prices  thereof  then in effect).  The Company  shall comply with the filing and
disclosure  requirements  of Section 14  promulgated  under the  Exchange Act in
connection with the solicitation, acquisition and disclosure of such stockholder
approval.  The Company  represents  and warrants that its Board of Directors has
unanimously  recommended that the Company's  stockholders  approve the proposals
contemplated by this Section 4(n) and shall so indicate such  recommendation  in
the proxy statement used to solicit such stockholder approval.

5.       TRANSFER AGENT INSTRUCTIONS.

         a. The Company shall instruct its transfer agent to issue certificates,
registered  in the name of each  Purchaser  or its nominee,  for the  Conversion
Shares and Warrant Shares in such amounts as specified from time to time by such
Purchaser to the Company upon conversion of the Preferred  Shares or exercise of
the Warrants.  To the extent and during the periods provided in Section 2(f) and
2(g) of this Agreement,  all such certificates shall bear the restrictive legend
specified in Section 2(g) of this Agreement.

         b.  The  Company   warrants  that  no   instruction   other  than  such
instructions  referred to in this Section 5, and stop transfer  instructions  to
give effect to Section 2(f) hereof in the case of all of the Securities prior to
registration  of the  Conversion  Shares and Warrant Shares under the Securities
Act, will be given by the Company to its transfer  agent and that the Securities
shall  otherwise be freely  transferable on the books and records of the Company
as and to the extent  provided in this  Agreement  and the  Registration  Rights
Agreement.  Nothing in this  Section  shall  affect in any way each  Purchaser's
obligations  and  agreement  set forth in  Section  2(g)  hereof  to resell  the
Securities pursuant to an effective registration statement or in compliance with
an exemption from the registration requirements of applicable securities law.

         c. If a  Purchaser  provides  the  Company  with an opinion of counsel,
which  opinion of counsel shall be in form,  substance  and scope  customary for
opinions  of  counsel  in  comparable  transactions,  to  the  effect  that  the
Securities to be sold or transferred  may be sold or transferred  pursuant to an
exemption from registration, or a Purchaser provides the Company with reasonable
assurances  that such  Securities  may be sold pursuant to Rule 144, the Company
shall permit the transfer, and, in the case of the Conversion Shares and Warrant
Shares promptly instruct its transfer agent to issue one or more certificates in
such name and in such denominations as specified by a Purchaser.

         d. The  Company  acknowledges  that a breach  by it of its  obligations
hereunder will cause irreparable harm to a Purchaser by vitiating the intent and
purpose  of  the  transaction  contemplated  hereby.  Accordingly,  the  Company

                                      -13-
<PAGE>

acknowledges  that the remedy at law for a breach of its obligations  under this
Section 5 will be inadequate and agrees,  in the event of a breach or threatened
breach by the  Company of the  provisions  of this  Section 5, that a  Purchaser
shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring  immediate  issuance and transfer,  without
the necessity of showing  economic  loss and without any bond or other  security
being required.

6.       CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

         The obligation of the Company  hereunder to issue and sell the Units to
a Purchaser at a closing hereunder is subject to the satisfaction,  at or before
the applicable  closing, of each of the following  conditions thereto,  provided
that these  conditions  are for the Company's  sole benefit and may be waived by
the Company at any time in its sole discretion. The obligation of the Company to
issue and sell the Units to any  Purchaser  hereunder  is distinct  and separate
from its obligation to issue and sell Units to any other Purchaser hereunder and
any failure by one or more Purchasers to fulfill the conditions set forth herein
or to consummate the purchase of Units hereunder will not relieve the Company of
its obligations with respect to any other Purchaser.

         a.  With respect to the First Closing:

                  (i) The applicable Purchaser shall have executed the signature
page to this Agreement and the Registration Rights Agreement,  and delivered the
same to the Company.

                  (ii)  The  applicable   Purchaser  shall  have  delivered  the
Purchase Price for the Units  purchased at the First Closing in accordance  with
Section 1(b) above.

                  (iii) The  representations  and  warranties of the  applicable
Purchaser  shall be true and correct as of the date when made and as of the date
and time of such closing as though made at that time (except for representations
and  warranties  that speak as of a specific  date,  which  representations  and
warranties  shall be true  and  correct  as of such  date),  and the  applicable
Purchaser shall have performed,  satisfied and complied in all material respects
with the covenants,  agreements and conditions  required by this Agreement to be
performed, satisfied or complied with by the applicable Purchaser at or prior to
the date of the First Closing.

