SECURITIES PURCHASE AGREEMENT


         SECURITIES  PURCHASE  AGREEMENT (this  "Agreement"),  dated as of July,
1996 by and among  Phase-Out  of America,  Inc.,  a Delaware  corporation,  with
headquarters located at 140 Broadway,  Lynbrook, New York 11563 (the "Company"),
and  each of the  purchasers  set  forth  on the  signature  pages  hereto  (the
"Buyers").

         WHEREAS:

         A. The  Company  and the  Buyers  are  executing  and  delivering  this
Agreement in reliance upon the exemption from securities  registration  afforded
by ss.  4(2) of the  Securities  Act of 1933,  as  amended  and  Rule 506  under
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 "1933 Act"); and

         B. The Buyers  desire to purchase and the Company  desires to issue and
sell, upon the terms and conditions  stated in this  Agreement,  an aggregate of
19,557,951  shares of Common Stock,  par value $.00003 per share, of the Company
(the "Common Stock") for an aggregate purchase price of $500,000;

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

1. PURCHASE AND SALE OF COMMON STOCK.

         a. Purchase of Common Stock.  On the closing date (as defined  herein),
subject to the satisfaction  (or waiver) of the conditions  thereto set forth in
Section 5 and Section 6 below,  the  Company  shall issue and sell to each Buyer
and each Buyer  shall  purchase  from the Company the number of shares of Common
Stock set forth immediately below such Buyer's name on the signature page hereto
(such shares being hereinafter  collectively referred to as the "Shares") for an
aggregate price of $500,000.

         The Shares shall constitute 18% of the number of shares of common stock
of the Company that would be outstanding if all of the outstanding securities of
the Company  convertible into common stock of the Company were so converted.  In
addition,  if and when any warrants to purchase common stock of the Company that
are  outstanding  on the date  hereof are  exercised  the Buyers will be issued,
without any additional payment, additional shares of common stock of the Company
pro  rata  so  that  the  Buyers  will  own in  the  aggregate  18% of the  then
outstanding shares of common stock of the Company.

         In the event that during the period of five years after the date hereof
the Company raises  additional  funds through the issuance of equity (other than
through an offering registered under




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the Securities  Act of 1933, as amended) the Buyers will be issued,  without any
additional payment, additional shares of common stock of the Company pro rata so
that  Buyers will own in the  aggregate  18% of the then  outstanding  shares of
common stock of the Company.

          b. Form of Payment.  On the Closing Date, (i) each Buyer shall pay the
purchase price for the Shares to be issued and sold to such Buyer (the "Purchase
Price") by wire  transfer  to the  Company,  in  accordance  with the  Company's
written  wiring  instruction  or by check  against  delivery of a duly  executed
certificate(s)  representing  such number of Shares and (ii) the  Company  shall
deliver  such  certificate(s)  against  delivery  of such  Purchase  Price.  The
Purchase Price payable by each Buyer is set forth immediately below such Buyer's
name of the signature page hereto.

          c.  Closing  Date.  Subject  to the  satisfaction  (or  waiver) of the
conditions thereto set forth in Section 5 and Section 6 below, the date and time
of the issuance and sale of the Shares  pursuant to this Agreement (the "Closing
Date") shall be 10:00 a.m.  Eastern  Standard Time not later than July 12, 1996,
or, such other mutually agreed time. The closing shall occur on the Closing Date
at the offices of the Company, 140 Broadway, Lynbrook, New York 11563.

2.        BUYERS' REPRESENTATIONS AND WARRANTIES

          Each Buyer, severally and not jointly,  represents and warrants to the
Company solely with respect to such Buyer that:

          a. Investment Purpose. The Buyer is purchasing the Shares for its
own account, not as nominee or agent, for investment only and not with
a present view towards the public sale or distribution thereof, except
pursuant to sales registered under the 1933 Act.

