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                            CERTIFICATE OF AMENDMENT
                                     of the
                          CERTIFICATE OF INCORPORATION
                                       of
                             SURGE COMPONENTS, INC.

                Under Section 805 of the Business Corporation Law

                  The undersigned, being the President and Secretary of Surge
Components, Inc. (the "Corporation"), do hereby certify and set forth:

1.   The name of the corporation is Surge Components, Inc. (the "Corporation").

2.   The date the Certificate of Incorporation of the Corporation was filed with
     the Department of State is November 24, 1981.

3.   Article FOURTH of the Certificate of Incorporation of the Corporation, as
     amended to the date hereof, authorizes the issuance of up to 1,000,000
     shares of preferred stock, par value $.001 per share (the "Preferred
     Stock"), of the Corporation in one or more series, from time to time, with
     each such series to have such designations, powers, preferences, and
     relative, participating, optional or other special rights, and
     qualifications, limitations or restrictions thereof as may be stated and
     expressed in the resolution or resolutions providing for the issuance of
     such series adopted by the Board of Directors of the Corporation, said
     Board of Directors being expressly vested with authority to adopt any such
     resolution or resolutions.

4.   The Board of Directors of the Corporation has, by resolutions duly adopted,
     authorized (a) 260,000 of the 1,000,000 shares of Preferred Stock of the
     Corporation to be designated Non-Voting Redeemable Convertible Series A
     Preferred Stock, par value $.001 per share (the "Series A Preferred
     Stock"), of which 239,000 shares of Series A Preferred Stock have been
     issued and are outstanding as of the date hereof, and (b) 200,000 of the
     1,000,000 shares of Preferred Stock of the Corporation to be designated
     Voting Redeemable Convertible Series B Preferred Stock, par value $.001 per
     share (the "Series B Preferred Stock"), of which 178,276.55 shares of
     Series B Preferred Stock have been issued as of the date hereof.

5.   Article FOURTH of the Certificate of Incorporation is amended by the
     addition of a provision fixing the number, designation, relative rights,
     preferences, and limitations of the Voting Redeemable Convertible Series C
     Preferred Stock as fixed by the Board of the Corporation in resolutions
     duly adopted by said Board of Directors pursuant to the authority vested in
     it by the Certificate of Incorporation of the Corporation.

6.   Article FOURTH of the Certificate of Incorporation is hereby amended to add
     the following provision to the end of Article FOURTH:

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Non-Voting Redeemable Convertible Series C Preferred Stock.

                  1. Number Authorized and Designation. Of the 1,000,000 shares
of preferred stock authorized under this Article FOURTH, the Corporation shall
have the authority to issue up to 100,000 shares designated as Non-Voting
Redeemable Convertible Series C Preferred Stock, $.001 par value per share
(referred to herein as "Series C Preferred Stock").

                  2. Rights, Preferences and Limitations.  The relative rights,
preferences and limitations of Series C Preferred Stock are as follows:

                  (a) Rank. The Series C Preferred Stock shall rank (i) senior
to the common stock, par value $.001 per share (the "Common Stock"), of the
Corporation, (ii) senior to any class or series of capital stock of the
Corporation hereafter created specifically ranking by its terms junior to any
Series C Preferred Stock of whatever subdivision, (iii) except as specifically
provided in this section 2, on parity with any class or series of capital stock
of the Corporation created specifically ranking by its terms on parity with the
Series C Preferred Stock, including, but not limited to, the Series A Preferred
Stock and Series B Preferred Stock, in each case, as to distributions of assets
upon liquidation, dissolution or winding up of the Corporation, whether
voluntarily or involuntarily.

                  (b)      Dividends.

                           (i) The dividend rate on the shares of Series C
         Preferred Stock shall be $.50 per share per annum. Such dividends shall
         be cumulative and accrue on each share of Series C Preferred Stock from
         April 15, 2001 and shall be payable in cash if, when and as declared by
         the Board of Directors, on June 30, and December 31, of each year,
         commencing with June 30, 2001. Each such dividend shall be paid to the
         holders of record of shares of the Series C Preferred Stock as they
         appear on the stock register of the Corporation on such record date,
         not exceeding 30 days nor less than ten days preceding the payment date
         thereof, as shall be fixed by the Board of Directors of the Corporation
         or a duly authorized committee thereof.

                           (ii) When dividends are not paid in full or declared
         in full and sums set apart for the payment thereof upon the Series C
         Preferred Stock and any other Preferred Stock ranking on a parity as to
         dividends with the Series C Preferred Stock, all dividends declared
         upon shares of Series C Preferred Stock and any other Preferred Stock
         ranking on a parity as to dividends shall be declared pro rata so that
         in all cases the amount of dividends declared per share on the Series C
         Preferred Stock and such other Preferred Stock shall bear to each other
         the same ratio that accumulated dividends per share, including
         dividends accrued or in arrears, on the shares of Series C Preferred
         Stock and such other Preferred Stock bear to each other. Except as
         provided in the preceding sentence, unless full cumulative dividends on
         the Series C Preferred Stock have been paid, or declared in full and
         sums set apart for the payment thereof, no dividends shall be declared
         or paid or set aside for payment or other distribution made upon the
         Common Stock or any other stock of the Corporation ranking junior to or
         on a parity with the Series C Preferred Stock as to dividends or
         liquidation rights, nor shall any Common Stock or any other stock of
         the Corporation

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         ranking junior to or on a parity with the Series C Preferred Stock as
         to dividends or upon liquidation be redeemed, purchased, exchanged or
         otherwise acquired for any consideration (or any payment made to or
         available for a sinking fund for the redemption of any shares of such
         stock) by the Corporation or any subsidiary (except by conversion into
         or exchange for stock of the Corporation ranking junior to the Series C
         Preferred Stock as to dividends and liquidation rights).

                           (iii) In the event that the outstanding shares of
         Series C Preferred Stock are converted into shares of Common Stock
         pursuant to paragraph 2(c) on or before April 15, 2001, the holders of
         Series C Preferred Stock shall not be entitled to any declaration or
         payment of dividends pursuant to this paragraph 2(b).

                  (c) Conversion. Upon (i) the receipt by the Corporation from
The Nasdaq Stock Market, Inc. ("Nasdaq") of confirmation (the "Nasdaq
Confirmation") that the conversion into shares of Common Stock of the
outstanding shares of Series C Preferred Stock issued pursuant to the terms of
the Investment Banking Agreement, dated as of November 14, 2000 (the "Investment
Banking Agreement"), between the Corporation and Equilink Capital Partners, LLC,
does not require shareholder approval under the Nasdaq Marketplace Rules or (ii)
shareholder approval of the conversion into Common Stock of the outstanding
shares of Series C Preferred Stock issued pursuant to the terms of the
Investment Banking Agreement, all of the issued and outstanding shares of the
Series C Preferred Stock will automatically convert into shares of Common Stock
at a rate of ten Common Shares for every one share of Series C Preferred Stock
so converted.

                  (d) Redemption. In the event that (i) on or before December
31, 2000, the Corporation shall not have received the Nasdaq Confirmation or
(ii) on or before June 30, 2001, the shareholders of the Corporation do not
approve the conversion into shares of Common Stock of the outstanding shares of
Series C Preferred Stock issued pursuant to the terms of the Investment Banking
Agreement, upon the affirmative vote by the holders of a majority of the then
outstanding shares of Series C Preferred Stock, the Corporation shall, unless
the period for redemption is extended by the Board of Directors of the
Corporation, redeem the outstanding shares of Series C Preferred Stock by paying
on the date set for redemption, which will be no more than sixty days and not
less than thirty days from April 16, 2001 (the "Redemption Date"), an amount
(the "Redemption Price") equal to the sum of $5.00 per share of Series C
Preferred Stock, subject to the following terms and conditions:

                           (i) The Corporation shall give notice (the
         "Redemption Notice") not more than sixty days and not less than thirty
         days prior to the Redemption Date by first class United States mail to
         each holder of record of shares of Series C Preferred Stock called for
         redemption (the "Redeemed Shares") at such holder's address appearing
         on the stock transfer books of the Corporation, and

                           (ii) The Corporation may pay the Redemption Price for
         any Redeemed Shares from the surplus and stated capital of the
         Corporation, but no such redemption shall be made if the Corporation
         would thereby become insolvent or, if stated capital is used, the

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         redemption would reduce the net assets of the Corporation below the
         stated capital remaining after giving effect to the cancellation of the
         Redeemed Shares.

                  (e)      Voting Rights.

                           (i) Except to the extent provided for in this
         paragraph 2(e) or by law, the holders of Series C Preferred Stock shall
         be not be entitled to vote on any matters.

