Document:

FORM OF

                             SUBSCRIPTION AGREEMENT

Dear Subscriber:

         You (the  "Subscriber")  hereby  agree to purchase,  and ICOA,  Inc., a
Nevada  corporation  (the  "Company")  hereby agrees to issue and to sell to the
Subscriber,  9% Convertible  Notes (the "Notes")  convertible in accordance with
the terms  thereof  into shares of the  Company's  $.0001 par value common stock
(the  "Company  Shares")  for the  aggregate  consideration  as set forth on the
signature  page  hereof  ["Purchase  Price"].  The form of  Convertible  Note is
annexed  hereto as Exhibit A. (The  Company  Shares are  sometimes  referred  to
herein as the  "Shares"  or "Common  Stock").  (The Notes,  the Company  Shares,
Common  Stock  Purchase  Warrants   ("Warrants")   issuable  to  the  recipients
identified on Schedule B hereto,  the Common Stock issuable upon exercise of the
Warrants,  and the Put Securities (as herein defined) are collectively  referred
to herein  as, the  "Securities").  Upon  acceptance  of this  Agreement  by the
Subscriber,  the  Company  shall issue and  deliver to the  Subscriber  the Note
against payment, by federal funds (U.S.) wire transfer of the Purchase Price.

                  The  following  terms  and  conditions  shall  apply  to  this
subscription.

                  1. Subscriber's Representations and Warranties. The Subscriber
hereby represents and warrants to and agrees with the Company that:

                           (a)  Information on Company.  The Subscriber has been
furnished  with the Company's  audited  financial  statements for the year ended
September 30, 1999 (hereinafter referred to as the "Reports").  In addition, the
Subscriber has received from the Company such other  information  concerning its
operations,  financial  condition  and  other  matters  as  the  Subscriber  has
requested,  and considered all factors the Subscriber deems material in deciding
on the advisability of investing in the Securities (such  information in writing
is collectively, the "Other Written Information").

                           (b)  Information on Subscriber.  The Subscriber is an
"accredited  investor",  as such term is defined in Regulation D promulgated  by
the Commission under the Securities Act of 1933, as amended (the "1933 Act"), is
experienced  in  investments  and business  matters,  has made  investments of a
speculative nature and has purchased securities of United States  publicly-owned
companies in private placements in the past and, with its  representatives,  has
such knowledge and experience in financial, tax and other business matters as to
enable the Subscriber to utilize the  information  made available by the Company
to evaluate the merits and risks of and to make an informed  investment decision
with  respect  to  the  proposed   purchase,   which  represents  a  speculative
investment.  The Subscriber has the authority and is duly and legally  qualified
to purchase and own the  Securities.  The Subscriber is able to bear the risk of
such investment for an indefinite period and to afford a complete loss thereof.

                           (c)  Purchase  of  Note.  On the  Closing  Date,  the
Subscriber will purchase the Note for its own account and not with a view to any
distribution thereof.

                           (d) Compliance  with  Securities  Act. The Subscriber
understands and agrees that the Securities  have not been  registered  under the
1933 Act by reason of their  issuance  in a  transaction  that does not  require
registration under the 1933 Act, in reliance upon Rule 903 of Regulation S under
the 1933  Act,  and  that  such  Securities  must be held  unless  a  subsequent
disposition   is  registered   under  the  1933  Act  or  is  exempt  from  such
registration.

<PAGE>

                           (e) Company Shares Legend.  The Company  Shares,  and
the shares of Common Stock  issuable  upon the exercise of the  Warrants,  shall
bear the following legend:

                  "THESE SHARES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN
                  REGISTERED  UNDER THE  SECURITIES ACT OF 1933, AS AMENDED (THE
                  "1933 ACT"), OR APPLICABLE  STATE OR FOREIGN  SECURITIES LAWS.
                  THESE  SHARES MAY NOT BE  TRANSFERRED  OR RESOLD IN THE UNITED
                  STATES,  OR TO A U.S.  PERSON,  OR TO OR FOR  THE  ACCOUNT  OR
                  BENEFIT OF A U.S.  PERSON  (AS SUCH TERMS ARE  DEFINED IN RULE
                  902 OF  REGULATION  S UNDER  THE 1933 ACT) FOR A PERIOD OF ONE
                  YEAR EXPIRING ON AUGUST 28, 2001,  EXCEPT IN  ACCORDANCE  WITH
                  THE  PROVISIONS  OF  REGULATION S UNDER THE 1933 ACT OR UNLESS
                  REGISTERED  UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES
                  LAWS OR UNLESS THE HOLDER PROVIDES THE COMPANY WITH AN OPINION
                  FROM  COUNSEL  ACCEPTABLE  TO  THE  COMPANY  STATING  THAT  AN
                  EXEMPTION FROM  REGISTRATION  IS AVAILABLE AT THE TIME OF SUCH
                  TRANSFER.  HEDGING TRANSACTIONS INVOLVING THESE SHARES MAY NOT
                  BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT."

                           (f)  Warrants  Legend.  The  Warrants  shall bear the
following legend:

                  "THIS WARRANT AND THE COMMON SHARES  ISSUABLE UPON EXERCISE OF
                  THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
                  OF 1933, AS AMENDED (THE "1933 ACT"),  OR APPLICABLE  STATE OR
                  FOREIGN  SECURITIES  LAWS.  THIS WARRANT AND THE COMMON SHARES
                  ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE  TRANSFERRED
                  OR RESOLD IN THE UNITED STATES,  OR TO A U.S. PERSON, OR TO OR
                  FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON (AS SUCH TERMS ARE
                  DEFINED  IN RULE 902 OF  REGULATION  S UNDER THE 1933 ACT) AND
                  THIS  WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S.
                  PERSON FOR A PERIOD OF ONE YEAR  EXPIRING ON AUGUST 28,  2001,
                  EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER
                  THE  1933  ACT OR  UNLESS  REGISTERED  UNDER  THE 1933 ACT AND
                  APPLICABLE STATE SECURITIES LAWS OR UNLESS THE HOLDER PROVIDES
                  THE COMPANY  WITH AN OPINION FROM  COUNSEL  ACCEPTABLE  TO THE
                  COMPANY  STATING  THAT  AN  EXEMPTION  FROM   REGISTRATION  IS
                  AVAILABLE AT THE TIME OF SUCH TRANSFER.  HEDGING  TRANSACTIONS
                  INVOLVING  THIS  WARRANT OR THE COMMON  SHARES  ISSUABLE  UPON
                  EXERCISE  OF THIS  WARRANT  MAY  NOT BE  CONDUCTED  UNLESS  IN
                  COMPLIANCE WITH THE 1933 ACT."