                  (iv) No statute,  rule,  regulation,  executive order, decree,
ruling or injunction shall have been enacted,  entered,  promulgated or endorsed
by  any  court  or  governmental  authority  of  competent  jurisdiction  or any
self-regulatory  organization  having  authority  over the matters  contemplated
hereby which prohibits the consummation of any of the transactions  contemplated
by this Agreement.

         b.  With respect to the Second and Third Closing:

                  (i) The applicable Purchaser shall have executed the signature
page to this Agreement and the Registration Rights Agreement,  and delivered the
same to the Company.

                  (ii) The  applicable  Purchaser  shall have paid the  Purchase
Price for the Units  purchased at such closing in  accordance  with Section 1(b)
above.

                  (iii) The  representations  and  warranties of the  applicable
Purchaser  shall be true and correct as of the date when made and as of the date

                                      -14-
<PAGE>

and time of such closing as though made at that time (except for representations
and  warranties  that speak as of a specific  date,  which  representations  and
warranties  shall be true  and  correct  as of such  date),  and the  applicable
Purchaser shall have performed,  satisfied and complied in all material respects
with the covenants,  agreements and conditions  required by this Agreement to be
performed, satisfied or complied with by the applicable Purchaser at or prior to
the date of such closing.

                  (iv) No statute,  rule,  regulation,  executive order, decree,
ruling or injunction shall have been enacted,  entered,  promulgated or endorsed
by  any  court  or  governmental  authority  of  competent  jurisdiction  or any
self-regulatory  organization  having  authority  over the matters  contemplated
hereby which prohibits the consummation of any of the transactions  contemplated
by this Agreement.

7.       CONDITIONS TO EACH PURCHASER'S OBLIGATION TO PURCHASE.

         The obligation of each Purchaser  hereunder to purchase the Units to be
purchased by it at the closings is subject to the satisfaction, at or before the
applicable  closing  date, of each of the  following  conditions,  provided that
these conditions are for such Purchaser's sole benefit and may be waived by such
Purchaser at any time in the Purchaser's sole discretion:

         a.  With respect to the First Closing:

                  (i) The Company shall have executed the signature page to this
Agreement and the Registration Rights Agreement,  and delivered the same to such
Purchaser.

                  (ii) The  Certificate of Designation  shall have been accepted
for  filing  with the  Secretary  of State of the State of  Delaware  and a copy
thereof  certified  by the  Secretary  of  State of  Delaware  shall  have  been
delivered to such Purchaser.

                  (iii) The Company shall have  delivered to such Purchaser duly
executed certificates and Warrant agreements (each in such denominations as such
Purchaser shall request) representing the Preferred Shares and Warrants being so
purchased by such Purchaser at the First Closing in accordance with Section 1(b)
above.

                  (iv) The Common  Stock shall be  authorized  for  quotation on
NASDAQ and trading in the Common Stock (or NASDAQ generally) shall not have been
suspended by the SEC or NASDAQ.

                  (v) The representations and warranties of the Company shall be
true and  correct  as of the  date  when  made  and as of the date of the  First
Closing as though made at that time (except for  representations  and warranties
that speak as of a specific date, which  representations and warranties shall be
true  and  correct  as of such  date)  and the  Company  shall  have  performed,
satisfied and complied in all material  respects with the covenants,  agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the date of the First Closing. Such Purchaser
shall have received a certificate,  executed by the Chief  Executive  Officer of
the Company,  dated as of the date of the First Closing to the foregoing  effect
and as to such other matters as may be reasonably requested by such Purchaser.

                  (vi) No statute,  rule,  regulation,  executive order, decree,
ruling or injunction shall have been enacted,  entered,  promulgated or endorsed
by  any  court  or  governmental  authority  of  competent  jurisdiction  or any
self-regulatory  organization  having  authority  over the matters  contemplated
hereby which prohibits the consummation of any of the transactions  contemplated
by this Agreement.

                                      -15-
<PAGE>

                  (vii) Such  Purchaser  shall have  received  an opinion of the
Company's counsel, dated as of the date of the First Closing, in form, scope and
substance reasonably satisfactory to the Purchaser and in substantially the form
of Exhibit D attached hereto.

                  (viii) The aggregate number of Units being purchased hereunder
by all Purchasers at the First Closing hereunder shall be at least 3,000.

         b.  With  respect  to  the  Second  Closing,  the Third Closing and any
closing under Section 1(a)(iv):

                  (i) The Company  shall have  executed  this  Agreement and the
Registration Rights Agreement, and delivered the same to such Purchaser.

