EXHIBIT 4.1

                               PURCHASE AGREEMENT

                  THIS PURCHASE  AGREEMENT  ("Agreement") is made as of the 19th
day of December, 2003 by and among GoAmerica,  Inc., a Delaware corporation (the
"Company"),  and the Investors set forth on the signature  pages affixed  hereto
(each an "Investor" and, collectively, the "Investors").

                                    Recitals

                  A. The Company and the Investors 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 U.S. Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended; and

                  B. On the date hereof the Investors  are severally  purchasing
from the Company, and the Company is issuing and selling to the Investors,  upon
the terms and conditions  stated in this Agreement,  (i) $1,015,000 in aggregate
principal  amount of the Company's  10% Senior  Secured  Convertible  Promissory
Notes in the form attached  hereto as Exhibit A (the  "Notes"),  which Notes are
convertible into shares of Common Stock (as defined below) at a conversion price
of $0.15 per share,  (appropriately  adjusted for any stock split, reverse stock
split,  stock  dividend or other  reclassification  or combination of the Common
Stock occurring  after the date hereof,  including the Reverse Split (as defined
below)) (the "Conversion  Price") and (ii) warrants (the "Warrants") to purchase
an aggregate of 1,353,333  shares  (appropriately  adjusted for any stock split,
reverse stock split, stock dividend or other  reclassification or combination of
the Common Stock occurring  after the date hereof,  including the Reverse Split)
of  Common  Stock in the form  attached  hereto as  Exhibit  B for an  aggregate
purchase price of $1,015,000 (the "Note Purchase Price"); and

                  C. Simultaneously  herewith,  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
will agree to provide  certain  registration  rights under the Securities Act of
1933, as amended,  and the rules and  regulations  promulgated  thereunder,  and
applicable state securities laws; and

                  D. The Investors  wish to purchase  from the Company,  and the
Company wishes to sell and issue to the Investors, upon the terms and conditions
stated in this  Agreement,  an aggregate of  89,900,000  shares  (before  giving
effect to the Reverse Split) of Common Stock,  at a price of $0.15 per share, in
addition to the shares of Common Stock issuable upon the conversion of the Notes
and the exercise of the Warrants.


<PAGE>

                  In  consideration  of the mutual  promises made herein and for
other good and valuable  consideration,  the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

         1. Definitions.  In addition to those terms defined above and elsewhere
in this Agreement, for the purposes of this Agreement, the following terms shall
have the meanings set forth below:

                  "Affiliate"  means,  with  respect  to any  Person,  any other
Person which directly or indirectly through one or more intermediaries Controls,
is controlled by, or is under common control with, such Person.

                  "Business  Day" means a day,  other than a Saturday or Sunday,
on which  banks  in New York  City  are  open  for the  general  transaction  of
business.

                  "Common  Stock"  means the common  stock,  par value $0.01 per
share,  of the Company,  and any  securities  into which the Common Stock may be
reclassified.

                  "Company's  Knowledge"  means  the  actual  knowledge  of  the
executive  officers  (as defined in Rule 405 under the 1933 Act) of the Company,
after reasonable inquiry.

                  "Confidential  Information" means trade secrets,  confidential
information and know-how that the Company classifies as confidential information
(including  but  not  limited  to  ideas,  formulae,  compositions,   processes,
procedures  and  techniques,  research  and  development  information,  computer
program  code,  performance  specifications,  support  documentation,  drawings,
specifications, designs, business and marketing plans, and customer and supplier
lists and related information).

                  "Control" (including the terms "controlling",  "controlled by"
or "under common control with") means the possession, direct or indirect, of the
power to direct or cause the  direction  of the  management  and  policies  of a
Person,  whether  through the  ownership  of voting  securities,  by contract or
otherwise.

                  "Conversion  Shares" means the shares of Common Stock issuable
upon the conversion of the Notes.

                  "Creditors"  shall mean the creditors of the Company set forth
in Schedule 4.3.

                  "Escrow Agent" means Pedley, Zielke, Gordinier & Pence, PLLC.

                  "Escrow  Agreement"  means that certain Escrow Agreement dated
on or about  December  ___, 2003 between the Company,  the  Placement  Agent and
Escrow Agent, in substantially the form of Exhibit D.

                  "Intellectual  Property"  means  all  of  the  following:  (i)
patents, patent applications,  patent disclosures and inventions (whether or not
patentable  and whether or not reduced to practice);  (ii)  trademarks,  service


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marks, trade dress, trade names,  corporate names,  logos,  slogans and Internet
domain names,  together with all goodwill associated with each of the foregoing;
(iii) copyrights and copyrightable  works; (iv) registrations,  applications and
renewals  for  any of the  foregoing;  and  (v)  proprietary  computer  software
(including but not limited to data, data bases and documentation).

                  "Interest Shares" means the shares of Common Stock issuable in
lieu of cash interest under the Notes.

                  "Material  Adverse Effect" means a material  adverse effect on
(i)  the  assets,  liabilities,  results  of  operations,  financial  condition,
business,  or expected  prospects of the Company and its Subsidiaries taken as a
whole, or (ii) the ability of the Company to perform its  obligations  under the
Transaction Documents.

                  "Nasdaq" means The Nasdaq Stock Market, Inc.

                  "Other  Shares"  means the  shares of  Common  Stock,  if any,
issuable to the Investors pursuant to the Registration Rights Agreement.

                  "Person"  means  an  individual,   corporation,   partnership,
limited  liability  company,  trust,  business trust,  association,  joint stock
company,  joint  venture,  sole  proprietorship,   unincorporated  organization,
governmental  authority  or any other  form of entity  not  specifically  listed
herein.

                  "Placement Agent" means Sunrise Securities Corp.

                  "Pledge  Agreement"  means the Pledge  Agreement  of even date
herewith in the form attached hereto as Exhibit E.

                  "Share  Purchase  Price" means  Thirteen  Million Four Hundred
Eighty-Five Thousand Dollars ($13,485,000).

                  "Reverse  Split"  means  a  one-for-four  to   one-for-fifteen
reverse  split of the Common  Stock,  as determined by the Board of Directors of
the Company.

                  "SEC Filings" has the meaning set forth in Section 4.6.

                  "Securities"  means the  Notes,  the  Conversion  Shares,  the
Interest  Shares,  the Warrants,  the Warrant  Shares,  the Shares and the Other
Shares.

                  "Shares"  means the shares of Common Stock being  purchased by
the Investors hereunder.

                  "Subsidiary" has the meaning set forth in Section 4.1.


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<PAGE>

                  "Transaction Documents" means the Notes, the Pledge Agreement,
this Agreement, the Registration Rights Agreement and the Warrants.

                  "Warrant  Shares"  means the shares of Common  Stock  issuable
upon the exercise of the Warrants.

                  "1933 Act" means the  Securities  Act of 1933, as amended,  or
any successor statute, and the rules and regulations promulgated thereunder.

                  "1934  Act"  means the  Securities  Exchange  Act of 1934,  as
amended,  or any successor  statute,  and the rules and regulations  promulgated
thereunder.

         2. Purchase and Sale.

                  2.1  Purchase and Sale of the Notes and  Warrants.  Subject to
the terms and  conditions  of this  Agreement,  on the date hereof,  each of the
Investors shall severally, and not jointly, purchase, and the Company shall sell
and issue to each Investor (i) the aggregate principal amount of the Notes as is
set forth opposite such  Investor's  name on the signature pages attached hereto
and (ii) such number of Warrants as is set forth opposite such  Investor's  name
on such  signature  pages  for an  aggregate  purchase  price  equal to the Note
Purchase Price as specified in Section 3.1 below.

                  2.2 Purchase and Sale of the Shares.  Subject to the terms and
conditions of this  Agreement,  on the Closing Date, each of the Investors shall
severally,  and not jointly,  purchase,  and the Company shall sell and issue to
each  Investor such number of Shares as is set forth  opposite  such  Investor's
name on the signature  pages  attached  hereto for an aggregate  purchase  price
equal to the Share Purchase Price as specified in Section 3.2 below.

                  2.3  Allocation  of Investment  Commitments.  For avoidance of
doubt,  the total  amount  being  invested by any  Investor  hereunder  shall be
allocated  pro rata to the  purchase  of (a) the Notes and  Warrants on the date
hereof and (b) the Shares on the Closing Date,  based on the aggregate  purchase
price for all such securities  delivered on such dates.  The aggregate amount to
be invested by each Investor shall be specified on the signature pages hereto.

         3. Closing.

                  3.1 Closing of the Notes and  Warrants.  (a) Prior to the date
hereof, the Company shall have delivered to Lowenstein Sandler PC, in trust, one
or more Notes in the principal  amounts and  registered in such name or names as
each Investor may designate  representing the aggregate  principal amount of the
Notes to be issued to each such  Investor on the date hereof,  and a certificate
or  certificates,  registered  in  such  name or  names  as  each  Investor  may
designate,  representing  the Warrants to be issued to each such Investor,  with
instructions  that the  Notes and  Warrants  are to be held for  release  to the
Investors only upon payment in full of the Note Purchase Price to the Company by
all  the  Investors.   Upon  such  receipt  by  Lowenstein  Sandler  PC  of  the
certificates and compliance by the parties hereto with the other requirements of
this Section 3.1, each Investor or the Escrow Agent shall  promptly cause a wire


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<PAGE>

transfer  in same  day  funds  to be  sent  to the  account  of the  Company  as
instructed in writing by the Company and/or the applicable parties to the Escrow
Agreement,  in an amount  representing  such  Investor's pro rata portion of the
Note Purchase Price as set forth on the signature pages to this Agreement.  Upon
receipt by the Company of the Note Purchase Price,  the Notes and Warrants shall
be released to the Investors.  The closing of the purchase and sale of the Notes
and  Warrants  shall take place on the date hereof at the offices of  Lowenstein
Sandler PC, 1330 Avenue of the Americas,  21st Floor,  New York, New York, or at
such other  location  and on such other date as the  Company  and the  Investors
shall mutually agree.

                  (b) On the date  hereof,  the  Company  shall  deliver to each
Investor the following:

                           (i) executed  counterparts of the Registration Rights
Agreement and the Pledge Agreement;

                           (ii)  the   Collateral  (as  defined  in  the  Pledge
Agreement) to be held pursuant to the Pledge Agreement;

                           (iii)  a  Certificate,  executed  on  behalf  of  the
Company by its Chief Executive Officer or its Chief Financial Officer,  dated as
of the date  hereof,  certifying  that (A) the Company has  obtained any and all
consents, permits, approvals, registrations and waivers necessary or appropriate
for  consummation  of the purchase and sale of the Notes and the Warrants all of
which shall be in full force and effect; (B) the Company has filed with Nasdaq a
Notice of Additional  Listing  Application  covering the Conversion  Shares, the
Interest  Shares  and  the  Warrant  Shares;  (C)  no  judgment,   writ,  order,
injunction, award or decree of or by any court, or judge, justice or magistrate,
including any bankruptcy  court or judge, or any order of or by any governmental
authority,  shall have been issued,  and no action or proceeding shall have been
instituted  by  any   governmental   authority,   enjoining  or  preventing  the
consummation of the transactions contemplated hereby or in the other Transaction
Documents; (D) no stop order or suspension of trading shall have been imposed by
Nasdaq, the SEC or any other governmental regulatory body with respect to public
trading in the Common Stock; and (E) that the Company had aggregate  liabilities
to the Creditors as of such date of less than $1,500,000;

                           (iv) a Certificate, executed on behalf of the Company
by its Secretary, dated as of
the date hereof, certifying the resolutions adopted by the Board of Directors of
the Company  approving the  transactions  contemplated by this Agreement and the
other Transaction  Documents and the issuance of the Securities,  certifying the
current versions of the Certificate of  Incorporation  and Bylaws of the Company
and  certifying  as to the  signatures  and  authority  of persons  signing  the
Transaction Documents and related documents on behalf of the Company;

                           (v) an opinion from Hale and Dorr LLP, the  Company's
counsel,  dated as of the date hereof,  in substantially  the form of Exhibit F;
and

                           (vi)  agreements  executed by each of Aaron Dobrinsky
and Joseph Korb, in substantially the form of Exhibit G.