                           (g) Note  Legend.  The Note shall bear the  following
legend:

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<PAGE>

                  "THIS NOTE AND THE COMMON SHARES  ISSUABLE UPON  CONVERSION OF
                  THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
                  1933,  AS AMENDED (THE "1933  ACT"),  OR  APPLICABLE  STATE OR
                  FOREIGN  SECURITIES  LAWS.  THIS  NOTE AND THE  COMMON  SHARES
                  ISSUABLE UPON  CONVERSION OF THIS NOTE MAY NOT BE  TRANSFERRED
                  OR RESOLD IN THE UNITED STATES,  OR TO A U.S. PERSON, OR TO OR
                  FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON (AS SUCH TERMS ARE
                  DEFINED IN RULE 902 OF  REGULATION S UNDER THE 1933 ACT) FOR A
                  PERIOD OF ONE YEAR  EXPIRING  ON AUGUST  28,  2001,  EXCEPT IN
                  ACCORDANCE  WITH THE PROVISIONS OF REGULATION S UNDER THE 1933
                  ACT OR UNLESS  REGISTERED  UNDER  THE 1933 ACT AND  APPLICABLE
                  STATE  SECURITIES  LAWS OR  UNLESS  THE  HOLDER  PROVIDES  THE
                  COMPANY WITH AN OPINION FROM COUNSEL ACCEPTABLE TO THE COMPANY
                  STATING THAT AN EXEMPTION  FROM  REGISTRATION  IS AVAILABLE AT
                  THE TIME OF SUCH TRANSFER. HEDGING TRANSACTIONS INVOLVING THIS
                  NOTE OR THE COMMON  SHARES  ISSUABLE  UPON  CONVERSION OF THIS
                  NOTE MAY NOT BE CONDUCTED  UNLESS IN COMPLIANCE  WITH THE 1933
                  ACT."

                           (h)  Communication  of  Offer.  The offer to sell the
Securities  was  directly  communicated  to the  Subscriber.  At no time was the
Subscriber  presented  with or solicited  by any leaflet,  newspaper or magazine
article,  radio  or  television  advertisement,  or any  other  form of  general
advertising  or solicited or invited to attend a promotional  meeting  otherwise
than in  connection  and  concurrently  with  such  communicated  offer.  To the
knowledge of the Subscriber, the offer to sell the Securities was not the result
of "directed  selling  efforts" (as that term is defined in Regulation S) by any
Distributor (as that term is defined in Regulation S) or any affiliate thereof.

                           (i)   Offshore   Transaction.    Subscriber   further
represents and warrants to Company as follows:

                                 (i)  Subscriber  is not,  and at the  time  the
offer to  purchase  the  Securities  was  made to  Subscriber  was not,  a "U.S.
Person", as that term is defined under Regulation S of the 1933 Act ("Regulation
S").

                                 (ii)   Subscriber  is  outside  of  the  United
States, as of the date of the execution of this Subscription Agreement.

                                 (iii)  No  resale  of  any  of  the  Securities
subscribed  for under this Agreement has been  pre-arranged  with a purchaser in
the United States.

                                 (iv)  Subscriber is not a Distributor  (as that
term is defined under  Regulation S) and is not purchasing  Securities  with the
intent of distributing  the Securities on behalf of the Company or a Distributor
or any of their  affiliates,  and to the knowledge of the Subscriber there is no
Distributor of the Securities.

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<PAGE>

                                 (v) Subscriber is purchasing the Securities for
its own  account  (and/or  for the  account of other  non-U.S.  Persons  who are
outside of the  United  States)  and not for the  account or benefit of any U.S.
Person.

                                 (vi) Subscriber  hereby covenants and agrees to
transfer or resell any of the Securities  only in accordance with the provisions
of Regulation S including,  without limitation,  Rules 902(c),  902(d),  902(g),
902(h),   902(k),   903(a),   903(b)(3)  and  903(b)(5)  thereof,   pursuant  to
registration  of the  Securities  under the 1933 Act or pursuant to an available
exemption from registration under the 1933 Act.

                                 (vii)  Subscriber  hereby  covenants and agrees
not to engage in hedging  transactions  with regard to the Securities  unless in
compliance with the 1933 Act.

                                 (viii)  The   certificates   representing   the
Securities will bear the legends in Sections 1(e), 1(f) and 1(g) above.

                           (j)  Correctness of  Representations.  The Subscriber
represents  that  the  foregoing  representations  and  warranties  are true and
correct as of the date hereof and, unless the Subscriber  otherwise notifies the
Company prior to the Closing Date (as  hereinafter  defined),  shall be true and
correct as of the Closing Date.  The foregoing  representations  and  warranties
shall survive the Closing Date.

                  2.  Company   Representations  and  Warranties.   The  Company
represents and warrants to and agrees with the Subscriber that:

                           (a) Due  Incorporation.  The  Company and each of its
subsidiaries  is a  corporation  duly  organized,  validly  existing and in good
standing under the laws of the respective  jurisdictions of their  incorporation
and have the requisite  corporate power to own their  properties and to carry on
their business as now being conducted.  The Company and each of its subsidiaries
is  duly  qualified  as a  foreign  corporation  to do  business  and is in good
standing in each  jurisdiction  where the nature of the  business  conducted  or
property  owned by it makes  such  qualification  necessary,  other  than  those
jurisdictions  in which the  failure  to so  qualify  would not have a  material
adverse effect on the business,  operations or prospects or condition (financial
or otherwise) of the Company.

                           (b)  Outstanding  Stock.  All issued and  outstanding
shares of capital  stock of the  Company and each of its  subsidiaries  has been
duly  authorized  and  validly  issued  and are fully  paid and  non-assessable.
Schedule 2(b) annexed hereto is a description  of the authorized  capitalization
of the Company  and the equity and rights to acquire  equity  outstanding  as of
July 31, 2000.

                           (c)  Authority;  Enforceability.  This  Agreement has
been duly  authorized,  executed and delivered by the Company and is a valid and
binding  agreement   enforceable  in  accordance  with  its  terms,  subject  to
bankruptcy,  insolvency,  fraudulent  transfer,  reorganization,  moratorium and
similar laws of general applicability relating to or affecting creditors' rights
generally  and to  general  principles  of  equity;  and the  Company  has  full
corporate  power and  authority  necessary to enter into this  Agreement  and to
perform its obligations  hereunder and all other agreements  entered into by the
Company relating hereto.

                           (d)  Additional  Issuances.  There are no outstanding
agreements or preemptive or similar rights  affecting the Company's common stock
or equity  and no  outstanding  rights,  warrants  or  options  to  acquire,  or
instruments   convertible   into  or   exchangeable   for,  or   agreements   or
understandings  with  respect  to the sale or  issuance  of any shares of common
stock  or  equity  of  the  Company  or  other  equity  interest  in  any of the
subsidiaries of the Company, except as described in the Reports or Other Written
Information.

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<PAGE>

                           (e) Consents. No consent, approval,  authorization or
order  of  any  court,   governmental   agency  or  body  or  arbitrator  having
jurisdiction over the Company, or any of its affiliates, the NASD, NASDAQ or the
Company's  Shareholders  is required for  execution of this  Agreement,  and all
other  agreements  entered  into by the  Company  relating  thereto,  including,
without limitation  issuance and sale of the Securities,  and the performance of
the Company's obligations hereunder.

                           (f)  No   Violation   or   Conflict.   Assuming   the
representations  and  warranties  of the  Subscriber in Paragraph 1 are true and
correct and the Subscriber  complies with its obligations  under this Agreement,
neither the  issuance  and sale of the  Securities  nor the  performance  of its
obligations  under this Agreement and all other  agreements  entered into by the
Company relating thereto by the Company will:

                                 (i) violate,  conflict with, result in a breach
of, or  constitute a default (or an event which with the giving of notice or the
lapse of time or both would be reasonably  likely to constitute a default) under
(A) the  articles of  incorporation,  charter or bylaws of the Company or any of
its affiliates,  (B) to the Company's knowledge,  any decree,  judgment,  order,
law, treaty, rule, regulation or determination  applicable to the Company or any
of its  affiliates  of any court,  governmental  agency or body,  or  arbitrator
having  jurisdiction  over  the  Company  or any of its  affiliates  or over the
properties  or  assets  of the  Company  or any of its  affiliates  except as to
foreign law applicable to the Subscriber,  (C) the terms of any bond, debenture,
note or any other evidence of  indebtedness,  or any agreement,  stock option or
other  similar  plan,  indenture,  lease,  mortgage,  deed  of  trust  or  other
instrument to which the Company or any of its  affiliates  is a party,  by which
the Company or any of its affiliates is bound, or to which any of the properties
of the  Company or any of its  affiliates  is  subject,  or (D) the terms of any
"lock-up" or similar provision of any underwriting or similar agreement to which
the Company, or any of its affiliates is a party; or

                                 (ii) result in the  creation or  imposition  of
any lien,  charge or encumbrance upon the Securities or any of the assets of the
Company, or any of its affiliates.