                           (ii) So long as at least 15,200 shares of Series C
         Preferred Stock remains outstanding, the consent of the holders of
         two-thirds of the then outstanding Series C Preferred Stock, voting as
         one class, either expressed in writing or at a meeting called for that
         purpose, shall be necessary to permit, effect or validate the creation
         and issuance of any series of preferred stock or other security of the
         Corporation which is senior as to payment of dividends to the Series C
         Preferred Stock.

                           (iii) So long as at least 15,200 shares of Series C
         Preferred Stock remains outstanding, the consent of two-thirds of the
         holders of the then outstanding Series C Preferred Stock, voting as one
         class, either expressed in writing or at a meeting called for that
         purpose, shall be necessary to repeal, amend or otherwise change this
         Certificate of Amendment of the Certificate of Incorporation of the
         Corporation, as amended, in a manner which would alter or change the
         powers, preferences, rights, privileges, restrictions and conditions of
         the Series C Preferred Stock so as to adversely affect the Series C
         Preferred Stock.

                           (iv) In the event that the holders of the Series C
         Stock are required to vote as a class on any other matter, the
         affirmative vote of holders of not less than fifty percent of the
         outstanding of Series C Preferred Stock shall be required to approve
         each such matter to be voted upon, and if any matter is approved by
         such requisite percentage of holders of Series C Preferred Stock, such
         matter shall bind all holders of Series C Preferred Stock.

                  (f)      Preemptive Rights. Holders of Series C Preferred
Stock shall have no preemptive rights.

                  (g) Liquidation Rights. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
holders of shares of Series C Preferred Stock shall be entitled to receive out
of the remaining assets of the Corporation available for distribution to
shareholders, before any distribution of assets is made to holders of Common
Stock or any other class or series of stock of the Corporation ranking junior to
the Series C Preferred Stock, liquidating distributions in an amount equal to
$5.00 per share, plus an amount equal to all accrued and unpaid dividends on
each such share up to the date fixed for such distribution. If, upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, the amounts payable with respect to the Series C Preferred Stock
and any other shares of stock of the Corporation ranking (as to any such
distribution) on a parity with the Series C Preferred Stock are not paid in
full, holders of the Series C Preferred Stock and of such other shares of stock
will share ratably in any such distribution of assets of the Corporation in
proportion to the full respective preferential amounts to

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which they are entitled. After payment of the full amount of the liquidating
distribution to which they are entitled, the holders of shares of Series C
Preferred Stock will not be entitled to any further participation in any
distribution of assets by the Corporation.

                  For purposes of this paragraph 2(g), a distribution of assets
in any dissolution, winding up, liquidation or reorganization shall not include
(i) any consolidation or merger of the Corporation with or into any other
corporation, (ii) any dissolution, liquidation, winding up or reorganization of
the Corporation immediately followed by reincorporation of another corporation
or (iii) a sale or other disposition of all or substantially all of the
Corporation's assets to another corporation; provided that, in each such case,
effective provision is made in the certificate of incorporation of the resulting
and surviving corporation or otherwise for the protection of the rights of the
holders of shares of Series C Preferred Stock.

6.       This Amendment of the Certificate of Incorporation of the Corporation
         was authorized by the Unanimous Written Consent of the Board of
         Directors of the Corporation, dated as of November 24, 2000, as
         authorized by Article FOURTH of the Certificate of Incorporation.

                  IN WITNESS WHEREOF, the undersigned have signed this
Certificate this 30th day of November, 2000, and do hereby affirm, under
penalties of perjury, that the statements contained herein have been examined by
us and are true and correct.

                                                     /s/ Ira Levy
                                       -----------------------------------------
                                                  Ira Levy, President

                                                 /s/ Steven J. Lubman
                                       -----------------------------------------
                                              Steven J. Lubman, Secretary

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NEITHER THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE NOR THE SHARES OF
COMMON STOCK OR ANY OTHER SECURITIES ISSUABLE UPON EXERCISE OF SUCH WARRANTS
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH WARRANTS
HAVE BEEN ACQUIRED, AND ANY SHARES OF COMMON STOCK OR ANY OTHER SECURITIES
ISSUABLE UPON EXERCISE OF SUCH WARRANTS ARE REQUIRED TO BE ACQUIRED, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT
BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH WARRANTS AND/OR SUCH SHARES OR OTHER
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF SUCH
WARRANTS AND SUCH SHARES OR OTHER SECURITIES TO THE EFFECT THAT REGISTRATION IS
NOT REQUIRED UNDER SUCH ACT AND SUCH STATE SECURITIES LAWS.

                    VOID AFTER 5:00 P.M. ON NOVEMBER 24, 2005

                             SURGE COMPONENTS, INC.
                               WARRANT CERTIFICATE

                    2,000,000 Common Stock Purchase Warrants

                                                             Deer Park, New York
Warrant Certificate No. ECP- 01                                November 24, 2000

                  THIS IS TO CERTIFY THAT, for value received, Equilink Capital
Partners, LLC (the "Warrantholder") is the registered owner of the number of
Common Stock Purchase Warrants (each, a "Warrant") set forth above, each Warrant
entitling the owner thereof to purchase from Surge Components, Inc., a New York
corporation (the "Company"), one duly authorized, validly issued, fully paid and
non-assessable share (each, a "Warrant Share") of the common stock, par value
$.001 per share ("Common Stock"), of the Company, at a purchase price of $3.00
per share (the "Purchase Price"), at any time on or after the period commencing
on the date (the "Approval Date") on which the shareholders of the Company shall
have approved, in accordance with Nasdaq Marketplace Rule 4310(c)(25)(G), the
issuance of the Warrant Shares upon due exercise(s) of the Warrants and
terminating at 5:00 p.m., New York City time, on November 24, 2005 (the
"Expiration Date"), all subject to the terms and conditions contained herein.
The number of Warrants evidenced by this Warrant Certificate (and the number and
kind of securities which may be purchased upon exercise hereof) set forth above,
and the Purchase Price per share set forth above, are as of the date hereof. As
provided herein, the Purchase Price and the number of shares of Common Stock or
other securities which may be purchased upon the exercise of the Warrants
evidenced by this Warrant Certificate are, upon the happening of certain events,
subject to modification and adjustment.

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                  This Warrant Certificate, together with any warrant
certificate(s) issued in replacement or substitution hereof (as provided for
herein) evidencing all or part of the Warrants evidenced hereby, are sometimes
collectively referred to herein as the "Warrant Certificates."

                  The rights of the registered holder of this Warrant
Certificate shall be subject to the following further terms and conditions:

1. Exercise of Warrants.

                  (a) The Warrants may be exercised, in whole or in part, on or
prior to the Expiration Time by surrendering this Warrant Certificate, with the
purchase form provided for herein duly executed by the Warrantholder or by the
Warrantholder's duly authorized attorney-in-fact, at the principal office of the
Company, presently located at 1016 Grand Boulevard, Deer Park, New York 11729,
or at such other office or agency in the United States as the Company may
designate by notice in writing to the Warrantholder (in either event, the
"Company Offices"), accompanied by payment in full, either in the form of cash,
bank cashier's check or certified check payable to the order of the Company, of
the Exercise Price payable in respect of the Warrants being exercised. If fewer
than all of the Warrants are exercised, the Company shall, upon each exercise
prior to the Expiration Time, execute and deliver to the Warrantholder a new
Warrant Certificate (dated as of the date hereof) evidencing the balance of the
Warrants that remain exercisable.

                  (b) On the date of exercise of the Warrants, the Warrantholder
exercising same shall be deemed to have become the holder of record for all
purposes of the Warrant Shares to which the exercise relates.

                  (c) As soon as practicable, but not in excess of ten days,
after the exercise of all or part of the Warrants evidenced by this Warrant
Certificate, the Company, at its expense (including the payment by it of any
applicable issue taxes), will cause to be issued in the name of and delivered to
the Warrantholder a certificate or certificates evidencing the number of duly
authorized, validly issued, fully paid and nonassessable Warrant Shares to which
the Warrantholder shall be entitled upon such exercise.

                  (d) No certificates for fractional Warrant Shares shall be
issued upon the exercise of any of the Warrants but, in lieu thereof, the
Company shall, upon exercise of all the Warrants, round up any fractional
Warrant Share to the nearest whole share of Common Stock.

2. Issuance of Common Stock; Reservation of Shares.

                  (a) The Company covenants and agrees that all Warrant Shares
which may be issued upon the exercise of all or part of the Warrants will, upon
issuance in accordance with the terms hereof, be validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof.