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

          c. Reliance on Exemptions.  The Buyer  understands that the Shares are
being  offered  and sold to it 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 the  Buyer's
compliance with, the representations,  warranties,  agreements,  acknowledgments
and  understandings  of the  Buyer set forth  herein in order to  determine  the
availability  of such exemptions and the eligibility of the Buyer to acquire the
Shares.

          d. Information.  The  Buyer  and  its  advisors,  if  any,  have  been
furnished with all materials  relating to the business,  finances and operations
of the Company and materials  relating to the offer and sale of the Shares which
have been requested by the Buyer or its advisors. The Buyer and its advisors, if
any, have






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

          e. Governmental Review. The Buyer 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 Shares.

          f. Transfer or Resale.  The Buyer understands that (i) the Shares have
not been and are not being registered under the 1933 Act or any state securities
laws, and may not be transferred unless (a) subsequently  registered thereunder,
or (b) the Buyer shall have  delivered to the Company an opinion of counsel,  in
form,  substance and scope reasonably  acceptable to the Company,  to the effect
that the Shares to be sold or  transferred  pursuant to an  exemption  from such
registration or (c) sold pursuant to Rule 144 promulgated under the 1933 Act (or
a successor rule); (ii) any sale of such Shares 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 Shares 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 1933 Act) may  require  compliance
with some other exemption under the 1933 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 Shares under the 1933 Act or any state  securities
laws or to comply with the terms and conditions of any exemption thereunder.

          The Company agrees on request at its expense to register the Shares in
a registration statement filed under the Securities Act of 1933, as amended (the
"Act").  The Company shall also offer the Buyers the  opportunity to include the
Shares in a registration  statement filed by the Company under the Act on a form
which permits inclusion of such Shares.

          g. Legends.  The  Buyer  understands  that  the  Shares,  may  bear  a
restrictive  legend in  substantially  the following  form (and a  stop-transfer
order may be placed against transfer of the certificates for such Shares):

          "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






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          an  opinion  of  counsel,  in form,  substance  and  scope  reasonably
          acceptable to the Company,  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 Shares upon which
it is stamped,  if, unless otherwise  required by state securities laws, (a) the
sale of such  Shares  is  registered  under  the 1933  Act,  or (b) such  holder
provides the Company with an opinion of counsel,  in form,  substance  and scope
reasonably  acceptable  to the  Company,  to the  effect  that a public  sale or
transfer of such Shares may be made without  registration  under the 1933 Act or
(c) such holder provides the Company with reasonable assurances that such Shares
can be sold  pursuant  to Rule  144  under  the 1933  Act (or a  successor  rule
thereto)  without any  restrictions  as to the number of shares acquired as of a
particular date that can then be immediately  sold. The Buyer agrees to sell all
Shares,  including those  represented by a certificate(s)  from which the legend
has been removed, in compliance with applicable securities law.

          h. Authorization:  Enforcement.  This  Agreement  has  been  duly  and
validly authorized, executed and delivered on behalf of the Buyer and is a valid
and binding agreement of the Buyer enforceable in accordance with their terms.

          i. Residency.  The Buyer is a resident of the  jurisdiction  set forth
immediately below such Buyer's name on the signature page hereto.

3.        REPRESENTATIONS AND WARRANTIES OF THE COMPANY

          The Company represents and warrants to each Buyer that:

          a. Organization  and  Qualification:  Subsidiaries.  The Company  is a
corporation  duly  organized and existing in good standing under the laws of the
State of Delaware,  and has the requisite  corporate power to own its properties
and to carry  on its  business  as now  being  conducted.  The  Company  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 the operations,  properties,  financial  condition or prospects of the
Company  or on the  transactions  contemplated  hereby.  None  of the  Company's
subsidiaries  are engaged in any activities which are material to the operations
of the Company and its subsidiaries taken as a whole.


          b. Authorization: Enforcement. (i) The Company has the

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requisite corporate power and authority to enter into and perform this Agreement
and to issue the Shares in accordance with the terms hereof,  (ii) the execution
and delivery of this Agreement by the Company and the  consummation by it of the
transactions  contemplated  hereby (including without limitation the issuance of
the 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,  (iii) this  Agreement  has been duly  executed  and
delivered  by the  Company,  and (iv)  this  Agreement  constitutes  a valid and
binding obligation of the Company  enforceable against the Company in accordance
with its terms.

          c. Capitalization.  The  Shares  constitute  not less  than 18% of the
fully diluted  common stock of the Company after giving effect to the conversion
of all  outstanding  convertible  securities of the Company and the Buyers shall
retain such percentage ownership as stated in section 1.