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<PAGE>

                  (c) On the date hereof,  the  Investors  shall  deliver to the
Company  executed  counterparts  of the  Registration  Rights  Agreement and the
Pledge Agreement.

                  (d) On or  before  the  date  hereof,  each  Investor  that is
purchasing Notes,  Warrants and Shares with an aggregate  purchase price of less
than $750,000  shall have  deposited the aggregate  purchase  price for all such
securities in such account as is designated by the Placement  Agent,  which such
account shall be subject to the Escrow Agreement.

                  3.2 Closing of the Shares.  Upon  confirmation  that the other
conditions to closing  specified in Section 6 hereof have been satisfied or duly
waived by the Required  Investors (as defined below),  the Company shall, at the
request of each Investor  either (i) arrange for the electronic  delivery of the
Shares (if  permitted  by the  Company's  transfer  agent),  or (ii)  deliver to
Lowenstein Sandler PC, in trust, a certificate or certificates  representing the
Shares to be issued to each such Investor,  in each case registered in such name
or  names  as  each  Investor  may  designate,   with   instructions  that  such
certificates  are to be held for release to the  Investors  only upon payment in
full of the Share Purchase Price to the Company by all the Investors.  Promptly,
but no more than one Business Day thereafter,  the Escrow Agent or such Investor
shall  cause a wire  transfer in same day funds to be sent to the account of the
Company as instructed in writing by the Company,  in an amount representing each
Investor's  pro rata  portion  of the Share  Purchase  Price as set forth on the
signature pages to this Agreement.  On the date (the "Closing Date") the Company
receives the Share Purchase Price, the certificates  evidencing the Shares shall
be released to the Investors  (the  "Closing").  The Closing of the purchase and
sale of the Shares  shall take place at the  offices of  Lowenstein  Sandler PC,
1330 Avenue of the Americas,  21st Floor,  New York,  New York, or at such other
location and on such other date as the Company and the Investors  shall mutually
agree.

                  3.3 Placement Agent.  Simultaneously  with the issuance of the
Notes and the Shares,  the Company shall deliver to the Placement Agent the full
amount of its  compensation  earned  through  such  closing for its  services in
connection  with the  transactions  contemplated by this Agreement in accordance
with that  certain  Investment  Banking  Agreement  between  the Company and the
Placement Agent,  dated October 17, 2003. For purposes of clarification,  to the
extent the Placement Agent receives  compensation upon the issuance of the Notes
and the Warrants, the Placement Agent shall not receive additional  compensation
for shares issued upon conversion of such Notes.

         4.  Representations  and Warranties of the Company.  The Company hereby
represents  and  warrants  to the  Investors  that,  except  as set forth in the
schedules delivered herewith (collectively, the "Disclosure Schedules"):

                  4.1 Organization, Good Standing and Qualification. Each of the
Company and its Subsidiaries is a corporation  duly organized,  validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has all requisite  corporate power and authority to carry on its business as now
conducted and to own its properties. Each of the Company and its Subsidiaries is
duly qualified to do business as a foreign  corporation  and is in good standing
in each  jurisdiction  in which the conduct of its business or its  ownership or
leasing of property makes such  qualification  or leasing  necessary  unless the
failure to so qualify  has not and could not  reasonably  be  expected to have a


                                      -6-
<PAGE>

Material Adverse Effect. The Company's  subsidiaries (which for purposes of this
Agreement  means any entity in which the Company,  directly or indirectly,  owns
more than 10% of the  capital  stock or holds a more than 10%  equity or similar
interest) are reflected on Schedule 4.1 hereto (the "Subsidiaries").

                  4.2  Authorization.  The Company has full power and  authority
and, other than the approval of the Proposals (as defined in Section 7.8) by the
Company's  stockholders in accordance with applicable law and Nasdaq Marketplace
Rule  4350,  has taken all  requisite  action  on the part of the  Company,  its
officers,  directors  and  stockholders  necessary  for (i)  the  authorization,
execution and delivery of the Transaction  Documents,  (ii) authorization of the
performance of all obligations of the Company hereunder or thereunder, and (iii)
the  authorization,  issuance (or  reservation for issuance) and delivery of the
Securities.  The Transaction  Documents  constitute the legal, valid and binding
obligations of the Company,  enforceable  against the Company in accordance with
their  terms,   subject  to   bankruptcy,   insolvency,   fraudulent   transfer,
reorganization,  moratorium and similar laws of general applicability,  relating
to or affecting creditors' rights generally.

                  4.3  Capitalization.  Schedule 4.3 sets forth (without  giving
effect to the Reverse Split) (a) the authorized  capital stock of the Company on
the  date  hereof;  (b) the  number  of  shares  of  capital  stock  issued  and
outstanding;  (c) the number of shares of capital stock issuable pursuant to the
Company's  stock plans;  and (d) the number of shares of capital stock  issuable
and reserved for issuance pursuant to securities exercisable for, or convertible
into or exchangeable for any shares of capital stock of the Company.  All of the
issued and  outstanding  shares of the  Company's  capital  stock have been duly
authorized  and  validly  issued and are fully paid,  nonassessable  and free of
pre-emptive  rights and were issued in full compliance with applicable state and
federal  securities law and any rights of third parties.  Except as described on
Schedule  4.3 and except as  contemplated  by the Pledge  Agreement,  all of the
issued and outstanding shares of capital stock of each Subsidiary have been duly
authorized  and  validly  issued and are fully paid,  nonassessable  and free of
pre-emptive  rights,  were issued in full compliance  with applicable  state and
federal  securities  law and any  rights of third  parties  and are owned by the
Company,  beneficially and of record,  subject to no lien,  encumbrance or other
adverse  claim.  Except as described  on Schedule  4.3, no Person is entitled to
pre-emptive  or similar  statutory  or  contractual  rights with  respect to any
securities  of the Company.  Except as described on Schedule  4.3,  there are no
outstanding  warrants,   options,   convertible   securities  or  other  rights,
agreements or  arrangements  of any character  under which the Company or any of
its  Subsidiaries  is or may be obligated to issue any equity  securities of any
kind and except as contemplated  by this Agreement,  neither the Company nor any
of its  Subsidiaries is currently in negotiations for the issuance of any equity
securities  of any kind.  Except as described on Schedule 4.3 and except for the
Registration  Rights  Agreement,  there  are  no  voting  agreements,   buy-sell
agreements,  option or right of first purchase agreements or other agreements of
any  kind  among  the  Company  and any of the  securityholders  of the  Company
relating to the  securities of the Company held by them.  Except as described on
Schedule  4.3, no Person has the right to require  the  Company to register  any
securities  of the Company  under the 1933 Act,  whether on a demand basis or in
connection  with the  registration  of  securities  of the  Company  for its own
account or for the account of any other Person.


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<PAGE>

                  Except as described on Schedule  4.3, the issuance and sale of
the Securities hereunder will not obligate the Company to issue shares of Common
Stock or other  securities  to any other Person (other than the  Investors)  and
will not result in the adjustment of the exercise, conversion, exchange or reset
price of any outstanding security.

                  Except as described on Schedule 4.3, the Company does not have
outstanding  stockholder  purchase  rights  or  "poison  pill"  or  any  similar
arrangement  in effect  giving  any  Person  the right to  purchase  any  equity
interest in the Company upon the occurrence of certain events.

                  4.4 Valid  Issuance.  The  Shares  have been duly and  validly
authorized  and,  when issued and paid for pursuant to this  Agreement,  will be
validly issued, fully paid and nonassessable, and shall be free and clear of all
encumbrances  and  restrictions  (other  than those  created by the  Investors),
except for  restrictions on transfer set forth in the  Transaction  Documents or
imposed by applicable  securities laws. The Notes, the Warrants,  the Conversion
Shares,  the  Interest  Shares and the Other  Shares  have been duly and validly
authorized.  Upon the due conversion of the Notes, the Conversion Shares will be
validly  issued,   fully  paid  and  non-assessable,   free  and  clear  of  all
encumbrances and restrictions,  except for restrictions on transfer set forth in
the  Transaction  Documents or imposed by applicable  securities laws and except
for those created by the Investors. Upon issuance thereof in accordance with the
terms of the Notes,  the Interest Shares will be validly issued,  fully paid and
non-assessable,  free and clear of all encumbrances and restrictions, except for
restrictions  on transfer set forth in the  Transaction  Documents or imposed by
applicable  securities laws and except for those created by the Investors.  Upon
the due exercise of the  Warrants,  the Warrant  Shares will be validly  issued,
fully  paid  and  non-assessable,   free  and  clear  of  all  encumbrances  and
restrictions,  except for  restrictions on transfer set forth in the Transaction
Documents or imposed by applicable  securities laws and except for those created
by the  Investors.  Upon issuance  thereof in  accordance  with the terms of the
Registration Rights Agreement, the Other Shares, if any, will be validly issued,
fully  paid  and  non-assessable,   free  and  clear  of  all  encumbrances  and
restrictions,  except for  restrictions on transfer set forth in the Transaction
Documents or imposed by applicable  securities laws and except for those created
by the  Investors.  The Company has  reserved a  sufficient  number of shares of
Common Stock for issuance upon the conversion of the Notes,  the exercise of the
Warrants and upon the issuance of the Interest Shares and the Other Shares, free
and clear of all  encumbrances  and  restrictions,  except for  restrictions  on
transfer  set  forth in the  Transaction  Documents  or  imposed  by  applicable
securities laws and except for those created by the Investors.

