Document:

SECURITIES PURCHASE AGREEMENT

          This SECURITIES PURCHASE AGREEMENT, dated as of February 3, 2000 (this
"Agreement"),  by and between Educational Video  Conferencing,  Inc., a Delaware
corporation,  with principal  executive offices located at 35 East Grassy Sprain
Road, Yonkers, NY 10710 (the "Company"), and The Shaar Fund Ltd. ("Buyer").

          WHEREAS,  Buyer desires to purchase from the Company,  and the Company
desires to issue and sell to Buyer, upon the terms and subject to the conditions
of this Agreement, (i) 400,000 shares of the Company's Series A 7.5% Convertible
Preferred  Stock,  par value  $.0001  per share  (collectively,  the  "Preferred
Shares"), and (ii) Common Stock Purchase Warrants in the form attached hereto as
Exhibit  A to  purchase  40,000  shares  of  Common  Stock  (as  defined  below)
(collectively, the "Warrants");

          WHEREAS,  upon the terms and subject to the designations,  preferences
and rights  set forth in the  Company's  Certificate  of  Designation  which was
amended by the Company's  Amended  Certificate of Designation  which was further
amended by the Company's  Second Amended  Certificate of Designation of Series A
7.5%  Convertible  Preferred Stock in the form attached hereto as Exhibit B (the
"Certificate of Designation"),  the Preferred Shares are convertible into shares
of the Company's  common stock, par value $.0001 per share (the "Common Stock");
and

          WHEREAS,  the Warrants,  upon the terms and subject to the  conditions
specified in the Warrants, will be exercisable for a period of three years;

          NOW,  THEREFORE,  in  consideration  of the  premises  and the  mutual
covenants  contained herein, the parties hereto,  intending to be legally bound,
hereby agree as follows:

          I. PURCHASE AND SALE OF PREFERRED SHARES AND WARRANTS

          A. Transaction.  Buyer hereby agrees to purchase from the Company, and
the  Company  has  offered  and  hereby  agrees  to issue and sell to Buyer in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities  Act of 1933, as amended (the  "Securities  Act"),  the Preferred
Shares and the Warrants to purchase 40,000 shares of Common Stock.

          B.  Purchase  Price;  Form of  Payment.  The  purchase  price  for the
Preferred  Shares and the Warrants to be purchased by Buyer  hereunder  shall be
$4,000,000  (the "Purchase  Price").  Simultaneously  with the execution of this
Agreement,  Buyer shall pay the Purchase  Price by wire transfer of  immediately
available  funds to the escrow agent (the "Escrow  Agent")  identified  in those
certain Escrow  Instructions of even date herewith,  a copy of which is attached
hereto  as  Exhibit  C (the  "Escrow  Instructions").  Simultaneously  with  the
execution  of this  Agreement,  the  Company  shall  deliver  one or  more  duly
authorized,  issued and  executed  certificates  (I/N/O Buyer or, if the Company
otherwise has been  notified,  I/N/O Buyer's  nominee)  evidencing the Preferred
Shares and the Warrants  which Buyer is  purchasing,  to the Escrow Agent or its
designated depository. By executing and delivering this Agreement, Buyer and the
Company  each  hereby  agree to observe the terms and  conditions  of the Escrow
Instructions,  all of which are incorporated herein by reference as if fully set
forth  herein.

         C. Method of Payment.  Payment into and out of escrow of the Purchase
Price shall be made as set forth in the Escrow Instructions.

          II. BUYER'S REPRESENTATIONS AND WARRANTIES

          Buyer  represents  and warrants to and  covenants  and agrees with the
Company as follows:

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          A. Buyer is purchasing the Preferred Shares, the Warrants,  the Common
Stock issuable upon exercise of the Warrants (the "Warrant Shares"),  the Common
Stock,  if any,  issuable in payment of dividends on the  Preferred  Shares (the
"Dividend Shares"),  and the Common Stock issuable upon conversion or redemption
of the Preferred  Shares (the  "Conversion  Shares" and,  collectively  with the
Preferred Shares, the Warrants,  the Warrant Shares and the Dividend Shares, the
"Securities") for its own account,  for investment  purposes only and not with a
view towards or in connection  with the public sale or  distribution  thereof in
violation of the Securities Act.

          B. Buyer is (i) an  "accredited  investor"  within the meaning of Rule
501 of  Regulation  D under  the  Securities  Act,  (ii)  experienced  in making
investments of the kind contemplated by this Agreement, (iii) capable, by reason
of its business and financial experience,  of evaluating the relative merits and
risks of an  investment in the  Securities,  and (iv) able to afford the loss of
its investment in the Securities.

          C. Buyer understands that the Securities are being offered and sold by
the Company in reliance on an exemption from the  registration  requirements  of
the Securities Act and equivalent state securities and "blue sky" laws, and that
the  Company is relying  upon the  accuracy  of, and  Buyer's  compliance  with,
Buyer's representations, warranties and covenants set forth in this Agreement to
determine the  availability  of such  exemption and the  eligibility of Buyer to
purchase the Securities;

          D. Buyer  understands  that the  Securities  have not been approved or
disapproved by the Securities and Exchange  Commission (the "Commission") or any
state  securities  commission.

          E. This Agreement has been duly and validly  authorized,  executed and
delivered  by Buyer and is a valid and binding  agreement  of Buyer  enforceable
against it in  accordance  with its terms,  subject  to  applicable  bankruptcy,
insolvency, fraudulent conveyance,  reorganization,  moratorium and similar laws
affecting  creditors'  rights  and  remedies  generally  and except as rights to
indemnity and contribution may be limited by federal or state securities laws or
the  public  policy  underlying  such  laws.

          F. Buyer has not relied on any  representations  made by J.P. Turner &
Company,   L.L.C.   in  entering  into  this  Agreement  and  the   transactions
contemplated hereby.

                       III. THE COMPANY'S REPRESENTATIONS

          The Company represents and warrants to Buyer that:

          A.   Capitalization.

               1. The authorized  capital stock of the Company  consists  solely
     of: (x) 20,000,000  shares of Common Stock, of which  4,347,243  shares are
     issued and  outstanding  on the date hereof;  and (y)  1,000,000  shares of
     preferred stock, of which no shares are issued. As of the date hereof,  the
     Company has outstanding  stock options to purchase 420,000 shares of Common
     Stock and Warrants  outstanding to purchase  570,252 shares of Common Stock
     exclusive of the shares of Common Stock underlying the Warrants referred to
     in footnotes (1) and (2) on Schedule III.A.1 hereto. The exercise price for
     each of such  outstanding  options and Warrants is accurately  set forth on
     Schedule III.A.1. hereto.

               2. The  Conversion  Shares,  the Dividend  Shares and the Warrant
     Shares have been duly and validly  authorized  and reserved for issuance by

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     the Company,  and when issued by the Company upon conversion of, or in lieu
     of cash dividends on, the Preferred  Shares and on exercise of the Warrants
     will be duly and validly issued,  fully paid and nonassessable and will not
     subject the holder  thereof to personal  liability  by reason of being such
     holder.

               3. Except as disclosed on Schedule III.A.3.  hereto, there are no
     preemptive,  subscription,  "call," right of first refusal or other similar
     rights  to  acquire  any  capital  stock  of  the  Company  or  any  of its
     Subsidiaries  or other  voting  securities  of the  Company  that have been
     issued or granted to any person and no other  obligations of the Company or
     any of its Subsidiaries to issue, grant, extend or enter into any security,
     option,  warrant,  "call,"  right,  commitment,  agreement,  arrangement or
     undertaking with respect to any of their respective capital stock.

               4. Schedule  III.A.4.  hereto lists all the  Subsidiaries  of the
     Company (the  "Subsidiaries").  Except as  disclosed  on Schedule  III.A.4.
     hereto,  the Company does not own or control,  directly or indirectly,  any
     interest in any other corporation,  partnership, limited liability company,
     unincorporated business organization,  association, trust or other business
     entity.

               5. The Company has delivered to Buyer complete and correct copies
     of the Certificate of Incorporation  and the By-Laws of each of the Company
     and  the  Subsidiaries,  in  each  case  as  amended  to the  date  of this
     Agreement.  Except as set  forth on  Schedule  III.A.5.,  the  Company  has
     delivered to Buyer true and complete  copies of all minutes of the Board of
     Directors of the Company (the "Board of Directors") since March, 1997.

          B.   Organization; Reporting Company Status.

               1. Each of the Company and the Subsidiaries is a corporation duly
     organized,  validly  existing  and in good  standing  under the laws of the
     state or jurisdiction in which it is incorporated  and is duly qualified as
     a foreign  corporation  in all  jurisdictions  in which the  failure  so to
     qualify would  reasonably be expected to have a material  adverse effect on
     the business, properties,  prospects, condition (financial or otherwise) or
     results of operations of the Company and the Subsidiaries  taken as a whole
     or on the  consummation  of any of the  transactions  contemplated  by this
     Agreement (a "Material Adverse Effect").

               2. The  Company  has  registered  the Common  Stock  pursuant  to
     Section  12 of  the  Securities  Exchange  Act of  1934,  as  amended  (the
     "Exchange  Act").  The  Common  Stock is listed  and  traded on the  Nasdaq
     SmallCap  Market  ("Nasdaq")  and the Company has not  received  any notice
     regarding,  and to its knowledge  there is no threat of, the termination or
     discontinuance of the eligibility of the Common Stock for such listing.

          C.  Authorization. The Company (i) has duly and validly authorized and
reserved  for  issuance  1,000,000  shares  of Common  Stock,  which is a number
sufficient  for the  conversion of and the payment of dividends (in lieu of cash
payments)  on the 400,000  Preferred  Shares and the exercise of the Warrants in
full,  and  (ii) at all  times  from and  after  the date  hereof  shall  have a
sufficient  number of shares of Common  Stock duly and  validly  authorized  and
reserved for issuance to satisfy the conversion of Preferred Shares, the payment
of dividends (in lieu of cash payments) on the Preferred Shares and the exercise
of  the  Warrants  in  full.  The  Company   understands  and  acknowledges  the
potentially dilutive effect on the Common Stock of the issuance of the Preferred
Shares and of the Conversion  Shares, the Dividend Shares and the Warrant Shares
upon the  conversion  of, and payment of dividends on, the Preferred  Shares and
the exercise of the Warrants,  respectively.  The Company  further  acknowledges

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that its obligation to issue Conversion  Shares upon conversion of the Preferred
Shares and Warrant Shares upon exercise of the Warrants in accordance  with this
Agreement,  the  Certificate  of  Designation  and the  Warrants is absolute and
unconditional  regardless of the dilutive  effect that such issuance may have on
the ownership interests of other stockholders of the Company and notwithstanding
the  commencement of any case under 11 U.S.C.  ss. 101 et seq. (the  "Bankruptcy
Code").  In the event the Company is a debtor  under the  Bankruptcy  Code,  the
Company  hereby waives to the fullest  extent  permitted any rights to relief it
may have under 11 U.S.C.  ss. 362 in respect of the  conversion of the Preferred
Shares and the exercise of the  Warrants.  The Company  agrees,  without cost or
expense  to  Buyer,  to take or  consent  to any and  all  action  necessary  to
effectuate relief under 11 U.S.C. ss. 362. Schedule III.C. hereto sets forth (i)
all issuances  and sales by the Company  since  December 31, 1998 of its capital
stock, and other securities  convertible into or exercisable or exchangeable for
capital stock of the Company, (ii) the amount of such securities sold, including
the  amount of any  underlying  shares of  capital  stock,  (iii) the  purchaser
thereof,  (iv) the  amount  paid  therefor,  and (v) the  material  terms of all
outstanding capital stock of the Company (other than the Common Stock).

          D.  Authority;  Validity  and  Enforceability.  The  Company  has  the
requisite  corporate  power and authority to file,  and perform its  obligations
under,  the  Certificate  of  Designation  and to enter into the  Documents  (as
hereinafter  defined)  and  to  perform  all of its  obligations  hereunder  and
thereunder  (including  the  issuance,   sale  and  delivery  to  Buyer  of  the
Securities).  The  execution,  delivery  and  performance  by the Company of the
Documents and the consummation by the Company of the  transactions  contemplated
hereby and thereby (including, without limitation, the filing of the Certificate
of Designation  with the Delaware  Secretary of State's office,  the issuance of
the  Preferred  Shares and the Warrants and the  issuance  and  reservation  for
issuance of the Conversion  Shares,  the Dividend Shares and the Warrant Shares)
have been duly and validly  authorized by all necessary  corporate action on the
part of the Company.  Each of the Documents  has been duly and validly  executed
and delivered by the Company and the  Certificate of  Designation  has been duly
filed with the  Delaware  Secretary of State's  office by the Company,  and each
Document  constitutes a valid and binding obligation of the Company  enforceable
against it in  accordance  with its terms,  subject  to  applicable  bankruptcy,
insolvency, fraudulent conveyance,  reorganization,  moratorium and similar laws
affecting  creditors'  rights  and  remedies  generally  and except as rights to
indemnity and contribution may be limited by federal or state securities laws or
the public  policy  underlying  such  laws.  The  Securities  have been duly and
validly  authorized for issuance by the Company and, when executed and delivered
by the Company, will be valid and binding obligations of the Company enforceable
against it in accordance  with their terms,  subject to  applicable  bankruptcy,
insolvency, fraudulent conveyance,  reorganization,  moratorium and similar laws
affecting  creditors'  rights  and  remedies  generally.  For  purposes  of this
Agreement, the term "Documents" means (i) this Agreement;  (ii) the Registration
Rights  Agreement of even date herewith between the Company and Buyer, a copy of
which is annexed  hereto as  Exhibit D (the  "Registration  Rights  Agreement");
(iii) the  Certificate  of  Designation;  (iv) the Warrants;  and (v) the Escrow
Instructions.

          E. Validity of Issuance of the  Securities.  The Preferred  Shares and
the Warrants as of the Closing Date,  and the  Conversion  Shares,  the Dividend
Shares  and the  Warrant  Shares  upon their  issuance  in  accordance  with the
Certificate  of  Designation  and the  Warrants,  respectively,  will be validly
issued and  outstanding,  fully paid and  nonassessable,  and not subject to any
preemptive rights, rights of first refusal,  tag-along rights, drag-along rights
or other similar rights.

          F.  Non-contravention.  Except as set forth on  Schedule  III.F.,  the
execution  and  delivery by the Company of the  Documents,  the  issuance of the

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Securities,  and the  consummation  by the  Company  of the  other  transactions
contemplated hereby and thereby,  including,  without limitation,  the filing of
the Certificate of Designation with the Delaware Secretary of State's office, do
not, and compliance  with the  provisions of this Agreement and other  Documents
will not,  conflict  with,  or result in any  violation  of, or default (with or
without  notice  or lapse of time,  or both)  under,  or give rise to a right of
termination,  cancellation  or  acceleration  of any  obligation  or  loss  of a
material  benefit  under,  or result in the  creation of any Lien (as defined in
Section  III.V.) upon any of the  properties  or assets of the Company or any of
its  Subsidiaries  under,  or result in the  termination of, or require that any
consent be obtained or any notice be given with respect to, (i) the  Certificate
of  Incorporation  or  By-Laws  of the  Company  or the  comparable  charter  or
organizational  documents  of any of its  Subsidiaries,  (ii) any loan or credit
agreement, note, bond, mortgage,  indenture, lease, contract or other agreement,
instrument  or permit  applicable to the Company or any of its  Subsidiaries  or
their respective  properties or assets,  or (iii) any Law (as defined in Section
III.N.)  applicable  to,  or any  judgment,  decree  or  order  of any  court or
government body having jurisdiction over, the Company or any of its Subsidiaries
or any of their respective properties or assets.

          G. Approvals.  No  authorization,  approval or consent of any court or
public or  governmental  authority is required to be obtained by the Company for
the issuance and sale of the Preferred Shares or the Warrants (or the Conversion
Shares,  the Dividend Shares or Warrant Shares) to Buyer as contemplated by this
Agreement,  except  such  authorizations,  approvals  and  consents as have been
obtained by the Company prior to the date hereof.

          H. Commission Filings.  The Company has properly and timely filed with
the Commission all reports, proxy statements, forms and other documents required
to be filed with the  Commission  under the  Securities Act and the Exchange Act
since  February  23, 1999 (the  "Commission  Filings").  As of their  respective
dates,  (i) the Commission  Filings  complied in all material  respects with the
requirements  of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the Commission promulgated thereunder applicable to
such Commission  Filings,  and (ii) none of the Commission  Filings contained at
the time of its  filing any untrue  statement  of a material  fact or omitted to
state a material  fact  required to be stated  therein or  necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.  The financial  statements of the Company  included in the
Commission Filings, as of the dates of such documents, were true and complete in
all material respects and complied with applicable  accounting  requirements and
the published rules and regulations of the Commission with respect thereto, were
prepared in accordance  with  generally  accepted  accounting  principles in the
United States ("GAAP") (except in the case of unaudited  statements permitted by
Form 10-Q under the  Exchange  Act)  applied on a  consistent  basis  during the
periods  involved  (except as may be indicated in the notes  thereto) and fairly
presented  the   consolidated   financial   position  of  the  Company  and  its
Subsidiaries  as of the dates  thereof  and the  consolidated  results  of their
operations  and cash flows for the periods then ended  (subject,  in the case of
unaudited statements, to normal year-end audit adjustments that in the aggregate
are not material and to any other adjustment described therein).