          d. Issuance  of  Shares.  The  Shares are duly  authorized  and,  upon
issuance in accordance with the terms of this Agreement shall be validly issued,
fully paid and  non-assessable,  and free from all taxes, liens and charges with
respect to the issue  thereof and shall not be subject to  preemptive  rights or
other similar rights of stockholders of the Company.

          e. No  Conflicts.  The  execution,  delivery and  performance  of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby (including without limitation,  the issuance of the 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  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
affect  (except  for  such  conflicts,   defaults,   terminations,   amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate,  have a Material Adverse Effect).  The Company is not in violation of
its Certificate of  Incorporation or By-laws and is not in default (and no event
has occurred which with notice or lapse of time of both would put the Company in
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,  except for possible defaults
as would not, individually or in the aggregate,  have a Material Adverse Effect.
The business of the Company is not being  conducted,  and shall not be conducted
so long as a Buyer owns any of the Shares,

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in violation of any law,  ordinance or  regulation of any  governmental  entity,
except for possible  violations  which either  singly or in the aggregate do not
have a Material  Adverse  Effect.  Except as  specifically  contemplated by this
Agreement and as required  under the 1933 Act any  applicable  state  securities
laws, 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 in accordance with the terms
hereof.

     f. SEC  Documents.  Financial  Statements.  Since  December 31,  1994,  the
Company has 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 Exchange Act of 1934,  as amended (the "1934  Act")(all of the  foregoing
filed prior to the date hereof and all exhibits  included  therein and financial
statements   and  schedules   thereto  and  documents   (other  than   exhibits)
incorporated by reference therein,  being hereinafter  referred to herein as the
"SEC  Documents").  The Company has  delivered  to each Buyer 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 1934 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
respect 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  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, the Company has no liabilities,  contingent or otherwise,  other than
(i)  liabilities  incurred  in the  ordinary  course of business  subsequent  to
December 31, 1995 and (ii) obligations under contracts and commitments  incurred
in the ordinary course of business and not required under generally




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accepted  accounting  principles to be reflected in such  financial  statements,
which,  individually  or in the  aggregate,  are not  material to the  financial
condition or operating  results of the Company.  The Company has not provided to
any Buyer or its representatives any information which,  according to applicable
law, rule or regulation,  should have been disclosed publicly by the Company but
which has not been so disclosed.

          g. Absence of Certain Chances.  Since December 31, 1995 there has been
no material adverse change and no material adverse  development in the business,
properties,  operations, financial condition, results of operations or prospects
of the Company.

          h. Absence of  Litigation.  Except as disclosed in the SEC  documents,
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,  the Common Stock or any of the
Company's subsidiaries.

          i. Disclosure.  All information  relating to or concerning the Company
set forth in this Agreement and provided to the Buyers  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 the
Company or its business, properties,  operations or financial conditions, which,
under  applicable  law,  rule  or  regulation,  requires  public  disclosure  or
announcement  by the  Company but which has not been so  publicly  announced  or
disclosed.

          j. Acknowledgment  Regarding  Buyers'  Purchase  of  the  Shares.  The
Company acknowledges and agrees that Buyers are acting solely in the capacity of
arm's length  purchasers  with respect to this  Agreement  and the  transactions
contemplated hereby. The Company further acknowledges that no Buyer is acting as
a financial  advisor or  fiduciary  of the Company (or in any similar  capacity)
with respect to this Agreement and the transactions  contemplated hereby and any
advice given by any Buyer or any of their respective  representatives  or agents
in connections with this Agreement and the transactions  contemplated  hereby is
merely  incidental to the Buyers'  purchase of the Shares.  The Company  further
represents  to each  Buyer  that  the  Company's  decision  to enter  into  this
Agreement has been based solely on the independent evaluation of the Company and
its representatives.

          k. No  Integrated  Offering.  Neither  the  Company,  nor  any  of its
affiliates,  nor any  person  acting on its or their  behalf,  has

<PAGE>
                                       7

directly or indirectly made any offers or sales in any security or solicited any
offers to buy any security under  circumstances that would require  registration
of the issuance of the Shares to the Buyers under the 1933 Act.

          1. 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  Buyer  relating  to  this   Agreement  or  the   transactions
contemplated hereby except for 2,000,000 warrants being issued by the Company to
Milton Walters.