                  (b) The Company further covenants and agrees that if any
shares of Common Stock to be reserved for the purpose of the issuance of Warrant
Shares upon the exercise of Warrants

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require registration with, or approval of, any governmental authority under any
federal or state law before such shares may be validly issued or delivered upon
exercise, then the Company will promptly use its best efforts to effect such
registration or obtain such approval, as the case may be.

3. Adjustments of Exercise Price, Number and Character of Warrant Shares, and
   Number of Warrants.

                  The Exercise Price the number and kind of securities
purchasable upon the exercise of each Warrant shall be subject to adjustment
from time to time upon the happening of the events enumerated in this Section 3.

                  (a) Stock Dividends, Subdivisions and Combinations. In case
the Company shall at any time on or before the Expiration Time:

                      (i)   pay a dividend in shares of Common Stock or make
         a distribution in shares of Common Stock or such other stock to holders
         of all its outstanding shares of Common Stock;

                      (ii)  subdivide or reclassify the outstanding shares of
         Common Stock into a greater number of shares;

                      (iii) combine the outstanding shares of Common Stock into
         a smaller number of shares of Common Stock; or

                      (iv) issue by reclassification of its shares of Common
         Stock other securities of the Company (including any such
         reclassification in connection with a consolidation or merger in which
         the Company is the continuing corporation);

then the number and kind of Warrant Shares purchasable upon exercise of each
Warrant outstanding immediately prior thereto shall be adjusted so that the
Warrantholder shall be entitled to receive the kind and number of shares of
Common Stock or other securities of the Company which the Warrantholder would
have owned or have been entitled to receive after the happening of any of the
events described above had such Warrant been exercised in full immediately prior
to the earlier of the happening of such event or any record date in respect
thereto. In the event of any adjustment of the number of Warrant Shares
purchasable upon the exercise of each then outstanding Warrants pursuant to this
Paragraph 3(a), the Exercise Price shall be adjusted to be the amount resulting
from dividing the number of shares of Common Stock (including fractional shares
of Common Stock) covered by such Warrant immediately after such adjustment into
the total amount payable upon exercise of such Warrant in full immediately prior
to such adjustment. An adjustment made pursuant to this Paragraph 3(a) shall
become effective immediately after the effective date of such event retroactive
to the record date for any such event. Such adjustment shall be made
successively whenever any event listed above shall occur.

                  (b) Extraordinary Dividends. In case the Company shall at any
time on or before the Expiration Time fix a record date for the issuance of
rights, options, or warrants to all holders

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of its outstanding shares of Common Stock, entitling them (for a period expiring
within 45 days after such record date) to subscribe for or purchase shares of
Common Stock (or securities exchangeable for or convertible into shares of
Common Stock) at a price per share of Common Stock (or having an exchange or
conversion price per share of Common Stock, with respect to a security
exchangeable for or convertible into shares of Common Stock) which is lower than
the current Market Price per share of Common Stock (as defined in Paragraph 3(d)
below) on such record date, then the Exercise Price shall be adjusted by
multiplying the Exercise Price in effect immediately prior to such record date
by a fraction, of which (i) the numerator shall be the number of shares of
Common Stock outstanding on such record date plus the number of shares of Common
Stock which the aggregate offering price of the total number of shares of Common
Stock so to be offered (or the aggregate initial exchange or conversion price of
the exchangeable or convertible securities so to be offered) would purchase at
such current Market Price and (ii) the denominator shall be the number of shares
of Common Stock outstanding on such record date plus the number of additional
shares of Common Stock to be offered for subscription or purchase (or into which
the exchangeable or convertible securities so to be offered are initially
exchangeable or convertible). Such adjustment shall become effective at the
close of business on such record date; however, to the extent that shares of
Common Stock (or securities exchangeable for or convertible into shares of
Common Stock) are not delivered after the expiration of such rights, options, or
warrants, the Exercise Price shall be readjusted (but only with respect to
Warrants exercised after such expiration) to the Exercise Price which would then
be in effect had the adjustments made upon the issuance of such rights, options,
or warrants been made upon the basis of delivery of only the number of shares of
Common Stock (or securities exchangeable for or convertible into shares of
Common Stock) actually issued. In case any subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company and shall be described in a statement mailed to the
Warrantholder. Shares of Common Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.

                  (c) Extraordinary Distributions. In case the Company shall at
any time after the original date of issuance of the Warrants (the "Date of
Issuance") distribute to all holders of its shares of Common Stock (including
any such distribution made in connection with a consolidation or merger in which
the Company is the surviving corporation) evidences of its indebtedness or
assets (excluding cash dividends and distributions payable out of consolidated
net income or earned surplus in accordance with Delaware law and dividends or
distributions payable in shares of stock described in Paragraph 3(a) above) or
rights, options, or warrants or exchangeable or convertible securities
containing the right to subscribe for or purchase shares of Common Stock (or
securities exchangeable for or convertible into shares of Common Stock), then
the Exercise Price shall be adjusted by multiplying the Exercise Price in effect
immediately prior to the record date for such distribution by a fraction, of
which (i) the numerator shall be the current Market Price per share of Common
Stock (as defined in Paragraph 3(d)) on such record date, less the fair market
value (as ---- determined by the Board of Directors of the Company, whose
determination shall be conclusive, and described in a notice to the
Warrantholders) of the portion of the evidences of indebtedness or assets so to
be distributed or of such rights, options or warrants applicable to one share of
Common Stock and (ii) the denominator shall be such current Market Price per
share of Common Stock. Such adjustment shall be made whenever any such

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distribution is made, and shall become effective on the date of distribution
retroactive to the record date for such transaction.

                  (d) Current Market Price Defined. For the purpose of any
computation under Paragraphs 3(b) and/or 3(c), the current Market Price per
share of Common Stock at any date shall be deemed to be the average daily
Closing Price of the shares of Common Stock for twenty consecutive trading days
ending within fifteen days before the date in question. The term "Closing Price"
of the shares of Common Stock for a day or days shall mean (i) if the shares of
Common Stock are listed or admitted for trading on a national securities
exchange, the last reported sales price regular way, or, in case no such
reported sale takes place on such day or days, the average of the reported
closing bid and asked prices regular way, in either case on the principal
national securities exchange on which the shares of the Common Stock are listed
or admitted for trading, or (ii) if the shares of Common Stock are not listed or
admitted for trading on a national securities exchange, (A) the last transaction
price for the Common Stock on The Nasdaq Stock Market ("Nasdaq") or, in the case
no such reported transaction takes place on such day or days, the average of the
reported closing bid and asked prices thereof quoted on Nasdaq, or (B) if the
shares of Common Stock are not quoted on Nasdaq, the average of the closing bid
and asked prices of the Common Stock as quoted on the Over-The-Counter Bulletin
Board maintained by the National Association of Securities Dealers, Inc. (the
"Bulletin Board"), or (C) if the shares of Common Stock are not quoted on Nasdaq
nor on the Bulletin Board, the average of the closing bid and asked prices of
the common stock in the over-the-counter market, as reported by The Pink
Sheets, LLC, or an equivalent generally accepted reporting service, or (iii) if
on any such trading day or days the shares of Common Stock are not quoted by any
such organization, the fair market value of the shares of Common Stock on such
day or days, as determined in good faith by the Board of Directors of the
Company, shall be used.

                  (e) Minimum Adjustment. Except as hereinafter provided, no
adjustment of the Exercise Price hereunder shall be made if such adjustment
results in a change of the Exercise Price then in effect of less than five cents
($.05) per share. Any adjustment of less than five cents ($.05) per share of any
Exercise Price shall be carried forward and shall be made at the time of and
together with any subsequent adjustment which, together with adjustment or
adjustments so carried forward, amounts to five cents ($.05) per share or more.
However, upon exercise of this Warrant Certificate, the Company shall make all
necessary adjustments (to the nearest cent) not theretofore made to the Exercise
Price up to and including the effective date upon which this Warrant Certificate
is exercised.

                  (f) Notice of Adjustments. Whenever the Exercise Price shall
be adjusted pursuant to this Section 3, the Company shall promptly deliver a
certificate signed by the President or a Vice President and by the Chief
Financial Officer, Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Company, setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated (including a description of the basis on
which the Board of Directors of the Company made any determination hereunder),
by first class mail postage prepaid to each Warrantholder.