                  4.5 Consents.  The execution,  delivery and performance by the
Company of the  Transaction  Documents  and the offer,  issuance and sale of the
Securities  require no consent of,  action by or in respect of, or filing  with,
any Person,  governmental  body, agency, or official other than (i) the approval
of the Proposals by the Company's stockholders in accordance with applicable law
and Nasdaq  Marketplace  Rule 4350, (ii) filings that have been made pursuant to
applicable  state  securities  laws and  (iii)  post-sale  filings  pursuant  to
applicable  state and federal  securities  laws which the Company  undertakes to
file  within  the  applicable  time  periods.  Subject  to the  accuracy  of the
representations  and  warranties of each Investor set forth in Section 5 hereof,
the Company has taken all action  necessary  to exempt (i) the issuance and sale


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<PAGE>

of  the  Securities,  and  (ii)  the  other  transactions  contemplated  by  the
Transaction  Documents  from the  provisions of any  stockholder  rights plan or
other "poison pill"  arrangement,  any  anti-takeover,  business  combination or
control  share law or statute  binding on the Company or to which the Company or
any of its  assets  and  properties  may be  subject  and any  provision  of the
Company's Certificate of Incorporation or By-laws that is or could reasonably be
expected to become  applicable to the Investors as a result of the  transactions
contemplated  hereby,  including,   without  limitation,  the  issuance  of  the
Securities  and the  ownership,  disposition  or voting of the Securities by the
Investors or the exercise of any right granted to the Investors pursuant to this
Agreement or the other Transaction Documents.

                  4.6  Delivery of SEC Filings;  Business.  The Company has made
available to the Investors  through the EDGAR system true,  correct and complete
copies of the  Company's  most recent  Annual Report on Form 10-K for the fiscal
year ended  December 31, 2002 (the  "10-K"),  and all other reports filed by the
Company  pursuant  to the 1934 Act since the filing of the 10-K and prior to the
date  hereof  (collectively,  the "SEC  Filings").  The SEC Filings are the only
filings  required of the Company  pursuant  to the 1934 Act since  December  31,
2002. The Company and its Subsidiaries are engaged in all material respects only
in the  business  described  in the SEC Filings  and the SEC  Filings  contain a
complete and accurate  description  in all material  respects of the business of
the Company and its Subsidiaries, taken as a whole.

                  4.7 Use of  Proceeds.  The  net  proceeds  of the  sale of the
Securities shall be used by the Company to repay certain indebtedness (a maximum
of $300,000 of which will be paid to the Creditors) and for working  capital and
general corporate purposes.

                  4.8 No Material  Adverse  Change.  Since  December  31,  2002,
except as  identified  and  described  in the SEC  Filings  or as  described  on
Schedule 4.8, there has not been:

                           (i)   any   change   in  the   consolidated   assets,
liabilities,  financial  condition or operating results of the Company from that
reflected in the financial statements included in the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 2003, except for changes in the
ordinary  course of business which have not and could not reasonably be expected
to have a Material Adverse Effect, individually or in the aggregate;

                           (ii) any  declaration or payment of any dividend,  or
any authorization or payment of any distribution, on any of the capital stock of
the Company, or any redemption or repurchase of any securities of the Company;

                           (iii)  any  material  damage,  destruction  or  loss,
whether or not covered by insurance to any assets or  properties  of the Company
or its Subsidiaries;

                           (iv)  any  waiver,  not in  the  ordinary  course  of
business,  by the Company or any Subsidiary of a material right or of a material
debt owed to it;

                           (v) any  satisfaction or discharge of any lien, claim
or  encumbrance  or payment of any  obligation  by the Company or a  Subsidiary,
except in the  ordinary  course of  business  and which is not  material  to the
assets,  properties,  financial condition,  operating results or business of the


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<PAGE>

Company and its  Subsidiaries  taken as a whole (as such  business is  presently
conducted and as it is proposed to be conducted);

                           (vi)  any  change  or  amendment  to  the   Company's
Certificate  of  Incorporation  or by-laws,  or material  change to any material
contract or  arrangement  by which the Company or any  Subsidiary is bound or to
which any of their respective assets or properties is subject;

                           (vii) any material labor  difficulties or labor union
organizing   activities  with  respect  to  employees  of  the  Company  or  any
Subsidiary;

                           (viii) any material  transaction  entered into by the
Company or a Subsidiary other than in the ordinary course of business;

                           (ix) the loss of the services of any key employee, or
material  change in the  composition  or duties of the senior  management of the
Company or any Subsidiary;

                           (x) the loss or threatened loss of any customer which
has had or could reasonably be expected to have a Material Adverse Effect; or

                           (xi) any other event or  condition  of any  character
that has had or could reasonably be expected to have a Material Adverse Effect.

                  4.9      SEC Filings; S-3 Eligibility.

                           (a) At the time of filing  thereof,  the SEC  Filings
complied as to form in all material  respects with the  requirements of the 1934
Act and did not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.

                           (b) Each  registration  statement  and any  amendment
thereto  filed by the Company since January 1, 2000 pursuant to the 1933 Act and
the rules and regulations thereunder, as of the date such statement or amendment
became effective, complied as to form in all material respects with the 1933 Act
and did not contain any untrue statement of a material fact or omit to state any
material  fact  required to be stated  therein or necessary in order to make the
statements  made therein not misleading;  and each prospectus  filed pursuant to
Rule  424(b)  under the 1933 Act,  as of its issue date and as of the closing of
any sale of securities  pursuant thereto did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements  made therein,  in the light of the
circumstances under which they were made, not misleading.

                           (c) Upon  the  filing  with the SEC of the  Company's
audited consolidated financial statements for the year ending December 31, 2003,
the  Company  will be  eligible  to use Form  S-3 to  register  the  Registrable
Securities (as such term is defined in the  Registration  Rights  Agreement) for


                                      -10-
<PAGE>

sale by the Investors as contemplated by the Registration Rights Agreement.

                  4.10 No Conflict, Breach, Violation or Default. The execution,
delivery and  performance  of the  Transaction  Documents by the Company and the
issuance and sale of the  Securities  will not (x) conflict  with or result in a
breach or  violation  of any of the terms and  provisions  of, or  constitute  a
default under (i) the Company's  Certificate of  Incorporation  or the Company's
Bylaws, both as in effect on the date hereof (true,  correct and complete copies
of which have been made available to the Investors through the EDGAR system), or
(ii)(a) any statute,  rule,  regulation or order of any  governmental  agency or
body or any court,  domestic or foreign,  having  jurisdiction over the Company,
any  Subsidiary  or any of their  respective  assets or  properties,  or (b) any
agreement or instrument to which the Company or any  Subsidiary is a party or by
which the Company or a Subsidiary  is bound or to which any of their  respective
assets or  properties  is bound or subject,  except with  respect to this clause
(ii),  where such conflict or breach would not  reasonably be expected to result
in a Material Adverse Effect, individually or in the aggregate, or (y) result in
(i) the  creation or  imposition  of any Lien (as defined in the Note) on any of
the assets or  properties  of the  Company or its  Subsidiaries  (except for the
security interests created pursuant to the Pledge Agreement),  or (ii) result in
the  acceleration  of, or permit any  Person to  accelerate  or declare  due and
payable  prior to its stated  maturity,  any  obligation  of the  Company or its
Subsidiaries.

                  4.11 Tax Matters.  The Company and each  Subsidiary has timely
prepared and filed  (within all  applicable  extension  periods) all tax returns
required  to have  been  filed  by the  Company  or  such  Subsidiary  with  all
appropriate  governmental  agencies  and timely paid all taxes shown  thereon or
otherwise  owed by it. The  charges,  accruals  and reserves on the books of the
Company in respect of taxes for all fiscal  periods are adequate in all material
respects,  and there are no material unpaid  assessments  against the Company or
any Subsidiary nor, to the Company's Knowledge,  any basis for the assessment of
any additional  taxes,  penalties or interest for any fiscal period or audits by
any federal,  state or local taxing authority except for any assessment which is
not material to the Company and its  Subsidiaries,  taken as a whole.  All taxes
and other  assessments and levies that the Company or any Subsidiary is required
to withhold or to collect for payment have been duly  withheld and collected and
paid to the proper governmental entity or third party when due. There are no tax
liens or claims pending or, to the Company's  Knowledge,  threatened against the
Company or any Subsidiary or any of their respective assets or property.  Except
as described on Schedule 4.11,  there are no outstanding tax sharing  agreements
or other such  arrangements  between  the Company  and any  Subsidiary  or other
corporation or entity.

                  4.12  Title to  Properties.  Except  as  disclosed  in the SEC
Filings,  the Company and each  Subsidiary has good and marketable  title to all
real  properties  and all other  properties and assets owned by it, in each case
free from liens, encumbrances and defects that would materially affect the value
thereof or  materially  interfere  with the use made or currently  planned to be
made thereof by them;  and except as  disclosed in the SEC Filings,  the Company
and each Subsidiary  holds any leased real or personal  property under valid and
enforceable  leases with no exceptions that would materially  interfere with the
use made or currently planned to be made thereof by them.


                                      -11-
<PAGE>

                  4.13  Certificates,  Authorities and Permits.  The Company and
each Subsidiary possess adequate certificates,  authorities or permits issued by
appropriate  governmental  agencies or bodies  necessary to conduct the business
now operated by it, except where the failure to possess such  instruments  would
not reasonably be expected to result in a Material Adverse Effect,  individually
or in the aggregate, and neither the Company nor any Subsidiary has received any
notice of  proceedings  relating to the revocation or  modification  of any such
certificate, authority or permit that, if determined adversely to the Company or
such Subsidiary, could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.

                  4.14 No Labor  Disputes.  No material  labor  dispute with the
employees  of the  Company  or  any  Subsidiary  exists  or,  to  the  Company's
Knowledge, is imminent.

                  4.15     Intellectual Property.

                           (a) To the  Company's  Knowledge,  all  payments  and
other papers necessary to maintain the Intellectual  Property listed in Schedule
4.15(a) have been made, and to the Company's Knowledge all Intellectual Property
of the Company and its  Subsidiaries is valid and  enforceable.  No Intellectual
Property of the Company or its  Subsidiaries  which is necessary for the conduct
of Company's and each of its  Subsidiaries'  respective  businesses as currently
conducted or as currently  proposed to be conducted  has been or is now involved
in any cancellation,  dispute or litigation, and, to the Company's Knowledge, no
such action is threatened.  To the Company's Knowledge, no patent of the Company
or its  Subsidiaries has been or is now involved in any  interference,  reissue,
re-examination or opposition proceeding.

                           (b) All of the licenses and  sublicenses and consent,
royalty or other agreements concerning Intellectual Property which are necessary
for the  conduct  of the  Company's  and  each of its  Subsidiaries'  respective
businesses  as currently  conducted or as currently  proposed to be conducted to
which the Company or any  Subsidiary  is a party or by which any of their assets
are  bound   (other   than   generally   commercially   available,   non-custom,
off-the-shelf software application programs having a retail acquisition price of
less than $10,000 per license)  (collectively,  "License  Agreements") are valid
and  binding  obligations  of the Company or its  Subsidiaries  that are parties
thereto and, to the Company's Knowledge, the other parties thereto,  enforceable
in accordance with their terms,  except to the extent that  enforcement  thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws affecting the enforcement of creditors'  rights
generally,  and, to the Company's Knowledge,  there exists no event or condition
which will result in a material  violation or breach of or  constitute  (with or
without  due notice or lapse of time or both) a default by the Company or any of
its Subsidiaries under any such License Agreement.