                  (ii) The Company shall have  delivered to such  Purchaser duly
executed certificates and Warrant agreements (each in such denominations as such
Purchaser shall request) representing the Preferred Shares and Warrants being so
purchased  by such  Purchaser at such  closing in  accordance  with Section 1(b)
above.

                  (iii) The Common Stock shall be  authorized  for  quotation on
NASDAQ and trading in the Common Stock (or NASDAQ generally) shall not have been
suspended by the SEC or NASDAQ.

                  (iv) The  representations  and warranties of the Company shall
be true and correct as of the date when made and as of the date of such  closing
as though made at that time  (except for  representations  and  warranties  that
speak as of a specific date, which  representations and warranties shall be true
and correct as of such date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants,  agreements and conditions
required by this  Agreement to be  performed,  satisfied or complied with by the
Company  at or prior to the date of such  closing.  Such  Purchaser  shall  have
received a certificate,  executed by the Chief Executive Officer of the Company,
dated as of the date of such  closing,  to the  foregoing  effect and as to such
other matters as may be reasonably requested by such Purchaser.

                  (v) No statute,  rule,  regulation,  executive order,  decree,
ruling or injunction shall have been enacted,  entered,  promulgated or endorsed
by  any  court  or  governmental  authority  of  competent  jurisdiction  or any
self-regulatory  organization  having  authority  over the matters  contemplated
hereby which prohibits the consummation of any of the transactions  contemplated
by this Agreement.

                  (vi) Such  Purchaser  shall  have  received  an opinion of the
Company's  counsel,  dated as of the date of such  closing,  in form,  scope and
substance  reasonably  satisfactory to such Purchaser and in  substantially  the
form of Exhibit D attached hereto.

                  (vii)  No  material  adverse  change  or  development  in  the
business,  operations,   properties,  or  financial  condition,  or  results  of
operations of the Company shall have occurred since the First Closing except for
such changes or developments set forth on Schedule 7(b)(vii).

         c. With respect to the Second Closing, each of the following conditions
must also be satisfied:

                  (i) The Company's quarterly report on Form 10-Q for the fiscal
quarter  ended  September  30, 1997 shall have been timely filed with the SEC at
least two (2) business days prior to the date of the Second Closing.

                  (ii) The first Registration  Statement required to be filed by
the Company pursuant to Section 2(a) of the Registration  Rights Agreement shall
have been declared effective by the SEC and shall be effective and available for
use by such Purchaser as of the date of the Second Closing.

                                      -16-
<PAGE>

                  (iii) The Additional  Second  Closing  Conditions set forth on
Exhibit F shall have been satisfied.

                  (iv) The date  of the  Second  Closing shall not be later than
November 30, 1997.

                  (v) The stockholder approvals  contemplated  by  Section  4(n)
shall have been obtained.

         d.  With respect to the Third Closing, each of the following conditions
must also be satisfied:

                  (i) The  Additional  Third  Closing  Conditions  set  forth on
Exhibit F shall have been satisfied.

                  (ii) The Second Closing shall have occurred.

                  (iii) All Registration  Statements required to be filed by the
Company pursuant to Section 2(a) of the  Registration  Rights Agreement prior to
the Third  Closing  shall have been  declared  effective by the SEC and shall be
effective and  available  for use by such  Purchaser as of the date of the Third
Closing.

                  (iv) The Company  has  announced  to  the  general  public its
earnings for the 1997 fiscal year.

                  (v) The date  of  the  Third  Closing  shall not be later than
March 15, 1997.

                  (vi) The stockholder  approvals  contemplated  by Section 4(n)
shall have been obtained.

8.       GOVERNING LAW; MISCELLANEOUS.

         a. Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in  accordance  with the laws of the State of Delaware  applicable  to
contracts made and to be performed in the State of Delaware. The Company and the
Purchasers  irrevocably  consent  to the  exclusive  jurisdiction  of the United
States  federal  courts  located in Kent  County in the State of Delaware in any
suit or  proceeding  based on or arising under this  Agreement  and  irrevocably
agrees that all claims in respect of such suit or  proceeding  may be determined
in such courts.  The Company  irrevocably  waived the defense of an inconvenient
forum to the  maintenance of such suit or proceeding.  Service of process on the
Company  mailed by first class mail shall be deemed in every  respect  effective
service of process  upon the  Company  in any such suit or  proceeding.  Nothing
herein  shall affect the right of any  Purchaser  to serve  process in any other
manner permitted by law. The Company agrees that a final non-appealable judgment
in any such suit or proceeding  shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful manner.
         b. Counterparts.  This   Agreement  may be  executed  in  two  or  more
counterparts,  all of which shall be considered  one and the same  agreement and
shall  become  effective  when  counterparts  have been signed by each party and
delivered to the other party.  This Agreement,  once executed by a party, may be
delivered to the other  parties  hereto by facsimile  transmission  of a copy of
this Agreement  bearing the signature of the party so delivering this Agreement.
In the event any  signature is delivered  by facsimile  transmission,  the party
using such means of delivery shall cause the manually executed Executive Page(s)
to be  physically  delivered  to the  other  party  within  five (5) days of the
execution hereof.

         c. Headings.  The headings of this  Agreement  are for  convenience  of
reference  and shall not form part of, or affect  the  interpretation  of,  this
Agreement.