                  (g) Capital Reorganizations and Other Reclassifications. In
case of any capital reorganization of the Company, or of any reclassification of
the shares of Common Stock (other than a reclassification, subdivision or

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combination of shares of Common Stock referred to in Paragraph 3(a)), or in case
of the consolidation of the Company with, or the merger of the Company with, or
merger of the Company into, any other corporation (other than a reclassification
of the shares of Common Stock referred to in Paragraph 3(a) or a consolidation
or merger which does not result in any reclassification or change of the
outstanding shares of Common Stock) or of the sale of the properties and assets
of the Company as, or substantially as, an entirety to any other corporation or
entity, each Warrant shall, after such capital reorganization, reclassification
of shares of Common Stock, consolidation, merger, or sale, be exercisable, upon
the terms and conditions specified in this Warrant Certificate, for the kind,
amount and number of shares or other securities, assets, or cash to which a
holder of the number of shares of Common Stock purchasable (at the time of such
capital reorganization, reclassification of shares of Common Stock,
consolidation, merger or sale) upon exercise of such Warrant would have been
entitled to receive upon such capital reorganization, reclassification of shares
of Common Stock, consolidation, merger, or sale; and in any such case, if
necessary, the provisions set forth in this Section 3 with respect to the rights
and interests thereafter of the Warrantholder shall be appropriately adjusted so
as to be applicable, as nearly equivalent as possible, to any shares or other
securities, assets, or cash thereafter deliverable on the exercise of the
Warrants. The Company shall not effect any such consolidation, merger, or sale,
unless prior to or simultaneously with the consummation thereof the successor
corporation or entity (if other than the Company) resulting from such
consolidation or merger or the corporation or entity purchasing such assets or
other appropriate corporation or entity shall assume, by written instrument, the
obligation to deliver to the Warrantholder such shares, securities, assets, or
cash as, in accordance with the foregoing provisions, such holders may be
entitled to purchase and the other obligations hereunder. The subdivision or
combination of shares of Common Stock at any time outstanding into a greater or
lesser number of shares shall not be deemed to be a reclassification of the
shares of Common Stock for purposes of this Paragraph 3(g).

                  (h) Adjustments to Other Securities. In the event that at any
time, as a result of an adjustment made pursuant to this Section 3, the
Warrantholder shall become entitled to purchase any shares or securities of the
Company other than the shares of Common Stock, thereafter the number of such
other shares or securities so purchasable upon exercise of each Warrant and the
exercise price for such shares or securities shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as possible to the
provisions with respect to the shares of Common Stock contained in Paragraphs
3(a) through (e), inclusive.

                  (i) Deferral of Issuance of Additional Shares in Certain
Circumstances. In any case in which this Section 3 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event issuing to the Warrantholder exercised after such record date the shares
of Common Stock, if any, issuable upon such exercise over and above the Warrant
Shares, if any, issuable upon such exercise on the basis of the Exercise Price
in effect prior to such adjustment; provided, however, that the Company shall
deliver as soon as practicable to such holder a due bill or other appropriate
instrument provided by the Company evidencing such holder's right to receive
such additional shares of Common Stock upon the occurrence of the event
requiring such adjustment.

                                        6
<PAGE>

4. Definition of Common Stock.

                  The Common Stock issuable upon exercise of the Warrants shall
be the Common Stock as constituted on the date hereof except as otherwise
provided in Section 3.

5. Replacement of Securities.

                  If this Warrant Certificate shall be lost, stolen, mutilated
or destroyed, the Company shall, on such terms as to indemnity or otherwise as
the Company may in its discretion reasonably impose, issue a new certificate of
like tenor or date representing in the aggregate the right to subscribe for and
purchase the number of shares of Common Stock which may be subscribed for and
purchased hereunder. Any such new certificate shall constitute an original
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant Certificate shall be at any time
enforceable by anyone.

6. Registration.

                  This Warrant Certificate, as well as all other warrant
certificates representing Warrants shall be numbered and shall be registered in
a register (the "Warrant Register") maintained at the Company Offices as they
are issued. The Warrant Register shall list the name, address and Social
Security or other Federal Identification Number, if any, of all Warrantholders.
The Company shall be entitled to treat the Warrantholder as set forth in the
Warrant Register as the owner in fact of the Warrants as set forth therein for
all purposes and shall not be bound to recognize any equitable or other claim to
or interest in such Warrants on the part of any other person, and shall not be
liable for any registration of transfer of Warrants that are registered or to be
registered in the name of a fiduciary or the nominee of a fiduciary unless made
with the actual knowledge that a fiduciary or nominee is committing a breach of
trust in requesting such registration of transfer, or with such knowledge of
such facts that its participation therein amounts to bad faith.

7. Transfer.

                  NEITHER THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE
NOR THE SHARES OF COMMON STOCK OR ANY OTHER SECURITIES ISSUABLE UPON EXERCISE OF
SUCH WARRANTS HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
SUCH WARRANTS HAVE BEEN ACQUIRED, AND ANY SHARES OF COMMON STOCK OR ANY OTHER
SECURITIES ISSUABLE UPON EXERCISE OF SUCH WARRANTS ARE REQUIRED TO BE ACQUIRED,
FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY
NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH WARRANTS AND/OR SUCH SHARES OR OTHER
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF SUCH

                                        7
<PAGE>

WARRANTS AND SUCH SHARES OR OTHER SECURITIES TO THE EFFECT THAT REGISTRATION IS
NOT REQUIRED UNDER SUCH ACT AND SUCH STATE SECURITIES LAWS.

8. Exchange of Warrant Certificates.

                  This Warrant Certificate may be exchanged for another
certificate or certificates entitling the Warrantholder thereof to purchase a
like aggregate number of Warrant Shares as this Warrant Certificate entitles
such Warrantholder to purchase. A Warrantholder desiring to so exchange this
Warrant Certificate shall make such request in writing delivered to the Company,
and shall surrender this Warrant Certificate therewith. Thereupon, the Company
shall execute and deliver to the person entitled thereto a new certificate or
certificates, as the case may be, as so requested.

9. Notices.

                  All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered in person, against written
receipt therefor, or two days after being sent, by registered or certified mail,
postage prepaid, return receipt requested, and, if to the Warrantholder, at such
address as is shown on the Warrant Register or as may otherwise may have been
furnished to the Company in writing in accordance with this Section 9 by the
Warrantholder and, if to the Company, at the Company Offices or such other
address as the Company shall give notice thereof to the Warrantholder in
accordance with this Section 9.

10. Registration Rights.

                  (a) Defined Terms. As used in this Section 10, terms defined
elsewhere herein shall have their assigned meanings and each of the following
terms shall have the following meanings (such definitions to be applicable to
both the plural and singular of the terms defined):

                      (i) Registerable Securities. The term "Registerable
         Securities" shall mean any of the Warrant Shares issuable upon exercise
         of any of the Warrants or any shares of Common Stock or other
         securities received in connection with any stock split, stock dividend,
         merger, reorganization, recapitalization, reclassification or other
         distribution payable or issuable upon shares of Common Stock. For the
         purposes of this Section 10, securities will cease to be Registerable
         Securities when (A) a registration statement under the Securities Act
         covering such Registerable Securities has been declared effective and
         (1) such Registerable Securities have been disposed of pursuant to such
         effective registration statement or (2) such registration statement has
         remained effective for 270 consecutive days, (B) such Registerable
         Securities are distributed to the public pursuant to the Securities Act
         or pursuant to an exemption from the registration requirements of the
         Securities Act, including, without limitation, Rules 144 and 144A
         promulgated under the Securities Act or (C) such Registerable
         Securities have been otherwise transferred and the Company, in
         accordance with applicable law and regulations, has delivered new
         certificates or other evidences of ownership for such securities which
         are not subject to any stop transfer order or other restriction on
         transfer.

                                        8
<PAGE>

                      (ii) Rightsholders. The term "Rightsholders" shall include
         the Warrantholder, all successors and assigns of the Warrantholders and
         all transferees of Registerable Securities where such transfer
         affirmatively includes the transfer and assignment of the rights of the
         transferor-Warrantholder under this Agreement with respect to the
         transferred Registerable Securities and such transferee agrees in
         writing to assume all of the transferor-Warrantholder's agreements,
         obligations and liabilities under this Article 10 with respect to the
         transferred Registerable Securities.

                      (iii) Initiating Holders. The term "Initiating Holders"
         shall include those Rightsholders owning of record over 50% of the then
         outstanding Registerable Securities which, for the purposes of this
         Subparagraph 10(a)(iii) only, shall assume that all Warrant Shares
         issuable upon exercise of the Warrants pursuant to this Warrant
         Certificate have been exercised.

                      (iv) Interpretations of Terms. The words "hereof,"
         "herein" and "hereunder" and words of similar import when used in this
         Section 10 shall refer to this Section 10 as a whole and not to any
         particular provision of this Section 10, and subsection, paragraph,
         clause, schedule and exhibit references are to this Section 10 unless
         otherwise specified.

                  (b) Demand Registration.