                           (g) The Securities. The Securities upon issuance:

                                 (i)  are,  or will be,  free  and  clear of any
security interests, liens, claims or other encumbrances, subject to restrictions
upon transfer under the 1933 Act and State laws;

                                 (ii) have been,  or will be,  duly and  validly
authorized  and on the date of issuance and on the Closing Date, as  hereinafter
defined, and the date the Note is converted, and the Warrants are exercised, the
Securities will be duly and validly issued, fully paid and nonassessable (and if
registered  pursuant  to the 1933  Act,  and  resold  pursuant  to an  effective
registration statement will be free trading and unrestricted,  provided that the
Subscriber complies with the Prospectus delivery requirements);

                                 (iii)  will not  have  been  issued  or sold in
violation  of any  preemptive  or other  similar  rights of the  holders  of any
securities of the Company;

                                 (iv) will not subject  the  holders  thereof to
personal liability by reason of being such holders; and

                           (h) Litigation.  Except as set forth in Schedule 2(h)
hereto, there is no pending or, to the best knowledge of the Company, threatened
action, suit, proceeding or investigation before any court,  governmental agency
or body,  or  arbitrator  having  jurisdiction  over the Company,  or any of its
affiliates  that would affect the execution by the Company or the performance by
the Company of its obligations  under this Agreement,  and all other  agreements
entered into by the Company relating hereto.

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<PAGE>

                           (i)  Disability.  The Company has no knowledge of any
impediment, nor is there any present impediment which would or could prevent the
Company  from  becoming a fully  reporting  company with a class of common stock
registered  pursuant to Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "1934 Act").

                           (j) No  Market  Manipulation.  The  Company  has  not
taken,  and will not take,  directly or indirectly,  any action  designed to, or
that might  reasonably  be  expected  to,  cause or result in  stabilization  or
manipulation  of the price of the common stock of the Company to facilitate  the
sale or resale of the Securities or affect the price at which the Securities may
be issued.

                           (k) Information  Concerning Company.  The Reports and
Other  Written  Information  contain all  material  information  relating to the
Company and its operations and financial  condition as of their respective dates
which  information  is required to be disclosed  therein.  Since the date of the
financial  statements  included  in the  Reports,  and except as modified in the
Other  Written  Information,  there has been no material  adverse  change in the
Company's business, financial condition or affairs not disclosed in the Reports.
The Reports and Other Written Information do not contain any untrue statement of
a material fact or omit to state a material  fact required to be stated  therein
or necessary to make the statements therein not misleading.

                           (l)  Dilution.  The  number of Shares  issuable  upon
conversion  of the Note may  increase  substantially  in certain  circumstances,
including,  but not necessarily limited to, the circumstance wherein the trading
price  of the  Common  Stock  declines  prior to  conversion  of the  Note.  The
Company's executive officers and directors have studied and fully understand the
nature of the  Securities  being  sold  hereby  and  recognize  that they have a
potential  dilutive effect. The board of directors of the Company has concluded,
in its good faith business judgment, that such issuance is in the best interests
of the Company.  The Company  specifically  acknowledges  that its obligation to
issue the Shares upon  conversion  of the Note and  exercise of the  Warrants is
binding upon the Company and enforceable,  except as otherwise described in this
Subscription Agreement or the Note, regardless of the dilution such issuance may
have on the ownership interests of other shareholders of the Company.

                           (m)Stop  Transfer.   The  Securities  are  restricted
securities as of the date of this Agreement. The Company will not issue any stop
transfer  order or other order  impeding the sale and delivery of the Securities
at such time as the  Securities  are  registered for public sale or an exemption
from registration is available.

                           (n)  Defaults.  Neither  the  Company  nor any of its
subsidiaries is in violation of its Articles of Incorporation or ByLaws. Neither
the Company nor any of its  subsidiaries is (i) in default under or in violation
of any other material agreement or instrument to which it is a party or by which
it or any of its  properties  are bound or affected,  which default or violation
would have a  material  adverse  effect on the  Company,  (ii) in  default  with
respect to any order of any court, arbitrator or governmental body or subject to
or party to any order of any court or governmental  authority arising out of any
action, suit or proceeding under any statute or other law respecting  antitrust,
monopoly, restraint of trade, unfair competition or similar matters, or (iii) to
its  knowledge  in  violation  of  any  statute,   rule  or  regulation  of  any
governmental  authority which violation would have a material  adverse effect on
the Company.

                           (o) No Integrated Offering.  Neither the Company, nor
any of its  affiliates,  nor any  person  acting  on its or  their  behalf,  has
directly or indirectly made any offers or sales of any security or solicited any
offers to buy any security under  circumstances that would cause the offering of
the Securities  pursuant to this Agreement to be integrated with prior offerings
by the Company for purposes of the 1933

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<PAGE>

Act which would prevent the Company from selling the  Securities  under the 1933
Act, or any applicable  exchange-related  stockholder approval  provisions.  Nor
will the Company or any of its  affiliates  or  subsidiaries  take any action or
steps that would cause the  offering of the  Securities  to be  integrated  with
other offerings.

                           (p) No General Solicitation. Neither the Company, nor
any of its affiliates,  nor to its knowledge,  any person acting on its or their
behalf, has engaged in any form of general  solicitation or general  advertising
(within the meaning of Regulation D under the Act) in connection  with the offer
or sale of the Securities.

                           (q) Listing. The Company's Common Stock is listed for
trading on the OTC Pink Sheets ("Pink  Sheets") and  satisfies all  requirements
for the  continuation  of such listing.  The Company has not received any notice
that its common  stock will be delisted  from the Pink Sheets or that the Common
Stock does not meet all requirements for the continuation of such listing.

                           (r)  Offshore   Transaction.   The  Company   further
represents and warrants to Subscriber as follows:

                                 (i) The  Company is not a  reporting  issuer as
defined by Rule 902 of Regulation S.

                                 (ii) The Company has not offered the Securities
to any  person  in the  United  States  or to any U.S.  Person  (as that term is
defined in Regulation S).

                                 (iii) In  connection  with the  offering of the
Securities,  the Company has not engaged in any "directed  selling  efforts" (as
that term is defined in Regulation S) nor has the Company  conducted any general
solicitation  relating to the  offering of the  Securities  to persons  residing
within  the  United  States or to U.S.  Persons  (as that  terms is  defined  in
Regulation S).

                                 (iv) The Company is not a Distributor  (as that
term is defined under  Regulation S) and is not issuing the Securities  with the
intent of  distributing  the  Securities  on behalf  of any  Distributor  or any
affiliate  thereof,  and to the knowledge of the Company there is no Distributor
of the Securities.

                                 (v) Pursuant to Rule 903(c)(3)(iii)(B)(4) under
the 1933 Act,  the Company  hereby  agrees for the benefit of all holders of the
Securities  that it will refuse to register any transfer of the  Securities  not
made in accordance  with the  provisions  of Regulation S and this  Subscription
Agreement.