                                      -17-
<PAGE>

         d. Severability.  If any provision of this Agreement  shall be  invalid
or unenforceable in any jurisdiction,  such invalidity or unenforceability shall
not affect the validity or  enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.

         e. Entire  Agreement;  Amendments.  This Agreement and the  instruments
referenced  herein contain the entire  understanding of the parties with respect
to the matters covered herein and therein and, except as specifically  set forth
herein  or  therein,   neither  the   Company  nor  the   Purchasers   make  any
representation,  warranty, covenant or undertaking with respect to such matters.
No provision of this  Agreement  may be waived  other than by an  instrument  in
writing signed by the party to be charged with  enforcement  and no provision of
this  Agreement may be amended other than by an instrument in writing  signed by
the Company and the Purchasers.

         f.  Notices.  Any notices  required or  permitted to be given under the
terms of this  Agreement  shall be sent by certified or registered  mail (return
receipt  requested)  or  delivered  personally  or by  courier  or by  confirmed
telecopy,  and shall be effective  five days after being placed in the mail,  if
mailed,  or upon receipt or refusal of receipt,  if delivered  personally  or by
courier or confirmed telecopy,  in each case addressed to a party. The addresses
for such communications shall be:
                           If to the Company:

                           Network Imaging Corporation
                           500 Huntmar Park Drive
                           Herndon, Virginia 20170
                           Attn:  President

                           with a copy to:

                           General Counsel's Office
                           Network Imaging Corporation
                           500 Huntmar Park Drive
                           Herndon, Virginia 20170

         If to any Purchaser,  to such address set forth under such  Purchaser's
name on the Execution Page hereto executed by such Purchaser.

         Each party shall  provide  notice to the other parties of any change in
address.

         g.  Successors and Assigns.  This  Agreement  shall be binding upon and
inure to the benefit of the parties and their  successors  and assigns.  Neither
the Company nor any  Purchaser  shall  assign  this  Agreement  or any rights or
obligations   hereunder   without  the  prior  written  consent  of  the  other.
Notwithstanding the foregoing,  any Purchaser may assign its rights hereunder to
any of its "affiliates," as that term is defined under the Exchange Act, without
the consent of the Company;  provided, such assignee is an "accredited investor"
as such term is defined in Rule 501(a) of Regulation D and such  assignment will
not impose any significant obligations on the Company under the blue sky laws of
any jurisdiction. This provision shall not limit a Purchaser's right to transfer
the  Securities  pursuant to the terms of the  Certificate of  Designation,  the
Warrants and this Agreement or to assign such  Purchaser's  rights  hereunder to
any such transferee.

         h.  Third Party  Beneficiaries.  This  Agreement  is  intended  for the
benefit of the parties  hereto and their  respective  permitted  successors  and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person,  except for the  provisions of Section 2(j) and 3(l) which
are for the benefit of, and may be enforced by, the Placement Agent.

                                      -18-
<PAGE>

         i. Survival.  The representations and warranties of the Company and the
agreements  and  covenants set forth in Sections 3, 4, 5 and 8 shall survive the
closings hereunder  notwithstanding any due diligence investigation conducted by
or on  behalf  of any  Purchasers.  Moreover,  none of the  representations  and
warranties  made by the  Company  herein  shall act as a waiver of any rights or
remedies a Purchaser may have under applicable federal or state securities laws.
Notwithstanding  the  foregoing,  any  disclosure  made  by the  Company  to the
Purchasers in this Agreement (including, without limitation, in Section 3 hereof
or in  the  Schedules  attached  hereto)  shall  constitute  disclosure  to  the
Purchasers for purposes of any applicable  federal or state securities laws. The
Company  agrees to indemnify and hold  harmless each  Purchaser and each of such
Purchaser's  officers,  directors,  employees,  partners,  members,  agents  and
affiliates for loss or damage arising as a result of or related to any breach or
alleged  breach by the Company of any of its  representations  or covenants  set
forth herein, including advancement of expenses as they are incurred.