                      (i) Right to Demand. Subject to Subparagraph 10(b)(ii)
         hereof, at any time on or after the Approval Date and on or prior to
         seven years from the Approval Date, the Initiating Holders may make a
         written request (each, a "Demand Request") to the Company for
         registration under the Securities Act of all or part of their
         Registerable Securities (a "Demand Registration"). Within ten days
         after receipt of a Demand Request, the Company shall deliver a written
         notice (the "Notice") of such Demand Request to all other
         Rightsholders. The Company will include in such Demand Registration all
         Registerable Securities with respect to which the Company has been
         given written requests (each, "Tag-Along Request") for inclusion
         therein within twenty days after the giving of the Notice. Each and
         every Demand Request shall be required to specify the aggregate amount
         of the Registerable Securities to be included in such Demand
         Registration, the amount of Registerable Securities to be registered
         for each of the Initiating Holders and the intended method(s) of
         disposition thereof, including whether or not such Demand Registration
         or portion thereof is to relate to an underwritten offering, the name
         of the managing underwriter(s), if any, and the terms of any such
         underwriting. Each and every Tag-Along Request shall be required to
         specify the amount of Registerable Securities to be registered in the
         Demand Registration and the intended method(s) of disposition thereof,
         including whether or not the Registerable Securities subject to such
         Tag-Along Request or portion thereof is to relate to an underwritten
         offering, the name of the managing underwriter(s), if any, and the
         terms of any such underwriting.

                      (ii) Number of Demand Registrations; Expenses. Subject to
         the provisions of Subparagraph 10(b)(iii) hereof, the holders of

                                        9
<PAGE>

         Registerable Securities shall be entitled, in the aggregate, to one
         Demand Registration, the Registration Expenses (as defined in Paragraph
         10(e) hereof) of which, subject to the provisions of Paragraph 10(e),
         shall be borne by the Company, but the Company shall not be responsible
         for the payment of any underwriter's discount, commission or selling
         concession in connection with any of the Registerable Securities. The
         Company shall not be deemed to have effected a Demand Registration
         unless and until such Demand Registration is declared effective.

                      (iii) Priority on Demand Registrations.

                            (A) Whenever the Company shall effect a Demand
                  Registration in connection with an underwritten offering by
                  one or more Initiating Holders, no other securities, including
                  other Registerable Securities, shall be included in such
                  Demand Registration, unless (1) the managing underwriter(s)
                  with respect to such Demand Registration shall have advised
                  the Company and each Initiating Holder whose Registerable
                  Securities were included in the Demand Request, in writing,
                  that the inclusion of such other securities would not
                  adversely affect such underwritten offering or (2) each of the
                  Initiating Holders shall each have consented in writing to the
                  inclusion of such other securities. In the event of such
                  written advice of the managing underwriter(s) or unanimous
                  consent of such Initiating Holders, the Company will include
                  in such Demand Registration securities in the following order
                  of priority until the maximum number of securities included in
                  the written advice of the managing underwriter(s) or unanimous
                  consent of such Initiating Holders shall be reached: (1)
                  first, pro rata (based upon the amount of Registerable
                  Securities) among the Registerable Securities included in the
                  Demand Request which are subject to the underwritten offering,
                  (2) second, pro rata (based upon the amount of Registerable
                  Securities) among the Registerable Securities of the other
                  holders (each, a "Rightsholder") of registration rights
                  granted by the Company in connection with the sale of the
                  Shares who have given a Tag-Along Request with respect to such
                  Demand Registration where the method of distribution shall be
                  pursuant to an underwritten offering, (3) third, pro rata
                  (based upon the amount of Registerable Securities) among all
                  other Registerable Securities included in the Demand Request
                  and Tag-Along Request(s) and (4) fourth, pro rata (based upon
                  the amount of securities owned which carry registration
                  rights) among all other securities to which the Company has
                  granted registration rights and for which a request for
                  inclusion in the Demand Registration shall have been made.

                            (B) Whenever the Company shall effect a Demand
                  Registration in connection with an offering of Registerable
                  Securities of Initiating Holders for which the intended
                  method(s) of distribution shall not include an underwritten
                  offering, and the holders of a majority of the Registerable
                  Securities which were subject to the Demand Request shall
                  advise the Company in writing that, in the opinion of such
                  Initiating Holders, the number of securities proposed to be
                  sold in such Demand Registration would adversely affect such
                  offering and the Board of Directors of the Company concurs
                  with such conclusion, the Company will include in such Demand
                  Registration securities in the following order of priority

                                       10
<PAGE>

                  until the maximum number of securities included in the written
                  advice of such Initiating Holders shall be reached: (1) first,
                  pro rata (based upon the amount of Registerable Securities)
                  among the Registerable Securities included in the Demand
                  Request, (2) second, pro rata (based upon the amount of
                  Registerable Securities) among the Registerable Securities of
                  the Rightsholders who have given a Tag-Along Request with
                  respect to such Demand Registration where the method of
                  distribution shall be pursuant to an underwritten offering,
                  (3) third, pro rata (based upon the amount of Registerable
                  Securities) among all other Registerable Securities included
                  in the Demand Request and Tag-Along Request(s) and (4) fourth,
                  pro rata (based upon the amount of securities owned which
                  carry registration rights) among all other securities to which
                  the Company has granted registration rights and for which a
                  request for inclusion in the Demand Registration shall have
                  been made.

                      (C) In the event that Initiating Holders and other
                  Rightsholders who have given a Tag-Along Request are unable to
                  have registered the full amount of Registerable Securities
                  which they requested to be registered pursuant to a Demand
                  Request or Tag-Along Request, pursuant to the provisions of
                  this Paragraph 10(b), such Initiating Holders and other
                  Rightsholders shall retain the right to one Demand
                  Registration with respect to such unregistered Registerable
                  Securities subject to such Demand Request and Tag-Along
                  Request.

                      (iv) Delay in Effecting Demand Registration.
         Notwithstanding anything in the foregoing to the contrary, the Company
         shall not be obligated to effect a Demand Registration at any time when
         the Company, in the good faith judgment of the Board of Directors of
         the Company made no later than 30 days after the giving of the Demand
         Request with respect to such Demand Registration, reasonably believes
         that the filing thereof at the time requested, or the offering of
         securities pursuant thereto, would be materially detrimental to the
         interests of the Company or the Company's shareholders. The
         effectuation of a Demand Registration cannot be suspended, pursuant to
         the provisions of the preceding sentence, on more than one occasion in
         any twelve-month period or for more than 120 days after the date of the
         Board's determination referenced in the preceding sentence.

                      (v) Approval of Underwriter by the Company. If the Demand
         Registration is to involve an underwritten offering, the managing
         underwriter(s) and each selling agent selected by those Rightsholders
         participating in each such underwritten offering shall be subject to
         the written approval of the Company, which approval may not be
         unreasonably withheld.

                  (c) Piggy-Back Registration.

                      (i) If, at any time on or after the Approval Date and on
         or prior to seven years from the Approval Date, the Company proposes to
         file a registration statement under the Securities Act with respect to
         an offering by the Company or any other party of any class of equity
         security similar to any Registerable Securities (other than a
         registration statement on Form S-4 or S-8 or any successor form or a
         registration statement filed solely in

                                       11
<PAGE>

         connection with an exchange offer, a business combination transaction
         or an offering of securities solely to the existing stockholders or
         employees of the Company), then the Company, on each such occasion,
         shall give written notice (each, a "Company Piggy-Back Notice") of such
         proposed filing to all of the Rightsholders owning Registerable
         Securities at least fifteen days before the anticipated filing date of
         such registration statement, and such Company Piggy-Back Notice also
         shall be required to offer to such Rightsholders the opportunity to
         register such aggregate number of Registerable Securities as each such
         Rightsholder may request. Each such Rightsholder shall have the right,
         exercisable for the five days immediately following the giving of a
         Company Piggy-Back Notice, to request, by written notice (each, a
         "Holder Notice") to the Company, the inclusion of all or any portion of
         the Registerable Securities of such Rightsholders in such registration
         statement. The Company shall use reasonable efforts to cause the
         managing underwriter(s) of a proposed underwritten offering to permit
         the inclusion of the Registerable Securities which were the subject of
         all Holder Notices in such underwritten offering on the same terms and
         conditions as any similar securities of the Company included therein.
         Notwithstanding anything to the contrary contained in this Subparagraph
         10(c)(i), if the managing underwriter(s) of such underwritten offering
         or any proposed underwritten offering delivers a written opinion to the
         Rightsholders of Registerable Securities which were the subject of all
         Holder Notices that the total amount and kind of securities which they,
         the Company and any other person intend to include in such offering is
         such as to materially and adversely affect the success of such
         offering, then the amount of securities to be offered for the accounts
         of such Rightsholders and persons other than the Company shall be
         eliminated or reduced pro rata (based on the amount of securities owned
         by such Rightsholders and other persons which carry registration
         rights) to the extent necessary to reduce the total amount of
         securities to be included in such offering to the amount recommended by
         such managing underwriter(s) in the managing underwriter's written
         opinion.