                           (s)  Correctness  of  Representations.   The  Company
represents  that  the  foregoing  representations  and  warranties  are true and
correct as of the date hereof in all material respects, will be true and correct
as of  the  Closing  Date,  and,  unless  the  Company  otherwise  notifies  the
Subscriber  prior to the Closing Date, shall be true and correct in all material
respects as of the Closing Date.  The foregoing  representations  and warranties
shall survive the Closing Date.

                  3. Regulation S Offering. This Offering is being made pursuant
to the exemption  from the  registration  provisions of the 1933 Act afforded by
Regulation  S  promulgated  thereunder.  On the Closing  Date,  the Company will
provide an opinion  acceptable  to Subscriber  from the Company's  legal counsel
opining on the  availability  of the Regulation S exemption as it relates to the
offer and  issuance of the  Securities.  A form of the legal  opinion is annexed
hereto as Exhibit C. The Company will provide,  at

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<PAGE>

the Company's expense, such other legal opinions in the future as are reasonably
necessary for the conversion of the Note and exercise of the Warrants.

                  4.  Reissuance of  Securities.  The Company  agrees to reissue
certificates  representing  the  Securities  without  the  legends  set forth in
Sections 1(e) and 1(f) above at such time as (a) the holder thereof is permitted
to dispose of such Securities pursuant to Rule 144(k) under the Act, or (b) upon
resale subject to an effective  registration  statement after the Securities are
registered under the Act. The Company agrees to cooperate with the Subscriber in
connection with all resales  pursuant to Rule 144(d) and Rule 144(k) and provide
legal  opinions  necessary  to allow such  resales  provided the Company and its
counsel receive  reasonably  requested  representations  from the Subscriber and
selling broker, if any.

                  5.  Redemption.  The  Company  may not redeem  the  Securities
without  the  consent  of the  holder  of the  Securities  except  as  otherwise
described herein.

                  6. Fees/Warrants.

                           (a)  The   Company   shall  pay  to  counsel  to  the
Subscriber  its fee of  $17,000  ($8,500  of which has  already  been  paid) for
services   rendered  to  Subscribers  in  reviewing  this  Agreement  and  other
Subscription  Agreements  for aggregate  subscription  amounts of up to $500,000
(the "Initial  Offering"),  and acting as escrow agent for the Initial Offering.
The  Company  will  pay a cash fee in the  amount  of ten  percent  (10%) of the
Purchase  Price and Put Purchase  Price  designated on the signature page hereto
("Finder's  Fee") and of the actual  cash  proceeds  received  by the Company in
connection  with the  exercise of the  Warrants  issued in  connection  with the
Initial Offering  ("Initial  Warrants") and Warrants issuable in connection with
the Put  ("Put  Warrants")  ("Warrant  Exercise  Compensation")  to the  Finders
identified  on Schedule B hereto.  Collectively,  the Initial  Warrants  and Put
Warrants are referred to herein as Warrants.  The Finder's Fee must be paid each
Closing Date and Put Closing Date.  The Warrant  Exercise  Compensation  must be
paid  within ten (10) days of Warrant  exercise  to the  Finders  identified  on
Schedule B hereto.  The Finder's Fee and legal fees will be payable out of funds
held  pursuant to a Funds  Escrow  Agreement  to be entered into by the Company,
Subscriber and an Escrow Agent.

                           (b) The  Company  will also issue and  deliver to the
Warrant  Recipients,  Warrants in the amounts designated on Schedule B hereto in
connection with the Initial  Offering and exercise of the Put. A form of Warrant
is annexed hereto as Exhibit D. The per share  "Purchase  Price" of Common Stock
as defined in the  Warrant  shall be equal to the lowest bid price of the Common
Stock as  reported  on the Pink  Sheets,  the NASD OTC  Bulletin  Board,  NASDAQ
SmallCap Market, NASDAQ National Market System,  American Stock Exchange, or New
York Stock  Exchange  (whichever  of the  foregoing is at the time the principal
trading  exchange or market for the Common Stock,  the "Principal  Market"),  or
such other  principal  market or  exchange  where the Common  Stock is listed or
traded for the ten (10) trading days  preceding  but not  including  the Closing
Date or Put Closing  Date,  as the case may be. The  aggregate  number of Common
Shares  purchasable  upon  exercise of the Initial  Warrants and Put Warrants is
equal to 12% of the Common  Shares  issued upon  conversion of the Notes and Put
Notes.  The Warrants  must be delivered no later than the Delivery Date (defined
in Section  9.1(b) hereof) in relation to the relevant  Conversion  Date. In the
event the Notes issued in the Initial Offering are not fully converted as of the
Maturity Date of the Notes, then at the election of each Warrant Recipient,  the
Maturity  Date (as  defined in the Note) shall be deemed a  Conversion  Date (as
defined in the Note) and the  Conversion  Price (as defined in the Note) will be
deemed to be 78% of the  average of the three  lowest  closing bid prices of the
Common  Stock as  reported  by the  Principal  Market for the ten  trading  days
preceding  but not including the Maturity  Date.  Failure to timely  deliver the
Finder's Fee, Warrant  Exercise  Compensation or the Warrants shall be deemed an
Event of Default as defined in Article III of the Note and Put Note.

                                       8
<PAGE>

                           (c) The  Finder's  Fee and legal fees will be paid to
the Finders and attorneys  only when,  as, and if a  corresponding  subscription
amount  is  released  from  escrow  to the  Company.  All  the  representations,
covenants, warranties, undertakings, and indemnification, other rights including
but not limited to registration  rights, and rights in Section 9 hereof, made or
granted to or for the benefit of the Subscriber are hereby also made and granted
to the Warrant Recipients in respect of the Warrants and Company Shares issuable
upon exercise of the Warrants.

                  7.1.  Covenants  of the  Company.  The Company  covenants  and
agrees with the Subscriber as follows:

                           (a) The Company will advise the Subscriber,  promptly
after it receives notice of issuance by the Securities and Exchange  Commission,
any state securities  commission or any other  regulatory  authority of any stop
order or of any order preventing or suspending any offering of any securities of
the Company,  or of the suspension of the  qualification  of the Common Stock of
the Company for offering or sale in any  jurisdiction,  or the initiation of any
proceeding for any such purpose.

                           (b) The Company shall promptly  secure the listing of
the Company Shares,  and Common Stock issuable upon the exercise of the Warrants
upon each national securities  exchange,  or automated quotation system, if any,
upon which shares of Common Stock are then listed (subject to official notice of
issuance) and shall  maintain such listing so long as any other shares of Common
Stock shall be so listed.  The Company will use its best efforts to maintain the
listing  of its  Common  Stock on a  Principal  Market,  and will  comply in all
respects with the Company's  reporting,  filing and other  obligations under the
bylaws or rules of the National  Association of Securities  Dealers ("NASD") and
such exchanges, as applicable. The Company will provide the Subscriber copies of
all  notices it receives  notifying  the  Company of the  threatened  and actual
delisting of the Common Stock from any Principal Market.

                           (c) The  Company  shall  notify  the  SEC,  NASD  and
applicable  state  authorities,  in accordance with their  requirements,  of the
transactions  contemplated by this Agreement, and shall take all other necessary
action and  proceedings as may be required and permitted by applicable law, rule
and  regulation,  for the legal  and valid  issuance  of the  Securities  to the
Subscriber and promptly provide copies thereof to Subscriber.