         j.  Publicity.  The Company and each Purchaser  shall have the right to
approve before issuance any press releases,  SEC, NASDAQ or NASD filings, or any
other public  statements with respect to the transactions  contemplated  hereby;
provided,  however,  that the  Company  shall be  entitled,  without  the  prior
approval of the  Purchasers,  to make any press  release or SEC,  NASDAQ or NASD
filings with respect to such  transactions  as is required by applicable law and
regulations  (although  the  Purchasers  shall be  consulted  by the  Company in
connection  with any  such  press  release  prior to its  release  and  shall be
provided with a copy thereof).

         k. Further Assurances.  Each party shall do and perform, or cause to be
done and  performed,  all such  further acts and things,  and shall  execute and
deliver all such other agreements,  certificates,  instruments and documents, as
the other  party may  reasonably  request  in order to carry out the  intent and
accomplish  the  purposes  of  this  Agreement  and  the   consummation  of  the
transactions contemplated hereby.

         l.  Termination.  In the event  that the First  Closing  shall not have
occurred on or before July 31, 1997,  unless the parties agree  otherwise,  this
Agreement shall terminate at the close of business on such date. Notwithstanding
any  termination  of this  Agreement,  any party not in breach of this Agreement
shall preserve all rights and remedies it may have against  another party hereto
for a breach of this Agreement prior to the termination hereof.

         m.  Joint Participation  in Drafting.  Each party to this Agreement has
participated in the  negotiation  and drafting of this  Agreement.  As such, the
language  used herein shall be deemed to be the  language  chosen by the parties
hereto to express their mutual intent,  and no rule of strict  construction will
be applied against any party to this Agreement.

















                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -19-
<PAGE>





         IN WITNESS  WHEREOF,  the  undersigned  Purchaser  and the Company have
caused this Agreement to be duly executed as of the date first above written.

NETWORK IMAGING CORPORATION

    By:
       ------------------------------  
    Name:
         ----------------------------
    Title:
          ---------------------------

PURCHASER:

CAPITAL VENTURES INTERNATIONAL

By: Susquehanna Securities Trading GmbH for the account
         of Capital Ventures International


    By:  ----------------------------------
         Martin Kobinger, Managing Director

RESIDENCE: Cayman Islands

ADDRESS:
    Susquehanna Securities Trading GmbH         with a copy to:
    Oberlindau 7                                Susquehanna Financial Group
    60323 Frankfurt am Main                     401 City Line Avenue
    Attn:    Martin Kobinger                    Suite 220
                                                Bala Cynwyd, PA 19004-1122
                                                Attn:   Melita Saunders

AGGREGATE SUBSCRIPTION AMOUNT

    Number of Units* to be Purchased at First Closing:             1,500
                                                              ----------
    Purchase Price ($1,000 per Unit):                         $1,500,000
                                                              ----------

    Number of Units* to be Purchased at Second Closing:            1,364
                                                              ----------
    Purchase Price ($1,000 per Unit):                         $1,364,000
                                                              ----------



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

 *   Each Unit  consists  of  one (1) Preferred  Share and a Warrant to purchase
     seventy-five (75) shares of Common Stock.



<PAGE>





                  IN WITNESS WHEREOF, the undersigned  Purchaser and the Company
have  caused  this  Agreement  to be duly  executed  as of the date first  above
written.

NETWORK IMAGING CORPORATION

    By:
       ------------------------------
    Name:
         ----------------------------
    Title:
          ---------------------------

PURCHASER:

ZANETT LOMBARDIER, LTD.



By: ----------------------------

    By:
       ------------------------------
    Name:
         ----------------------------
    Title:
          ---------------------------

RESIDENCE: Cayman Islands

ADDRESS:
                Zanett Lombardier, Ltd.
                c/o The Zanett Securities Corporation
                767 Fifth Avenue
                New York, NY 10153
                Telecopy: (212) 588-0205
                Attn:    Claudio Guazzoni

AGGREGATE SUBSCRIPTION AMOUNT

    Number of Units* to be Purchased at First Closing:             1,800
                                                              ----------
    Purchase Price ($1,000 per Unit):                         $1,800,000
                                                              ----------

    Number of Units* to be Purchased at Second Closing:            1,636
                                                              ----------
    Purchase Price ($1,000 per Unit):                         $1,636,000
                                                              ----------



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

 *   Each Unit  consists  of  one (1) Preferred  Share and a Warrant to purchase
     seventy-five (75) shares of Common Stock.