                      (ii) Number of Piggy-Back Registrations; Expenses. The
         obligations of the Company under this Paragraph 10(c) shall be
         unlimited with respect to each Rightsholder. Subject to the provisions
         of Paragraph 10(e) hereof, the Company will pay all Registration
         Expenses in connection with any registration of Registerable Securities
         effected pursuant to this Paragraph 10(c), but the Company shall not be
         responsible for the payment of any underwriter's discount, commission
         or selling concession in connection therewith.

                      (iii) Withdrawal or Suspension of Registration Statement.
         Notwithstanding anything contained to the contrary in this Paragraph
         10(c), the Company shall have the absolute right, whether before or
         after the giving of a Company Piggy-Back Notice or Holder Notice, to
         determine not to file a registration statement to which the
         Rightsholders shall have the right to include their Registerable
         Securities therein pursuant to this Paragraph 10(c), to withdraw such
         registration statement or to delay or suspend pursuing the
         effectiveness of such registration statement. In the event of such a
         determination after the giving of a Company Piggy-Back Notice, the
         Company shall give notice of such determination to all Rightsholders
         and, thereupon, (A) in the case of a determination not to register or
         to withdraw such registration statement, the Company shall be relieved
         of its obligation under this Paragraph 10(c) to register any of the
         Registerable

                                       12
<PAGE>

         Securities in connection with such registration and (B) in the case of
         a determination to delay the registration, the Company shall be
         permitted to delay or suspend the registration of Registerable
         Securities pursuant to this Paragraph 10(c) for the same period as the
         delay in the registration of such other securities. No registration
         effected under this Paragraph 10(c) shall relieve the Company of its
         obligation to effect any registration upon demand otherwise granted to
         a Rightsholder under Paragraph 10(b) hereof or any other agreement with
         the Company.

                  (d) Registration Procedures.

                      (i) Obligations of the Company. The Company will, in
         connection with any registration pursuant to Paragraph 10(b) or (c)
         hereof, as expeditiously as possible:

                          (A) prepare and file with the Commission a
                  registration statement under the Securities Act on any
                  appropriate form chosen by the Company, in the Company's sole
                  discretion, which shall be available for the sale of all
                  Registerable Securities in accordance with the intended
                  method(s) of distribution thereof set forth in all applicable
                  Demand Requests, Tag-Along Requests and Holder Notices, and
                  use the Company's commercially reasonable best efforts to
                  cause such registration statement to become effective as soon
                  thereafter as reasonably practicable but in no event more than
                  100 days after receipt of such notices or requests; provided,
                  that, at least five business days before filing with the
                  Commission of such registration statement, the Company shall
                  furnish to each Rightsholder whose Registerable Securities are
                  included therein draft copies of such registration statement,
                  including all exhibits thereto and documents incorporated by
                  reference therein, and, upon the reasonable request of any
                  such Rightsholder, shall continue to provide drafts of such
                  registration statement until filed, and, after such filing,
                  the Company shall, as diligently as practicable, provide to
                  each such Rightsholders such number of copies of such
                  registration statement, each amendment and supplement thereto,
                  the prospectus included in such registration statement
                  (including each preliminary prospectus), all exhibits thereto
                  and documents incorporated by reference therein and such other
                  documents as such Rightsholder may reasonably request in order
                  to facilitate the disposition of the Registerable Securities
                  owned by such Rightsholder and included in such registration
                  statement; provided, further, the Company shall modify or
                  amend the registration statement as it relates to such
                  Rightsholder as reasonably requested by such Rightsholder on a
                  timely basis, and shall reasonably consider other changes to
                  the registration statement (but not including any exhibit or
                  document incorporated therein by reference) reasonably
                  requested by such Rightsholder on a timely basis, in light of
                  the requirements of the Securities Act and any other
                  applicable laws and regulations; and provided, further, that
                  the obligation of the Company to effect such registration
                  and/or cause such registration statement to become effective,
                  may be postponed for (1) such period of time when the
                  financial statements of the Company required to be included in
                  such registration statement are not available (due solely to
                  the fact that such financial statements have not been

                                       13
<PAGE>

                  prepared in the regular course of business of the Company) or
                  (2) any other bona fide corporate purpose, but then only for a
                  period not to exceed 90 days;

                          (B) prepare and file with the Commission such
                  amendments and post-effective amendments to a registration
                  statement as may be necessary to keep such registration
                  statement effective for up to nine months; and cause the
                  related prospectus to be supplemented by any required
                  prospectus supplement, and as so supplemented to be filed to
                  the extent required pursuant to Rule 424 promulgated under the
                  Securities Act, during such nine-month period; and otherwise
                  comply with the provisions of the Securities Act with respect
                  to the disposition of all Registerable Securities covered by
                  such registration statement during the applicable period in
                  accordance with the intended method(s) of disposition of such
                  Registerable Securities set forth in such registration
                  statement, prospectus or supplement to such prospectus;

                          (C) notify the Rightsholders whose Registerable
                  Securities are included in such registration statement and the
                  managing underwriter(s), if any, of an underwritten offering
                  of any of the Registerable Securities included in such
                  registration statement, and confirm such advice in writing,
                  (1) when a prospectus or any prospectus supplement or
                  post-effective amendment has been filed, and, with respect to
                  a registration statement or any post-effective amendment, when
                  the same has become effective, (2) of any request by the
                  Commission for amendments or supplements to a registration
                  statement or related prospectus or for additional information,
                  (3) of the issuance by the Commission of any stop order
                  suspending the effectiveness of a registration statement or
                  the initiation of any proceedings for that purpose, (4) if at
                  any time the representations and warranties of the Company
                  contemplated by subclause (1) of clause 10(d)(i)(J) hereof
                  cease to be true and correct, (5) of the receipt by the
                  Company of any notification with respect to the suspension of
                  the qualification of any of the Registerable Securities for
                  sale in any jurisdiction or the initiation or threatening of
                  any proceeding for such purpose and (6) of the happening of
                  any event which makes any statement made in the registration
                  statement, the prospectus or any document incorporated therein
                  by reference untrue or which requires the making of any
                  changes in the registration statement or prospectus so that
                  such registration statement, prospectus or document
                  incorporated by reference will not contain any untrue
                  statement of material fact or omit to state any material fact
                  required to be stated therein or necessary to make the
                  statements therein not misleading;

                          (D) make reasonable efforts to obtain the withdrawal
                  of any order suspending the effectiveness of such registration
                  statement at the earliest possible moment and to prevent the
                  entry of such an order;

                          (E) use reasonable efforts to register or qualify the
                  Registerable Securities included in such registration
                  statement under such other securities or blue sky laws of such
                  jurisdictions as any Rightsholder whose Registerable
                  Securities are included in such registration statement

                                       14
<PAGE>

                  reasonably requests in writing and do any and all other acts
                  and things which may be necessary or advisable to enable such
                  Rightsholder to consummate the disposition in such
                  jurisdictions of such Registerable Securities; provided, that
                  the Company will not be required to (1) qualify generally to
                  do business in any jurisdiction where it would not otherwise
                  be required to qualify but for this clause 10(d)(i)(E), (2)
                  subject itself to taxation in any such jurisdiction or (3)
                  take any action which would subject it to general service of
                  process in any such jurisdiction;

                          (F) make available for inspection by each Rightsholder
                  whose Registerable Securities are included in such
                  registration, any underwriter(s) participating in any
                  disposition pursuant to such registration statement, and any
                  representative, agent or employee of or attorney or accountant
                  retained by any such Rightsholder or underwriter(s)
                  (collectively, the "Inspectors"), all financial and other
                  records, pertinent corporate documents and properties of the
                  Company (collectively, the "Records") as shall be reasonably
                  necessary to enable them to exercise their due diligence
                  responsibility (or establish a due diligence defense), and
                  cause the officers, directors and employees of the Company to
                  supply all information reasonably requested by any such
                  Inspector in connection with such registration statement;
                  provided, that records which the Company determines, in good
                  faith, to be confidential and which it notifies the Inspectors
                  are confidential shall not be disclosed by the Inspectors,
                  unless (1) the release of such Records is ordered pursuant to
                  a subpoena or other order from a court of competent
                  jurisdiction or (2) the disclosure of such Records is required
                  by any applicable law or regulation or any governmental
                  regulatory body with jurisdiction over such Rightsholder or
                  underwriter; provided, further, that such Rightsholder or
                  underwriter(s) agree that such Rightsholder or underwriter(s)
                  will, upon learning the disclosure of such Records is sought
                  in a court of competent jurisdiction, give notice to the
                  Company and allow the Company, at the Company's expense, to
                  undertake appropriate action to prevent disclosure of the
                  Records deemed confidential;