                           (d)  Until  at  least   two  (2)   years   after  the
effectiveness  of  the  Registration  Statement  on  Form  SB-2  or  such  other
Registration  Statement  described in Section 10.1(iv) hereof,  the Company will
(i) cause its Common Stock to continue to be registered  under Sections 12(b) or
12(g) of the Exchange  Act,  (ii) comply in all respects  with its reporting and
filing  obligations  under the Exchange  Act,  (iii)  comply with all  reporting
requirements  that is applicable to an issuer with a class of Shares  registered
pursuant  to  Section  12(g)  of the  Exchange  Act,  and (iv)  comply  with all
requirements  related  to any  registration  statement  filed  pursuant  to this
Agreement. The Company will not take any action or file any document (whether or
not  permitted  by the  Act or the  Exchange  Act or the  rules  thereunder)  to
terminate or suspend such  registration or to terminate or suspend its reporting
and  filing  obligations  under  said Acts  until the later of (y) two (2) years
after the  effective  date of the  Registration  Statement  on Form SB-2 or such
other  Registration  Statement  described in Section 10.1(iv) hereof, or (z) the
sale by the  Subscribers  of all the  Company  Shares  issuable  by the  Company
pursuant to this Agreement. Until at least two (2) years after the Warrants have
been exercised, the Company will use its commercial best efforts to initiate the
listing of the Common  Stock on the NASD OTC  Bulletin  Board and will comply in
all respects with the Company's  reporting,  filing and other  obligations under
the bylaws or rules of the NASD and NASDAQ.

                           (e) The Company undertakes to use the proceeds of the
Subscriber's funds for working capital and expenses of this offering.

                                       9
<PAGE>

                  8.       Covenants of the Company and Subscriber Regarding
                           -------------------------------------------------
                           Indemnification.
                           ----------------

                           (a) The Company  agrees to indemnify,  hold harmless,
reimburse  and defend  Subscriber,  Subscriber's  officers,  directors,  agents,
affiliates,  control  persons,  and principal  shareholders,  against any claim,
cost, expense, liability, obligation, loss or damage (including reasonable legal
fees) of any  nature,  incurred by or imposed  upon  Subscriber  which  results,
arises out of or is based upon (i) any misrepresentation by Company or breach of
any  warranty  by Company in this  Agreement  or in any  Exhibits  or  Schedules
attached hereto, or Reports or other Written Information;  or (ii) any breach or
default in performance by Company of any covenant or undertaking to be performed
by Company  hereunder,  or any other  agreement  entered into by the Company and
Subscribers relating hereto.

                           (b)  Subscriber  agrees to indemnify,  hold harmless,
reimburse and defend the Company at all times against any claim, cost,  expense,
liability,  obligation,  loss or damage (including reasonable legal fees) of any
nature,  incurred by or imposed upon the Company which results, arises out of or
is based upon (a) any  misrepresentation  by Subscriber in this  Agreement or in
any  Exhibits  or  Schedules  attached  hereto;  or (b) any breach or default in
performance  by  Subscriber  of any covenant or  undertaking  to be performed by
Subscriber  hereunder,  or any other  agreement  entered into by the Company and
Subscribers relating hereto.

                           (c) The  procedures  set forth in Section  10.6 shall
apply to the indemnifications set forth in Sections 8(a) and 8(b) above.

                  9.1.     Conversion of Note.
                           ------------------

                           (a) Upon the  conversion of the Note or part thereof,
the  Company  shall,  at its own cost and  expense,  take all  necessary  action
(including  the issuance of an opinion of counsel) to assure that the  Company's
transfer agent shall issue stock  certificates in the name of Subscriber (or its
nominee)  or  such  other  persons  as  designated  by  Subscriber  and in  such
denominations to be specified at conversion representing the number of shares of
common  stock  issuable  upon such  conversion.  The  Company  warrants  that no
instructions  other  than these  instructions  have been or will be given to the
transfer  agent of the  Company's  Common  Stock  and that  the  Shares  will be
unlegended, free-trading, and freely transferable, and will not contain a legend
restricting  the resale or  transferability  of the Company Shares  provided the
Subscriber has notified the Company of Subscriber's intention to sell the Shares
and the  Shares are  included  in an  effective  registration  statement  or are
otherwise exempt from registration when sold.

                           b.  Subscriber  will give  notice of its  decision to
exercise  its  right to  convert  the Note or part  thereof  by  telecopying  an
executed and completed  Notice of  conversion  ("Notice of  Conversion")  to the
Company.  The  Subscriber  will not be required to surrender  the Note until the
Note has been  fully  converted  or  satisfied.  Each  date on which a Notice of
Conversion is telecopied to the Company in accordance with the provisions hereof
shall be deemed a Conversion  Date. The Company will or cause the transfer agent
to transmit the  Company's  Common Stock  certificates  representing  the Shares
issuable upon conversion of the Note (and a Note representing the balance of the
Note not so converted, if requested by Subscriber) to the Subscriber via express
courier for receipt by such  Subscriber  within five business days after receipt
by the Company of the Notice of Conversion (the "Delivery  Date"). To the extent
that a  Subscriber  elects not to surrender a Note for  reissuance  upon partial
payment or conversion, the Subscriber hereby indemnifies the Company against any
and all loss or  damage  attributable  to a  third-party  claim in an  amount in
excess of the actual amount then due under the Note.

                                       10
<PAGE>

                           c.  The  Company  understands  that  a  delay  in the
delivery of the Shares in the form required pursuant to Section 9 hereof, or the
Mandatory Redemption Amount described in Section 9.2 hereof, beyond the Delivery
Date or Mandatory  Redemption Payment Date (as hereinafter defined) could result
in economic loss to the  Subscriber.  As compensation to the Subscriber for such
loss,  the  Company  agrees  to pay late  payments  to the  Subscriber  for late
issuance  of Shares  in the form  required  pursuant  to  Section 9 hereof  upon
conversion of the Note or late payment of the Mandatory  Redemption  Amount,  in
the  amount  of $100 per  business  day  after the  Delivery  Date or  Mandatory
Redemption  Payment Date, as the case may be, for each $10,000 of Note principal
amount being converted or redeemed.  The Company shall pay any payments incurred
under this Section in immediately available funds upon demand.  Furthermore,  in
addition to any other remedies which may be available to the Subscriber,  in the
event that the Company fails for any reason to effect  delivery of the Shares by
the Delivery Date or make payment by the Mandatory  Redemption Payment Date, the
Subscriber  will be  entitled  to revoke all or part of the  relevant  Notice of
Conversion  or rescind  all or part of the  notice of  Mandatory  Redemption  by
delivery of a notice to such effect to the Company whereupon the Company and the
Subscriber  shall each be restored  to their  respective  positions  immediately
prior to the delivery of such notice, except that late payment charges described
above shall be payable  through the date notice of  revocation  or rescission is
given to the Company.

                           d.  Nothing  contained  herein  or  in  any  document
referred  to herein  or  delivered  in  connection  herewith  shall be deemed to
establish  or require  the  payment of a rate of  interest  or other  charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest or dividends  required to be paid or other charges hereunder exceed the
maximum  permitted by such law, any payments in excess of such maximum  shall be
credited against amounts owed by the Company to the Subscriber and thus refunded
to the Company.