          I.  Absence  of  Certain  Changes.  Since the  Balance  Sheet Date (as
defined  in  Section  III.M.),  there  has not  occurred  any  change,  event or
development  in the  business,  financial  condition,  prospects  or  results of
operations  of the  Company  and the  Subsidiaries,  there has not  existed  any
condition having or reasonably likely to have a Material Adverse Effect, and the
Company and the Subsidiaries have conducted their respective  businesses only in
the ordinary course.

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          J. Full Disclosure.  There is no fact known to the Company (other than
general economic or industry  conditions known to the public generally) that has
not been  fully  disclosed  in writing  to Buyer  that (i)  reasonably  could be
expected to have a Material  Adverse Effect or (ii) reasonably could be expected
to  materially  and  adversely  affect the ability of the Company to perform its
obligations pursuant to the Documents.

          K.  Absence of  Litigation.  Except as set forth on  Schedule  III.K.,
there are (i) no suits,  actions or proceedings  pending or, to the knowledge of
the Company, threatened against the Company or any of its Subsidiaries,  (ii) no
complaints,  lawsuits, charges or other proceedings pending or, to the knowledge
of the Company, threatened in any forum by or on behalf of any present or former
employee of the Company or any of its Subsidiaries, any applicant for employment
or classes of the foregoing  alleging breach of any express or implied  contract
of  employment,  any  applicable  law governing  employment  or the  termination
thereof or other discriminatory, wrongful or tortious conduct in connection with
the employment  relationship,  and (iii) no judgments,  decrees,  injunctions or
orders  of any court or other  governmental  entity  or  arbitrator  outstanding
against the Company or any Subsidiary.

          L.  Absence  of Events  of  Default.  Except as set forth in  Schedule
III.L.,  no "Event of Default"  (as defined in any  agreement or  instrument  to
which the Company is a party) and no event which, with notice,  lapse of time or
both, would constitute an Event of Default (as so defined),  has occurred and is
continuing.

          M. Financial Statements;  No Undisclosed Liabilities.  The Company has
delivered to Buyer true and complete  copies of the (i) audited balance sheet of
the Company and the Subsidiaries as at December 31, 1998 and 1997, respectively,
and the related audited  statements of income,  changes in stockholders'  equity
and cash  flows  for the two  fiscal  years  ended  December  31,  1998 and 1997
including  the related notes and schedules  thereto and (ii)  unaudited  balance
sheets of the Company and the Subsidiaries and the statements of income, changes
in  stockholders'  equity  and cash  flows as at the end of and for each  fiscal
quarter ended since  December 31, 1998 including the related notes and schedules
thereto,   all  certified  by  the  chief  financial   officer  of  the  Company
(collectively,  the "Financial Statements"), and all management letters, if any,
from the  Company's  independent  auditors  relating  to the dates  and  periods
covered  by the  Financial  Statements.  Each  of the  Financial  Statements  is
complete and correct in all material  respects,  has been prepared in accordance
with GAAP (subject, in the case of the interim Financial  Statements,  to normal
year end  adjustments  and the absence of  footnotes),  and fairly  presents the
financial  position,  results of operations  and cash flows of the Company as at
the dates and for the  periods  indicated.  For  purposes  hereof,  the  audited
balance sheet of the Company as at December 31, 1998 is hereinafter  referred to
as the "Balance  Sheet" and December 31, 1998 is hereinafter  referred to as the
"Balance  Sheet  Date".  The  Company  has  no   indebtedness,   obligations  or
liabilities of any kind (whether accrued, absolute, contingent or otherwise, and
whether  due or to  become  due),  which was not fully  reflected  in,  reserved
against or  otherwise  described  in the Balance  Sheet or the notes  thereto or
incurred in the ordinary  course of business  consistent with the Company's past
practices since the Balance Sheet Date.

          N.  Compliance  with  Laws;  Permits.  Each  of the  Company  and  its
Subsidiaries  is  in  compliance  with  all  laws,  rules,  regulations,  codes,
ordinances  and  statutes  (collectively,  "Laws")  applicable  to it or to  the
conduct of its business. The Company possesses all material permits,  approvals,
authorizations,   licenses,  certificates  and  consents  from  all  public  and
governmental authorities which are necessary to conduct its business.

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          O. Related Party Transactions.  Except as set forth on Schedule III.O.
hereto,  neither the Company nor any of its officers,  directors or "Affiliates"
(as such term is defined in Rule 12b-2  under the  Exchange  Act) nor any family
member of any  officer,  director or  Affiliate  of the Company has borrowed any
moneys from or has outstanding any indebtedness or other similar  obligations to
the Company or any of the  Subsidiaries.  Except as set forth on Schedule III.O.
hereto, neither the Company nor any of its officers, directors or Affiliates nor
any family member of any officer,  director or Affiliate of the Company (i) owns
any direct or indirect  interest  constituting more than a 1% equity (or similar
profit  participation)  interest  in, or  controls  or is a  director,  officer,
partner,  member or employee of, or consultant or lender to or borrower from, or
has the right to  participate  in the profits of, any person or entity  which is
(x) a competitor,  supplier,  customer,  landlord, tenant, creditor or debtor of
the Company or any Subsidiary, (y) engaged in a business related to the business
of the Company or any  Subsidiary,  or (z) a participant  in any  transaction to
which  the  Company  or any  Subsidiary  is a party  or  (ii) is a party  to any
contract,  agreement,  commitment or other  arrangement  with the Company or any
Subsidiary.

          P.  Insurance.  Each of the  Company  and the  Subsidiaries  maintains
property and casualty, general liability,  workers' compensation,  environmental
hazard,  personal  injury and other similar types of insurance with  financially
sound and  reputable  insurers  that is adequate and  consistent  with  industry
standards and the Company's historical claims experience. None of the Company or
the Subsidiaries has received notice from, and none of them has knowledge of any
threat by, any insurer (that has issued any  insurance  policy to the Company or
any  Subsidiary)  that such insurer  intends to deny  coverage  under or cancel,
discontinue or not renew any insurance policy presently in force.

          Q.   Securities   Law   Matters.   Assuming   the   accuracy   of  the
representations  and  warranties  of Buyer set forth in Article  II hereof,  the
offer  and  sale  by the  Company  of the  Securities  is  exempt  from  (i) the
registration and prospectus delivery  requirements of the Securities Act and the
rules and  regulations  of the Commission  thereunder and (ii) the  registration
and/or  qualification  provisions of all applicable  state  securities and "blue
sky" laws. Other than pursuant to an effective  registration statement under the
Securities Act, the Company has not issued, offered or sold the Preferred Shares
or any shares of Common Stock  (including for this purpose any securities of the
same or a  similar  class  as the  Preferred  Shares  or  Common  Stock,  or any
securities  convertible  into or  exchangeable  or exercisable for the Preferred
Shares or Common Stock or any such other securities)  within the one-year period
next preceding the date hereof,  except as disclosed on Schedule III.Q.  hereto,
and the Company shall not directly or indirectly  take, and shall not permit any
of its  directors,  officers or Affiliates  directly or indirectly to take,  any
action  (including,  without  limitation,  any offering or sale to any person or
entity of the  Preferred  Shares or shares  of  Common  Stock)  which  will make
unavailable the exemption from Securities Act registration  being relied upon by
the  Company  for the offer and sale to Buyer of the  Preferred  Shares  and the
Warrants (and the Conversion Shares, the Dividend Shares and the Warrant Shares)
as  contemplated  by  this  Agreement.   No  form  of  general  solicitation  or
advertising  has been used or  authorized by the Company or any of its officers,
directors or Affiliates  in  connection  with the offer or sale of the Preferred
Shares and the Warrants (and the Conversion  Shares, the Dividend Shares and the
Warrant  Shares) as  contemplated  by this  Agreement or any other  agreement to
which the Company is a party.

          R. Environmental Matters.

          Except as set forth on Schedule III.R. hereto:

               1. The Company, the Subsidiaries and their respective  operations
     are in compliance  with all applicable  Environmental  Laws and all permits

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<PAGE>

     (including terms,  conditions,  and limitations therein) issued pursuant to
     Environmental   Laws  or  otherwise;

               2. Each of the  Company  and the  Subsidiaries  has all  permits,
     licenses, waivers, exceptions, and exemptions required under all applicable
     Environmental  Laws  necessary  to  operate  its  business;

               3. None of the Company or the  Subsidiaries is the subject of any
     outstanding  written order of or agreement with any governmental  authority
     or person  respecting  (i)  Environmental  Laws or permits,  (ii)  Remedial
     Action or (iii) any Release or threatened Release of Hazardous Materials;

               4. None of the  Company  or the  Subsidiaries  has  received  any
     written  communication  alleging  that  it  may  be  in  violation  of  any
     Environmental Law or any permit issued pursuant to any  Environmental  Law,
     or may have any  liability  under  any  Environmental  Law;

               5. None of the  Company or the  Subsidiaries  has any  liability,
     contingent  or  otherwise,  in  connection  with any  presence,  treatment,
     storage, disposal or Release of any Hazardous Materials whether on property
     owned or  operated by the  Company or any  Subsidiary or property of third-
     parties,  and none of the Company or the Subsidiaries  has transported,  or
     arranged for  transportation  of, any Hazardous  Materials for treatment or
     disposal on any property;

               6. There are no  investigations of the business,  operations,  or
     currently or previously  owned,  operated or leased property of the Company
     or any Subsidiary  pending or threatened which could lead to the imposition
     of any case or liability pursuant to any Environmental Law;

               7.  There  is not  located  at any of  the  properties  owned  or
     operated  by the  Company or any  Subsidiary  any (A)  underground  storage
     tanks,  (B)  asbestos-containing   material  or  (C)  equipment  containing
     polychlorinated  biphenyls;

               8. Each of the Company and the Subsidiaries has provided to Buyer
     all  environmentally  related  assessments,   audits,   studies,   reports,
     analyses,  and  results of  investigations  that have been  performed  with
     respect to the currently or previously owned, leased or operated properties
     or activities of the Company and such Subsidiaries;

               9.  There  are  no  liens   arising  under  or  pursuant  to  any
     Environmental  Law on any real property owned,  operated,  or leased by the
     Company or any Subsidiary,  and no action of any governmental authority has
     been  taken or, to the  knowledge  of the  Company,  is in process of being
     taken which could subject any of such properties to such liens, and none of
     the Company or the  Subsidiaries  has been or is expected to be required to
     place any notice or  restriction  relating  to the  presence  of  Hazardous
     Material at any real property owned,  operated, or leased by it in any deed
     to such property;

               10.  Neither  the  Company  nor  any  of the  Subsidiaries  owns,
     operates, or leases any hazardous waste generation,  treatment, storage, or
     disposal facility,  as such terms are used pursuant to the RCRA and related
     or analogous  state,  local, or foreign law. None of the properties  owned,
     operated,  or  leased  by  the  Company,  any of  the  Subsidiaries  or any
     predecessor  thereof  are now,  or were in the past,  used in any part as a
     dump,  landfill,  or disposal  site,  and neither the  Company,  any of the
     Subsidiaries nor any predecessor of any of them has filled any wetlands;

                                      -8-
<PAGE>

               11. The purchase that is the subject of this  Agreement  will not
     require any  governmental  approvals under  Environmental  Laws,  including
     those  that are  triggered  by sales or  transfers  of  businesses  or real
     property,  including,  as examples and without  limitation,  the New Jersey
     Industrial  Site  Recovery  Act,  N.J.  Stat.  13:1K-7  et  seq.,  and  the
     Connecticut Transfer of Establishments Act, Conn. Gen. Stat. ss. 22a-134 et
     seq.;

               12. There is no currently existing  requirement or requirement to
     be imposed in the future by any Environmental  Law or Environmental  Permit
     which could  result in the  incurrence  of a cost that could be  reasonably
     expected to have a Material Adverse Effect; and

               13.  Each  of  the  Company  and  each  of the  Subsidiaries  has
     disclosed  to Buyer all other acts or  conditions  that could result in any
     costs or liabilities under Environmental Laws.

          For purposes of this Section III.R.:

          "Environmental  Law"  means  any  foreign,  federal,  state  or  local
statute,  regulation,  ordinance, or common law as now or hereafter in effect in
any way relating to the  protection  of human  health,  safety or welfare or the
environment  including,  without  limitation,  the  Comprehensive  Environmental
Response, Compensation and Liability Act, the Hazardous Materials Transportation
Act, the Resource  Conservation and Recovery Act ("RCRA"),  the Clean Water Act,
the Clean Air Act, the Toxic  Substances  Control Act, the Federal  Insecticide,
Fungicide,  and Rodenticide Act and the Occupational  Safety and Health Act, and
the regulations promulgated pursuant to any of them;

          "Hazardous Material" means any substance that is listed, classified or
regulated pursuant to any Environmental Law, including petroleum,  gasoline, and
any other petroleum  product,  by-product,  fraction or derivative,  asbestos or
asbestos-containing   material,   lead-containing  paint,  water,  or  plumbing,
polychlorinated biphenyls, radioactive materials and radon;

          "Release" means any placement,  release, spill, filtration,  emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, migration,
or leaching to, through,  or under the indoor or outdoor  environment,  or into,
through, under, or out of any property; and

          "Remedial Action" means any action to (x) clean up, remove, remediate,
treat or in any other way address any Hazardous Material; (y) prevent or contain
the Release of any Hazardous Material; or (z) perform studies and investigations
or  post-remedial  monitoring and care in relation to (x) or (y) above.

          S. Labor Matters.  Neither the Company nor any of the  Subsidiaries is
party to any labor or collective bargaining agreement, and there are no labor or
collective  bargaining  agreements which pertain to any employees of the Company
or any Subsidiary.  No employees of the Company or any of the  Subsidiaries  are
represented  by any labor  organization  and none of such  employees  has made a
pending demand for recognition,  and there are no representation  proceedings or
petitions  seeking a  representation  proceeding  presently  pending  or, to the
Company's knowledge,  threatened to be brought or filed, with the National Labor
Relations  Board or  other  labor  relations  tribunal.  There is no  organizing
activity  involving  the Company or any  Subsidiary  pending or to the Company's
knowledge,  threatened  by any labor  organization  or group of employees of the
Company or any of the  Subsidiaries.  There are no (i) strikes,  work stoppages,
slowdowns,  lockouts or arbitrations or (ii) material  grievances or other labor
disputes  pending or, to the  knowledge  of the Company,  threatened  against or
involving  the  Company or any of the  Subsidiaries.  There are no unfair  labor
practice charges,  grievances or complaints  pending or, to the knowledge of the
Company, threatened by or on behalf of any employee or group of employees of the
Company or any of the Subsidiaries.