                          (G) cooperate with the Rightsholder whose Registerable
                  Securities are included in such registration statement and the
                  managing underwriter(s), if any, to facilitate the timely
                  preparation and delivery of certificates representing
                  Registerable Securities to be sold thereunder, not bearing any
                  restrictive legends, and enable such Registerable Securities
                  to be in such denominations and registered in such names as
                  such Rightsholder or any managing underwriter(s) may
                  reasonably request at least two business days prior to any
                  sale of Registerable Securities;

                          (H) comply with all applicable rules and regulations
                  of the Commission and promptly make generally available to its
                  security holders an earnings statement covering a period of
                  twelve months commencing, (1) in an underwritten offering, at
                  the end of any fiscal quarter in which Registerable Securities
                  are sold to underwriter(s), or (2) in a non-underwritten
                  offering, with the first month of the Company's first fiscal

                                       15
<PAGE>

                  quarter beginning after the effective date of such
                  registration statement, which earnings statement in each case
                  shall satisfy the provisions of Section 11(a) of the
                  Securities Act;

                          (I) provide a CUSIP number for all Registerable
                  Securities not later than the effective date of the
                  registration statement relating to the first public offering
                  of Registerable Securities of the Company pursuant hereto;

                          (J) enter into such customary agreements (including an
                  underwriting agreement in customary form) and take all such
                  other actions reasonably requested by the Rightsholders
                  holding a majority of the Registerable Securities included in
                  such registration statement or the managing underwriter(s) in
                  order to expedite and facilitate the disposition of such
                  Registerable Securities and in such connection, whether or not
                  an underwriting agreement is entered into and whether or not
                  the registration is an underwritten registration, (1) make
                  such representations and warranties, if any, to the holders of
                  such Registerable Securities and any underwriter(s) with
                  respect to the registration statement, prospectus and
                  documents incorporated by reference, if any, in form,
                  substance and scope as are customarily made by issuers to
                  underwriter(s) in underwritten offerings and confirm the same
                  if and when requested, (2) obtain opinions of counsel to the
                  Company and updates thereof addressed to each such
                  Rightsholder and the underwriter(s), if any, with respect to
                  the registration statement, prospectus and documents
                  incorporated by reference, if any, covering the matters
                  customarily covered in opinions requested in underwritten
                  offerings and such other matters as may be reasonably
                  requested by such Rightsholders and underwriter(s), (3) obtain
                  a "cold comfort" letter and updates thereof from the Company's
                  independent certified public accountants addressed to such
                  Rightsholders and to the underwriter(s), if any, which letters
                  shall be in customary form and cover matters of the type
                  customarily covered in "cold comfort" letters by accountants
                  in connection with underwritten offerings, and (4) deliver
                  such documents and certificates as may be reasonably requested
                  by the Rightsholders holding a majority of such Registerable
                  Securities and managing underwriter(s), if any, to evidence
                  compliance with any customary conditions contained in the
                  underwriting agreement or other agreement entered into by the
                  Company; each such action required by this clause 10(d)(i)(J)
                  shall be done at each closing under such underwriting or
                  similar agreement or as and to the extent required thereunder;
                  and

                          (K) if requested by the holders of a majority of the
                  Registerable Securities included in such registration
                  statement, use its best efforts to cause all Registerable
                  Securities which are included in such registration statement
                  to be listed, subject to notice of issuance, by the date of
                  the first sale of such Registerable Securities pursuant to
                  such registration statement, on each securities exchange, if
                  any, on which securities similar to the Registered Securities
                  are listed.

                      (ii) Obligations of Rightsholders. In connection with any
         registration of Registerable Securities of a Rightsholder pursuant to
         Paragraph 10(b) or (c) hereof:

                                       16
<PAGE>

                          (A) The Company may require that each Rightsholder
                  whose Registerable Securities are included in such
                  registration statement furnish to the Company such information
                  regarding the distribution of such Registerable Securities and
                  such Rightsholder as the Company may from time to time
                  reasonably request in writing; and

                          (B) Each Rightsholder, upon receipt of any notice from
                  the Company of the happening of any event of the kind
                  described in subclauses (2), (3), (5) and (6) of clause
                  10(d)(i)(C) hereof, shall forthwith discontinue disposition of
                  Registerable Securities pursuant to the registration statement
                  covering such Registerable Securities until such
                  Rightsholder's receipt of the copies of the supplemented or
                  amended prospectus contemplated by subclause (1) of clause
                  10(d)(i)(C) hereof, or until such Rightsholder is advised in
                  writing (the "Advice") by the Company that the use of the
                  applicable prospectus may be resumed, and until such
                  Rightsholder has received copies of any additional or
                  supplemental filings which are incorporated by reference in or
                  to be attached to or included with such prospectus, and, if so
                  directed by the Company, such Rightsholder will deliver to the
                  Company (at the expense of the Company) all copies, other than
                  permanent file copies then in the possession of such
                  Rightsholder, of the current prospectus covering such
                  Registerable Securities at the time of receipt of such notice;
                  the Company shall have the right to demand that such
                  Rightsholder or other holder verify its agreement to the
                  provisions of this clause 10(d)(ii)(B) in any Demand Request,
                  Tag-Along Request or Holder Notice of the Rightsholder or in a
                  separate document executed by the Rightsholder.

                  (e) Registration Expenses. All expenses incident to the
performance of or compliance with this Agreement by the Company, including,
without imitation, all registration and filing fees of the Commission, National
Association of Securities Dealers, Inc. and other agencies, fees and expenses of
compliance with securities or blue sky laws (including reasonable fees and
disbursements of counsel in connection with blue sky qualifications of the
Registerable Securities), rating agency fees, printing expenses, messenger and
delivery expenses, internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the fees and expenses incurred in connection with the
listing, if any, of the Registerable Securities on any securities exchange and
fees and disbursements of counsel for the Company and the Company's independent
certified public accountants (including the expenses of any special audit or
"cold comfort" letters required by or incidental to such performance),
Securities Act or other liability insurance (if the Company elects to obtain
such insurance), the fees and expenses of any special experts retained by the
Company in connection with such registration and the fees and expenses of any
other person retained by the Company (but not including any underwriting
discounts or commissions attributable to the sale of Registerable Securities or
other out-of-pocket expenses of the Rightsholders, or the agents who act on
their behalf, unless reimbursement is specifically approved by the Company) will
be borne by the Company. All such expenses are herein referred to as
"Registration Expenses." Notwithstanding the foregoing, the Company shall not be
required to pay for any Registration Expenses of any Demand Registration if such
Demand Request is subsequently withdrawn at the request of the holders of a

                                       17
<PAGE>

majority of the Registerable Securities included in such Demand Registration (in
which case all Rightsholders which requested the withdrawal of the Demand
Registration shall bear such expenses pro rata); provided that, if, at the time
of such withdrawal, such Rightsholders have learned of a material adverse change
in the condition, business or prospects of the Company from that known to such
Rightsholders at the time of their Demand Request, such Rightsholders shall not
be required to pay any of such expenses. In either event, if such Rightsholders
pay in full the expenses of such withdrawn Demand Registration, such
Rightsholders shall retain the right to one Demand Registration.

                  (f) Indemnification: Contribution.

                      (i) Indemnification by the Company. The Company agrees to
         indemnify and hold harmless, to the full extent permitted by law, each
         Rightsholder, its officers and directors and each person who controls
         such Rightsholder (within the meaning of the Securities Act), if any,
         and any agent thereof against all losses, claims, damages, liabilities
         and expenses incurred by such party pursuant to any actual or
         threatened suit, action, proceeding or investigation (including
         reasonable attorney's fees and expenses of investigation) arising out
         of or based upon any untrue or alleged untrue statement of a material
         fact contained in any registration statement, prospectus or preliminary
         prospectus or any omission or alleged omission to state therein a
         material fact required to be stated therein or necessary to make the
         statements therein (in the case of a prospectus, in the light of the
         circumstances under which they were made) not misleading, except
         insofar as the same arise out of or are based upon, any such untrue
         statement or omission based upon information with respect to such
         Rightsholder furnished in writing to the Company by such Rightsholder
         expressly for use therein.