4.        COVENANTS.

          a. Best  Efforts.  The parties shall use their best efforts to satisfy
each of the conditions described in Section 5 and 6 of this Agreement.

          b. Reporting Status. So long as any Buyer beneficially owns any of the
Shares, the Company shall not terminate its status as an issuer required to file
reports  under the 1934 Act even if the 1934 Act or the  rules  and  regulations
thereunder would permit such termination.

          c. Use of Proceeds.  The Company  shall use the proceeds from the sale
of the Shares  substantially  as set forth in Exhibit A. The Company  shall not,
directly or  indirectly,  use such  proceeds for any loan or  investment  in any
other corporation, partnership, enterprise or other person.

          d. Expenses. Each party hereto shall be responsible for the payment of
its own  expenses  incurred in  connection  with the  negotiation,  preparation,
execution,  delivery and performance of this Agreement and the other  agreements
to be executed in connection herewith.

          e. Financial  Information.  The Company  agrees  to send the following
reports to each Buyer until such Buyer transfers,  assigns,  or sells all of the
Shares:  (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 and any Current
Reports on Form 8-K;  and (ii) within one (1) day after  release,  copies of all
press releases by the Company or any of its subsidiaries.

          f. Officers and Directors. The Company shall cause Herbert M. Reichlin
("Reichlin") and Burton A. Goldstein ("Goldstein") to be elected to its Board of
Directors and to its Executive Committee effective  upon the  closing.  Reichlin
shall  also be elected a member of the Company's Audit Committee and a member of
its Compensation  Committee.  Reichlin will also  be elected Secretary Treasurer
effective upon the closing.

          g. Executive Compensation.  The cash salaries of Bernard

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<PAGE>

Gutman,  Irwin Pearl and Drew Gutman shall be  maintained at the rate of $50,000
per annum  subject  to change  by  action  of the Board of  Directors  after the
Company has become  profitable.  Each of these three persons shall receive a car
allowance of $500 per month and no additional  allowances shall be made for auto
insurance, maintenance or other upkeep.

          h. Employment  Agreement and Consulting  Agreement.  The Company shall
honor the existing  employment  agreements with Bernard Gutman,  Irwin Pearl and
Drew Gutman,  which have a remaining  term of  approximately  18 months.  At the
expiration of Bernard Gutman's employment agreement, the Company will enter into
a three-year  consulting agreement with him on terms and conditions to be agreed
upon at the time.

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

          The  obligation of the Company  hereunder to issue and sell the Shares
to each of the  Buyers at the  closing is  subject  to the  satisfaction,  at or
before the Closing Date, 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:

                   (i)   The  Buyers  shall  have  executed this  Agreement  and
delivered the same to the Company.

                   (ii)  The Buyers shall have delivered  the Purchase  Price in
accordance with Section l(b) above.

                   (iii) The representations and  warranties of the Buyers shall
be true and correct in all  material respects as of the date when made and as of
the Closing Date as though made at that time  (except  for  representations  and
warranties  that  speak  as of a  specific  date),  and the  Buyers  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 Buyers at or prior to the Closing Date.

                   (iv)  No injunction.  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.

6.        CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.

          The  obligation of each Buyer  hereunder to purchase the Shares at the
closing is subject to the satisfaction,  at or before the

                                       9

<PAGE>

Closing  Date,  of  each  of  the  following  conditions,  provided  that  these
conditions  are for such Buyer's sole benefit and may be waived by such Buyer at
any time in its sole discretion:

                   (i)   The  Company shall  have executed  this  Agreement  and
delivered the same to the Buyers.

                   (ii)  The Company shall have entered into Warrant  Agreements
substantially in the form of Exhibit "B" hereto.

                   (iii) The  Company   shall  have   delivered   duly  executed
certificates (in such  denominations  as such Buyer shall request)  representing
the Shares  being so  purchased  to such Buyer in  accordance  with Section l(b)
above.

                   (iv)  The representations and warranties of the Company shall
be true and correct in all material  respects as of the date when made and as of
the date of the closing as though made at that time (except for  representations
and  warranties  that speak as of a specific  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  closing.  The
Buyers  shall  have  received a  certificate,  executed  by the chief  executive
officer of the Company,  dated as of the date of the closing,  to the  foregoing
effect  and as to such  other  matters  as may be  reasonably  requested  by the
Buyers.