                  9.2.  Mandatory  Redemption.  In the event the Company may not
issue Shares on a Delivery Date or at any time when the Note is convertible, for
any reason,  then at the  Subscriber's  election,  the  Company  must pay to the
Subscriber  five (5) business  days after  request by the  Subscriber  or on the
Delivery  Date (if  requested by the  Subscriber)  a sum of money  determined by
multiplying  the principal of the Note not  convertible  by 130%,  together with
accrued  but unpaid  interest  thereon  ("Mandatory  Redemption  Payment").  The
Mandatory Redemption Payment must be received by the Subscriber on the same date
as the Company  Shares  otherwise  deliverable  or within five (5) business days
after request,  whichever is sooner ("Mandatory  Redemption Payment Date"). Upon
receipt of the Mandatory  Redemption  Payment,  the corresponding Note principal
and interest will be deemed paid and no longer outstanding.

                  9.3. Maximum Conversion.  The Subscriber shall not be entitled
to convert on a Conversion  Date that amount of the Note in connection with that
number of shares of Common  Stock which would be in excess of the sum of (i) the
number of shares of Common Stock  beneficially  owned by the  Subscriber and its
affiliates on a Conversion  Date,  and (ii) the number of shares of Common Stock
issuable upon the conversion of the Note with respect to which the determination
of this  proviso is being  made on a  Conversion  Date,  which  would  result in
beneficial  ownership by the Subscriber and its affiliates of more than 4.99% of
the outstanding  shares of Common Stock of the Company on such Conversion  Date.
For  the  purposes  of  the  proviso  to  the  immediately  preceding  sentence,
beneficial ownership shall be determined in accordance with Section 13(d) of the
Securities  Exchange Act of 1934, as amended,  and Regulation 13d-3  thereunder.
Subject to the  foregoing,  the  Subscriber  shall not be  limited to  aggregate
conversions of only 4.99%.  The  Subscriber  may void the conversion  limitation
described  in this  Section 9.3 upon 75 days prior  notice to the  Company.  The
Subscriber may allocate  which of the equity of the Company deemed  beneficially
owned by the Subscriber  shall be included in the 4.99% amount  described  above
and which shall be allocated to the excess above 4.99%.

                                       11
<PAGE>

                  9.4.  Injunction - Posting of Bond.  In the event a Subscriber
shall  elect to  convert a Note or part  thereof,  the  Company  may not  refuse
conversion  based on any claim that such  Subscriber  or any one  associated  or
affiliated  with such  Subscriber  has been  engaged  in any  violation  of law,
unless,  an injunction  from a court,  on notice,  restraining  and or enjoining
conversion  of all or part of said Note shall have been sought and  obtained and
the Company posts a surety bond for the benefit of such Subscriber in the amount
of 130% of the amount of the Note,  which is subject  to the  injunction,  which
bond shall remain in effect until the  completion of  arbitration/litigation  of
the dispute and the proceeds of which shall be payable to such Subscriber to the
extent it obtains judgment.

                  9.5. Buy-In.  In addition to any other rights available to the
Subscriber,  if the  Company  fails to deliver  to the  Subscriber  such  shares
issuable  upon  conversion  of a Note by the  Delivery  Date  and if  after  the
Delivery  Date  the  Subscriber  purchases  (in an open  market  transaction  or
otherwise)  shares of Common Stock to deliver in  satisfaction of a sale by such
Subscriber of the Common Stock which the Subscriber  anticipated  receiving upon
such  conversion  (a  "Buy-In"),  then  the  Company  shall  pay in  cash to the
Subscriber  (in  addition  to  any  remedies  available  to or  elected  by  the
Subscriber)  the  amount  by which (A) the  Subscriber's  total  purchase  price
(including  brokerage  commissions,  if any) for the  shares of Common  Stock so
purchased exceeds (B) the aggregate principal and/or interest amount of the Note
for which such conversion was not timely honored, together with interest thereon
at a rate of 15% per annum,  accruing until such amount and any accrued interest
thereon is paid in full (which  amount shall be paid as  liquidated  damages and
not as a penalty).  For example,  if the Subscriber  purchases  shares of Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to
an  attempted  conversion  of $10,000 of note  principal  and/or  interest,  the
Company  shall be required to pay the  Subscriber  $1,000,  plus  interest.  The
Subscriber  shall  provide the Company  written  notice  indicating  the amounts
payable to the Subscriber in respect of the Buy-In.

                  10.1.  Registration  Rights.  The  Company  hereby  grants the
following registration rights to holders of the Securities.

                                 (i) On one  occasion,  for a period  commencing
151 days  after the  Closing  Date,  but not later than  three  years  after the
Closing Date ("Request Date"), the Company, upon a written request therefor from
any record  holder or holders of more than 50% of the aggregate of the Company's
Shares issued and issuable  upon  conversion of the Note and the Put Notes which
are actually  issued (the  Securities,  Put Securities and securities  issued or
issuable by virtue of ownership of the Securities,  and Put  Securities,  being,
the  "Registrable   Securities"),   shall  prepare  and  file  with  the  SEC  a
registration  statement under the Act covering the Registrable  Securities which
are the subject of such  request,  unless such  Registrable  Securities  are the
subject of an effective registration statement. In addition, upon the receipt of
such request, the Company shall promptly give written notice to all other record
holders of the Registrable  Securities that such registration statement is to be
filed and shall include in such registration  statement  Registrable  Securities
for which it has  received  written  requests  within 10 days after the  Company
gives such written notice.  Such other requesting record holders shall be deemed
to have exercised their demand registration right under this Section 10.1(i). As
a condition  precedent to the inclusion of  Registrable  Securities,  the holder
thereof  shall  provide  the  Company  with  such  information  as  the  Company
reasonably  requests.  The obligation of the Company under this Section  10.1(i)
shall be limited to one registration statement.

                                 (ii) If the  Company  at any time  proposes  to
register any of its securities under the Act for sale to the public, whether for
its own account or for the  account of other  security  holders or both,  except
with respect to  registration  statements  on Forms S-4, S-8 or another form not
available for  registering  the  Registrable  Securities for sale to the public,
provided the Registrable  Securities are not otherwise  registered for resale by
the Subscriber or Holder pursuant to an effective registration  statement,  each
such  time it will give at least 30 days'  prior  written  notice to the  record
holder of the Registrable Securities of its

                                       12
<PAGE>

intention  so to do.  Upon the written  request of the  holder,  received by the
Company  within 30 days after the giving of any such notice by the  Company,  to
register  any of  the  Registrable  Securities,  the  Company  will  cause  such
Registrable  Securities as to which registration shall have been so requested to
be included  with the  securities  to be covered by the  registration  statement
proposed to be filed by the  Company,  all to the extent  required to permit the
sale or other  disposition  of the  Registrable  Securities so registered by the
holder of such  Registrable  Securities  (the  "Seller").  In the event that any
registration pursuant to this Section 10.1(ii) shall be, in whole or in part, an
underwritten  public  offering  of common  stock of the  Company,  the number of
shares of Registrable  Securities to be included in such an underwriting  may be
reduced by the  managing  underwriter  if and to the extent that the Company and
the  underwriter  shall  reasonably be of the opinion that such inclusion  would
adversely  affect the  marketing  of the  securities  to be sold by the  Company
therein; provided,  however, that the Company shall notify the Seller in writing
of any such reduction.  Notwithstanding the forgoing provisions, or Section 10.4
hereof,  the Company may withdraw or delay or suffer a delay of any registration
statement  referred to in this Section  10.1(ii)  without thereby  incurring any
liability to the Seller.