                      (ii) Indemnification by Rightsholder. In connection with
         any registration statement in which a Rightsholder is participating,
         each such Rightsholder will be required to furnish to the Company in
         writing such information with respect to such Rightsholder as the
         Company reasonably requests for use in connection with any such
         registration statement or prospectus, and each Rightsholder agrees to
         the extent it is such a holder of Registerable Securities included in
         such registration statement, and each other such holder of Registerable
         Securities included in such Registration Statement will be required to
         agree, to indemnify, to the full extent permitted by law, the Company,
         the directors and officers of the Company and each person who controls
         the Company (within the meaning of the Securities Act) and any agent
         thereof, against any losses, claims, damages, liabilities and expenses
         (including reasonable attorney's fees and expenses of investigation
         incurred by such party pursuant to any actual or threatened suit,
         action, proceeding or investigation arising out of or based upon any
         untrue or alleged untrue statement of a material fact or any omission
         or alleged omission of a material fact necessary, to make the
         statements therein (in the case of a prospectus, in the light of the
         circumstances under which they are made) not misleading, to the extent,
         but only to the extent, that such untrue statement or omission is based
         upon information relating to such Rightsholder or other holder
         furnished in writing to the Company expressly for use therein.

                                       18
<PAGE>

                      (iii) Conduct of Indemnification Proceedings. Promptly
         after receipt by an indemnified party under this Paragraph 10(f) of
         written notice of the commencement of any action, proceeding, suit or
         investigation or threat thereof made in writing for which such
         indemnified party may claim indemnification or contribution pursuant to
         this Agreement, such indemnified party shall notify in writing the
         indemnifying party of such commencement or threat; but the omission so
         to notify the indemnifying party shall not relieve the indemnifying
         party from any liability which the indemnifying party may have to any
         indemnified party (A) hereunder, unless the indemnifying party is
         actually prejudiced thereby, or (B) otherwise than under this Paragraph
         10(f). In case any such action, suit or proceeding shall be brought
         against any indemnified party, and the indemnified party shall notify
         the indemnifying party of the commencement thereof, the indemnifying
         party shall be entitled to participate therein and the indemnifying
         party shall assume the defense thereof, with counsel reasonably
         satisfactory to the indemnified party, and the obligation to pay all
         expenses relating thereto. The indemnified party shall have the right
         to employ separate counsel in any such action, suit or proceeding and
         to participate in the defense thereof, but the fees and expenses of
         such counsel shall be at the expense of such indemnified party unless
         (A) the indemnifying party has agreed to pay such fees and expenses,
         (B) the indemnifying party shall have failed to assume the defense of
         such action, suit or proceeding or to employ counsel reasonably
         satisfactory to the indemnified party therein or to pay all expenses
         relating thereto or (C) the named parties to any such action or
         proceeding (including any impleaded parties) include both the
         indemnified party and the indemnifying party and the indemnified party
         shall have been advised by counsel that there may be one or more legal
         defenses available to the indemnified party which are different from or
         additional to those available to the indemnifying party and which may
         result in a conflict between the indemnifying party and such
         indemnified party (in which case, if the indemnified party notifies the
         indemnifying party in writing that the indemnified party elects to
         employ separate counsel at the expense of the indemnifying party, the
         indemnifying party shall not have the right to assume the defense of
         such action or proceeding on behalf of the indemnified party; it being
         understood, however, that the indemnifying party shall not, in
         connection with any one such action, suit or proceeding or separate but
         substantially similar or related actions, suits or proceedings in the
         same jurisdiction arising out of the same general allegations or
         circumstances, be liable for the fees and expenses of more than one
         separate firm of attorneys at any time for the indemnified party, which
         firm shall be designated in writing by the indemnified party).

                      (iv) Contribution. If the indemnification provided for in
         this Paragraph 10(f) from the indemnifying party is unavailable to an
         indemnified party hereunder in respect of any losses, claims, damages,
         liabilities or expenses referred to therein, then the indemnifying
         party, in lieu of indemnifying such indemnified party, shall contribute
         to the amount paid or payable by such indemnified party as a result of
         such losses, claims, damages, liabilities or expenses (A) in such
         proportion as is appropriate to reflect the relative benefits received
         by the indemnifying party on the one hand and the indemnified party on
         the other or (B) if the allocation provided by clause (A) above is not
         permitted by applicable law, in such proportion as is appropriate to
         reflect not only the relative benefits received by the indemnifying
         party on the one hand and the indemnified party on the other but also

                                       19

<PAGE>

         the relative fault of the indemnifying party and indemnified party, as
         well as any other relevant equitable considerations. The relative fault
         of such indemnifying party and the indemnified parties shall be
         determined by reference to, among other things, whether any action in
         question, including any untrue or alleged untrue statement of a
         material fact or omission or alleged omission to state a material fact,
         has been made by, or relates to information supplied by, such
         indemnifying party or indemnified parties, and the parties' relative
         intent, knowledge, access to information and opportunity to correct or
         prevent such action. The amount paid or payable by a party as a result
         of the losses, claims, damages. liabilities and expenses referred to
         above shall be deemed to include, subject to the limitation set forth
         in Subparagraph 10(f)(v), any legal or other fees or expenses
         reasonably incurred by such party in connection with any investigation
         or proceeding.

                      The parties hereto agree that it would not be just and
         equitable if contribution pursuant to this Subparagraph 10(f)(iv) were
         determined by pro rata allocation or by any other method of allocation
         which does not take into account the equitable considerations referred
         to in clauses (A) and (B) of the immediately preceding paragraph. No
         person guilty of fraudulent misrepresentation (within the meaning of
         Section 11(f) of the Securities Act) shall be entitled to contribution
         from any person who was not guilty of such fraudulent
         misrepresentation.

                      (v) Limitation. Anything to the contrary contained in this
         Paragraph 10(f) or in Paragraph 10(g) notwithstanding, no holder of
         Registerable Securities shall be liable for indemnification and
         contribution payments aggregating an amount in excess of the maximum
         amount received by such holder in connection with any sale of
         Registerable Securities as contemplated herein.

                  (g) Participation in Underwritten Registration. No
Rightsholder may participate in any underwritten registration hereunder unless
such Rightsholder (i) agrees to sell such holder's securities on the basis
provided in any underwriting arrangements approved by the persons entitled
hereunder to approve such arrangements and to comply with Regulation M under the
Exchange Act and (ii) completes and executes all questionnaires, appropriate and
limited powers of attorney, escrow agreements, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangement; provided, that all such documents shall be consistent
with the provisions of Paragraph 10(e).

11. Miscellaneous.

                  This Warrant Certificate and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This certificate is deemed to have been delivered in the State of New
York and shall be construed and enforced in accordance with and governed by the
laws of such State. The headings in this Warrant Certificate are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.

                                       20
<PAGE>

11. Expiration.

                  Unless as hereinafter provided, the right to exercise these
Warrants shall expire at the Expiration Date.

Dated: ________________________, 2000
                                             SURGE COMPONENTS, INC.

                                             By:         /s/ Ira Levy
                                                 -------------------------------
                                                      Ira Levy, President
ATTEST:

          /s/ Steven J. Lubman
----------------------------------------
     Steven J. Lubman, Secretary

                                       21
<PAGE>

                                  EXERCISE FORM

                                              Dated:_______________, ____

TO: SURGE COMPONENTS, INC.:

                  The undersigned hereby irrevocably elects to exercise the
within Warrant, to the extent of purchasing _________________ shares of Common
Stock, and hereby makes payment of _____________ in payment of the actual
Exercise Price thereof.

                 _____________________________________________

                     INSTRUCTIONS FOR REGISTRATION OF STOCK

              Name:  _____________________________________________________
                            (Please type or print in block letters)
          Taxpayer
    Identification
            Number:  ___________________________________________________________

           Address:  ___________________________________________________________

                     ___________________________________________________________

                     ___________________________________________________________

              _____________________________________________

         Signature: ____________________________________________________________
                    (Signature must conform in all respects to the name of the
                         Warrantholder as set forth on the face of this
                                      Warrant Certificate.)

                                       22
<PAGE>

                                 ASSIGNMENT FORM

                     FOR VALUE RECEIVED, _______________________________________
                                         (Please type or print in block letters)
hereby sells, assigns and transfers unto:

              Name:  _____________________________________________________
                            (Please type or print in block letters)
          Taxpayer
    Identification
            Number:  ___________________________________________________________

           Address:  ___________________________________________________________

                     ___________________________________________________________

                     ___________________________________________________________

this Warrant Certificate and the Warrants represented by this Warrant
Certificate to the extent of ________________ Warrants and does hereby
irrevocably constitute and appoint ___________________________ Attorney-in-Fact,
to transfer the same on the books of the Company with full power of substitution
in the premises.

             Dated:  ______________________________

         Signature: ____________________________________________________________
                    (Signature must conform in all respects to the name of the
                         Warrantholder as set forth on the face of this
                                      Warrant Certificate.)

                                       23

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