                   (v)  The  Buyers  shall  have  received  an  opinion  of  the
Company's  counsel,  dated as of the Closing Date, in form,  scope and substance
reasonably  satisfactory  to the  Buyers and in  substantially  the same form as
Exhibit "C" attached hereto.

                   (vi) The Buyers shall have received the officer's certificate
described in Section 3(c) above, dated as of the Closing Date.

7.        GOVERNING LAW: MISCELLANEOUS.

          a. Governing Law. This Agreement  shall be governed by and interpreted
in accordance with the laws of the Delaware  without regard to the principles of
conflict of laws. The parties hereto hereby submit to the exclusive jurisdiction
of the New York  Supreme  Court  located in New York  County in the State of New
York with respect to any dispute  arising under this  Agreement,  the agreements
entered into in connection  herewith or the transactions  contemplated hereby or
thereby.

          b. Counterparts.  This  Agreement  may  be  executed  in  two or  more
counterparts,  all of which shall be considered  one and the

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<PAGE>

same agreement and shall become effective when  counterparts have been signed by
each party and delivered to the other party.

          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.

          d. Severability.  If any  provision of this Agreement shall be invalid
or unenforceable in any jurisdiction,  such invalidity or uneforceability  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 Agreements:  Authority to Act for Buyers. 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 Buyers
make any representation,  warranty, covenant or undertaking with respect to such
matters.  No provision of this  Agreement may be waived or amended other than by
an instrument in writing signed by the party to be charged with enforcement.

          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 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, in each case addressed to a
party. The addresses for such communications shall be:

          If to the Company:

          Phase-Out of America, Inc.
          140 Broadway
          Lynbrook, New York 11563

          With copy to:

          Jack H. Halperin, Esq.
          711 Third Avenue, Suite 1505
          New York, New York 10017

          If to Buyers to:

          Herbert Reichlin,  CPA
          6800 Jericho  Turnpike-Suite  214E
          Syosset, NY 11791

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

                                       11

<PAGE>


          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  Buyer  shall  assign  this  Agreement  or any  rights  or
obligations   hereunder   without  the  prior  written  consent  of  the  other.
Notwithstanding the foregoing,  any Buyer may assign its rights hereunder to any
of its  "affiliates",  as that term is defined  under the 1934 Act,  without the
consent of the Company.  The Company  shall be sent  written  notice of any such
assignment prior to the closing.

          h. Third  Part  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.

          i. Survival. The representations and warranties of the Company and the
agreements  and  covenants  set forth in Section 3, 4, 5 and 7 shall survive the
closing  notwithstanding  any due  diligence  investigation  conducted  by or on
behalf of the Buyers.  The Company agrees to indemnify and hold harmless each of
the Buyers 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 set forth in Section
3 hereof.

          j. 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 an 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.

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

                                                      Phase-Out of America, Inc.

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

                                                      Name:---------------------

                                                      Its:----------------------



                                                      "BUYERS"


RESIDENCE: New York                                   --------------------------
Subscription Amount:                                  --------------------------
Number of Shares:

                                       12

<PAGE>

[LOGO]
PHASEOUT.                                                              EXHIBIT A
OF AMERICA, INC
--------------------------------------------------------------------------------
140 Broadway                                                      (800) PHASEOUT
Lynbrook, New York                                                (516) 599-1900
                                                              Fax (516) 593-6511

                                Use of Proceeds

Description of Use                                             Amount to be Used

Inventory Purchase from South Korea                                 $ 175,000
Marketing/Media/Advertising Budget                                  $ 225,000
To Begin Clinical Study Preparation                                  $ 25,000
On-Air Infonetwork Settlement                                        $ 25,000
Working Capital                                                      $ 50,000

Total Use of Proceeds                                               $ 500,000
                                                                    =========





<PAGE>




                                                                       EXHIBIT C

                             JACK H. HALPERIN, ESQ.
                                  ------------
                                711 THIRD AVENUE
                                   SUITE 1505
                            NEW YORK. NEW YORK 10017
                            TELEPHONE (212) 378-1200
                             TELEFAX (212) 378-1299

                                                    July , 1996

Purchasers under that
Certain Securities Purchase Agreements
Dated as of July  ,1996 with
Phase-Out of America, Inc.

          Re: Phase-Out of America, Inc.