                           (c) The Company and its  Subsidiaries own or have the
right to use all of the Intellectual  Property that is necessary for the conduct
of  the  Company's  and  each  of its  Subsidiaries'  respective  businesses  as
currently  conducted  or as  currently  proposed  to be  conducted  and  for the
ownership,  maintenance  and operation of the  Company's  and its  Subsidiaries'
properties and assets, free and clear of all liens, encumbrances, adverse claims
(to  the  Company's   Knowledge)  or  obligations  to  license  all  such  owned
Intellectual Property and Confidential Information,  other than licenses entered


                                      -12-
<PAGE>

into in the ordinary course of the Company's and its  Subsidiaries'  businesses.
The Company and its Subsidiaries  have a valid and enforceable  right to use all
third party Intellectual Property and Confidential  Information used or held for
use in the respective businesses of the Company and its Subsidiaries.

                           (d)   The   conduct   of  the   Company's   and   its
Subsidiaries'  businesses  as  currently  conducted  does not, to the  Company's
Knowledge,   infringe  or  otherwise  impair  or  conflict  with  (collectively,
"Infringe")  any  Intellectual  Property  rights  of  any  third  party  or  any
confidentiality  obligation  owed  to a  third  party,  and,  to  the  Company's
Knowledge, the Intellectual Property and Confidential Information of the Company
and its  Subsidiaries  which are necessary for the conduct of Company's and each
of  its  Subsidiaries'  respective  businesses  as  currently  conducted  or  as
currently  proposed to be conducted are not being  Infringed by any third party.
There is no  litigation  or order  pending or  outstanding  or, to the Company's
Knowledge,  threatened  or  imminent,  that seeks to limit or  challenge or that
concerns the ownership,  use,  validity or  enforceability  of any  Intellectual
Property or Confidential Information of the Company and its Subsidiaries and the
Company's and its Subsidiaries' use of any Intellectual Property or Confidential
Information owned by a third party, and, to the Company's Knowledge, there is no
valid basis for the same.

                           (e) The consummation of the transactions contemplated
hereby and by the other Transaction Documents will not result in the alteration,
loss,  impairment of or restriction on the Company's or any of its Subsidiaries'
ownership  or  right to use any of the  Intellectual  Property  or  Confidential
Information  which is  necessary  for the conduct of  Company's  and each of its
Subsidiaries'  respective  businesses  as  currently  conducted  or as currently
proposed to be conducted.

                           (f) The  Company  and  its  Subsidiaries  have  taken
reasonable steps to protect the Company's and its Subsidiaries'  rights in their
Intellectual Property and Confidential  Information.  Each employee,  consultant
and contractor who has had access to Confidential Information which is necessary
for the conduct of Company's and each of its Subsidiaries' respective businesses
as currently  conducted or as currently proposed to be conducted has executed an
agreement to maintain the  confidentiality of such Confidential  Information and
has executed appropriate  agreements that are substantially  consistent with the
Company's  standard forms  thereof.  Except under  confidentiality  obligations,
there  has  been  no  material  disclosure  of  any  of  the  Company's  or  its
Subsidiaries' Confidential Information to any third party.

                  4.16  Environmental  Matters.  Neither  the  Company  nor  any
Subsidiary is in violation of any statute, rule,  regulation,  decision or order
of any governmental agency or body or any court,  domestic or foreign,  relating
to the use,  disposal or release of hazardous or toxic substances or relating to
the protection or restoration of the  environment or human exposure to hazardous
or toxic substances  (collectively,  "Environmental Laws"), owns or operates any
real  property   contaminated   with  any  substance  that  is  subject  to  any
Environmental  Laws,  is  liable  for any  off-site  disposal  or  contamination
pursuant to any Environmental Laws, and, to the Company's Knowledge,  is subject
to any claim relating to any Environmental Laws, which violation, contamination,
liability  or claim has had or could  reasonably  be expected to have a Material


                                      -13-
<PAGE>

Adverse Effect, individually or in the aggregate; and there is no pending or, to
the  Company's  Knowledge,  threatened  investigation  that might lead to such a
claim.

                  4.17  Litigation.  Except as described on Schedule 4.17, there
are no pending actions,  suits or proceedings  against or affecting the Company,
its  Subsidiaries  or  any  of its or  their  properties;  and to the  Company's
Knowledge, no such actions, suits or proceedings are threatened or contemplated.

                  4.18 Financial  Statements.  The financial statements included
in each SEC Filing present fairly,  in all material  respects,  the consolidated
financial  position of the  Company as of the dates  shown and its  consolidated
results of operations and cash flows for the periods  shown,  and such financial
statements  have been  prepared  in  conformity  with  United  States  generally
accepted  accounting  principles applied on a consistent basis (except as may be
disclosed  therein  or in the  notes  thereto,  and,  in the  case of  quarterly
financial  statements,  as permitted by Form 10-Q under the 1934 Act). Except as
set forth in the financial statements of the Company included in the SEC Filings
filed prior to the date hereof or as  described  on Schedule  4.18,  neither the
Company nor any of its Subsidiaries has incurred any liabilities,  contingent or
otherwise, except those incurred in the ordinary course of business,  consistent
(as to amount and nature) with past  practices  since the date of such financial
statements,  none of which,  individually or in the aggregate, have had or could
reasonably be expected to have a Material Adverse Effect.

                  4.19  Insurance  Coverage.  The  Company  and each  Subsidiary
maintains in full force and effect  insurance  coverage  that is  customary  for
comparably  situated  companies for the business being  conducted and properties
owned or leased by the Company and each Subsidiary,  and the Company  reasonably
believes such insurance coverage to be adequate against all liabilities,  claims
and risks  against which it is customary for  comparably  situated  companies to
insure.

                  4.20 Compliance with Nasdaq  Continued  Listing  Requirements.
Except as  disclosed  in the SEC  Filings,  the  Company is in  compliance  with
applicable Nasdaq SmallCap Market continued listing  requirements.  There are no
proceedings  pending  or, to the  Company's  Knowledge,  threatened  against the
Company  relating to the continued  listing of the Company's Common Stock on the
Nasdaq  SmallCap  Market and the Company has not  received any notice of, nor to
the  Company's  Knowledge  is there any basis for,  the  delisting of the Common
Stock from the Nasdaq SmallCap Market.

                  4.21 Brokers and Finders.  No Person will have, as a result of
the  transactions  contemplated by the Transaction  Documents,  any valid right,
interest or claim against or upon the Company, any Subsidiary or an Investor for
any commission, fee or other compensation pursuant to any agreement, arrangement
or  understanding  entered  into by or on behalf of the  Company,  other than as
described in Schedule 4.21.

                  4.22 No  Directed  Selling  Efforts or  General  Solicitation.
Neither  the  Company  nor any Person  acting on its behalf  has  conducted  any
general  solicitation  or  general  advertising  (as  those  terms  are  used in


                                      -14-
<PAGE>

Regulation D) in connection with the offer or sale of any of the Securities.

                  4.23 No  Integrated  Offering.  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 Company  security or solicited  any
offers to buy any security,  under  circumstances  that would  adversely  affect
reliance by the Company on Section 4(2) for the exemption from  registration for
the  transactions  contemplated  hereby  or would  require  registration  of the
Securities under the 1933 Act.

                  4.24   Private   Placement.   Assuming  the  accuracy  of  the
Investors'  representations  in  Section  5  below,  the  offer  and sale of the
Securities  to  the  Investors  as  contemplated   hereby  is  exempt  from  the
registration requirements of the 1933 Act.

                  4.25 Questionable Payments. Neither the Company nor any of its
Subsidiaries nor, to the Company's Knowledge, any of their respective current or
former stockholders,  directors,  officers,  employees,  agents or other Persons
acting on behalf of the Company or any Subsidiary,  has on behalf of the Company
or any Subsidiary or in connection with their  respective  businesses:  (a) used
any corporate funds for unlawful  contributions,  gifts,  entertainment or other
unlawful  expenses  relating  to  political  activity;  (b) made any  direct  or
indirect  unlawful  payments to any  governmental  officials or  employees  from
corporate  funds;  (c) established or maintained any unlawful or unrecorded fund
of corporate monies or other assets; (d) made any false or fictitious entries on
the books and records of the Company or any Subsidiary; or (e) made any unlawful
bribe, rebate, payoff, influence payment,  kickback or other unlawful payment of
any nature.

                  4.26 Transactions with Affiliates.  Except as disclosed in SEC
Filings or as disclosed on Schedule  4.26,  none of the officers or directors of
the Company  and,  to the  Company's  Knowledge,  none of the  employees  of the
Company  is  presently  a party  to any  transaction  with  the  Company  or any
Subsidiary  (other than as holders of stock  options  and/or  warrants,  and for
services  as  employees,  officers  and  directors),   including  any  contract,
agreement or other  arrangement  providing for the  furnishing of services to or
by,  providing for rental of real or personal  property to or from, or otherwise
requiring payments to or from any officer,  director or such employee or, to the
Company's  Knowledge,  any entity in which any  officer,  director,  or any such
employee  has a  substantial  interest  or is an officer,  director,  trustee or
partner.

                  4.27  Internal  Controls.  The  Company  and the  Subsidiaries
maintain  a  system  of  internal  accounting  controls  sufficient  to  provide
reasonable  assurance  that (i)  transactions  are executed in  accordance  with
management's general or specific authorizations,  (ii) transactions are recorded
as necessary to permit  preparation of financial  statements in conformity  with
generally accepted accounting  principles and to maintain asset  accountability,
(iii) access to assets is permitted only in accordance with management's general
or specific  authorization,  and (iv) the recorded  accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. The Company has established disclosure
controls and procedures (as defined in 1934 Act Rules 13a-14 and 15d-14) for the


                                      -15-
<PAGE>

Company and designed  such  disclosure  controls and  procedures  to ensure that
material  information  relating to the Company,  including the Subsidiaries,  is
made  known  to  the  certifying  officers  by  others  within  those  entities,
particularly during the period in which the Company's most recently filed period
report under the 1934 Act, as the case may be, is being prepared.  The Company's
certifying  officers have evaluated the effectiveness of the Company's  controls
and  procedures as of a date within 90 days prior to the filing date of the most
recently  filed periodic  report under the 1934 Act (such date, the  "Evaluation
Date").  The Company  presented in its most recently filed periodic report under
the 1934 Act the conclusions of the certifying  officers about the effectiveness
of the disclosure  controls and procedures based on their  evaluations as of the
Evaluation  Date.  Since the  Evaluation  Date,  there have been no  significant
changes  in the  Company's  internal  controls  (as such term is defined in Item
307(b) of Regulation S-K) or, to the Company's Knowledge,  in other factors that
could  significantly  affect  the  Company's  internal  controls.   The  Company
maintains  and will  continue  to  maintain  a  standard  system  of  accounting
established  and  administered  in  accordance  with  GAAP  and  the  applicable
requirements of the 1934 Act.