                                      -9-
<PAGE>

          T. ERISA  Matters.  All Plans  maintained by the Company or any of its
Subsidiaries  and ERISA  Affiliates are listed in Schedule III.T.  and copies of
all documentation relating to such Plans (including,  but not limited to, copies
of written Plans, written descriptions of oral Plans, summary plan descriptions,
trust agreements,  the three most recent annual returns, employee communications
and IRS  determination  letters)  have been  delivered to or made  available for
review by the Buyer. Each Plan has at all times been maintained and administered
in all material  respects in accordance  with its terms and the  requirements of
applicable law,  including ERISA and the Code, and each Plan intended to qualify
under  section  401(a) of the Code has at all times since its  adoption  been so
qualified,  and each trust  which forms a part of any such plan has at all times
since its adoption been tax-exempt under section 501(a) of the Code. The Company
and each of its  Subsidiaries  and ERISA  Affiliates  are in  compliance  in all
material  respects with all provisions of ERISA  applicable to it. No Reportable
Event has occurred,  been waived or exists as to which the Company or any of its
Subsidiaries  and ERISA  Affiliates was required to file a report with the PBGC,
and the present value of all liabilities under each Pension Plan (based on those
assumptions  used to fund such Plans) listed in Schedule  III.T.  did not, as of
the most recent annual  valuation date applicable  thereto,  exceed the value of
the assets of such Pension Plan. None of the Company, its Subsidiaries and ERISA
Affiliates  has  incurred,  or  reasonably  expects  to  incur,  any  Withdrawal
Liability  with  respect  to any  Multi-employer  Plan  that  could  result in a
Material  Adverse  Effect.  None of the  Company,  its  Subsidiaries  and  ERISA
Affiliates  has received any  notification  that any  Multi-employer  Plan is in
reorganization  or has been terminated  within the meaning of Title IV of ERISA,
and no  Multi-employer  Plan is reasonably  expected to be in  reorganization or
termination  where such  reorganization  or  termination  has  resulted or could
reasonably be expected to result in increases to the  contributions  required to
be made to such Plan or otherwise. No direct,  contingent or secondary liability
has been  incurred  or is  expected  to be incurred by the Company or any of its
Subsidiaries  under Title IV of ERISA to any party with respect to any Plan,  or
with respect to any other Plan presently or heretofore maintained or contributed
to by any ERISA  Affiliate.  Neither the Company nor any of its Subsidiaries and
ERISA  Affiliates  has incurred any liability for any tax imposed under sections
4971 through 4980B of the Code or civil liability under section 502(i) or (l) of
ERISA.  No suit,  action or other  litigation  or any other  claim  which  could
reasonably  be  expected  to result in a  material  liability  or expense to the
Company or any of its  Subsidiaries or ERISA  Affiliates  (excluding  claims for
benefits  incurred in the ordinary  course of plan  activities) has been brought
or, to the knowledge of the Company,  threatened  against or with respect to any
Plan and there are no facts or circumstances  known to the Company or any of its
Subsidiaries or ERISA  Affiliates that could reasonably be expected to give rise
to any such suit,  action or other  litigation.  All contributions to Plans that
were  required  to be made under such  Plans  have been made,  and all  benefits
accrued under any unfunded Plan have been paid, accrued or otherwise  adequately
reserved in accordance with GAAP, all of which accruals under unfunded Plans are
as disclosed in Schedule  III.T.,  and the Company,  its  Subsidiaries and ERISA
Affiliates have each performed all material obligations required to be performed
under all Plans.  The execution,  delivery and performance of this Agreement and
the other Documents and the consummation of the transactions contemplated hereby
and thereby  (including,  without  limitation,  the offer, issue and sale by the
Company,  and the purchase by the Buyer, of the Preferred Shares, the Conversion
Shares,  the Warrants,  the Warrant Shares and Dividend Shares) will not involve
any  "prohibited  transaction"  within  the  meaning  of ERISA or the Code  with
respect to any Plan.

          As used in this Agreement:

          "Code" means the Internal Revenue Code of 1986, as amended.

                                      -10-
<PAGE>

          "ERISA" means the Employee  Retirement Income Security Act of 1974, or
any successor statute, together with the regulations thereunder, as the same may
be amended from time to time.

          "ERISA  Affiliate"  means  any  trade  or  business  (whether  or  not
incorporated) that was, is or hereafter may become, a member of a group of which
the Company is a member and which is treated as a single  employer under section
414 of the Code.

          "Multi-employer  Plan"  means  a  multi-employer  plan as  defined  in
section  4001(a)(3) of ERISA to which the Company or any ERISA Affiliate  (other
than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
section  414  of  the  Code)  is  making  or  accruing  an  obligation  to  make
contributions, or has within any of the preceding six plan years made or accrued
an obligation to make contributions.

          "PBGC" means the Pension Benefit Guaranty  Corporation referred to and
defined in ERISA or any successor thereto.

          "Pension  Plan"  means any pension  plan (other than a  Multi-employer
Plan)  subject to the  provision of Title IV of ERISA or section 412 of the Code
that is maintained for employees of the Company or any of its  Subsidiaries,  or
any ERISA Affiliate.

          "Plan" means any bonus, incentive compensation, deferred compensation,
pension,  profit  sharing,  retirement,  stock  purchase,  stock  option,  stock
ownership,  stock appreciation rights, phantom stock, leave of absence,  layoff,
vacation,  day or dependent  care,  legal  services,  cafeteria,  life,  health,
accident,  disability,  workmen's  compensation or other  insurance,  severance,
separation or other employee  benefit plan,  practice,  policy or arrangement of
any kind,  whether  written  or oral,  or  whether  for the  benefit of a single
individual  or more than one  individual  including,  but not  limited  to,  any
"employee  benefit plan" within the meaning of section 3(3) of ERISA,  including
any Pension Plan.

          "Reportable  Event" means any  reportable  event as defined in section
4043(b) of ERISA or the regulations issued thereunder with respect to a Plan.

          "Withdrawal  Liability" means liability to a Multi-employer  Plan as a
result of a complete or partial  withdrawal  from such  Multi-employer  Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.

          U. Tax Matters.

               1. The Company  has filed all  material  Tax Returns  which it is
     required to file under  applicable  Laws; all such Tax Returns are true and
     accurate in all material respects and have been prepared in compliance with
     all  applicable  Laws;  the  Company has paid all Taxes due and owing by it
     (whether  or not such Taxes are  required  to be shown on a Tax Return) and
     has withheld and paid over to the appropriate  taxing authorities all Taxes
     which  it is  required  to  withhold  from  amounts  paid or  owing  to any
     employee,  stockholder,  creditor  or other  third  parties;  and since the
     Balance  Sheet Date,  the  charges,  accruals  and  reserves for Taxes with
     respect to the Company (including any provisions for deferred income taxes)
     reflected  on the  books of the  Company  are  adequate  to  cover  any Tax
     liabilities  of the Company if its current tax year were  treated as ending
     on the date  hereof.

                                      -11-
<PAGE>

               2. No claim has been made by a taxing authority in a jurisdiction
     where the Company  does not file tax returns  that the Company is or may be
     subject to taxation by such  jurisdiction.  There are no foreign,  federal,
     state or local tax audits or administrative or judicial proceedings pending
     or being conducted with respect to the Company;  no information  related to
     Tax matters has been  requested  by any  foreign,  federal,  state or local
     taxing  authority;  and,  except as  disclosed  above,  no  written  notice
     indicating  an intent to open an audit or other review has been received by
     the Company from any  foreign,  federal,  state or local taxing  authority.
     There  are no  material  unresolved  questions  or  claims  concerning  the
     Company's Tax liability. The Company (A) has not executed or entered into a
     closing  agreement  pursuant to section 7121 of the Code or any predecessor
     provision thereof or any similar provision of state,  local or foreign law;
     or (B) has not agreed to or is required to make any adjustments pursuant to
     section  481(a) of the Code or any  similar  provision  of state,  local or
     foreign law by reason of a change in  accounting  method  initiated  by the
     Company or any of its  subsidiaries  or has any knowledge  that the IRS has
     proposed any such  adjustment  or change in accounting  method,  or has any
     application pending with any taxing authority requesting permission for any
     changes in accounting  methods that relate to the business or operations of
     the Company. The Company has not been a United States real property holding
     corporation  within the meaning of section 897(c)(2) of the Code during the
     applicable period specified in section 897(c)(1)(A)(ii) of the Code.

               3. The Company has not made an election  under section  341(f) of
     the Code. The Company is not liable for the Taxes of another person that is
     not a subsidiary of the Company under (A) Treas.  Reg. Section 1.1502-6 (or
     comparable  provisions of state, local or foreign law), (B) as a transferee
     or successor, (C) by contract or indemnity or (D) otherwise. The Company is
     not a party to any tax  sharing  agreement.  The  Company  has not made any
     payments,  is not  obligated  to make  payments  and is not a  party  to an
     agreement  that could  obligate it to make any  payments  that would not be
     deductible  under  section  280G of the Code  except  pursuant to the Chief
     Executive  Officer  Change in  Control  Agreement  dated  October  1, 1998,
     between the Company and Dr. Arol I. Buntzman.

          As used in this Agreement:

          "IRS" means the United States Internal Revenue Service.

          "Tax" or "Taxes" means federal,  state,  county,  local,  foreign,  or
other income,  gross receipts,  ad valorem,  franchise,  profits,  sales or use,
transfer, registration, excise, utility, environmental,  communications, real or
personal property,  capital stock, license,  payroll, wage or other withholding,
employment, social security, severance, stamp, occupation, alternative or add-on
minimum,  estimated and other taxes of any kind whatsoever  (including,  without
limitation, deficiencies, penalties, additions to tax, and interest attributable
thereto) whether disputed or not.

          "Tax  Return"  means any  return,  information  report or filing  with
respect to Taxes,  including  any schedules  attached  thereto and including any
amendment thereof.

          V.  Property.  Except as set  forth on  Schedule  III.V.,  each of the
Company and the  Subsidiaries has good and marketable title to all of its assets
and  properties  material to the conduct of its business,  free and clear of any
liens, pledges, security interests,  claims,  encumbrances or other restrictions
of any kind (collectively, "Liens"). With respect to any assets or properties it
leases,  each of the Company and its  Subsidiaries  holds a valid and subsisting
leasehold  interest therein,  free and clear of any Liens, is in compliance,  in
all  material  respects,  with the terms of the  applicable  lease,  and  enjoys

                                      -12-
<PAGE>

peaceful  and  undisturbed  possession  under such lease.  All of the assets and
properties of the Company and its Subsidiaries  that are material to the conduct
of business as  presently  conducted or as proposed to be conducted by it are in
good  operating  condition and repair.  The inventory of each of the Company and
its  Subsidiaries  is in good and  marketable  condition,  does not  include any
material  quantity of items which are obsolete,  damaged or slow moving,  and is
salable  (or may be  leased)  in the  normal  course of  business  as  currently
conducted by it.

          W. Intellectual  Property.  The Company owns or possesses adequate and
enforceable  rights  to  use  all  patents,  patent  applications,   trademarks,
trademark  applications,  trade  names,  service  marks,  copyrights,  copyright
applications,  licenses,  know-how (including trade secrets and other unpatented
and/or  unpatentable  proprietary  or  confidential   information,   systems  or
procedures)  and other similar rights and proprietary  knowledge  (collectively,
"Intangibles")  necessary for the conduct of its business as now being conducted
including, but not limited to, those described on Schedule III.W. hereto. Except
as set forth on Schedule III.W, the Company has all right, title and interest in
all of the Intangibles,  free and clear of any and all Liens. The Company is not
infringing  upon or in conflict  with any right of any other person with respect
to any Intangibles. Except as disclosed on Schedule III.W. hereto, (i) no claims
have been asserted by any individual, partnership,  corporation,  unincorporated
organization or association,  limited liability  company,  trust or other entity
(collectively,  a "Person")  contesting  the  validity,  enforceability,  use or
ownership of any Intangibles,  and the Company has no knowledge of any basis for
such claim,  and (ii) neither the Company nor the Subsidiaries has any knowledge
of  infringement or  misappropriation  of the Intangibles by any third party.

          X.  Contracts.   All  contracts,   Agreements,   notes,   instruments,
franchises,  leases,  licenses,  commitments,  arrangements  or  understandings,
written or oral  (collectively,  "Contracts") which are material to the business
and operations of the Company and the  Subsidiaries are in full force and effect
and  constitute  legal,  valid and  binding  obligations  of the Company and the
Subsidiaries  and,  to the best  knowledge  of the  Company,  the other  parties
thereto;  the Company and the  Subsidiaries  and, to the best  knowledge  of the
Company,  each other party thereto,  have performed in all material respects all
obligations  required  to be  performed  by them  under  the  Contracts,  and no
material violation or default exists in respect thereof, nor any event that with
notice or lapse of time, or both,  would  constitute a default  thereof,  on the
part of the  Company  and the  Subsidiaries  or,  to the best  knowledge  of the
Company,  any other party  thereto;  none of the  Contracts is  currently  being
renegotiated; and the validity,  effectiveness and continuation of all Contracts
will not be materially  adversely  affected by the transactions  contemplated by
this Agreement.

          Y.  Registration  Rights.  Except as set forth on Schedule III.Y.,  no
Person has, and as of the Closing (as defined in Article  VII),  no Person shall
have, any demand,  "piggy-back" or other rights to cause the Company to file any
registration  statement  under  the  Securities  Act,  relating  to  any  of its
securities or to participate in any such registration  statement.

          Z. Dividends.  The timely payment of dividends on the Preferred Shares
as  specified  in  the  Certificate  of  Designation  is not  prohibited  by the
Certificate  of  Incorporation  or  By-Laws  of the  Company  or any  Agreement,
Contract,  document  or other  undertaking  to which the  Company  or any of the
Subsidiaries is a party.

          AA.  Investment  Company  Act.  Neither  the  Company  nor  any of the
Subsidiaries  is an  "investment  company"  within the meaning of the Investment
Company Act of 1940,  as amended  (the  "Investment  Company  Act"),  nor is the
Company nor any of the  Subsidiaries  directly or  indirectly  controlled  by or
acting on behalf of any  Person  which is an  "investment  company"  within  the
meaning  of  the  Investment  Company  Act.

                                      -13-
<PAGE>

          BB. Business Plan. Any business  information of the Company previously
submitted to Buyer in any form, including the projections contained therein, was
prepared by the senior  management  of the Company in good faith and is based on
assumptions that the Company  believes are reasonable.  The Company is not aware
of any fact or  condition  that could  reasonably  be  expected to result in the
Company not achieving the results described in such business plan.

          CC.  Year 2000  Compliance.  The Company has  reviewed  its  products,
business  and  operations  that  could be  adversely  affected  by the risk that
computer  applications used by the Company and the Subsidiaries may be unable to
recognize, and properly perform date-sensitive functions involving,  dates prior
to and after December 31, 1999 (the "Year 2000 Problem").  The Company  believes
its internal  information and business  systems will be able to perform properly
date-sensitive  functions  for all dates  before and after  January 1, 2000.  In
addition,  the Company has surveyed  those  vendors,  suppliers  and other third
parties  (collectively,  the "Outside Parties") with which the Company or any of
the  Subsidiaries  do business and whose failure to adequately  address the Year
2000 Problem could  reasonably be expected to adversely  affect the business and
operations  of  the  Company  or  any  of  the  Subsidiaries.   Based  upon  the
aforementioned internal review and surveys of the Outside Parties as of the date
of this  Agreement,  the Year  2000  Problem  has not  resulted  in,  and is not
reasonably expected to have, a Material Adverse Effect.

          DD. Internal Controls and Procedures.  The Company maintains  accurate
books and records and  internal  accounting  controls  that  provide  reasonable
assurance  that  (i)  all  transactions  to  which  the  Company  or each of the
Subsidiaries  is a party or by which its  properties are bound are executed with
management's  authorization;  (ii) the reported  accountability of the Company's
and the  Subsidiaries'  assets is  compared  with  existing  assets  at  regular
intervals;  (iii)  access  to the  Company's  and the  Subsidiaries'  assets  is
permitted  only in  accordance  with  management's  authorization;  and (iv) all
transactions  to which any of the Company and the  Subsidiaries is a party or by
which its properties  are bound are recorded as necessary to permit  preparation
of the financial statements of the Company in accordance with GAAP.

          EE.  Payments  and  Contributions.  Neither the Company nor any of its
Subsidiaries  nor any of  their  respective  directors,  officers  or,  to their
respective  knowledge,  other  employees  has (i) used any Company funds for any
unlawful  contribution,  endorsement,  gift,  entertainment  or  other  unlawful
expense  relating  to  political  activity;  (ii) made any  direct  or  indirect
unlawful payment of Company funds to any foreign or domestic government official
or employee,  (iii)  violated or is in violation of any provision of the Foreign
Corrupt  Practices  Act of 1977,  as  amended;  or (iv) made any bribe,  rebate,
payoff, influence payment,  kickback or other similar payment to any person with
respect to Company matters.

          FF. No Misrepresentation. No representation or warranty of the Company
contained in this Agreement or any of the other Documents,  any schedule,  annex
or  exhibit  hereto or  thereto  or any  agreement,  instrument  or  certificate
furnished by the Company to Buyer pursuant to this Agreement contains any untrue
statement of a material  fact or omits to state a material  fact  required to be
stated therein or necessary to make the statements  therein not misleading.

          GG.  Finder's Fee. There is no finder's fee,  brokerage  commission or
like payment in connection with the transactions  contemplated by this Agreement
for  which  Buyer  is  liable  or   responsible.

                    IV. CERTAIN COVENANTS AND ACKNOWLEDGMENTS

          A.  Restrictive  Legend.  Buyer  acknowledges  and agrees  that,  upon
issuance  pursuant to this  Agreement,  the Securities  (including any Dividends

                                      -14-
<PAGE>

Shares,  Conversion  Shares or the Warrant Shares) shall have endorsed thereon a
legend in  substantially  the following form (and a  stop-transfer  order may be
placed  against  transfer of the Preferred  Shares,  the Warrant  Shares and the
Conversion Shares until such legend has been removed):

          "THESE   SECURITIES  HAVE  NOT  BEEN  REGISTERED  UNDER  THE
          SECURITIES ACT OF 1933, AS AMENDED (THE  "SECURITIES  ACT"),
          OR THE SECURITIES  LAWS OF ANY STATE,  AND ARE BEING OFFERED
          AND SOLD  PURSUANT  TO AN  EXEMPTION  FROM THE  REGISTRATION
          REQUIREMENTS  OF THE  SECURITIES  ACT AND SUCH  LAWS.  THESE
          SECURITIES MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO
          AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
          OR PURSUANT TO AN AVAILABLE  EXEMPTION FROM THE REGISTRATION
          REQUIREMENTS OF THE SECURITIES ACT OR SUCH OTHER LAWS."