                                 (iii) If, at the time any  written  request for
registration is received by the Company pursuant to Section 10.1(i), the Company
has  determined  to  proceed  with  the  actual  preparation  and  filing  of  a
registration  statement under the 1933 Act in connection with the proposed offer
and sale for cash of any of its securities  for the Company's own account,  such
written request shall be deemed to have been given pursuant to Section  10.1(ii)
rather  than  Section  10.1(i),  and the rights of the  holders  of  Registrable
Securities covered by such written request shall be governed by Section 10.1(ii)
except  that  the  Company  or  underwriter,  if  any,  may  not  withdraw  such
registration  or limit the amount of  Registrable  Securities  included  in such
registration.

                                 (iv) The Company shall file with the Commission
within 90 days of the Closing Date (the "Filing  Date"),  and use its reasonable
commercial  efforts to cause to be declared  effective a Form SB-2  registration
statement (or such other form that it is eligible to use) within 150 days of the
Closing  Date in order to register  the  Registrable  Securities  for resale and
distribution  under  the  Act.  The  registration  statement  described  in this
paragraph must be declared  effective by the  Commission  within 150 days of the
Closing Date (as defined herein)  ("Effective  Date"). The Company will register
not  less  than  45,000,000  shares  of  Common  Stock  in  the   aforedescribed
registration  statement  of  which  not less  than  33,000,000  Shares  shall be
reserved for issuance upon  conversion of the Notes and exercise of the Warrants
issuable in connection with the Notes and the remaining  registered Shares shall
be reserved for issuance  upon  conversion  of the Put Notes and exercise of the
Warrants  issuable in connection with the Put Notes. The Registrable  Securities
shall be reserved and set aside  exclusively  for the benefit of the  Subscriber
and Warrant Recipients, as the case may be, and not issued, employed or reserved
for anyone other than the Subscriber and Warrant  Recipients.  Such registration
statement will be promptly amended or additional registration statements will be
promptly filed by the Company as necessary to register additional Company Shares
to allow the public  resale of all Common  Stock  included  in and  issuable  by
virtue of the  Registrable  Securities.  No securities of the Company other than
the  Registrable  Securities  will be  included  in the  registration  statement
described in this Section 10.1(iv).

                  10.2. Registration Procedures.  If and whenever the Company is
required by the provisions  hereof to effect the  registration  of any shares of
Registrable  Securities  under the Act, the Company  will, as  expeditiously  as
possible:

                           (a)   prepare   and  file  with  the   Commission   a
registration  statement with respect to such securities and use its best efforts
to cause such  registration  statement  to become and remain  effective  for the
period of the distribution contemplated thereby (determined as herein provided),
and  promptly  provide to the holders of  Registrable  Securities  copies of all
filings and Commission letters of comment;

                                       13
<PAGE>

                           (b)  prepare  and  file  with  the  Commission   such
amendments  and  supplements to such  registration  statement and the prospectus
used in  connection  therewith  as may be  necessary  to keep such  registration
statement  effective  until the  latest  of:  (i) six  months  after the  latest
exercise  period of the Warrants;  (ii) twelve months after the Maturity Date of
the Note or Put Note; or (iii) two years after the Closing Date, and comply with
the  provisions  of  the  Act  with  respect  to the  disposition  of all of the
Registrable Securities covered by such registration statement in accordance with
the  Seller's  intended  method of  disposition  set forth in such  registration
statement for such period;

                           (c) furnish to the Seller, and to each underwriter if
any,  such number of copies of the  registration  statement  and the  prospectus
included  therein  (including  each  preliminary  prospectus)  as  such  persons
reasonably  may  request  in  order  to  facilitate  the  public  sale or  their
disposition of the securities covered by such registration statement;

                           (d) use its best  efforts to  register or qualify the
Seller's Registrable Securities covered by such registration statement under the
securities  or "blue  sky" laws of such  jurisdictions  as the Seller and in the
case  of  an  underwritten  public  offering,  the  managing  underwriter  shall
reasonably request,  provided,  however, that the Company shall not for any such
purpose be  required  to qualify  generally  to  transact  business as a foreign
corporation  in any  jurisdiction  where it is not so qualified or to consent to
general service of process in any such jurisdiction;

                           (e) list the Registrable  Securities  covered by such
registration statement with any securities exchange on which the Common Stock of
the Company is then listed;

                           (f)   immediately   notify   the   Seller   and  each
underwriter  under such  registration  statement  at any time when a  prospectus
relating  thereto is required to be delivered under the Act, of the happening of
any event of which the Company has knowledge as a result of which the prospectus
contained in such registration  statement, as then in effect, includes an 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 in
light of the circumstances then existing;

                           (g) make available for inspection by the Seller,  any
underwriter  participating  in any  distribution  pursuant to such  registration
statement, and any attorney, accountant or other agent retained by the Seller or
underwriter,  all  publicly  available,  non-confidential  financial  and  other
records,  pertinent corporate documents and properties of the Company, and cause
the  Company's  officers,   directors  and  employees  to  supply  all  publicly
available,  non-confidential  information  reasonably  requested  by the seller,
underwriter,  attorney, accountant or agent in connection with such registration
statement.

                  10.3. Provision of Documents.

                           (a) At the request of the  Seller,  provided a demand
for  registration  has been made  pursuant  to Section  10.1(i) or a request for
registration  has been  made  pursuant  to  Section  10.1(ii),  the  Registrable
Securities  will be included in a registration  statement filed pursuant to this
Section 10.

                           (b) In connection with each  registration  hereunder,
the  Seller  will  furnish  to the  Company  in  writing  such  information  and
representation  letters with respect to itself and the proposed  distribution by
it as reasonably  shall be necessary in order to assure  compliance with federal
and  applicable  state  securities  laws. In connection  with each  registration
pursuant  to  Section  10.1(i)  or  10.1(ii)  covering  an  underwritten  public
offering,  the  Company and the Seller  agree to enter into a written  agreement
with the managing underwriter in such form and containing such provisions as are
customary  in the  securities

                                       14
<PAGE>

business for such an arrangement  between such  underwriter and companies of the
Company's size and investment stature.

                  10.4.  Non-Registration Events. The Company and the Subscriber
agree that the Seller will suffer damages if any registration statement required
under  Section  10.1(i)  or  10.1(ii)  above is not filed  within 90 days  after
written  request by the  Holder and not  declared  effective  by the  Commission
within 150 days after such  request  [or the  Filing  Date and  Effective  Date,
respectively,  in reference to the  Registration  Statement on Form SB-2 or such
other form  described in Section  10.1(iv)],  and  maintained  in the manner and
within the time periods  contemplated by Section 10 hereof,  and it would not be
feasible to ascertain the extent of such damages with precision. Accordingly, if
(i) the Registration  Statement described in Sections 10.1(i) or 10.1(ii) is not
filed within 90 days of such written  request,  or is not declared  effective by
the  Commission on or prior to the date that is 120 days after such request,  or
(ii) the  registration  statement  on Form SB-2 or such other form  described in
Section  10.1(iv)  is not filed on or before  the  Filing  Date or not  declared
effective on or before the sooner of the Effective  Date, or within five days of
receipt  by  the  Company  of a  communication  from  the  Commission  that  the
registration  statement  described in Section 10.1(iv) will not be reviewed,  or
(iii) any  registration  statement  described in Sections  10.1(i),  10.1(ii) or
10.1(iv)  is filed  and  declared  effective  but shall  thereafter  cease to be
effective  (without being  succeeded  immediately by an additional  registration
statement filed and declared  effective) for a period of time which shall exceed
30 days in the aggregate per year but not more than 20 consecutive calendar days
(defined  as a period  of 365  days  commencing  on the  date  the  Registration
Statement is declared  effective)  (each such event  referred to in clauses (i),
(ii) and (iii) of this Section 10.4 is referred to herein as a "Non-Registration
Event"),  then, for so long as such Non-Registration  Event shall continue,  the
Company  shall  pay  in  cash  as  Liquidated  Damages  to  each  holder  of any
Registrable  Securities  an amount equal to one (1%) percent per month  (ratably
applied for any part thereof) for the first forty-five (45) days and two percent
(2%) per month  (ratably  applied for any part  thereof)  thereafter  during the
pendency  of such  Non-Registration  Event,  of (i) the  principal  of the Notes
issued in connection with the Initial Offering,  whether or not converted;  (ii)
the principal  amount of Put Notes  actually  issued,  whether or not converted,
then owned of record by such  holder or  issuable  because of a prior Put Notice
(as  hereinafter  defined),  as of or  subsequent  to  the  occurrence  of  such
Non-Registration  Event. Payments to be made pursuant to this Section 10.4 shall
be due and payable  immediately  upon demand in immediately  available funds. In
the event a Mandatory  Redemption  Payment is  demanded  from the Company by the
Holder  pursuant  to  Section  9.2 of  this  Subscription  Agreement,  then  the
Liquidated  Damages described in this Section 10.4 shall no longer accrue on the
portion of the Purchase Price underlying the Mandatory Redemption Payment,  from
and after the date the Holder  receives the  Mandatory  Redemption  Payment.  It
shall be deemed a Non-Registration Event to the extent that all the Common Stock
underlying  the   Registrable   Securities  is  not  included  in  an  effective
registration  statement  as of and after the  Effective  Date at the  Conversion
Prices in effect from and after the Effective Date.