                  4.28 Indebtedness and Other Contracts.  Except as disclosed in
Schedule  4.28,  neither  the Company  nor any of its  Subsidiaries  (i) has any
outstanding  Indebtedness  (as defined below),  (ii) is a party to any contract,
agreement or instrument,  the violation of which, or default under which, by the
other  party(ies) to such  contract,  agreement or instrument  would result in a
Material  Adverse  Effect,  (iii) is in  violation  of any term of or in default
under any contract, agreement or instrument relating to any Indebtedness, except
where such  violations  and defaults  would not result,  individually  or in the
aggregate,  in a Material  Adverse  Effect,  or (iv) is a party to any contract,
agreement or instrument relating to any Indebtedness,  the performance of which,
in the judgment of the Company's officers, has or is expected to have a Material
Adverse  Effect.  Schedule 4.28 provides a detailed  description of the material
terms of any such outstanding Indebtedness.  For purposes of this Agreement: (x)
"Indebtedness" of any Person means, without duplication (A) all indebtedness for
borrowed  money,  (B) all  obligations  issued,  undertaken  or  assumed  as the
deferred  purchase  price of  property or  services  (other than trade  payables
entered into in the  ordinary  course of  business),  (C) all  reimbursement  or
payment  obligations  with respect to letters of credit,  surety bonds and other
similar instruments,  (D) all obligations evidenced by notes, bonds,  debentures
or  similar  instruments,   including   obligations  so  evidenced  incurred  in
connection  with the  acquisition  of property,  assets or  businesses,  (E) all
indebtedness  created  or  arising  under any  conditional  sale or other  title
retention  agreement,  or incurred as financing,  in either case with respect to
any property or assets  acquired  with the proceeds of such  indebtedness  (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property),  (F) all
monetary  obligations  under  any  leasing  or  similar  arrangement  which,  in
connection with generally accepted accounting  principles,  consistently applied
for the periods  covered  thereby,  is  classified as a capital  lease,  (G) all
indebtedness  referred to in clauses  (A)  through (F) above  secured by (or for
which the holder of such  Indebtedness  has an  existing  right,  contingent  or
otherwise,  to be secured  by) any  mortgage,  lien,  pledge,  charge,  security
interest  or other  encumbrance  upon or in any  property  or assets  (including
accounts and contract rights) owned by any Person,  even though the Person which
owns such assets or property has not assumed or become liable for the payment of
such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
or  obligations  of others of the kinds  referred  to in clauses (A) through (G)
above; and (y) "Contingent  Obligation"  means, as to any Person,  any direct or


                                      -16-
<PAGE>

indirect liability,  contingent or otherwise, of that Person with respect to any
indebtedness,  lease,  dividend  or other  obligation  of another  Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect  thereof,  is to provide  assurance to the obligee of such liability that
such  liability  will be paid or  discharged,  or that any  agreements  relating
thereto will be complied  with,  or that the holders of such  liability  will be
protected (in whole or in part) against loss with respect thereto.

                  4.29 Solvency.  Assuming that no event or condition shall have
occurred  after the date  hereof  and prior to the  Closing  that  would  have a
Material  Adverse  Effect,  the Company will not be Insolvent (as defined below)
after giving  effect to the issuance of the Notes,  the Warrants and the Shares.
For  purposes of this  Section  4.29,  "Insolvent"  means (i) the  present  fair
saleable value of the Company's  assets is less than the amount  required to pay
the Company's  total  indebtedness,  (ii) the Company is unable to pay its debts
and  liabilities,  subordinated,  contingent  or  otherwise,  as such  debts and
liabilities  become absolute and matured,  or (iii) the Company intends to incur
or believes  that it will incur debts that would be beyond its ability to pay as
such debts mature. Neither the Company nor any of its Subsidiaries has taken any
steps to seek  protection  pursuant to any  bankruptcy  law nor does the Company
have any  knowledge  or reason to believe  that its or any of its  Subsidiaries'
creditors intend to initiate  involuntary  bankruptcy  proceedings or any actual
knowledge of any fact which would reasonably lead a creditor to do so.

                  4.30 Disclosures. Neither the Company nor any Person acting on
its  behalf has  provided  the  Investors  or their  agents or counsel  with any
information   that  constitutes  or  might   constitute   material,   non-public
information  which has not been, or will not be, made publicly  available on the
date hereof. The Transaction  Documents do not contain any untrue statement of a
material  fact or omit to state a material  fact  necessary in order to make the
statements  contained  therein,  in light of the circumstances  under which they
were made, not misleading.

         5.  Representations  and  Warranties  of  the  Investors.  Each  of the
Investors  hereby  severally,  and not jointly,  represents  and warrants to the
Company only with respect to itself that:

                  5.1  Organization  and  Existence.  The  Investor is a validly
existing  corporation,  limited partnership or limited liability company and has
all requisite  corporate,  partnership  or limited  liability  company power and
authority to invest in the Securities pursuant to this Agreement.

                  5.2 Authorization.  The execution, delivery and performance by
the Investor of the Transaction Documents to which such Investor is a party have
been duly  authorized  and will each  constitute  the valid and legally  binding
obligation of the Investor,  enforceable against the Investor in accordance with
their respective terms, subject to bankruptcy,  insolvency, fraudulent transfer,
reorganization,  moratorium and similar laws of general applicability,  relating
to or affecting creditors' rights generally.

                  5.3 Purchase  Entirely for Own Account.  The  Securities to be
received by the  Investor  hereunder  will be acquired  for the  Investor's  own
account,  not as  nominee  or  agent,  and  not  with a view  to the  resale  or
distribution  of any part thereof in violation of the 1933 Act, and the Investor
has no present intention of selling, granting any participation in, or otherwise


                                      -17-
<PAGE>

distributing the same in violation of the 1933 Act; provided,  however,  that by
making the  representations  herein,  the Investor does not agree to hold any of
the  Securities for any minimum or other specific term and reserves the right to
dispose  of the  Securities  at any time in  accordance  with or  pursuant  to a
registration statement or an exemption under the 1933 Act. The Investor is not a
registered  broker dealer or an entity engaged in the business of being a broker
dealer.

                  5.4 Investment  Experience.  The Investor acknowledges that it
can bear the economic risk and complete loss of its investment in the Securities
and has such knowledge and  experience in financial or business  matters that it
is capable of  evaluating  the merits and risks of the  investment  contemplated
hereby.

                  5.5  Disclosure  of  Information.  The  Investor  has  had  an
opportunity to receive all  information  related to the Company  requested by it
and to ask  questions  of and receive  answers  from the Company  regarding  the
Company,  its  business  and the terms and  conditions  of the  offering  of the
Securities.  The  Investor  acknowledges  receipt of copies of the SEC  Filings.
Neither such  inquiries nor any other due diligence  investigation  conducted by
the Investor shall modify,  amend or affect the Investor's  right to rely on the
Company's representations and warranties contained in this Agreement.

                  5.6 Restricted  Securities.  The Investor understands that the
Securities are  characterized as "restricted  securities" under the U.S. federal
securities  laws  inasmuch  as they are being  acquired  from the  Company  in a
transaction  not  involving  a public  offering  and that  under  such  laws and
applicable  regulations such securities may be resold without registration under
the 1933 Act only in certain limited circumstances.

                  5.7 Legends.  It is understood that, except as provided below,
certificates  evidencing  the  Securities  may bear the following or any similar
legend:

                           (a) "The  securities  represented  hereby  may not be
transferred unless (i) such securities have been registered for sale pursuant to
the  Securities  Act of 1933,  as  amended,  (ii)  such  securities  may be sold
pursuant to Rule 144(k), or (iii) the Company has received an opinion of counsel
reasonably  satisfactory  to it that such  transfer may lawfully be made without
registration under the Securities Act of 1933 or qualification  under applicable
state securities laws."

                           (b) If  required by the  authorities  of any state in
connection with the issuance of sale of the Shares,  the legend required by such
state authority.

                  Upon the earlier of (i)  registration  for resale  pursuant to
the  Registration  Rights Agreement and receipt by the Company of the Investor's
written  confirmation  that such  Securities  will not be  disposed of except in
compliance  with the prospectus  delivery  requirements  of the 1933 Act or (ii)
Rule 144(k)  becoming  available the Company shall,  upon an Investor's  written
request,  promptly cause  certificates  evidencing the Securities to be replaced
with  certificates  which do not bear such restrictive  legends,  and Conversion
Shares,  Interest Shares,  Other Shares and Warrant Shares  subsequently  issued
shall not bear such restrictive legends provided the provisions of either clause
(i) or clause (ii) above,  as applicable,  are satisfied  with respect  thereto.


                                      -18-
<PAGE>

When the  Company  is  required  to cause  unlegended  certificates  to  replace
previously  issued legended  certificates,  if unlegended  certificates  are not
delivered to an Investor  within three (3) Business  Days of  submission by that
Investor of legended certificate(s) to the Company's transfer agent, the Company
shall be liable (in addition to any other remedy  available to the  Investor) to
the Investor for  liquidated  damages in an amount equal to 1% of the  aggregate
purchase price of the shares  evidenced by such  certificate(s)  for each thirty
(30) day period (or portion thereof) beyond such three (3) Business Day that the
unlegended certificates have not been so delivered.

                  5.8  Accredited  Investor.   The  Investor  is  an  accredited
investor as defined in Rule 501(a) of Regulation  D, as amended,  under the 1933
Act.

                  5.9 No General Solicitation. The Investor did not learn of the
investment in the  Securities as a result of any public  advertising  or general
solicitation.

                  5.10 Brokers and Finders.  No Person will have, as a result of
the  transactions  contemplated by the Transaction  Documents,  any valid right,
interest or claim against or upon the Company, any Subsidiary or an Investor for
any commission, fee or other compensation pursuant to any agreement, arrangement
or  understanding  entered into by or on behalf of the Investors,  other than as
described in Schedule 4.21.

                  5.11 Prohibited Transactions. During the last thirty (30) days
prior to the date hereof, no Investor has,  directly or indirectly,  effected or
agreed to effect any short sale, whether or not against the box, established any
"put equivalent  position" (as defined in Rule 16a-1(h) under the 1934 Act) with
respect  to the  Common  Stock,  granted  any other  right  (including,  without
limitation,  any put or call  option)  with  respect to the Common Stock or with
respect to any security  that  includes,  relates to or derived any  significant
part of its  value  from the  Common  Stock or  otherwise  sought  to hedge  its
position in the  Securities  (each,  a "Prohibited  Transaction").  Prior to the
earlier of (i) the termination of this  Agreement,  or (ii) the Closing Date, no
Investor shall engage, directly or indirectly, in a Prohibited Transaction. Each
Investor  acknowledges that the representations and warranties contained in this
Section  5.11 are being  made for the  benefit of the  Investors  as well as the
Company and that each of the other Investors shall have an independent the right
to assert any claims against any Investor arising out of any breach or violation
of the provisions of this Section 5.11.

         6. Conditions to Closing.

                  6.1 Conditions to the Investors'  Obligations.  The obligation
of each  Investor  to  purchase  its  Shares at the  Closing  is  subject to the
fulfillment to the Investors' satisfaction,  on or prior to the Closing Date, of
the following  conditions,  any of which may be waived by the Investors agreeing
hereunder to purchase a majority of the Shares (the "Required Investors"):

                           (a) The  representations  and warranties  made by the
Company  in  Section  4 hereof  qualified  as to  materiality  shall be true and
correct at all times prior to and on the Closing Date,  except to the extent any
such representation or warranty expressly speaks as of an earlier date, in which
case  such  representation  or  warranty  shall be true and  correct  as of such


                                      -19-
<PAGE>

earlier date,  and, the  representations  and warranties  made by the Company in
Section 4 hereof not  qualified as to  materiality  shall be true and correct in
all material  respects at all times prior to and on the Closing Date,  except to
the extent any such representation or warranty expressly speaks as of an earlier
date, in which case such representation or warranty shall be true and correct in
all material  respects as of such earlier date. The Company shall have performed
in all material  respects all obligations  and conditions  herein required to be
performed or observed by it on or prior to the Closing Date.