          B. Filings.  The Company shall make all necessary  Commission  Filings
and "blue sky" filings required to be made by the Company in connection with the
sale of the  Securities to Buyer as required by all  applicable  Laws, and shall
provide a copy thereof to Buyer promptly after such filing.

          C. Reporting  Status.  So long as Buyer  beneficially  owns any of the
Securities, the Company shall timely file all reports required to be filed by it
with the Commission  pursuant to Section 13 or 15(d) of the Exchange Act.

          D. Use of Proceeds.  The Company  shall use the proceeds from the sale
of the Securities (net of amounts paid by the Company for Buyer's  out-of-pocket
costs and expenses,  whether or not accounted for or incurred in connection with
the  transactions  contemplated  by  this  Agreement  (including  the  fees  and
disbursements  of Buyer's legal  counsel),  and finder's fees in connection with
such sale) solely for general corporate and working capital purposes.

          E. Listing. Except to the extent the Company lists its Common Stock on
The New York Stock Exchange or The Nasdaq National Market, the Company shall use
its best efforts to maintain  its listing of the Common Stock on Nasdaq.  If the
Common Stock is delisted  from Nasdaq,  the Company will use its best efforts to
list the  Common  Stock on the  most  liquid  national  securities  exchange  or
quotation system that the Common Stock is qualified to be listed on.

          F. Reserved Conversion Shares. The Company at all times from and after
the date  hereof  shall  have such  number of  shares of Common  Stock  duly and
validly  authorized  and reserved for  issuance as shall be  sufficient  for the
conversion in full of, and the payment of dividends on, the Preferred Shares and
the exercise in full of the Warrants.

          G. Right of First  Refusal.  If,  during the period  commencing on the
date hereof and ending  three years after the Closing  Date (the "Right of First
Refusal  Period"),  the Company should propose (the  "Proposal") to issue Common
Stock  (other than the  issuance  of Common  Stock in  connection  with a merger
transaction or an acquisition  transaction,  in each case, where at least 50% of
the consideration to be paid consists of Common Stock and the transaction is not
with an Affiliate of the Company) or securities convertible into Common Stock at
a price less than the Current  Market  Price (as defined in the  Certificate  of
Designation),  or debt at less  than par value or  having  an  effective  annual
interest  rate in excess of 9.9% (each a "Right of First  Refusal  Security" and
collectively, the "Right of First Refusal Securities"), in each case on the date
of issuance the Company  shall be obligated to offer such Right of First Refusal
Securities  to Buyer on the terms set forth in the  Proposal  (the  "Offer") and
Buyer shall have the right, but not the obligation, to accept such Offer on such
terms.  The  Company  shall  provide  written  notice to Buyer of any  Proposal,
setting  forth in full the terms and  conditions  thereof,  and Buyer shall then
have 10 business  days to accept or reject the Offer in writing.  If the Company

                                      -15-
<PAGE>

issues any Right of First Refusal  Securities  during the Right of First Refusal
Period but fails to:  (i) notify  Buyer of the  Proposal,  (ii) offer  Buyer the
opportunity to complete the  transaction as set forth in the Proposal,  or (iii)
enter into and  consummate  an  agreement  to issue such Right of First  Refusal
Securities to Buyer on the terms and conditions set forth in the Proposal, after
Buyer has accepted the Offer, then the Company shall pay to Buyer, as liquidated
damages,  an amount  equal to 5% of the amount paid to the Company for the Right
of First Refusal  Securities.  The foregoing Right of First Refusal is and shall
be senior in right to any other right of first refusal  issued by the Company to
any other Person.

          H.  Information.  Each of the parties hereto  acknowledges  and agrees
that Buyer  shall not be provided  with,  nor be given  access to, any  material
non-public  information  relating to the Company or any of the Subsidiaries.

          I.  Exemption from  Investment  Company Act. The Company shall conduct
its business,  and shall cause the Subsidiaries to conduct their businesses,  in
such a manner  that  neither  the Company  nor any  Subsidiary  shall  become an
"investment  company"  within the  meaning of the  Investment  Company  Act.

          J. Accounting and Reserves.  The Company shall maintain a standard and
uniform  system of  accounting  and shall  keep  proper  books and  records  and
accounts  in  which  full,  true  and  correct  entries  shall  be  made  of its
transactions,  all in accordance with GAAP applied on a consistent basis through
all  periods,  and shall set aside on such books for each  fiscal  year all such
reserves  for  depreciation,  obsolescence,  amortization,  bad  debts and other
purposes in connection with its operations as are required by such principles so
applied.

          K.  Transactions  with Affiliates.  Neither the Company nor any of its
Subsidiaries  shall,  directly  or  indirectly,  enter into any  transaction  or
Agreement with any stockholder, officer, director or Affiliate of the Company or
family member of any officer,  director or Affiliate of the Company,  unless the
transaction  or  Agreement  is  (i)  reviewed  and  approved  by a  majority  of
Disinterested  Directors (as defined  below) and (ii) on terms no less favorable
to the  Company  or the  applicable  Subsidiary  than  those  obtainable  from a
non-affiliated  person or, with respect to employment  arrangements  and benefit
programs,   are  on  reasonable  terms  as  determined  by  a  majority  of  the
Disinterested Directors. A "Disinterested Director" shall mean a director of the
Company  who is not and has not been an officer or  employee  of the Company and
who is not a member of the  family of,  controlled  by or under  common  control
with, any such officer or employee.

          L. Issuances of Additional Convertible Preferred Shares or Convertible
Debentures.  So long as Buyer beneficially owns any of the Preferred Shares, the
Company  shall  not  issue  any  additional   convertible   preferred  stock  or
convertible  debt securities,  in each case,  convertible into Common Stock at a
floating conversion price, without the prior written consent of Buyer.

          M.  Certain  Restrictions.   So  long  as  any  Preferred  Shares  are
outstanding, no dividends shall be declared or paid or set apart for payment nor
shall any other  distribution  be declared or made upon  Junior  Securities  (as
defined in the Certificate of Designation),  nor shall any Junior  Securities be
redeemed, purchased or otherwise acquired (other than a redemption,  purchase or
other  acquisition  of shares of Common  Stock made for  purposes of an employee
incentive or benefit plan  (including a stock option plan) of the Company or any
Subsidiary,  for any consideration by the Company,  directly or indirectly,  nor
shall  any  moneys  be paid to or made  available  for a  sinking  fund  for the
redemption of any shares of any such stock.

                                      -16-
<PAGE>

          N. Transfer  Agent.  If requested by Buyer,  the Company shall replace
the then Transfer Agent for the Common Stock with a Transfer Agent designated by
Buyer.

          O. Certain  Restrictions.  Neither  Buyer nor its  affiliates  nor any
person  acting on its or their behalf shall enter into,  prior to the Closing or
at any other time while any of the Preferred Shares remain outstanding,  any put
option,  short position or other similar  instrument or position with respect to
the Common  Stock and  neither  Buyer nor any of its  affiliates  nor any person
acting  on its or their  behalf  will use at any time  shares  of  Common  Stock
acquired pursuant to this Agreement to settle any put option,  short position or
other  similar  instrument  or position that may have been entered into prior to
the execution of this Agreement; provided, however, that nothing in this Section
IV.O.  shall  operate  to forbid  Buyer or any of its  affiliates  or any person
acting  on its or  their  behalf  from  selling,  or  entering  into  any  other
transaction  with  respect  to,  the  Common  Stock  contemporaneously  with  or
following such date and time as the person or persons in whose name or names the
Common Stock  delivered at  conversion of Preferred  Shares,  as provided in the
Certificate of Designation, shall be issuable shall be deemed to have become the
holder or holders of record of the Common  Shares  represented  thereby  and all
voting and other rights associated with the beneficial  ownership of such Common
Shares shall have vested with such person or persons.

                         V. TRANSFER AGENT INSTRUCTIONS

          A. The Company  undertakes and agrees that no  instruction  other than
the  instructions  referred to in this  Article V and  customary  stop  transfer
instructions  prior to the registration and sale of the Common Stock pursuant to
an  effective  Securities  Act  registration  statement  shall  be  given to its
transfer agent for the Common Stock and that the Conversion Shares, the Dividend
Shares and the Warrant  Shares  shall  otherwise be freely  transferable  on the
books  and  records  of  the  Company  as and to the  extent  provided  in  this
Agreement,  the  Registration  Rights  Agreement  and  applicable  law.  Nothing
contained in this Section V.A. shall affect in any way Buyer's  obligations  and
agreement  to comply  with all  applicable  securities  laws upon resale of such
Common  Stock.  If, at any time,  Buyer  provides the Company with an opinion of
counsel  reasonably  satisfactory to the Company that registration of the resale
by Buyer of such Common Stock is not required  under the Securities Act and that
the removal of  restrictive  legends is  permitted  under  applicable  law,  the
Company shall permit the transfer of such Common Stock and promptly instruct the
Company's  transfer  agent to issue one or more  certificates  for Common  Stock
without any restrictive legends endorsed thereon.

          B.  Buyer  shall  have the right to convert  the  Preferred  Shares by
telecopying  an executed and completed  Notice of Conversion  (as defined in the
Certificate  of  Designation  and  subject to the  conditions  specified  in the
Certificate  of  Designation)  to the  Company.  Each  date on which a Notice of
Conversion is  telecopied to and received by the Company in accordance  with the
provisions  hereof  shall  be  deemed  a  Conversion  Date  (as  defined  in the
Certificate  of  Designation).  The  Company  shall  transmit  the  certificates
evidencing the shares of Common Stock issuable upon  conversion of any Preferred
Shares (together with certificates  evidencing any Preferred Shares not being so
converted) to Buyer by overnight  express  courier within ten (10) business days
after  receipt by the Company of the Notice of  Conversion  and  delivery to the
Company of a certificate or certificates  evidencing the Preferred  Shares being
converted (the "Delivery Date").

          C.  Buyer  shall  have the right to  purchase  shares of Common  Stock
pursuant to exercise of the Warrants in accordance with its applicable  terms of
the Warrants.  The last date that the Company may deliver shares of Common Stock
issuable  upon any  exercise of  Warrants is referred to herein as the  "Warrant

                                      -17-
<PAGE>

Delivery Date."

      D. The Company  understands  that a delay in the issuance of the shares of
Common Stock issuable in lieu of cash dividends on the Preferred  Shares or upon
the  conversion of the Preferred  Shares or exercise of the Warrants  beyond the
applicable  Dividend  Payment  Due  Date  (as  defined  in  the  Certificate  of
Designation),  Delivery  Date or Warrant  Delivery Date could result in economic
loss to Buyer.  As  compensation  to Buyer for such loss (and not as a penalty),
the Company agrees to pay to Buyer for late issuance of Common Stock issuable in
lieu of cash  dividends  on the  Preferred  Shares  or  upon  conversion  of the
Preferred  Shares or exercise of the Warrants in  accordance  with the following
schedule  (where "No.  Business  Days" is defined as the number of business days
after the five business  days  immediately  following  the Dividend  Payment Due
Date, the Delivery Date or the Warrant Delivery Date, as applicable):

                               Compensation For Each 10 Shares
                              of Preferred Shares Not Converted
                               Timely or 500 Shares of Common
                                Stock Issuable In Payment of
                                Dividends or Upon Exercise of
     No. Business Days           Warrants Not Issued Timely
     -----------------        ---------------------------------

           1                               $   25
           2                                   50
           3                                   75
           4                                  100
           5                                  125
           6                                  150
           7                                  175
           8                                  200
           9                                  225
           10                                 250
      more than 10           $250 + $100 for each Business Day
                             Late beyond 10 days

The Company shall pay to Buyer the compensation  described above by the transfer
of immediately  available funds upon Buyer's demand.  Nothing herein shall limit
Buyer's  right to pursue actual  damages for the Company's  failure to issue and
deliver  Common Stock to Buyer.  In addition to any other  remedies which may be
available  to Buyer,  in the event the  Company  fails for any reason to deliver
such  shares of Common  Stock  within  five  business  days  after the  relevant
Dividend  Payment  Due  Date,   Delivery  Date  or  Warrant  Delivery  Date,  as
applicable, Buyer shall be entitled to rescind the relevant Notice of Conversion
or exercise of  Warrants  by  delivering  a notice to such effect to the Company
whereupon  the Company  and Buyer  shall each be  restored  to their  respective
original positions immediately prior to delivery of such Notice of Conversion on
delivery.

                           VI. DELIVERY INSTRUCTIONS

          The  Securities  shall be delivered by the Company to the Escrow Agent
pursuant to Section  I.B.  hereof on a  "delivery-against-payment  basis" at the
Closing.

                               VII. CLOSING DATE

          The date and time (the "Closing Date") of the issuance and sale of the
Preferred  Shares and the Warrants (the  "Closing")  shall be the date hereof or
such other date as shall be mutually  agreed upon in writing.  The  issuance and
sale of the  Securities  shall occur on the  Closing  Date at the offices of the
Escrow Agent.  Notwithstanding  anything to the contrary  contained herein,  the

                                      -18-
<PAGE>

Escrow  Agent shall not be  authorized  to release to the  Company the  Purchase
Price or to Buyer the  certificate(s)  (I/N/O  Buyer or I/N/O  Buyer's  nominee)
evidencing  the  Securities  being  purchased by Buyer unless the conditions set
forth in Sections VIII.C. and IX.H. hereof have been satisfied.

                 VIII. CONDITIONS TO THE COMPANY'S OBLIGATIONS

          Buyer understands that the Company's obligation to sell the Securities
on the Closing Date to Buyer pursuant to this Agreement is conditioned upon:

          A. Delivery by Buyer to the Escrow Agent of the Purchase Price;

          B.  The  accuracy  on the  Closing  Date  of the  representations  and
warranties of Buyer  contained in this  Agreement as if made on the Closing Date
(except for  representations and warranties which, by their express terms, speak
as of and  relate to a  specified  date,  in which case such  accuracy  shall be
measured as of such specified date) and the performance by Buyer in all material
respects on or before the Closing Date of all covenants and  agreements of Buyer
required  to be  performed  by it pursuant  to this  Agreement  on or before the
Closing  Date;  and

          C. There shall not be in effect any Law or order, ruling,  judgment or
writ of any court or public or governmental authority restraining,  enjoining or
otherwise prohibiting any of the transactions contemplated by this Agreement.

                     IX. CONDITIONS TO BUYER'S OBLIGATIONS

          The Company  understands  that  Buyer's  obligation  to  purchase  the
Securities on the Closing Date pursuant to this Agreement is  conditioned  upon:

          A. Delivery by the Company to Buyer of evidence  that the  Certificate
of  Designation  has been filed and is effective;

          B.  Delivery  by  the  Company  to the  Escrow  Agent  of one or  more
certificates (I/N/O Buyer or I/N/O Buyer's nominee) evidencing the Securities to
be purchased by Buyer pursuant to this Agreement;

          C.  The  accuracy  on the  Closing  Date  of the  representations  and
warranties of the Company  contained in this Agreement as if made on the Closing
Date (except for  representations  and warranties which, by their express terms,
speak as of and relate to a specified date, in which case such accuracy shall be
measured as of such  specified  date) and the  performance by the Company in all
respects on or before the Closing Date of all  covenants  and  Agreements of the
Company  required to be performed by it pursuant to this  Agreement on or before
the Closing  Date,  all of which shall be  confirmed to Buyer by delivery of the
certificate  of the chief  executive  officer of the Company to that effect;

          D. Buyer having received an opinion of counsel for the Company,  dated
the Closing Date, in form, scope and substance reasonably  satisfactory to Buyer
as to the  matters  set forth in Annex A;

          E. There not having occurred (i) any general suspension of trading in,
or  limitation  on prices  listed  for,  the Common  Stock on  Nasdaq,  (ii) the
declaration of a banking  moratorium or any suspension of payments in respect of
banks in the United States,  (iii) the commencement of a war, armed  hostilities
or other international or national calamity directly or indirectly involving the
United States or any of its territories,  protectorates or possessions,  or (iv)
in the case of the foregoing existing at the date of this Agreement,  a material
acceleration  or worsening  thereof;

          F. There not having occurred any event or development, and there being
in existence no condition, having or which reasonably and foreseeably could have
a Material  Adverse  Effect;

                                      -19-
<PAGE>

          G. The  Company  shall have  delivered  to Buyer (as  provided  in the
Escrow Instructions)  reimbursement of Buyer's out-of-pocket costs and expenses,
whether or not  accounted for or incurred in  connection  with the  transactions
contemplated by this Agreement  (including the fees and disbursements of Buyer's
legal  counsel),  of $30,000;

          H. There shall not be in effect any Law,  order,  ruling,  judgment or
writ of any court or public or governmental authority restraining,  enjoining or
otherwise prohibiting any of the transactions contemplated by this Agreement;

          I.  Delivery  by  the  Company  of  irrevocable  instructions  to  the
Company's  transfer  agent to  reserve  1,000,000  shares  of  Common  Stock for
issuance of the Conversion  Shares and the Warrant Shares;

          J. The Company shall have obtained all consents,  approvals or waivers
from  governmental  authorities  and third persons  necessary for the execution,
delivery and  performance  of the  Documents and the  transactions  contemplated
thereby,  all  without  material  cost to the  Company;  and

          K. Buyer shall have received such additional Documents,  certificates,
payment,  assignments,  transfers and other delivers, as it or its legal counsel
may  reasonably  request and as are customary to effect a closing of the matters
herein  contemplated.