Gentlemen:

          I am counsel to  Phase-Out of America,  Inc.  (the  "Company")  and am
rendering this opinion pursuant to those certain Securities  Purchase Agreements
(the  "Agreements")  dated  as of July , 1996  between  the  purchasers  and the
Company.  Certain capitalized terms used herein and not otherwise defined herein
shall have the respective meanings given in the Agreements.

          In rendering the following  opinions,  I have examined the  Agreements
and related  agreements and documents,  and I have examined and considered  such
corporate records,  certificates and matters of law as I have deemed appropriate
as a basis for the  opinions  set forth  below.  As to  various  matters of fact
material to the opinions set forth below,  I have relied on the  representations
and warranties  contained in the Agreements and on  certificates  of officers of
the  Company.  I have also assumed the receipt by the Company of $500,000 as the
purchase price for the Shares.

          Based upon the foregoing and subject to the assumptions,  limitations,
qualifications  and exceptions stated herein, I am of the opinion that as of the
date hereof:

          (1) The Company is a corporation duly organized,  validly existing and
in good standing under the laws of Delaware.

          (2) (i) The Company has the requisite corporate power and authority to
enter into and perform  the  Agreements,  and to issue the Shares in  accordance
with the  terms  of the  Agreements,  (ii) the  execution  and  delivery  of the
Agreements  by the  Company  and  the  consummation  by it of  the  transactions
contemplated  thereby  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, (iii) the Agreements


<PAGE>



have been duly  executed and delivered by the Company,  and (iv) the  Agreements
constitutes valid and binding obligations of the Company enforceable against the
Company in accordance  with their terms,  except as such  enforceability  may be
limited  by  applicable  bankruptcy,  insolvency,  reorganization,   moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors'  rights and remedies or by other  equitable  principles of general
application.

          (3) The Shares are duly  authorized,  validly  issued,  fully paid and
non-assessable  and free from all taxes,  liens and charges  with respect to the
issue thereof.

          (4) Based in part upon your representations,  warranties and covenants
set  forth  in  the  Agreements,  the  Shares  may  be  issued  to  you  without
registration under the Securities Act of 1933, as amended.

          (5) Other  than  necessary  approvals  that have  been  obtained,  no
authorization  approval or consent of any court,  governmental body,  regulatory
agency,  self-regulatory  organization  or  stock  exchange  or  market,  or the
stockholders of the Company, or, to my knowledge, any third party is required to
be  obtained  by the  Company  for  the  issuance  and  sale  of the  Shares  as
contemplated by the Agreements.

          These opinions are limited to the matters  expressly stated herein and
are  rendered  solely for your  benefit and may not be quoted or relied upon for
any other purpose or by another  person,  except that the opinions  expressed in
paragraphs (3) and (4) may be relied upon by North American Transfer Company, as
Transfer Agent.

          The   opinions   expressed   herein  are  subject  to  the   following
assumptions, limitations, qualifications and exceptions:

          (a) I have assumed the genuineness of all signatures, the authenticity
of all Agreements submitted to me as copies, the authenticity of certificates of
public  officials  and the due  authorization,  execution  and  delivery  of all
Agreements (except the due authorization,  execution and delivery by the Company
of the Agreements).

          (b) I have  assumed that each of the parties to the  Agreements  other
than the Company (the "Other Parties") has the legal right,  capacity, and power
to enter into,  enforce and perform all of its obligations under the Agreements.
Furthermore,  I have assumed the due  authorization by each of the Other Parties
of all requisite action and the due execution and delivery of the Agreements.

          My examination of law relevant to the matters  covered by this opinion
is limited to the laws of New York and the federal law of the United States, and
I express no opinion as to the

<PAGE>



effect  on the  matters  covered  by  this  opinion  of the  laws  of any  other
jurisdiction.  To the extent that the  governing law with respect to any matters
covered by this opinion is the law of a jurisdiction other than the State of New
York,  or federal  law, I have  assumed  the law of such other  jurisdiction  is
identical to New York law.

          The undersigned is a stockholder of the Company.

          This opinion is given as of the date hereof and I assume no obligation
to update or supplement this opinion to reflect any facts or circumstances which
may  hereafter  come to my attention or any changes in laws which may  hereafter
occur.

                                         Very truly yours,

                                         Jack H. Halperin