                           (b) The  Company  shall  have  obtained  in a  timely
fashion any and all  consents,  permits,  approvals,  registrations  and waivers
necessary or appropriate for consummation of the purchase and sale of the Shares
all of which shall be in full force and effect.

                           (c) At least 15  calendar  days prior to the  Closing
Date or such  shorter  period as Nasdaq  may,  in its  discretion,  permit,  the
Company shall have  delivered to Nasdaq the notice of issuance of the Shares and
the Other Shares, if any, in accordance with Nasdaq Marketplace Rule 4310(c)(17)
and the  Company  shall have  delivered  to each of the  Investors  satisfactory
evidence of the delivery of such notice. The Company shall not have received any
communication  (whether  written  or oral)  from  Nasdaq  requesting  additional
information   regarding  the   transactions   contemplated  by  this  Agreement,
including,  without limitation, the issuance of the Shares and the Other Shares,
if any,  which has not been  complied  with or  indicating  that  Nasdaq has any
objections  to the  transactions  contemplated  by  this  Agreement,  including,
without  limitation,  the issuance of the Shares and the Other  Shares,  if any,
which has not been satisfied.

                           (d) The  Company's  stockholders  shall have approved
the Proposals in accordance with  applicable  law, the Company's  Certificate of
Incorporation and By-laws and Nasdaq Marketplace Rule 4350(i).

                           (e) No Event of  Default  or  event  which,  with the
giving of notice,  the lapse of time or both,  would  become an Event of Default
under the Notes or the Pledge Agreement shall have occurred and be continuing.

                           (f) No judgment,  writ, order,  injunction,  award or
decree of or by any  court,  or judge,  justice  or  magistrate,  including  any
bankruptcy  court or judge,  or any order of or by any  governmental  authority,
shall have been issued,  and no action or proceeding  shall have been instituted
by any governmental  authority,  enjoining or preventing the consummation of the
transactions contemplated hereby or in the other Transaction Documents.

                           (g) The Company shall have  delivered a  Certificate,
executed  on behalf of the Company by its Chief  Executive  Officer or its Chief
Financial Officer, dated as of the Closing Date, certifying to the fulfilment of
the conditions  specified in  subsections  (a), (b), (c), (d), (e), (f), (j) and
(k) of this Section 6.1.

                           (h) The Company shall have  delivered a  Certificate,
executed  on behalf of the  Company by its  Secretary,  dated as of the  Closing
Date,  certifying  the  resolutions  adopted  by the Board of  Directors  of the


                                      -20-
<PAGE>

Company approving the transactions  contemplated by this Agreement and the other
Transaction Documents and the issuance of the Securities, certifying the current
versions  of the  Certificate  of  Incorporation  and Bylaws of the  Company and
certifying as to the signatures and authority of persons signing the Transaction
Documents and related documents on behalf of the Company.

                           (i) The Investors shall have received an opinion from
Hale and Dorr LLP,  the  Company's  counsel,  dated as of the Closing  Date,  in
substantially the form of Exhibit H.

                           (j) No stop order or suspension of trading shall have
been imposed by Nasdaq, the SEC or any other  governmental  regulatory body with
respect to public trading in the Common Stock.

                           (k) The Company  shall have  completely  executed and
delivered to the appropriate Investors all forms which such Investors shall have
informed  the Company are  required by the Small  Business  Administration  (the
"SBA")  in  connection  with the  transactions  contemplated  hereby,  including
without  limitation  a Size Status  Declaration  on SBA Form 480,  Assurance  of
Compliance for  Nondiscrimination on SBA Form 652 and Portfolio Financing Report
on SBA Form 1031.

                           (l) The  Company  and each  Investor  that is a small
business  investment  company  shall have  entered  into a letter  agreement  in
substantially the form of Exhibit I.

                  6.2 Conditions to  Obligations  of the Company.  The Company's
obligation  to sell and  issue the  Shares  at the  Closing  is  subject  to the
fulfillment to the  satisfaction  of the Company on or prior to the Closing Date
of the following conditions, any of which may be waived by the Company:

                           (a) The  representations  and warranties  made by the
Investors in Section 5 hereof,  other than the  representations  and  warranties
contained in Sections 5.3,  5.4,  5.5,  5.6,  5.7, 5.8 and 5.9 (the  "Investment
Representations"), shall be true and correct in all material respects when made,
and shall be true and correct in all material  respects on the Closing Date with
the same force and  effect as if they had been made on and as of said date.  The
Investment  Representations shall be true and correct in all respects when made,
and shall be true and correct in all  respects on the Closing Date with the same
force and effect as if they had been made on and as of said date.  The Investors
shall have  performed in all material  respects all  obligations  and conditions
herein  required to be  performed or observed by them on or prior to the Closing
Date.

                           (b) The  Investors  shall  have  delivered  the Share
Purchase Price to the Company.


                                      -21-
<PAGE>

                           (c) The  Company's  stockholders  shall have approved
the Proposals in accordance with  applicable  law, the Company's  Certificate of
Incorporation and By-laws and Nasdaq Marketplace Rule 4350(i).

                  6.3 Termination of Obligations to Effect Closing; Effects.

                           (a) The obligations of the Company,  on the one hand,
and the Investors,  on the other hand, to effect the Closing shall  terminate as
follows:

                                    (i) Upon the mutual  written  consent of the
Company and the Required Investors;

                                    (ii) By the Company if any of the conditions
set forth in Section 6.2 shall have become  incapable of fulfillment,  and shall
not have been waived by the Company;

                                    (iii) By the  Required  Investors  if any of
the  conditions  set  forth in  Section  6.1  shall  have  become  incapable  of
fulfillment, and shall not have been waived by the Required Investors; or

                                    (iv) By either the  Company or the  Required
Investors if the Closing has not occurred on or prior to April 30, 2004;

provided,  however,  that,  except in the case of clause  (i)  above,  the party
seeking to terminate  its  obligation to effect the Closing shall not then be in
breach  of any of  its  representations,  warranties,  covenants  or  agreements
contained in this  Agreement or the other  Transaction  Documents if such breach
has  resulted  in the  circumstances  giving  rise to such  party's  seeking  to
terminate its obligation to effect the Closing.

                  (b) In the event of termination by the Company or the Required
Investors of their  obligations  to effect the Closing  pursuant to this Section
6.3, written notice thereof shall forthwith be given to the other parties hereto
and the  obligation  of all parties to effect the Closing  shall be  terminated,
without further action by any party. Nothing in this Section 6.3 shall be deemed
to  release  any party  from any  liability  for any breach by such party of the
terms and provisions of this Agreement or the other Transaction  Documents or to
impair the right of any party to compel specific  performance by any other party
of its obligations under this Agreement or the other Transaction Documents.

         7. Covenants and Agreements of the Company.

                  7.1  Reservation  of Common  Stock.  The Company  shall at all
times reserve and keep available out of its  authorized  but unissued  shares of
Common  Stock such  number of shares of Common  Stock as shall from time to time
permit the full issuance of the  Conversion  Shares,  the Interest  Shares,  the
Conversion Shares and the Warrant Shares.

                  7.2      [intentionally omitted]


                                      -22-
<PAGE>

                  7.3 No Conflicting  Agreements.  The Company will not take any
action,  enter into any agreement or make any commitment  that would conflict or
interfere  in  any  material  respect  with  the  Company's  obligations  to the
Investors under the Transaction Documents.

                  7.4      [intentionally omitted]

                  7.5  Compliance  with Laws.  The  Company  will  comply in all
material  respects with all  applicable  laws,  rules,  regulations,  orders and
decrees of all governmental authorities.

                  7.6 Listing of Shares and Related Matters.  Promptly following
the date  hereof,  the  Company  shall  take all  necessary  action to cause the
Conversion  Shares,  the Warrant Shares and the Interest  Shares to be listed on
the Nasdaq SmallCap Market as promptly as  practicable.  Promptly  following the
date hereof,  the Company shall take all necessary action to cause the Shares to
be listed on the Nasdaq  SmallCap  Market as promptly as  practicable  but in no
event later than the Closing Date.  Promptly following the issuance of any Other
Shares,  the Company shall take all necessary  action to cause such Other Shares
to be listed on the Nasdaq SmallCap Market promptly thereafter.  Further, if the
Company applies to have its Common Stock or other securities traded on any other
principal  stock exchange or market,  it shall include in such  application  the
Shares,  the Warrant Shares,  the Conversion Shares, the Interest Shares and the
Other  Shares,  if any, and will take such other action as is necessary to cause
such Common Stock to be so listed. The Company will use commercially  reasonable
efforts to continue  the  listing and trading of its Common  Stock on the Nasdaq
SmallCap Market (including,  if necessary,  effecting a Reverse Split subject to
the  provisions  of  Section  7.10)  and,  in  accordance,  therewith,  will use
commercially  reasonable  efforts to comply in all respects  with the  Company's
reporting, filing and other obligations under the bylaws or rules of such market
or  exchange,  as  applicable.  The Company  shall pay all fees and  expenses in
connection with satisfying its obligations under this Section 7.6.

                  7.7  Termination of Covenants.  The provisions of Sections 7.2
through  7.5 shall  terminate  and be of no further  force and  effect  upon the
earlier of (i) the mutual  consent of the Company and the Required  Investors or
(ii) the date on which the Company's  obligations under the Registration  Rights
Agreement to register or maintain the effectiveness of any registration covering
the Registrable  Securities (as such term is defined in the Registration  Rights
Agreement) shall terminate.

                  7.8  Proxy  Statement;   Stockholders  Meeting.  (a)  Promptly
following the  execution  and delivery of this  Agreement the Company shall take
all action  necessary to call a meeting of its stockholders  (the  "Stockholders
Meeting"),  which shall  occur not later than April 30, 2004 (the  "Stockholders
Meeting  Deadline")  for  the  purpose  of  seeking  approval  of the  Company's
stockholders  for (i) the issuance  and sale to the  Investors of the Shares and
(ii),  subject to Section  7.10 below,  the  Reverse  Split  (collectively,  the
"Proposals").  In connection  therewith,  the Company will promptly  prepare and
file with the SEC  proxy  materials  (including  a proxy  statement  and form of
proxy) for use at the  Stockholders  Meeting and,  after  receiving and promptly
responding  to any comments of the SEC thereon,  shall  promptly mail such proxy


                                      -23-
<PAGE>

materials to the  stockholders  of the Company.  Each  Investor  shall  promptly
furnish in writing to the Company such information relating to such Investor and
its  investment  in the  Company  as the  Company  may  reasonably  request  for
inclusion in the Proxy Statement.  The Company will comply with Section 14(a) of
the 1934 Act and the  rules  promulgated  thereunder  in  relation  to any proxy
statement (as amended or  supplemented,  the "Proxy  Statement") and any form of
proxy to be sent to the  stockholders  of the  Company  in  connection  with the
Stockholders  Meeting,  and the Proxy  Statement shall not, on the date that the
Proxy Statement (or any amendment thereof or supplement thereto) is first mailed
to stockholders or at the time of the Stockholders  Meeting,  contain any untrue
statement  of a material  fact or omit to state any material  fact  necessary in
order to make the statements  made therein not false or  misleading,  or omit to
state any  material  fact  necessary  to correct  any  statement  in any earlier
communication  with respect to the  solicitation of proxies or the  Stockholders
Meeting which has become false or misleading.  If the Company should discover at
any time prior to the Stockholders Meeting, any event relating to the Company or
any of its  Subsidiaries  or any of their  respective  affiliates,  officers  or
directors  that is required to be set forth in a supplement  or amendment to the
Proxy Statement,  in addition to the Company's  obligations  under the 1934 Act,
the Company will promptly inform the Investors thereof.