                                 X. TERMINATION

          A.  Termination  by Mutual  Written  Consent.  This  Agreement  may be
terminated and the transactions  contemplated  hereby may be abandoned,  for any
reason and at any time prior to the Closing Date, by the mutual written  consent
of the Company and Buyer.

          B.  Termination  by  the  Company  or  Buyer.  This  Agreement  may be
terminated and the transactions  contemplated  hereby may be abandoned by action
of the Company or Buyer if (i) the Closing  shall not have  occurred at or prior
to 5:00 p.m.,  New York City time,  on  February  4, 2000 (the  "Latest  Closing
Date");  provided,  however, that the right to terminate this Agreement pursuant
to this  Section  X.B.  shall not be  available  to any party  whose  failure to
fulfill any of its obligations under this Agreement has been the cause of or has
resulted in the failure of the Closing to occur at or before such time and date;
provided,  further,  however,  that if the Closing shall not have occurred on or
prior to the Latest  Closing  Date,  the Closing may only occur after the Latest
Closing Date with the written  consent of Buyer.

          C.  Termination  by Buyer.  This  Agreement may be terminated  and the
transactions  contemplated hereby may be abandoned by Buyer at any time prior to
the Closing Date, if (i) the Company shall have failed to comply with any of its
covenants or Agreements contained in this Agreement,  (ii) there shall have been
a breach by the Company of any  representation  or  warranty  made by it in this
Agreement,  (iii) there shall have occurred any event or  development,  or there
shall be in  existence  any  condition,  having or  reasonably  likely to have a
Material  Adverse  Effect or (iv) the  Company  shall have failed to satisfy the
conditions  provided in Article IX hereof.

          D.  Termination  by the Company.  This Agreement may be terminated and
the transactions contemplated hereby may be abandoned by the Company at any time
prior to the Closing  Date, if (i) Buyer shall have failed to comply with any of
its covenants or Agreements contained in this Agreement or (ii) there shall have
been a breach  by Buyer of any  representation  or  warranty  made by it in this
Agreement.

                                      -20-
<PAGE>

          E.  Effect of  Termination.  In the event of the  termination  of this
Agreement  pursuant to this Article X, this Agreement  shall  thereafter  become
void and have no  effect,  and no  party  hereto  shall  have any  liability  or
obligation to any other party hereto in respect of this  Agreement,  except that
the provisions of Article XI, this Section X.E and Section X.F shall survive any
such termination;  provided,  however,  that no party shall be released from any
liability  hereunder  if this  Agreement  is  terminated  and  the  transactions
contemplated  hereby abandoned by reason of (i) willful failure of such party to
perform its  obligations  hereunder or (ii) any  misrepresentation  made by such
party of any matter set forth herein.

          F. Fees and Expenses of  Termination.  If this Agreement is terminated
for any reason,  the Company shall promptly  reimburse  Buyer for all of Buyer's
out-of-pocket  costs and expenses  incurred in connection with the  transactions
contemplated  by this  Agreement  and the other  Documents  (including,  without
limitation,  the fees and disbursements of Buyer's legal counsel).

                         XI. SURVIVAL; INDEMNIFICATION

          A. The  representations,  warranties and covenants made by each of the
Company and Buyer in this Agreement, the annexes,  schedules and exhibits hereto
and in each instrument,  agreement and certificate entered into and delivered by
them pursuant to this Agreement  shall survive the Closing and the  consummation
of the transactions  contemplated  hereby. In the event of a breach or violation
of any of such representations,  warranties or covenants, the party to whom such
representations,  warranties  or covenants  have been made shall have all rights
and remedies for such breach or violation  available to it under the  provisions
of this Agreement or otherwise, whether at law or in equity, irrespective of any
investigation  made by or on  behalf  of such  party on or prior to the  Closing
Date.

          B. The Company hereby agrees to indemnify and hold harmless Buyer, its
Affiliates  and their  respective  officers,  directors,  partners  and  members
(collectively,  the "Buyer  Indemnitees")  from and  against any and all losses,
claims,   damages,   judgments,   penalties,    liabilities   and   deficiencies
(collectively,  "Losses") and agrees to reimburse Buyer  Indemnitees for all out
of-pocket expenses  (including the fees and expenses of legal counsel),  in each
case promptly as incurred by Buyer  Indemnitees and to the extent arising out of
or in connection with:

               1. any  misrepresentation,  omission  of fact or breach of any of
     the Company's  representations or warranties contained in this Agreement or
     the other  Documents,  or the  annexes,  schedules  or  exhibits  hereto or
     thereto  or any  instrument,  Agreement  or  certificate  entered  into  or
     delivered by the Company pursuant to this Agreement or the other Documents;

               2. any failure by the Company to perform in any material  respect
     any of its covenants, agreements,  undertakings or obligations set forth in
     this  Agreement or the other  Documents or any  instrument,  certificate or
     Agreement  entered  into  or  delivered  by the  Company  pursuant  to this
     Agreement or the other Documents; or

               3.  resales  of the  Common  Shares by Buyer in the manner and as
     contemplated by this Agreement and the Registration Rights Agreement and in
     compliance  with the  registration  statement and all  applicable  Laws (as
     defined in Section III.N);  provided,  however,  this indemnification shall
     not be deemed to guarantee  that Buyer will be able to make such resales at
     any minimum or other price.

          C. Buyer hereby agrees to indemnify and hold harmless the Company, its
Affiliates  and their  respective  officers,  directors,  partners  and  members

                                      -21-
<PAGE>

(collectively,  the "Company  Indemnitees") from and against any and all Losses,
and agrees to reimburse the Company  Indemnitees for all out-of-pocket  expenses
(including  the fees and  expenses of legal  counsel)  in each case  promptly as
incurred  by the  Company  Indemnitees  and to the extent  arising  out of or in
connection with:

               1. any  misrepresentation,  omission  of fact or breach of any of
     Buyer's  representations  or warranties  contained in this Agreement or the
     other Documents, or the annexes, schedules or exhibits hereto or thereto or
     any instrument, agreement or certificate entered into or delivered by Buyer
     pursuant to this Agreement or the other Documents; or

               2. any failure by Buyer to perform in any material respect any of
     its covenants,  agreements,  undertakings  or obligations set forth in this
     Agreement  or  the  other  Documents  or  any  instrument,  certificate  or
     agreement  entered into or delivered by Buyer pursuant to this Agreement or
     the other Documents.

          D.   Promptly   after   receipt  by  either   party   hereto   seeking
indemnification  pursuant to this Article XI (an "Indemnified Party") of written
notice of any  investigation,  claim,  proceeding  or other action in respect of
which  indemnification is being sought (each, a "Claim"),  the Indemnified Party
promptly  shall notify the party against whom  indemnification  pursuant to this
Article  XI is being  sought  (the  "Indemnifying  Party")  of the  commencement
thereof;  but the omission so to notify the Indemnifying Party shall not relieve
it from any liability that it otherwise may have to the Indemnified Party except
to the extent that the Indemnifying Party is materially  prejudiced and forfeits
substantive rights or defenses by reason of such failure. In connection with any
Claim as to which  both the  Indemnifying  Party and the  Indemnified  Party are
parties, the Indemnifying Party shall be entitled to assume the defense thereof.
Notwithstanding  the assumption of the defense of any Claim by the  Indemnifying
Party,  the  Indemnified  Party  shall have the right to employ  separate  legal
counsel and to  participate in the defense of such Claim,  and the  Indemnifying
Party shall bear the reasonable fees,  out-of-pocket  costs and expenses of such
separate  legal  counsel  to the  Indemnified  Party if (and only  if):  (x) the
Indemnifying Party shall have agreed to pay such fees,  out-of-pocket  costs and
expenses,  (y) the Indemnified Party and the Indemnifying Party reasonably shall
have concluded that representation of the Indemnified Party and the Indemnifying
Party by the same legal  counsel would not be  appropriate  due to actual or, as
reasonably  determined by legal counsel to the  Indemnified  Party,  potentially
differing  interests  between such parties in the conduct of the defense of such
Claim, or if there may be legal defenses available to the Indemnified Party that
are in addition to or disparate from those available to the Indemnifying  Party,
or (z) the  Indemnifying  Party  shall  have  failed  to  employ  legal  counsel
reasonably  satisfactory to the Indemnified  Party within a reasonable period of
time after notice of the  commencement of such Claim.  If the Indemnified  Party
employs  separate  legal  counsel in  circumstances  other than as  described in
clauses  (x),  (y) or (z)  above,  the fees,  costs and  expenses  of such legal
counsel shall be borne exclusively by the Indemnified Party.  Except as provided
above,  the  Indemnifying  Party shall not, in connection  with any Claim in the
same jurisdiction,  be liable for the fees and expenses of more than one firm of
legal  counsel  for the  Indemnified  Party  (together  with  appropriate  local
counsel). The Indemnifying Party shall not, without the prior written consent of
the Indemnified Party (which consent shall not unreasonably be withheld), settle
or  compromise  any Claim or consent to the entry of any judgment  that does not
include an unconditional  release of the Indemnified  Party from all liabilities
with respect to such Claim or judgment.

          E.  In  the  event  one  party  hereunder  should  have  a  claim  for
indemnification  that does not  involve a claim or demand  being  asserted  by a
third party,  the Indemnified  Party promptly shall deliver notice of such claim

                                      -22-
<PAGE>

to the  Indemnifying  Party. If the Indemnified  Party disputes the claim,  such
dispute shall be resolved by mutual  agreement of the Indemnified  Party and the
Indemnifying  Party or by  binding  arbitration  conducted  in New York  City in
accordance   with  the  procedures   and  rules  of  the  American   Arbitration
Association.  Judgment upon any award rendered by any arbitrators may be entered
in any court having competent jurisdiction thereof.

                               XII. GOVERNING LAW

          This Agreement shall be governed by and interpreted in accordance with
the laws of the  State of New  York,  without  regard  to the  conflicts  of law
principles of such state.

                        XIII. SUBMISSION TO JURISDICTION

          Each of the parties hereto  consents to the exclusive  jurisdiction of
the federal courts whose districts encompass any part of the City of New York or
the state  courts of the  State of New York  sitting  in the City of New York in
connection  with  any  dispute  arising  under  this  Agreement  and  the  other
Documents.  Each party hereto hereby irrevocably and unconditionally  waives, to
the fullest  extent it may  effectively  do so, any  defense of an  inconvenient
forum or improper  venue to the  maintenance of such action or proceeding in any
such court and any right of jurisdiction on account of its place of residence or
domicile.  Each party hereto  irrevocably  and  unconditionally  consents to the
service of any and all process in any such action or  proceeding  in such courts
by the mailing of copies of such process by certified or  registered  airmail at
its address  specified  in Article XIX.  Each party  hereto  agrees that a final
judgment  in any  such  action  or  proceeding  shall be  conclusive  and may be
enforced in other  jurisdictions  by suit on the judgment or in any other manner
provided by law.

                           XIV. WAIVER OF JURY TRIAL

          TO THE FULLEST  EXTENT  PERMITTED BY LAW,  EACH OF THE PARTIES  HERETO
HEREBY KNOWINGLY,  VOLUNTARILY AND INTENTIONALLY WAIVES ITS RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION  BASED UPON OR ARISING  OUT OF THIS
AGREEMENT  OR ANY OTHER  DOCUMENT OR ANY DEALINGS  BETWEEN THEM  RELATING TO THE
SUBJECT  MATTER OF THIS  AGREEMENT  AND OTHER  DOCUMENTS.  EACH PARTY HERETO (i)
CERTIFIES THAT NEITHER OF THEIR RESPECTIVE REPRESENTATIVES,  AGENTS OR ATTORNEYS
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT
OF LITIGATION,  SEEK TO ENFORCE THE FOREGOING WAIVERS AND (ii) ACKNOWLEDGES THAT
IT HAS BEEN INDUCED TO ENTER INTO THIS  AGREEMENT  BY, AMONG OTHER  THINGS,  THE
MUTUAL WAIVERS AND CERTIFICATIONS HEREIN.

                          XV. COUNTERPARTS; EXECUTION

          This  Agreement may be executed in any number of  counterparts  and by
the different  parties  hereto on separate  counterparts,  each of which when so
executed and  delivered  shall be an original,  but all the  counterparts  shall
together  constitute one and the same  instrument.  A facsimile  transmission of
this signed Agreement shall be legal and binding on all parties hereto.

                                 XVI. HEADINGS

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

                               XVII. SEVERABILITY

          In the  event  any  one or more of the  provisions  contained  in this
Agreement  or in  the  other  Documents  should  be  held  invalid,  illegal  or

                                      -23-
<PAGE>

unenforceable in any respect,  the validity,  legality and enforceability of the
remaining  provisions  contained  herein  or  therein  shall  not in any  way be
affected  or  impaired  thereby.   The  parties  shall  endeavor  in  good-faith
negotiations to replace the invalid,  illegal or  unenforceable  provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.

           XVIII. ENTIRE AGREEMENT; REMEDIES, AMENDMENTS AND WAIVERS

          This Agreement and the Documents constitute the entire agreement among
the parties  pertaining  to the subject  matter  hereof and  supersede all prior
agreements,  understandings,  negotiations  and  discussions,  whether  oral  or
written, of the parties. No supplement, modification or waiver of this Agreement
shall be binding unless executed in writing by all parties.  No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other  provision  hereof  (whether  or not  similar),  nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.

                                  XIX. NOTICES

          Except  as may be  otherwise  provided  herein,  any  notice  or other
communication  or delivery  required or permitted  hereunder shall be in writing
and shall be delivered personally or sent by certified mail, postage prepaid, or
by a nationally  recognized overnight courier service, and shall be deemed given
when so delivered  personally or by overnight  courier  service,  or, if mailed,
three (3) days after the date of deposit in the United States mails, as follows:

          A.    if to the Company, to:

                Educational Video Conferencing, Inc.
                35 East Grassy Sprain Road
                Yonkers, NY 10710
                Attention: Dr. Arol I. Buntzman
                (914) 787-3500
                (914) 395-3498 (fax)

                with a copy to:

                Fischbein, Badillo, Wagner, Harding
                909 Third Avenue, 17th Floor
                New York, NY 10022
                Attention:  Joseph D. Alperin, Esq.
                (212) 826-2000
                (212) 644-3601 (Fax)

          B.    if to Buyer, to:

                The Shaar Fund Ltd.
                c/o Levinson Capital Management
                2 World Trade Center, Suite 1820
                New York, NY 10048
                Attention:  Samuel Levinson
                (212) 432-7711
                (212) 432-7771 (Fax)

                with a copy to:

                Cadwalader, Wickersham & Taft
                100 Maiden Lane
                New York, NY 10038
                Attention:  Dennis J. Block, Esq.
                (212) 504-5555
                (212) 504-5557 (Fax)

                                      -24-
<PAGE>

          C.    if to the Escrow Agent, to:

                Cadwalader, Wickersham & Taft
                100 Maiden Lane
                New York, NY 10038
                Attention:  Dennis J. Block, Esq.
                (212) 504-5555
                (212) 504-5557 (Fax)

The  Company,  Buyer or the Escrow  Agent may change  the  foregoing  address by
notice given pursuant to this Article XIX.

                              XX. CONFIDENTIALITY

          Each of the Company and Buyer agrees to keep  confidential  and not to
disclose  to or use for  the  benefit  of any  third-party  the  terms  of this
Agreement  or any other  information  which at any time is  communicated  by the
other  party as being  confidential  without the prior  written  approval of the
other  party;  provided,  however,  that  this  provision  shall  not  apply  to
information  which,  at the time of  disclosure,  is already  part of the public
domain (except by breach of this Agreement) and information which is required to
be disclosed by law (including, without limitation,  pursuant to Item 601(b)(10)
of Regulation S-K under the Securities Act and the Exchange Act).

                                XXI. ASSIGNMENT

          This Agreement shall not be assignable by either of the parties hereto
prior to the Closing without the prior written  consent of the other party,  and
any attempted  assignment  contrary to the  provisions  hereby shall be null and
void;  provided,  however,  that Buyer may  assign  its  rights and  obligations
hereunder, in whole or in part, to any Affiliate of Buyer.

                            [SIGNATURE PAGE FOLLOWS.]

                                      -25-
<PAGE>

          IN  WITNESS  WHEREOF,  the  parties  hereto  have  duly  executed  and
delivered this Agreement on the date first above written.

                                 EDUCATIONAL VIDEO CONFERENCING, INC.

                                 By: /s/ Dr. Arol I. Buntzman
                                     ___________________________________________
                                     Name: Dr. Arol I. Buntzman
                                     Title: Chairman & CEO

                                 THE SHAAR FUND LTD.

                                  By: /s/ Declan Quilligan /s/ Henriette DeVries
                                      __________________________________________
                                      Name:  Inter Caribbean Services Ltd.
                                      Title: Director

                                         By: /s/ Uri Wolfman
                                             ________________________________
                                             Name: Uri Wolfson

                                      -26-

<PAGE>

                                                                         ANNEX A

                                 FORM OF OPINION

          1. The Company has been duly incorporated and is validly existing as a
corporation  in good standing  under the laws of the State of Delaware,  is duly
qualified to do business as a foreign corporation and is in good standing in all
jurisdictions  where the Company owns or leases properties or conducts business,
except for  jurisdictions  in which the  failure to so qualify  would not have a
Material Adverse Effect, and has all requisite  corporate power and authority to
own its  properties  and conduct its  business as  described  in the  Commission
Filings.

          2. The authorized  capital stock of the Company consists of 20,000,000
shares of Common  Stock,  par value $.0001 per share (the "Common  Stock"),  and
1,000,000  shares of  Preferred  Stock,  par value  $.0001  per  share.

          3. When  delivered  to you or upon your order  against  payment of the
agreed  consideration   therefor  in  accordance  with  the  provisions  of  the
Documents, the Securities will be duly authorized and validly issued, fully paid
and nonassessable.

          4. The Company has the  requisite  corporate  power and  authority  to
enter into the Documents and to sell and deliver the  Securities as described in
the Documents; each of the Documents has been duly and validly authorized by all
necessary  corporate action by the Company;  each of the Documents has been duly
and validly executed and delivered by and on behalf of the Company, and is valid
and binding agreement of the Company,  enforceable in accordance with its terms,
except  as  enforceability  may be  limited  by  general  equitable  principles,
bankruptcy,  insolvency,  fraudulent conveyance,  reorganization,  moratorium or
other laws affecting  creditors rights generally.

          5. Except as set forth on the  Schedules  to the  Securities  Purchase
Agreement,  the  execution  and  delivery by the Company of the  Documents,  the
issuance of the  Securities,  and the  consummation  by the Company of the other
transactions contemplated thereby, including,  without limitation, the filing of
the  Certificate  of  Designation  and the Amended and Restated  Certificate  of
Designation  with  the  Delaware  Secretary  of  State's  office,  do  not,  and
compliance  with the  provisions of the Documents  will not,  conflict  with, or
result in any violation of, or default (with or without notice or lapse of time,
or  both)  under,  or give  rise  to a right  of  termination,  cancellation  or
acceleration of any obligation or loss of a material benefit under, or result in
the creation of any Lien upon any of the  properties or assets of the Company or
any of its Subsidiaries  under, or result in the termination of, or require that
any  consent  be  obtained  or any  notice be given  with  respect  to,  (i) the
Certificate of Incorporation or By-Laws of the Company or the comparable charter
or organizational documents of any of its Subsidiaries,  (ii) any loan or credit
agreement, note, bond, mortgage,  indenture, lease, contract or other agreement,
instrument  or permit  known to us and  applicable  to the Company or any of its
Subsidiaries  or  their  respective  properties  or  assets,  or  (iii)  any Law
applicable to, or, to the best of our knowledge,  any judgment,  decree or order
of any court or government body having  jurisdiction over, the Company or any of
its Subsidiaries or any of their respective properties or assets. To the best of
our knowledge, no consent, approval, authorization, order, registration, filing,
qualification,   license  or  permit  of  or  with  any  court  or  any  public,
governmental or regulatory  agency or body having  jurisdiction over the Company
or any of its properties or assets is required for the  execution,  delivery and
performance by the Company of the Documents or the  consummation  by the Company
of the transactions contemplated thereby.

                                      A-1
<PAGE>

          6. When issued,  the Preferred  Shares and the Warrants  shall be duly
authorized, validly issued, fully paid and nonassessable,  and free and clear of
all encumbrances and  restrictions,  except for restrictions on transfer imposed
by applicable securities laws. The Conversion Shares and Warrant Shares issuable
upon  conversion  or exercise,  respectively,  of the  Preferred  Shares and the
Warrants,  respectively, will be duly authorized, validly issued, fully paid and
nonassessable,  and free and clear of all encumbrances and restrictions,  except
for restrictions on transfer imposed by applicable securities laws.

          7. Based on Buyer's representations  contained in this Agreement,  the
offer and sale of the  Preferred  Shares and the  Warrants  are exempt  from the
registration  requirements  of  the  Securities  Act.

          8. To the  best of our  knowledge,  other  than  as  described  in the
Commission  Filings,  there  are  no  outstanding  options,  warrants  or  other
securities exercisable or convertible into Common Stock of the Company.

          9. There is no action, suit, claim,  inquiry or investigation  pending
or, to the best of our knowledge, threatened by or before any court or public or
governmental authority which, if determined adversely to the Company, would have
a Material Adverse Effect.

          10.  Neither the Company  nor any of its  Subsidiaries  is, or will be
after the  consummation of the  transactions  contemplated by this Agreement and
the other Documents and the use of the proceeds from the sale of the Securities,
an "investment company" or an entity "controlled" by an "investment company," as
such terms are defined in the Investment Company Act of 1940, as amended.

                                      A-2THIS COMMON STOCK PURCHASE  WARRANT AND THE SECURITIES  REPRESENTED  HEREBY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED  IN VIOLATION OF SUCH ACT, THE RULES AND  REGULATIONS  THEREUNDER OR
THE PROVISIONS OF THIS COMMON STOCK PURCHASE WARRANT.

                    Number of Shares of Common Stock: 40,000

                                  Warrant No. 1

                          COMMON STOCK PURCHASE WARRANT

                           To Purchase Common Stock of

                      Educational Video Conferencing, Inc.

          THIS IS TO CERTIFY THAT The Shaar Fund Ltd., or registered assigns, is
entitled,  at any time from the  Closing  Date (as  hereinafter  defined) to the
Expiration Date (as hereinafter  defined),  to purchase from  Educational  Video
Conferencing,  Inc., a Delaware  corporation (the  "Company"),  40,000 shares of
Common  Stock (as  hereinafter  defined  and subject to  adjustment  as provided
herein),  in whole or in part,  including  fractional parts, at a purchase price
per share equal to 120% of the Market  Price,  subject to adjustment as provided
herein,  all on  the  terms  and  conditions  and  pursuant  to  the  provisions
hereinafter set forth.

          1. Definitions

          As used in this Common Stock Purchase  Warrant (this  "Warrant"),  the
following terms shall have the respective meanings set forth below:

          "Additional  Shares of Common  Stock"  shall mean all shares of Common
Stock issued by the Company after the Closing Date, other than Warrant Stock.

          "Book  Value"  shall mean,  in respect of any share of Common Stock on
any date herein specified,  the consolidated book value of the Company as of the
last day of any month immediately  preceding such date, divided by the number of
Fully  Diluted  Outstanding  shares of Common Stock as  determined in accordance
with GAAP  (assuming  the  payment of the  exercise  prices for such  shares) by
Goldstein  Golub Kessler LLP or any other firm of independent  certified  public
accountants  of  recognized  national  standing  selected  by  the  Company  and
reasonably acceptable to the Holder.

          "Business  Day" shall mean any day that is not a Saturday or Sunday or
a day on which banks are  required or permitted to be closed in the State of New
York.

          "Closing  Date"  shall have the  meaning  set forth in the  Securities
Purchase Agreement.

          "Commission" shall mean the Securities and Exchange  Commission or any
other federal  agency then  administering  the  Securities Act and other federal
securities laws.

          "Common  Stock"  shall  mean  (except  where  the  context   otherwise
indicates)  the Common  Stock,  par value  $.0001 per share,  of the  Company as
constituted  on the Closing  Date,  and any capital stock into which such Common
Stock may thereafter be changed, and shall also include (i) capital stock of the
Company of any other class (regardless of how denominated) issued to the holders

<PAGE>

of shares of Common Stock upon any  reclassification  thereof  which is also not
preferred as to dividends or assets over any other class of stock of the Company
and which is not subject to  redemption  and (ii) shares of common  stock of any
successor or acquiring  corporation received by or distributed to the holders of
Common Stock of the Company in the circumstances contemplated by Section 4.4.

          "Convertible Securities" shall mean evidences of indebtedness,  shares
of stock or other securities which are convertible into or exchangeable, with or
without payment of additional  consideration in cash or property,  for shares of
Common Stock, either immediately or upon the occurrence of a specified date or a
specified event.

          "Current  Market  Price" shall mean on any date of  determination  the
closing bid price of a Common Share on such day as reported on Nasdaq; provided,
if such security bid is not listed or admitted to trading on Nasdaq, as reported
on the principal  national  security  exchange or quotation system on which such
security is quoted or listed or admitted to trading, or, if not quoted or listed
or admitted to trading on any national  securities exchange or quotation system,
the closing bid price of such security on the over-the-counter market on the day
in  question  as  reported  by  Bloomberg  LP, or a similar  generally  accepted
reporting service, as the case may be.

          "Current  Warrant  Price" shall mean,  in respect of a share of Common
Stock at any date herein  specified,  the price at which a share of Common Stock
may be  purchased  pursuant  to this  Warrant on such date,  as set forth in the
first paragraph hereof.

          "Exchange  Act" shall mean the  Securities  Exchange  Act of 1934,  as
amended, or any successor federal statute,  and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.

          "Exercise  Period"  shall mean the period during which this Warrant is
exercisable pursuant to Section 2.1.

          "Expiration Date" shall mean February 2, 2003.

          "Fully Diluted  Outstanding"  shall mean,  when used with reference to
Common  Stock,  at any date as of which the  number of shares  thereof  is to be
determined,  all shares of Common Stock  Outstanding at such date and all shares
of Common Stock  issuable in respect of this Warrant,  outstanding on such date,
and other  options or warrants to  purchase,  or  securities  convertible  into,
shares  of  Common  Stock  outstanding  on  such  date  which  would  be  deemed
outstanding in accordance  with GAAP for purposes of  determining  Book Value or
net income per share.

          "Fundamental  Corporate  Change"  shall have the  meaning set forth in
Section 4.4.

          "GAAP" shall mean  generally  accepted  accounting  principles  in the
United States of America as from time to time in effect.

          "Holder"  shall mean the  Person in whose name the  Warrant or Warrant
Stock set forth herein is registered on the books of the Company  maintained for
such purpose.

          "Market  Price" per Common  Share means the average of the closing bid
prices of the Common Shares as reported on the Nasdaq SmallCap Market ("Nasdaq")
for the five trading days immediately preceding the Closing Date.

          "Other Property" shall have the meaning set forth in Section 4.4.

                                      -2-
<PAGE>

          "Outstanding" shall mean, when used with reference to Common Stock, at
any date as of which the  number  of shares  thereof  is to be  determined,  all
issued  shares of Common  Stock,  except shares then owned or held by or for the
account of the Company or any subsidiary  thereof,  and shall include all shares
issuable  in  respect  of  outstanding  scrip or any  certificates  representing
fractional interests in shares of Common Stock.

          "Person" shall mean any individual, sole proprietorship,  partnership,
joint  venture,  trust,  incorporated  organization,  association,  corporation,
institution,  public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise,  including, without limitation, any
instrumentality, division, agency, body or department thereof).

          "Registration  Rights  Agreement" shall mean the  Registration  Rights
Agreement  dated as of a date even  herewith  between  the Company and The Shaar
Fund Ltd., as it may be amended from time to time.

          "Restricted Common Stock" shall mean shares of Common Stock which are,
or which  upon  their  issuance  on their  exercise  of this  Warrant  would be,
evidenced by a certificate  bearing the restrictive  legend set forth in Section
9.1(a).

          "Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor  federal statute,  and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.

          "Securities  Purchase  Agreement"  shall mean the Securities  Purchase
Agreement  dated as of a date even  herewith  between  the Company and The Shaar
Fund Ltd., as it may be amended from time to time.

          "Transfer"  shall mean any disposition of any Warrant or Warrant Stock
or of any  interest in either  thereof,  which would  constitute  a sale thereof
within the meaning of the Securities Act.

          "Transfer Notice" shall have the meaning set forth in Section 9.2.

          "Warrant Price" shall mean an amount equal to (i) the number of shares
of Common  Stock  being  purchased  upon  exercise of this  Warrant  pursuant to
Section 2.1, multiplied by (ii) the Current Warrant Price as of the date of such
exercise.

          "Warrant Stock" shall mean the shares of Common Stock purchased by the
holders of the Warrants upon the exercise thereof.

          "Warrants"  shall  mean this  Warrant  and all  warrants  issued  upon
transfer,  division or combination of, or in substitution for, any thereof.  All
Warrants  shall at all times be identical as to terms and  conditions  and date,
except  as to the  number of  shares  of  Common  Stock  for  which  they may be
exercised.

          2. Exercise of Warrant

          2.1 Manner of Exercise

          From and after the  earlier to occur of (i) the first  anniversary  of
the Closing Date and (ii) the date immediately succeeding a period of sixty (60)
consecutive  trading  days during which the Common Stock trades above $23.50 (as
adjusted for any stock splits or similar corporate actions) and until 5:00 p.m.,
New York time, on the Expiration Date, Holder may exercise this Warrant,  on any
Business  Day,  for all or any part of the  number of  shares  of  Common  Stock
purchasable hereunder.

                                      -3-
<PAGE>

          In order to exercise this Warrant,  in whole or in part,  Holder shall
deliver to the Company at its  principal  office at 35 East Grassy  Sprain Road,
Yonkers, NY 10710, or at the office or agency designated by the Company pursuant
to Section  12, (i) a written  notice of  Holder's  election  to  exercise  this
Warrant,  which notice shall  specify the number of shares of Common Stock to be
purchased,  (ii) to the extent  such  exercise is not being  effected  through a
Cashless  Exercise,  payment of the  Warrant  Price in cash or wire  transfer or
cashier's  check  drawn on a United  States  bank and (iii) this  Warrant.  Such
notice shall be substantially in the form of the subscription  form appearing at
the end of this  Warrant as Exhibit A, duly  executed  by Holder or its agent or
attorney.  Upon receipt of the items  referred to in clauses (i), (ii) and (iii)
above,  the Company shall, as promptly as  practicable,  and in any event within
five  Business Days  thereafter,  execute or cause to be executed and deliver or
cause to be delivered to Holder a certificate or certificates  representing  the
aggregate  number of full shares of Common Stock  issuable  upon such  exercise,
together with cash in lieu of any fraction of a share, as hereinafter  provided.
The stock  certificate  or  certificates  so  delivered  shall be, to the extent
possible,  in such  denomination or denominations as Holder shall request in the
notice and shall be registered  in the name of Holder or,  subject to Section 9,
such other name as shall be  designated  in the notice.  This  Warrant  shall be
deemed to have been  exercised and such  certificate  or  certificates  shall be
deemed to have been issued,  and Holder or any other Person so  designated to be
named  therein  shall be deemed to have become a holder of record of such shares
for all purposes, as of the date the notice,  together with the cash or check or
checks and this Warrant,  is received by the Company as described  above and all
taxes  required to be paid by Holder,  if any,  pursuant to Section 2.2 prior to
the  issuance  of such shares have been paid.  If this  Warrant  shall have been
exercised in part, the Company shall, at the time of delivery of the certificate
or  certificates  representing  Warrant  Stock,  deliver to Holder a new Warrant
evidencing  the rights of Holder to purchase  the  unpurchased  shares of Common
Stock called for by this Warrant,  which new Warrant shall in all other respects
be  identical  with this  Warrant,  or, at the  request of  Holder,  appropriate
notation  may be  made  on  this  Warrant  and  the  same  returned  to  Holder.
Notwithstanding  any provision herein to the contrary,  the Company shall not be
required to register  shares in the name of any Person who acquired this Warrant
(or part hereof) or any Warrant Stock  otherwise  than in  accordance  with this
Warrant.

          Simultaneously  with the exercise of this Warrant,  payment in full of
the Warrant Price shall be made, at the option of the Holder,  (i) by payment of
the  Warrant  Price in cash or by wire  transfer or  cashier's  check drawn on a
United States bank,  (ii) through a net exercise  without payment of the Warrant
Price in cash by  providing  notice to the Company of the  Holder's  election to
receive a number of shares of Common Stock in a Cashless  Exercise  equal to the
product of (1) the number of shares for which such Warrant is  exercisable  with
payment  in cash of the  Warrant  Price as of the date of  exercise  and (2) the
Cashless Exercise Ratio or (iii) by any combination of clauses (i) and (ii). For
purposes  of  this  Agreement,  the  "Cashless  Exercise  Ratio"  shall  equal a
fraction,  the numerator of which is the excess of the Current  Market Price per
share of the Common Stock on the date of exercise over the Current Warrant Price
as of the date of exercise,  and the  denominator of which is the Current Market
Price per share of the Common  Stock on the date of  exercise.  An exercise of a
Warrant  in  accordance  with  clause  (ii) above is herein  called a  "Cashless
Exercise." Following a Cashless Exercise,  this Warrant shall be canceled in all
respects  with  regard to (a) the  number of  shares of Common  Stock  issued in
accordance  with the  Cashless  Exercise  plus (b) the number of shares  used as
consideration for the Cashless Exercise.