                  (b) Subject to their fiduciary  obligations  under  applicable
law (as  determined  in good faith by the  Company's  Board of  Directors  after
consultation  with  the  Company's  outside  counsel),  the  Company's  Board of
Directors shall recommend to the Company's  stockholders  (and, subject to their
fiduciary  obligations,  not  revoke  or  amend  such  recommendation)  that the
stockholders  vote in favor of the Proposals and shall cause the Company to take
all commercially reasonable action (including, without limitation, the hiring of
a proxy  solicitation  firm of  nationally  recognized  standing) to solicit the
approval of the  stockholders  for the  Proposals.  Whether or not the Company's
Board of Directors determines at any time after the date hereof that, due to its
fiduciary  duties,  it must revoke or amend its  recommendation to the Company's
stockholders,  the Company  shall be required to, and will take,  in  accordance
with applicable law and its Certificate of Incorporation and Bylaws,  all action
necessary to convene the Stockholders Meeting as promptly as practicable, but no
later than the  Stockholders  Meeting  Deadline,  to consider  and vote upon the
approval of the Proposals.

                  (c) No Investor  shall vote or cause any Person to vote on its
behalf any Conversion Shares,  Interest Shares,  Warrant Shares or Other Shares,
if any, then owned by it at the Stockholders Meeting.

                  7.9      Director Designee.

                           (a)  Commencing  on the  Closing,  so long as Special
Situations  Fund  III,  L.P.  ("SSF")  and/or  one or  more  of  its  Affiliates
collectively are the beneficial owners of at least 14% of the outstanding Common
Stock  (determined in accordance  with Rule 13d-3 under the 1934 Act), SSF shall
have the right to designate one person for election to the board of directors of
the  Company  (the "SSF  Designee").  The  Company  shall  use its  commercially
reasonable  efforts to cause the SSF  Designee  to be  elected to the  Company's
board of  directors.  SSF shall  have the right to  remove  or  replace  any SSF
Designee by giving  notice to such SSF  Designee  and the  Company.  The Company


                                      -24-
<PAGE>

shall  use  its  commercially  reasonable  efforts  to  effect  the  removal  or
replacement of any such SSF Designee.

                           (b) Subject to any limitations  imposed by applicable
law, the SSF Designee shall be entitled to the same perquisites, including stock
options,  reimbursement  of expenses and other similar rights in connection with
such  person's  membership  on the Board of Directors  of the Company,  as every
other non-employee member of the Board of Directors of the Company.

                           (c) At such  time as SSF  and its  Affiliates  are no
longer the beneficial owners of at least 14% and  notwithstanding any subsequent
increase in such  percentage:  (i) SSF shall no longer have the rights set forth
in this  Section 7.9;  and (ii) the SSF  Designee  shall,  upon the request of a
majority of the other members of the Company's  Board of Directors,  resign from
the Board of Directors.

                  7.10 Reverse  Split.  If the Board of Directors,  based on the
advice of its counsel and financial advisors,  determines in good faith that the
Company  should effect a Reverse  Split in order to maintain or  facilitate  the
maintenance  of the listing of the Common Stock on the Nasdaq  SmallCap  Market,
the Board of  Directors  shall  determine in good faith the terms of the Reverse
Split, subject to the parameters contained in the definition of "Reverse Split".
If the Board of  Directors,  based on the advice of its  counsel  and  financial
advisors,  determines  in good  faith  that no  Reverse  Split is  necessary  to
maintain the listing of the Common Stock on the Nasdaq SmallCap Market, then the
Company shall not be obligated to effect the Reverse Split.

                  7.11 Rights Offering.  Prior to the Closing, the Company shall
not make any rights offering to its stockholders.

         8. Survival and Indemnification.

                  8.1 Survival. All representations,  warranties,  covenants and
agreements  contained in this Agreement  shall be deemed to be  representations,
warranties, covenants and agreements as of the date hereof and shall survive the
execution and delivery of this  Agreement  for a period of eighteen  months from
the date of this Agreement;  provided, however, that the provisions contained in
Section 7 hereof shall survive in accordance therewith.


                  8.2 Indemnification.  The Company agrees to indemnify and hold
harmless,  on an after-tax and after insurance recovery basis, each Investor and
its Affiliates and their respective  directors,  officers,  employees and agents
from and against any and all losses, claims,  damages,  liabilities and expenses
(including  without  limitation  reasonable  attorney fees and disbursements and
other expenses incurred in connection with investigating, preparing or defending
any  action,  claim  or  proceeding,  pending  or  threatened  and the  costs of
enforcement  thereof)  (collectively,  "Losses") to which such Person may become
subject  as a result of any  breach of  representation,  warranty,  covenant  or
agreement  made by or to be  performed  on the  part of the  Company  under  the
Transaction  Documents,  and will reimburse any such Person for all such amounts
as they are incurred by such Person.


                                      -25-
<PAGE>

                  8.3 Conduct of  Indemnification  Proceedings.  Promptly  after
receipt by any Person (the "Indemnified  Person") of notice of any demand, claim
or  circumstances  which would or might give rise to a claim or the commencement
of any action,  proceeding or investigation in respect of which indemnity may be
sought  pursuant to Section 8.2, such  Indemnified  Person shall promptly notify
the  Company in writing  and the  Company  shall  assume  the  defense  thereof,
including the employment of counsel reasonably  satisfactory to such Indemnified
Person,  and shall  assume the  payment  of all  reasonable  fees and  expenses;
provided,  however,  that the failure of any Indemnified Person so to notify the
Company shall not relieve the Company of its obligations hereunder except to the
extent that the Company is materially  prejudiced by such failure to notify.  In
any such proceeding,  any Indemnified  Person shall have the right to retain its
own counsel,  but the fees and expenses of such counsel  shall be at the expense
of such Indemnified  Person unless:  (i) the Company and the Indemnified  Person
shall have  mutually  agreed to the  retention of such  counsel;  or (ii) in the
reasonable judgment of counsel to such Indemnified Person representation of both
parties by the same counsel  would be  inappropriate  due to actual or potential
differing  interests  between  them.  The  Company  shall not be liable  for any
settlement of any proceeding effected without its written consent, which consent
shall not be  unreasonably  withheld,  but if settled with such  consent,  or if
there be a final  judgment for the  plaintiff,  the Company shall  indemnify and
hold harmless such Indemnified Person from and against any loss or liability (to
the extent stated above) by reason of such  settlement or judgment.  Without the
prior  written  consent of the  Indemnified  Person,  which consent shall not be
unreasonably  withheld,  the  Company  shall not  effect any  settlement  of any
pending or threatened  proceeding in respect of which any Indemnified  Person is
or could have been a party and  indemnity  could have been sought  hereunder  by
such Indemnified Party, unless such settlement includes an unconditional release
of such Indemnified Person from all liability arising out of such proceeding.

         9. Miscellaneous.

                  9.1 Successors and Assigns. This Agreement may not be assigned
by a party  hereto  without  the prior  written  consent  of the  Company or the
Required  Investors,  as  applicable,  provided,  however,  that an Investor may
assign its rights and  delegate  its duties  hereunder in whole or in part to an
Affiliate  or to a third  party  acquiring  some or all of its  Securities  in a
private  transaction  without  the prior  written  consent of the Company or the
other Investors, after notice duly given by such Investor to the Company and the
other  Investors,  provided,  that no such assignment or obligation shall affect
the  obligations  of such Investor  hereunder.  The provisions of this Agreement
shall  inure to the  benefit of and be  binding  upon the  respective  permitted
successors  and assigns of the parties.  Nothing in this  Agreement,  express or
implied,  is intended to confer upon any party other than the parties  hereto or
their respective successors and assigns any rights,  remedies,  obligations,  or
liabilities under or by reason of this Agreement,  except as expressly  provided
in this Agreement.  Notwithstanding  any other provision hereof, in no event may
the rights  granted to SSF pursuant to Section 7.9 hereof be  transferred to any
Person which is not an Affiliate of SSF.

                  9.2 Counterparts; Faxes. This Agreement may be executed in two
or more  counterparts,  each of which  shall be deemed an  original,  but all of
which together shall constitute one and the same instrument.  This Agreement may


                                      -26-
<PAGE>

also be executed via facsimile, which shall be deemed an original.

                  9.3 Titles and  Subtitles.  The titles and  subtitles  used in
this  Agreement  are used for  convenience  only and are not to be considered in
construing or interpreting this Agreement.

                  9.4 Notices. Unless otherwise provided, any notice required or
permitted  under this  Agreement  shall be given in writing  and shall be deemed
effectively  given as hereinafter  described (i) if given by personal  delivery,
then such  notice  shall be deemed  given upon such  delivery,  (ii) if given by
telex or  telecopier,  then such notice  shall be deemed  given upon  receipt of
confirmation of complete  transmittal,  (iii) if given by mail, then such notice
shall be deemed  given  upon the  earlier of (A)  receipt of such  notice by the
recipient  or (B) three days after such notice is deposited in first class mail,
postage prepaid,  and (iv) if given by an internationally  recognized  overnight
air  courier,  then such notice  shall be deemed  given one  business  day after
delivery to such  carrier.  All notices  shall be  addressed  to the party to be
notified at the address as follows,  or at such other  address as such party may
designate by ten days' advance written notice to the other party:

                           If to the Company:

                                    GoAmerica, Inc.
                                    433 Hackensack Avenue
                                    Hackensack, New Jersey
                                    Attention:  Chief Executive Officer
                                    Fax:  (201) 996-1772

                           With a copy to:

                                    Hale and Dorr LLP
                                    650 College Road East
                                    Princeton, NJ 08540
                                    Attention:  Richard Mattessich, Esq.
                                    Fax:  (609) 750-7700

                           If to the Investors:

to the addresses set forth on the signature pages hereto.