                                      -4-
<PAGE>

          2.2 Payment of Taxes and Charges

          All shares of Common Stock  issuable upon the exercise of this Warrant
pursuant  to  the  terms  hereof  shall  be  validly  issued,   fully  paid  and
nonassessable, freely tradable after registration of such shares, subject to any
applicable limitations of Section 3(a) of the Registration Rights Agreement, and
without any preemptive  rights. The Company shall pay all expenses in connection
with,  and all taxes and other  governmental  charges  that may be imposed  with
respect  to, the  issuance  or  delivery  thereof,  unless such tax or charge is
imposed by law upon Holder, in which case such taxes or charges shall be paid by
Holder.  The Company  shall not be  required,  however,  to pay any tax or other
charge imposed in connection  with any transfer  involved in the issuance of any
certificate for shares of Common Stock issuable upon exercise of this Warrant in
any name other than that of Holder,  and in such case the  Company  shall not be
required  to issue or  deliver  any stock  certificate  until  such tax or other
charge  has been  paid or it has been  established  to the  satisfaction  of the
Company that no such tax or other charge is due.

          2.3 Fractional Shares

          The  Company  shall not be  required  to issue a  fractional  share of
Common Stock upon  exercise of any Warrant.  As to any fraction of a share which
Holder would  otherwise be entitled to purchase upon such exercise,  the Company
shall pay a cash adjustment in respect of such final fraction in an amount equal
to the same  fraction  of the Market  Price per share of Common  Stock as of the
Closing Date.

          2.4 Continued Validity

          A holder of shares of Common  Stock  issued upon the  exercise of this
Warrant, in whole or in part (other than a holder who acquires such shares after
the same have been publicly sold pursuant to a Registration  Statement under the
Securities  Act or sold pursuant to Rule 144  thereunder)  shall  continue to be
entitled  with  respect to such shares to all rights to which it would have been
entitled  as Holder  under  Sections 9, 10 and 14 of this  Warrant.  The Company
will,  at the time of exercise of this  Warrant,  in whole or in part,  upon the
request of Holder,  acknowledge in writing,  in form reasonably  satisfactory to
Holder,  its continuing  obligation to afford Holder all such rights;  provided,
however,  that if Holder shall fail to make any such request, such failure shall
not affect the continuing obligation of the Company to afford to Holder all such
rights.

          3. Transfer, Division and Combination

          3.1 Transfer

          Subject to compliance with Section 9, transfer of this Warrant and all
rights  hereunder,  in whole or in part, shall be registered on the books of the
Company to be maintained for such purpose, upon surrender of this Warrant at the
principal  office of the  Company  referred  to in Section  2.1 or the office or
agency designated by the Company pursuant to Section 12, together with a written
assignment  of this Warrant  substantially  in the form of Exhibit B hereto duly
executed  by Holder or its agent or  attorney  and funds  sufficient  to pay any
transfer  taxes payable upon the making of such  transfer.  Upon such  surrender
and, if required, such payment, the Company shall, subject to Section 9, execute
and deliver a new Warrant or Warrants in the name of the  assignee or  assignees
and in the  denomination  specified in such instrument of assignment,  and shall
issue to the assignor a new Warrant  evidencing  the portion of this Warrant not
so assigned, and this Warrant shall promptly be canceled. A Warrant, if properly
assigned in compliance  with Section 9, may be exercised by a new Holder for the
purchase of shares of Common Stock without having a new warrant issued.

                                      -5-
<PAGE>

          3.2 Division and Combination

          Subject to Section 9, this  Warrant  may be divided or  combined  with
other Warrants upon presentation hereof at the aforesaid office or agency of the
Company,  together with a written notice  specifying the names and denominations
in which  new  Warrants  are to be  issued,  signed  by  Holder  or its agent or
attorney.  Subject to  compliance  with  Sections  3.1 and 9, as to any transfer
which may be involved in such division or combination, the Company shall execute
and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to
be divided or combined in accordance with such notice.

          3.3 Expenses

          The Company shall prepare, issue and deliver at its own expense (other
than  transfer  taxes) the new  Warrants or Warrants  under this  Section 3.

          3.4 Maintenance of Books

          The Company  agrees to maintain,  at its  aforesaid  office or agency,
books for the registration and the registration of transfer of the Warrants.

          4. ADJUSTMENTS

          The  number  of shares of Common  Stock  for  which  this  Warrant  is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant,  shall be subject to adjustment  from time to time as set forth in
this  Section 4. The  Company  shall give Holder  notice of any event  described
below which  requires an  adjustment  pursuant to this  Section 4 at the time of
such event.

          4.1 Stock Dividends, Subdivisions and Combinations

          If at any time the Company shall:

          (a) take a record of the  holders of its Common  Stock for the purpose
of entitling them to receive a dividend  payable in, or other  distribution  of,
Additional  Shares of Common  Stock;

          (b)  subdivide  its  outstanding  shares of Common Stock into a larger
number of shares of Common  Stock;  or

          (c)  combine  its  outstanding  shares of Common  Stock into a smaller
number of shares of Common Stock;

then (i) the  number  of  shares of Common  Stock  for  which  this  Warrant  is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record  holder of the same
number of  shares  of  Common  Stock  for  which  this  Warrant  is  exercisable
immediately  prior to the  occurrence  of such event would own or be entitled to
receive  after the happening of such event,  and (ii) the Current  Warrant Price
shall be adjusted  to equal (A) the  Current  Warrant  Price  multiplied  by the
number of  shares  of  Common  Stock  for  which  this  Warrant  is  exercisable
immediately  prior to the  adjustment  divided  by (B) the  number of shares for
which this  Warrant  is  exercisable  immediately  after  such  adjustment.  4.2
Intentionally  Omitted 4.3 Other Provisions Applicable to Adjustments under this
Section

          The  following  provisions  shall  be  applicable  to  the  making  of
adjustments  of the number of shares of Common  Stock for which this  Warrant is
exercisable  and the Current  Warrant Price  provided for in this Section 4:

                                      -6-
<PAGE>

          (a) When  Adjustments  to be Made.  The  adjustments  required by this
Section 4 shall be made whenever and as often as any specified  event  requiring
an  adjustment  shall occur.  For the purpose of any  adjustment,  any specified
event  shall be deemed to have  occurred at the close of business on the date of
its occurrence.

          (b) Fractional Interests.  In computing adjustments under this Section
4,  fractional  interests  in Common  Stock  shall be taken into  account to the
nearest  1/10th of a share.

          (c) When  Adjustment not Required.  If the Company shall take a record
of the holders of its Common Stock for the purpose of entitling  them to receive
a  dividend  or  distribution  or  subscription  or  purchase  rights and shall,
thereafter and before the distribution to stockholders thereof,  legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights,  then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment  previously made in respect thereof shall
be rescinded and annulled.

          (d)  Challenge  to Good  Faith  Determination.  Whenever  the Board of
Directors of the Company shall be required to make a determination in good faith
of the fair value of any item under this  Section 4, such  determination  may be
challenged in good faith by the Holder,  and any dispute shall be resolved by an
investment banking firm of recognized  national standing selected by the Company
and acceptable to Holder.

          4.4       Reorganization,  Reclassification,  Merger, Consolidation or
                    Disposition of Assets

          In case the Company  shall  reorganize  its  capital,  reclassify  its
capital  stock,  consolidate  or merge with or into  another  Person  (where the
Company is not the survivor or where there is a change in or  distribution  with
respect  to the Common  Stock of the  Company),  or sell,  convey,  transfer  or
otherwise dispose of all or substantially  all its property,  assets or business
to another Person, or effectuate a transaction or series of related transactions
in which more than 50% of the voting  power of the Company is disposed of (each,
a "Fundamental Corporate Change") and, pursuant to the terms of such Fundamental
Corporate  Change,  shares  of  Common  Stock  of  the  successor  or  acquiring
corporation, or any cash, shares of stock or other securities or property of any
nature whatsoever  (including warrants or other subscription or purchase rights)
in  addition  to or in  lieu of  common  stock  of the  successor  or  acquiring
corporation  ("Other  Property"),  are to be received by or  distributed  to the
holders  of  Common  Stock of the  Company,  then  Holder  shall  have the right
thereafter to receive,  upon  exercise of the Warrant,  such number of shares of
common stock of the successor or acquiring  corporation or of the Company, if it
is the surviving  corporation,  and Other Property as is receivable upon or as a
result of such Fundamental  Corporate Change by a holder of the number of shares
of Common Stock for which this Warrant is exercisable  immediately prior to such
Fundamental  Corporate Change. In case of any such Fundamental Corporate Change,
the  successor  or  acquiring  corporation  (if other  than the  Company)  shall
expressly  assume the due and punctual  observance  and  performance of each and
every covenant and condition of this Warrant to be performed and observed by the
Company  and all the  obligations  and  liabilities  hereunder,  subject to such
modifications  as may be deemed  appropriate (as determined by resolution of the
Board of Directors of the Company) in order to provide for adjustments of shares
of Common Stock for which this Warrant is  exercisable  which shall be as nearly
equivalent as practicable to the adjustments provided for in this Section 4. For
purposes of this  Section  4.4,  "common  stock of the  successor  or  acquiring
corporation"  shall include stock of such  corporation of any class which is not
preferred  as to  dividends  or  assets  over any  other  class of stock of such
corporation  and which is not subject to  redemption  and shall also include any

                                      -7-
<PAGE>

evidences  of  indebtedness,  shares  of  stock or other  securities  which  are
convertible into or exchangeable for any such stock,  either immediately or upon
the arrival of a specified  date or the  happening of a specified  event and any
warrants  or other  rights to  subscribe  for or purchase  any such  stock.  The
foregoing  provisions  of this Section 4.4 shall  similarly  apply to successive
Fundamental Corporate Change.

          4.5 Other Action Affecting Common Stock

          In case at any time or from time to time the  Company  shall  take any
action in respect of its Common Stock,  other than any action  described in this
Section  4, which  would have a  materially  adverse  effect  upon the rights of
Holder,  the number of shares of Common Stock and/or the purchase  price thereof
shall be adjusted in such manner as may be  equitable in the  circumstances,  as
determined in good faith by the Board of Directors of the Company.

          4.6 Certain Limitations

          Notwithstanding  anything  herein to the contrary,  the Company agrees
not to enter into any transaction which, by reason of any adjustment  hereunder,
would cause the Current Warrant Price to be less than the par value per share of
Common Stock.

          5. NOTICES TO HOLDER

          5.1 Notice of Adjustments

          Whenever  the number of shares of Common  Stock for which this Warrant
is exercisable,  or whenever the price at which a share of such Common Stock may
be  purchased  upon  exercise of the  Warrants,  shall be  adjusted  pursuant to
Section 4, the Company shall  forthwith  prepare a certificate to be executed by
the chief financial officer of the Company setting forth, in reasonable  detail,
the event  requiring the adjustment and the method by which such  adjustment was
calculated (including a description of the basis on which the Board of Directors
of the  Company  determined  the fair value of any  evidences  of  indebtedness,
shares of stock,  other securities or property or warrants or other subscription
or purchase rights referred to in Section 4.2),  specifying the number of shares
of Common Stock for which this Warrant is  exercisable  and (if such  adjustment
was made pursuant to Section 4.4 or 4.5)  describing  the number and kind of any
other shares of stock or Other  Property for which this Warrant is  exercisable,
and any change in the purchase price or prices  thereof,  after giving effect to
such  adjustment or change.  The Company shall  promptly  cause a signed copy of
such  certificate to be delivered to the Holder in accordance with Section 14.2.
The Company shall keep at its office or agency designated pursuant to Section 12
copies  of all  such  certificates  and  cause  the  same  to be  available  for
inspection  at said office  during  normal  business  hours by the Holder or any
prospective purchaser of a Warrant designated by Holder.

        5.2 Notice of Corporate Action

          If at any time:

          (a) the Company shall take a record of the holders of its Common Stock
for the purpose of entitling  them to receive a dividend or other  distribution,
or any right to subscribe for or purchase any evidences of its indebtedness, any
shares of stock of any class or any other securities or property,  or to receive
any  other  right;  or

          (b) there  shall be any capital  reorganization  of the  Company,  any
reclassification  or recapitalization of the capital stock of the Company or any
consolidation  or merger of the  Company  with,  or any sale,  transfer or other
disposition of all or substantially all the property,  assets or business of the
Company  to,  another  corporation;  or

                                      -8-
<PAGE>

          (c) there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Company;

then, in any one or more of such cases,  the Company shall give to Holder (i) at
least 30 days' prior written  notice of the date on which a record date shall be
selected for such dividend,  distribution or right or for determining  rights to
vote  in  respect  of  any  such   reorganization,   reclassification,   merger,
consolidation, sale, transfer, disposition,  dissolution, liquidation or winding
up, and (ii) in the case of any such reorganization,  reclassification,  merger,
consolidation, sale, transfer, disposition,  dissolution, liquidation or winding
up, at least 30 days' prior written  notice of the date when the same shall take
place.  Such notice in accordance  with the foregoing  clause also shall specify
(i) the date on which any such  record is to be taken  for the  purpose  of such
dividend,  distribution or right,  the date on which the holders of Common Stock
shall be entitled to any such dividend,  distribution  or right,  and the amount
and  character  thereof,  and (ii) the  date on which  any such  reorganization,
reclassification,    merger,   consolidation,   sale,   transfer,   disposition,
dissolution,  liquidation  or winding  up is to take place and the time,  if any
such  time is to be fixed,  as of which the  holders  of Common  Stock  shall be
entitled  to  exchange  their  shares of Common  Stock for  securities  or other
property  deliverable  upon  such  reorganization,   reclassification,   merger,
consolidation, sale, transfer, disposition,  dissolution, liquidation or winding
up. Each such written notice shall be sufficiently  given if addressed to Holder
at the  last  address  of  Holder  appearing  on the  books of the  Company  and
delivered in accordance with Section 14.2.

          6. No Impairment

          The Company shall not by any action,  including,  without  limitation,
amending  its  certificate  of  incorporation  or  through  any  reorganization,
transfer  of assets,  consolidation,  merger,  dissolution,  issuance or sale of
securities or other voluntary  action,  avoid or seek to avoid the observance or
performance  of any of the terms of this Warrant,  but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
actions as may be  necessary  or  appropriate  to  protect  the rights of Holder
against  impairment.  Without  limiting the  generality  of the  foregoing,  the
Company  will (a) not  increase  the par value of any  shares  of  Common  Stock
receivable  upon the exercise of this Warrant above the amount payable  therefor
upon such exercise immediately prior to such increase in par value, (b) take all
such action as may be  necessary  or  appropriate  in order that the Company may
validly and legally  issue fully paid and  nonassessable  shares of Common Stock
upon the  exercise of this  Warrant,  and (c) use its best efforts to obtain all
such  authorizations,  exemptions  or consents from any public  regulatory  body
having jurisdiction thereof as may be necessary to enable the Company to perform
its obligations under this Warrant.

          Upon the request of Holder,  the  Company  will at any time during the
period this Warrant is outstanding  acknowledge in writing, in form satisfactory
to Holder,  the continuing  validity of this Warrant and the  obligations of the
Company hereunder.

          7. Reservation and Authorization of Common Stock

          From and  after  the  Closing  Date,  the  Company  shall at all times
reserve and keep  available  for  issuance  upon the  exercise of Warrants  such
number  of its  authorized  but  unissued  shares  of  Common  Stock  as will be
sufficient  to permit the  exercise  in full of all  outstanding  Warrants.  All
shares of Common Stock which shall be so issuable,  when issued upon exercise of
any Warrant and payment  therefor in accordance  with the terms of such Warrant,
shall be duly and  validly  issued  and  fully  paid and  nonassessable  and not
subject to preemptive rights.

                                      -9-
<PAGE>

          Before taking any action which would cause an adjustment  reducing the
Current  Warrant Price below the then par value, if any, of the shares of Common
Stock  issuable  upon  exercise  of the  Warrants,  the  Company  shall take any
corporate  action  which may be  necessary in order that the Company may validly
and legally  issue fully paid and  nonassessable  shares of such Common Stock at
such adjusted Current Warrant Price.

          Before  taking any action which would result in an  adjustment  in the
number of shares of Common Stock for which this Warrant is exercisable or in the
Current  Warrant  Price,  the Company  shall obtain all such  authorizations  or
exemptions  thereof,  or consents  thereto,  as may be necessary from any public
regulatory  body or bodies  having  jurisdiction  thereof.

          8. Taking of Record; Stock and Warrant Transfer Books

          In the case of all dividends or other  distributions by the Company to
the holders of its Common Stock with respect to which any provision of Section 4
refers to the taking of record of such  holders,  the Company  will in each case
take such a record and will take such  record as of the close of  business  on a
Business  Day.  The  Company  will not at any  time,  except  upon  dissolution,
liquidation  or winding up of the  Company,  close its stock  transfer  books or
Warrant transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.

          9. Restrictions on Transferability

          The  Warrants  and  the  Warrant  Stock  shall  not  be   transferred,
hypothecated or assigned before satisfaction of the conditions specified in this
Section  9,  which  conditions  are  intended  to  ensure  compliance  with  the
provisions of the  Securities Act with respect to the Transfer of any Warrant or
any Warrant Stock. Holder, by acceptance of this Warrant,  agrees to be bound by
the provisions of this Section 9.

          9.1 Restrictive Legend

          (a) Holder,  by accepting  this  Warrant and any Warrant  Stock agrees
that this Warrant and the Warrant Stock issuable upon exercise hereof may not be
assigned or otherwise  transferred unless and until (i) the Company has received
an opinion of counsel for Holder that such securities may be sold pursuant to an
exemption  from  registration  under the  Securities  Act or (ii) a registration
statement relating to such securities has been filed by the Company and declared
effective by the Commission.

          Each  certificate  for Warrant Stock issuable  hereunder  shall bear a
legend as follows until such  securities have been sold pursuant to an effective
registration statement under the Securities Act:

          "THESE   SECURITIES  HAVE  NOT  BEEN  REGISTERED  UNDER  THE
          SECURITIES ACT OF 1933, AS AMENDED (THE  "SECURITIES  ACT"),
          OR THE SECURITIES  LAWS OF ANY STATE,  AND ARE BEING OFFERED
          AND SOLD  PURSUANT  TO AN  EXEMPTION  FROM THE  REGISTRATION
          REQUIREMENTS  OF THE  SECURITIES  ACT AND SUCH  LAWS.  THESE
          SECURITIES MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO
          AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
          OR PURSUANT TO AN AVAILABLE  EXEMPTION FROM THE REGISTRATION
          REQUIREMENTS OF THE SECURITIES ACT OR SUCH OTHER LAWS."

          (b) Except as otherwise  provided in this Section 9, the Warrant shall
be stamped or otherwise  imprinted with a legend in substantially  the following
form:

                                      -10-
<PAGE>

          "THIS  COMMON  STOCK  PURCHASE  WARRANT  AND THE  SECURITIES
          REPRESENTED  HEREBY  HAVE  NOT  BEEN  REGISTERED  UNDER  THE
          SECURITIES  ACT  OF  1933,  AS  AMENDED,   AND  MAY  NOT  BE
          TRANSFERRED   IN  VIOLATION  OF  SUCH  ACT,  THE  RULES  AND
          REGULATIONS  THEREUNDER  OR THE  PROVISIONS  OF THIS  COMMON
          STOCK PURCHASE WARRANT."

          9.2 Notice of Proposed Transfers

          Prior to any  Transfer or  attempted  Transfer of any  Warrants or any
shares of Restricted Common Stock, the Holder shall give ten days' prior written
notice (a "Transfer Notice") to the Company of Holder's intention to effect such
Transfer,  describing the manner and circumstances of the proposed Transfer, and
obtain  from  counsel  to Holder  who shall be  reasonably  satisfactory  to the
Company,  an  opinion  that  the  proposed  Transfer  of such  Warrants  or such
Restricted  Common  Stock  may  be  effected  without   registration  under  the
Securities  Act. After receipt of the Transfer  Notice and opinion,  the Company
shall, within five days thereof, notify the Holder as to whether such opinion is
reasonably  satisfactory  and, if so, such holder shall thereupon be entitled to
Transfer such Warrants or such  Restricted  Common Stock, in accordance with the
terms of the Transfer Notice.  Each certificate,  if any, evidencing such shares
of Restricted  Common Stock issued upon such Transfer shall bear the restrictive
legend set forth in Section  9.1(a),  and the Warrant  issued upon such Transfer
shall bear the  restrictive  legend set forth in Section  9.1(b),  unless in the
opinion  of such  counsel  such  legend  is not  required  in  order  to  ensure
compliance  with the  Securities  Act.  Holder shall not be entitled to Transfer
such Warrants or such  Restricted  Common Stock until receipt of notice from the
Company under this Section 9.2 that such opinion is reasonably satisfactory.

          9.3 Required Registration

          Pursuant to the terms and conditions set forth in Registration  Rights
Agreement, the Company shall prepare and file with the Commission not later than
the date five (5)  business  days after the date the Company  files the Form 10K
for its fiscal year ending  December 31, 1999,  but in no event later than April
15, 2000, a Registration  Statement relating to the offer and sale of the Common
Stock  issuable  upon exercise of the Warrants and shall use its best efforts to
cause the Commission to declare such Registration  Statement effective under the
Securities Act as promptly as  practicable  but no later than June 30, 2000. 9.4
Termination of Restrictions

          Notwithstanding   the   foregoing   provisions   of   Section  9,  the
restrictions  imposed by this Section upon the  transferability of the Warrants,
the Warrant Stock and the Restricted Common Stock (or Common Stock issuable upon
the exercise of the Warrants) and the legend  requirements  of Section 9.1 shall
terminate as to any  particular  Warrant or share of Warrant Stock or Restricted
Common Stock (or Common Stock  issuable  upon the exercise of the  Warrants) (i)
when and so long as such security shall have been  effectively  registered under
the  Securities  Act and  disposed of pursuant  thereto or (ii) when the Company
shall have  received an opinion of counsel  reasonably  satisfactory  to it that
such shares may be transferred without registration thereof under the Securities

                                      -11-
<PAGE>

Act.  Whenever the restrictions  imposed by Section 9 shall terminate as to this
Warrant, as hereinabove provided, the Holder hereof shall be entitled to receive
from the  Company  upon  written  request of the  Holder,  at the expense of the
Company,  a new Warrant bearing the following legend in place of the restrictive
legend set forth hereon:

          "THE RESTRICTIONS ON  TRANSFERABILITY  OF THE WITHIN WARRANT
          CONTAINED  IN  SECTION 9 HEREOF  TERMINATED  ON  __________,
          _____, AND ARE OF NO FURTHER FORCE AND EFFECT."

All Warrants issued upon  registration of transfer,  division or combination of,
or in  substitution  for,  any Warrant or Warrants  entitled to bear such legend
shall have a similar legend endorsed thereon.  Whenever the restrictions imposed
by this Section shall  terminate as to any share of Restricted  Common Stock, as
hereinabove  provided,  the holder thereof shall be entitled to receive from the
Company,  at the Company's expense,  a new certificate  representing such Common
Stock not bearing the restrictive legend set forth in Section 9.1(a).

          9.5 Listing on Securities Exchange

          If the Company shall list any shares of Common Stock on any securities
exchange or quotation  system, it will, at its expense,  list thereon,  maintain
and, when necessary, increase such listing of, all shares of Common Stock issued
or, to the extent  permissible under the applicable  securities  exchange rules,
issuable upon the exercise of this Warrant so long as any shares of Common Stock
shall be so listed during any such Exercise Period.

          10. Supplying Information

          The Company shall cooperate with Holder in supplying such  information
as may be reasonably  necessary for Holder to complete and file any  information
reporting forms presently or hereafter required by the Commission as a condition
to the  availability of an exemption from the Securities Act for the sale of any
Warrant or Restricted Common Stock. 11. Loss or Mutilation

          Upon  receipt  by the  Company  from  Holder  of  evidence  reasonably
satisfactory  to it of the  ownership  of and the loss,  theft,  destruction  or
mutilation of this Warrant and indemnity reasonably satisfactory to it (it being
understood  that  the  written  agreement  of the  Holder  shall  be  sufficient
indemnity),  and in case of mutilation upon surrender and  cancellation  hereof,
the Company  will execute and deliver in lieu hereof a new Warrant of like tenor
to Holder; provided, in the case of mutilation no indemnity shall be required if
this  Warrant  in   identifiable   form  is   surrendered  to  the  Company  for
cancellation. 12. Office of the Company

          As long as any of the Warrants remain  outstanding,  the Company shall
maintain an office or agency  (which may be the principal  executive  offices of
the Company) where the Warrants may be presented for exercise,  registration  of
transfer, division or combination as provided in this Warrant.

          13. Limitation of Liability

          No provision hereof, in the absence of affirmative action by Holder to
purchase  shares of Common  Stock,  and no  enumeration  herein of the rights or
privileges of Holder hereof,  shall give rise to any liability of Holder for the
purchase price of any Common Stock or as a stockholder  of the Company,  whether
such  liability is asserted by the Company or by  creditors of the Company.

                                      -12-
<PAGE>

          14. Miscellaneous

          14.1 Nonwaiver and Expenses

          No course of dealing or any delay or  failure  to  exercise  any right
hereunder  on the part of Holder  shall  operate  as a waiver  of such  right or
otherwise prejudice Holder's rights, powers or remedies. If the Company fails to
make, when due, any payments provided for hereunder, or fails to comply with any
other provision of this Warrant, the Company shall pay to Holder such amounts as
shall  be  sufficient  to  cover  any  costs  and  expenses  including,  without
limitation,   reasonable   attorneys'   fees,   including   those  of  appellate
proceedings, incurred by Holder in collecting any amounts due pursuant hereto or
in otherwise enforcing any of its rights, powers or remedies hereunder.

          14.2 Notice Generally

          Except  as may be  otherwise  provided  herein,  any  notice  or other
communication  or delivery  required or permitted  hereunder shall be in writing
and shall be delivered personally or sent by certified mail, postage prepaid, or
by a nationally  recognized overnight courier service, and shall be deemed given
when so delivered  personally or by overnight  courier  service,  or, if mailed,
three days after the date of deposit in the United States mails, as follows:

          (a)       if to the Company, to:

                    Educational Video  Conferencing,  Inc.
                    35 East Grassy Sprain Road
                    Yonkers,  NY 10710
                    Attention: Dr. Arol I. Buntzman
                    (914) 787-3500
                    (914) 395-3498 (fax)

                    with a copy to:

                    Fischbein, Badillo, Wagner, Harding
                    909 3rd Avenue, 17th Floor
                    New York, NY 10022
                    Attention:  Joseph D. Alperin, Esq.
                    (212) 826-2000
                    (212) 644-3601 (fax)

          (b)       if to the Holder, to:

                    The Shaar Fund Ltd.,
                    c/o Levinson Capital Management
                    2 World Trade Center, Suite 1820
                    New York, NY 10048
                    Attention:  Samuel Levinson
                    (212) 432-7711
                    (212) 432-7771 (Fax)

                     with a copy to:

                     Cadwalader, Wickersham & Taft
                     100 Maiden Lane
                     New York, NY 10038
                     Attention:  Dennis J. Block, Esq.
                     (212) 504-5555
                     (212) 504-5557 (Fax)

The  Company or the Holder may  change  the  foregoing  address by notice  given
pursuant to this Section 14.2.

                                      -13-
<PAGE>

          14.3 Indemnification

          The Company  agrees to  indemnify  and hold  harmless  Holder from and
against any  liabilities,  obligations,  losses,  damages,  penalties,  actions,
judgments,  suits, claims, costs, attorneys' fees, expenses and disbursements of
any kind which may be imposed upon,  incurred by or asserted  against  Holder in
any manner  relating  to or arising out of any failure by the Company to perform
or  observe  in  any  material   respect  any  of  its  covenants,   agreements,
undertakings or obligations set forth in this Warrant;  provided,  however, that
the Company  will not be liable  hereunder  to the extent that any  liabilities,
obligations,  losses, damages,  penalties,  actions,  judgments,  suits, claims,
costs,  attorneys'  fees,  expenses  or  disbursements  are  found  in  a  final
nonappealable  judgment  by  a  court  to  have  resulted  from  Holder's  gross
negligence,  bad faith or willful misconduct in its capacity as a stockholder or
warrantholder of the Company.

          14.4 Remedies

          Holder in addition to being entitled to exercise all rights granted by
law, including recovery of damages,  will be entitled to specific performance of
its rights under  Section 9 of this  Warrant.  The Company  agrees that monetary
damages would not be adequate  compensation for any loss incurred by reason of a
breach by it of the provisions of Section 9 of this Warrant and hereby agrees to
waive the defense in any action for  specific  performance  that a remedy at law
would be adequate.

          14.5 Successors and Assigns

          Subject to the  provisions of Sections 3.1 and 9, this Warrant and the
rights  evidenced  hereby  shall inure to the benefit of and be binding upon the
successors  of the  Company  and the  successors  and  assigns  of  Holder.  The
provisions  of this  Warrant  are  intended to be for the benefit of all Holders
from time to time of this Warrant and, with respect to Section 9 hereof, holders
of  Warrant  Stock,  and shall be  enforceable  by any such  Holder or holder of
Warrant Stock.

          14.6 Amendment

          This Warrant and all other  Warrants may be modified or amended or the
provisions  hereof  waived with the  written  consent of the Company and Holder.

          14.7 Severability

          Wherever possible, each provision of this Warrant shall be interpreted
in such manner as to be  effective  and valid under  applicable  law, but if any
provision of this Warrant shall be  prohibited  by or invalid  under  applicable
law, such provision shall only be ineffective to the extent of such  prohibition
or  invalidity,  without  invalidating  the  remainder of such  provision or the
remaining provisions of this Warrant.

          14.8 Headings

          The headings used in this Warrant are for the convenience of reference
only and shall not,  for any  purpose,  be deemed a part of this  Warrant.

          14.9 Governing Law

          This  Warrant  shall be governed by the laws of the State of New York,
without regard to the provisions thereof relating to conflicts of law.

                            [SIGNATURE PAGE FOLLOWS.]

                                      -14-
<PAGE>

          IN WITNESS  WHEREOF,  the Company  has caused this  Warrant to be duly
executed  and its  corporate  seal to be  impressed  hereon and  attested by its
Secretary or an Assistant Secretary.

Dated:  February 3, 2000

                                       EDUCATIONAL VIDEO CONFERENCING, INC.

                                       By: /s/ Dr. Arol I. Buntzman
                                           -------------------------------------
                                           Name:  Dr. Arol I. Buntzman
                                           Title: Chairman and Chief Executive
                                                  Officer

Attest:

By:  /s/ Richard Goldenberg
    ----------------------------
    Name:  Richard Goldenberg
    Title: Secretary

                                      -15-
<PAGE>

                                SUBSCRIPTION FORM

                 [To be executed only upon exercise of Warrant]

          The undersigned registered owner of this Warrant irrevocably exercises
this  Warrant  for  the  purchase  of  __________  shares  of  Common  Stock  of
Educational Video Conferencing, Inc. and herewith makes payment therefor, all at
the price and on the terms and conditions specified in this Warrant and requests
that  certificates  for the shares of Common  Stock  hereby  purchased  (and any
securities or other property  issuable upon such exercise) be issued in the name
of and delivered to

________________________________________________________________________________

whose address is

________________________________________________________________________________

and,  if such  shares of Common  Stock  shall not  include  all of the shares of
Common Stock  issuable as provided in this  Warrant,  that a new Warrant of like
tenor and date for the balance of the shares of Common Stock issuable  hereunder
be delivered to the undersigned.

                                           _____________________________________
                                                 (Name of Registered Owner)

                                           _____________________________________
                                              (Signature of Registered Owner)

                                           _____________________________________
                                                     (Street Address)

                                           _____________________________________
                                            (City)      (State)      (Zip Code)

                                      A-1

<PAGE>

                              Notice:  The signature on this  subscription  must
                              correspond  with the name as written upon the face
                              of the within Warrant in every particular, without
                              alteration   or    enlargement   or   any   change
                              whatsoever.

                                      A-2
<PAGE>

                                                                       EXHIBIT B

                                 ASSIGNMENT FORM

          FOR VALUE RECEIVED the  undersigned  registered  owner of this Warrant
hereby  sells,  assigns and transfers  unto the Assignee  named below all of the
rights of the  undersigned  under this  Warrant,  with  respect to the number of
shares of Common Stock set forth below:

                                                        No. of Shares of
    Name and Address of Assignee                           Common Stock
    ----------------------------                           ------------

and does hereby irrevocably constitute and appoint

________________________________________________________________________________

attorney-in-fact  to register  such transfer on the books of  Educational  Video
Conferencing,  Inc. maintained for the purpose,  with full power of substitution
in the premises.

Dated: ________________________

                                             ___________________________________
                                                        (Print Name)

                                             ___________________________________
                                                        (Signature)

                                             ___________________________________
                                                   (Print Name of Witness)

                                             ___________________________________
                                                    (Witness's Signature)

                              Notice:  The  signature  on this  assignment  must
                              correspond  with the name as written upon the face
                              of the within Warrant in every particular, without
                              alteration   or    enlargement   or   any   change
                              whatsoever.

                                      B-1

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