                  9.5 Expenses. Except as otherwise set forth in the Transaction
Documents,  the  parties  hereto  shall pay their  own  costs  and  expenses  in
connection  herewith.  On the date hereof,  the Company shall pay the reasonable
fees and expenses of Lowenstein Sandler PC ("Lowenstein Sandler"), not to exceed
$25,000. In addition,  the Company shall pay the reasonable fees and expenses of
Lowenstein  Sandler  incurred  subsequent  to the  date  hereof,  not to  exceed
$10,000.  Such expenses  shall be paid at Closing or, if incurred  subsequent to
the Closing,  on demand.  In  addition,  at the closing of the sale of the Notes


                                      -27-
<PAGE>

hereunder,  the  Company  shall pay the  reasonable  fees and  expenses of legal
counsel  to the  Placement  Agent,  not to exceed  $25,000.  The  Company  shall
reimburse the Investors  upon demand for all reasonable  out-of-pocket  expenses
incurred by the  Investors,  including,  without  limitation,  reimbursement  of
attorneys'   fees  and   disbursements,   in  connection   with  any  amendment,
modification or waiver of this Agreement or the other Transaction Documents.  In
the event that legal  proceedings  are commenced by any party to this  Agreement
against another party to this Agreement in connection with this Agreement or the
other Transaction  Documents,  the party or parties which do not prevail in such
proceedings  shall severally,  but not jointly,  pay their pro rata share of the
reasonable attorneys' fees and other reasonable out-of-pocket costs and expenses
incurred by the prevailing party in such proceedings.

                  9.6 Amendments and Waivers.  Any term of this Agreement may be
amended and the  observance of any term of this  Agreement may be waived (either
generally   or  in  a   particular   instance   and  either   retroactively   or
prospectively),  only with the written  consent of the Company and the  Required
Investors.  Any amendment or waiver  effected in accordance  with this paragraph
shall be  binding  upon  each  holder of any  Securities  purchased  under  this
Agreement at the time  outstanding,  each future holder of all such  Securities,
and the Company.  The foregoing  notwithstanding,  no amendment shall be made to
this Agreement which affects any particular  Investor in a manner different than
any other Investor without the prior written consent of that Investor.

                  9.7 Publicity.  No public release or  announcement  concerning
the  transactions  contemplated  hereby  shall be issued by the  Company  or the
Investors  without the prior consent of the Company (in the case of a release or
announcement  by the Investors) or SSF (in the case of a release or announcement
by the Company) (which consents shall not be unreasonably  withheld),  except as
such release or announcement  may be required by law or the applicable  rules or
regulations of any securities  exchange or securities  market, in which case the
Company or the Investors, as the case may be, shall allow SSF or the Company, as
applicable,   to  the  extent  reasonably   practicable  in  the  circumstances,
reasonable  time to comment on such release or  announcement  in advance of such
issuance.  Notwithstanding the foregoing,  each party hereto (and each employee,
representative,  or  other  agent of such  party)  may  disclose  to any and all
persons, without limitation of any kind, the United States federal tax treatment
and tax structure of the transactions  contemplated  hereby and all materials of
any kind  (including  opinions or other tax  analyses)  that are  provided to it
relating  to such  tax  treatment  and tax  structure.  For this  purpose,  'tax
structure' is limited to any facts  relevant to the United States federal income
tax treatment of the  transaction and does not include  information  relating to
the identity of the parties. In addition to the foregoing,  no Investor shall be
named in any press  release or  governmental  or  regulatory  filing unless such
disclosure is required by law, rule, regulation or the requirements of any stock
market or stock  exchange on which the Common Stock is listed or traded  without
the prior consent of the applicable Investor.

                  9.8  Severability.  Any  provision of this  Agreement  that is
prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction,
be ineffective to the extent of such  prohibition  or  unenforceability  without
invalidating the remaining  provisions  hereof but shall be interpreted as if it
were  written  so as to be  enforceable  to  the  maximum  extent  permitted  by
applicable law, and any such prohibition or unenforceability in any jurisdiction


                                      -28-
<PAGE>

shall  not  invalidate  or  render  unenforceable  such  provision  in any other
jurisdiction.  To the extent  permitted by  applicable  law, the parties  hereby
waive any  provision of law which  renders any  provision  hereof  prohibited or
unenforceable in any respect.

                  9.9 Entire Agreement.  This Agreement,  including the Exhibits
and the Disclosure Schedules, and the other Transaction Documents constitute the
entire  agreement  among the parties  hereof with respect to the subject  matter
hereof and thereof and supersede all prior agreements and  understandings,  both
oral and written,  between the parties with respect to the subject matter hereof
and thereof.

                  9.10 Further Assurances. The parties shall execute and deliver
all such further  instruments  and  documents and take all such other actions as
may reasonably be required to carry out the transactions contemplated hereby and
to evidence the fulfillment of the agreements herein contained.

                  9.11 Governing Law;  Consent to  Jurisdiction.  This Agreement
shall be governed by, and construed in accordance with, the internal laws of the
State of New York without regard to the choice of law principles  thereof.  Each
of the parties hereto irrevocably  submits to the exclusive  jurisdiction of the
courts of the State of New York located in New York County and the United States
District  Court for the  Southern  District  of New York for the  purpose of any
suit,  action,  proceeding  or  judgment  relating  to or  arising  out of  this
Agreement  and the  transactions  contemplated  hereby.  Service  of  process in
connection with any such suit,  action or proceeding may be served on each party
hereto anywhere in the world by the same methods as are specified for the giving
of notices under this Agreement. Each of the parties hereto irrevocably consents
to the jurisdiction of any such court in any such suit, action or proceeding and
to the laying of venue in such court. Each party hereto  irrevocably  waives any
objection to the laying of venue of any such suit, action or proceeding  brought
in such courts and  irrevocably  waives any claim that any such suit,  action or
proceeding brought in any such court has been brought in an inconvenient  forum.
EACH OF THE  PARTIES  HERETO  WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
LITIGATION  WITH RESPECT TO THIS AGREEMENT AND REPRESENTS  THAT COUNSEL HAS BEEN
CONSULTED SPECIFICALLY AS TO THIS WAIVER.


                                      -29-
<PAGE>

                  9.12 Pledge of Securities. The Company acknowledges and agrees
that an  Investor  may from time to time  pledge  pursuant to a bona fide margin
agreement or grant a security  interest in some or all of the Securities and, if
required under the terms of such arrangement, such Investor may transfer pledged
or secured  Securities  to the  pledgees  or secured  parties.  Such a pledge or
transfer would not be subject to approval of the Company and no legal opinion of
the pledgee, secured party or pledgor shall be required in connection therewith.
Further,  no  notice  shall  be  required  of such  pledge.  At the  appropriate
Investor's  expense,  the  Company  will  execute and  deliver  such  reasonable
documentation as a pledgee or secured party of Securities may reasonably request
in  connection  with a  pledge  or  transfer  of the  Securities  including  the
preparation  and  filing  of  any  required  prospectus  supplement  under  Rule
424(b)(3)  of the  1933  Act or other  applicable  provision  of the 1933 Act to
appropriately amend the list of selling stockholders  thereunder to include such
pledgee or secured party.


                  9.13  Remedies.  Each  Investor  shall  have  all  rights  and
remedies  set forth in the  Transaction  Documents  and all rights and  remedies
which such holders have been granted at any time under the Transaction Documents
and all of the rights which such holders  have under any law.  Furthermore,  the
Company  recognizes  that in the event  that it fails to  perform,  observe,  or
discharge any or all of its  obligations  under the Transaction  Documents,  any
remedy at law may prove to be inadequate  relief to the  Investors.  The Company
therefore  agrees that the  Investors  shall be entitled to seek  temporary  and
permanent  injunctive  relief in any such case without the  necessity of proving
actual damages and without posting a bond or other security.


                  9.14 Payment Set Aside. To the extent that the Company makes a
payment or payments to the  Investors  hereunder or pursuant to any of the other
Transaction  Documents  or  the  Investors  enforce  or  exercise  their  rights
hereunder  or  thereunder,  and such payment or payments or the proceeds of such
enforcement  or  exercise  or any part  thereof  are  subsequently  invalidated,
declared to be fraudulent or preferential,  set aside, recovered from, disgorged
by or are required to be refunded,  repaid or otherwise restored to the Company,
a  trustee,  receiver  or any other  Person  under any law  (including,  without
limitation,  any bankruptcy  law,  foreign,  state or federal law, common law or
equitable  cause of  action),  then to the  extent of any such  restoration  the
obligation or part thereof originally  intended to be satisfied shall be revived
and  continued  in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.


                  9.15 Independent Nature of Investors'  Obligations and Rights.
The obligations of each Investor under any Transaction  Document are several and
not joint with the obligations of any other  Investor,  and no Investor shall be
responsible  in any way for the  performance  of the  obligations  of any  other
Investors under any Transaction  Document.  Nothing  contained  herein or in any
other Transaction Document,  and no action taken by any Investor pursuant hereto
or thereto,  shall be deemed to constitute  the Investors as a  partnership,  an
association,  a  joint  venture  or any  other  kind  of  entity,  or  create  a
presumption  that the  Investors  are in any way acting in concert or as a group
with  respect  to  such  obligations  or the  transactions  contemplated  by the
Transaction  Documents.   Each  Investor  confirms  that  it  has  independently
participated in the negotiation of the transaction  contemplated hereby with the
advice of its own  counsel  and  advisors.  Each  Investor  shall be entitled to
independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement or out of any other Transaction  Documents,


                                      -30-
<PAGE>

and it  shall  not be  necessary  for any  other  Investor  to be  joined  as an
additional party in any proceeding for such purpose.


                  9.16   Lowenstein   Sandler.   Each  of  the  parties   hereto
acknowledges that Lowenstein  Sandler has acted solely as counsel to SSF and its
Affiliates in connection with the  transactions  contemplated  hereby and is not
acting as  counsel or  otherwise  providing  advice to the  Company or any other
Investor with respect  thereto.  Each of the parties further  acknowledges  that
Lowenstein  Sandler has provided  legal  services to the Company in the past and
expects to provide  further  services to the Company in the future.  Each of the
parties hereto irrevocably  consents to Lowenstein  Sandler's  representation of
SSF and its Affiliates in connection with the transactions  contemplated  hereby
and irrevocably waives any conflict of interest that may arise as a result. Each
of the parties  hereto agrees that,  subject to any applicable  ethical  canons,
Lowenstein  Sandler may act as counsel to SSF and its Affiliates in the event of
any suit, action or proceeding  arising hereunder and none of such parties shall
seek to  disqualify  Lowenstein  Sandler  from so  acting  or  raise  Lowenstein
Sandler's  dual  representation  as a defense to any claim  asserted in any such
suit, action or proceeding.

                            [signature page follows]


                                      -31-
<PAGE>

                  IN WITNESS  WHEREOF,  the parties have executed this Agreement
or caused their duly  authorized  officers to execute  this  Agreement as of the
date first above written.

The Company:                        GOAMERICA, INC.



                                    By: /s/ Daniel R. Luis
                                        ----------------------------------------
                                    Name:  Daniel R. Luis
                                    Title: Chief Executive Officer

                                      -32-
<PAGE>

The Investors:                              ________________________________



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

Aggregate Investment:  $
Principal Amount of Notes:  $
Number of Warrants:
Number of Shares:

Address for Notice:
                                    153 E. 53rd Street
                                    55th Floor
                                    New York, NY  10022

                                    with a copy to:

                                    Lowenstein Sandler PC
                                    65 Livingston Avenue
                                    Roseland, NJ  07068
                                    Attn:  John D. Hogoboom, Esq.
                                    Telephone:  973.597.2500
                                    Facsimile:  973.597.2400


                                      -33-