                  10.5.  Expenses.  All  expenses  incurred  by the  Company  in
complying with Section 10, including,  without limitation,  all registration and
filing  fees,   printing  expenses,   fees  and  disbursements  of  counsel  and
independent  public  accountants for the Company,  fees and expenses  (including
reasonable  counsel  fees)  incurred in  connection  with  complying  with state
securities or "blue sky" laws,  fees of the National  Association  of Securities
Dealers, Inc., transfer taxes, fees of transfer agents and registrars, and costs
of insurance are called "Registration  Expenses". All underwriting discounts and
selling commissions applicable to the sale of Registrable Securities,  including
any fees and  disbursements  of any special  counsel to the  Seller,  are called
"Selling Expenses". The Seller shall pay the fees of its own additional counsel,
if any.

                  The Company will pay all  Registration  Expenses in connection
with the  registration  statement  under  Section  10. All  Selling  Expenses in
connection with each  registration  statement under Section 10 shall be borne by
the Seller and may be apportioned  among the Sellers in proportion to the

                                       15
<PAGE>

number of shares sold by the Seller  relative to the number of shares sold under
such registration statement or as all Sellers thereunder may agree.

                  10.6. Indemnification and Contribution.

                           (a) In the event of a registration of any Registrable
Securities  under the Act pursuant to Section 10, the Company will indemnify and
hold  harmless  the Seller,  each  officer of the Seller,  each  director of the
Seller,  each  underwriter of such  Registrable  Securities  thereunder and each
other person, if any, who controls such Seller or underwriter within the meaning
of the 1933 Act, against any losses,  claims,  damages or liabilities,  joint or
several,  to which the Seller,  or such  underwriter or  controlling  person may
become  subject  under the Act or  otherwise,  insofar as such  losses,  claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue  statement or alleged  untrue  statement  of any  material  fact
contained in any registration  statement under which such Registrable Securities
was registered under the Act pursuant to Section 10, any preliminary  prospectus
or final prospectus  contained therein,  or any amendment or supplement thereof,
or arise out of or are based  upon the  omission  or alleged  omission  to state
therein a material fact  required to be stated  therein or necessary to make the
statements  therein not  misleading,  and will  reimburse the Seller,  each such
underwriter  and each such  controlling  person for any legal or other  expenses
reasonably  incurred by them in connection with  investigating  or defending any
such loss,  claim,  damage,  liability or action;  provided,  however,  that the
Company  will not be liable in any such case if and to the extent  that any such
loss,  claim,  damage  or  liability  arises  out of or is based  upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by any such Seller, the underwriter or any
such controlling  person in writing  specifically  for use in such  registration
statement or prospectus.

                           (b)  In the  event  of a  registration  of any of the
Registrable  Securities  under the Act  pursuant  to Section 10, the Seller will
indemnify and hold harmless the Company,  and each person,  if any, who controls
the Company within the meaning of the Act, each officer of the Company who signs
the registration  statement,  each director of the Company, each underwriter and
each person who controls any underwriter  within the meaning of the Act, against
all losses,  claims,  damages or  liabilities,  joint or  several,  to which the
Company or such officer, director,  underwriter or controlling person may become
subject under the Act or otherwise,  insofar as such losses,  claims, damages or
liabilities  (or actions in respect  thereof) arise out of or are based upon any
untrue  statement or alleged untrue  statement of any material fact contained in
the  registration   statement  under  which  such  Registrable  Securities  were
registered  under the Act pursuant to Section 10, any preliminary  prospectus or
final prospectus  contained therein,  or any amendment or supplement thereof, or
arise out of or are based upon the omission or alleged omission to state therein
a  material  fact  required  to be  stated  therein  or  necessary  to make  the
statements therein not misleading,  and will reimburse the Company and each such
officer,  director,  underwriter and  controlling  person for any legal or other
expenses  reasonably  incurred  by  them in  connection  with  investigating  or
defending any such loss, claim, damage, liability or action, provided,  however,
that the  Seller  will be liable  hereunder  in any such case if and only to the
extent that any such loss, claim,  damage or liability arises out of or is based
upon an untrue  statement  or alleged  untrue  statement  or omission or alleged
omission made in reliance upon and in conformity with information  pertaining to
such  Seller,  as such,  furnished  in  writing to the  Company  by such  Seller
specifically for use in such registration statement or prospectus, and provided,
further, however, that the liability of the Seller hereunder shall be limited to
the proportion of any such loss,  claim,  damage,  liability or expense which is
equal  to the  proportion  that the  public  offering  price of the  Registrable
Securities  sold by the Seller under such  registration  statement  bears to the
total public  offering price of all securities sold  thereunder,  but not in any
event to exceed  the gross  proceeds  received  by the  Seller  from the sale of
Registrable Securities covered by such registration statement.

                           (c) Promptly  after receipt by an  indemnified  party
hereunder of notice of the

                                       16
<PAGE>

commencement of any action,  such indemnified party shall, if a claim in respect
thereof is to be made  against  the  indemnifying  party  hereunder,  notify the
indemnifying  party in  writing  thereof,  but the  omission  so to  notify  the
indemnifying  party shall not relieve it from any liability which it may have to
such  indemnified  party  other than under this  Section  10.6(c) and shall only
relieve it from any liability which it may have to such indemnified  party under
this Section 10.6(c) if and to the extent the  indemnifying  party is prejudiced
by such  omission.  In case  any  such  action  shall  be  brought  against  any
indemnified party and it shall notify the indemnifying party of the commencement
thereof,  the indemnifying party shall be entitled to participate in and, to the
extent it shall wish, to assume and  undertake the defense  thereof with counsel
satisfactory to such indemnified  party, and, after notice from the indemnifying
party to such  indemnified  party of its election so to assume and undertake the
defense thereof,  the indemnifying party shall not be liable to such indemnified
party under this Section 10.6(c) for any legal expenses subsequently incurred by
such  indemnified  party in  connection  with the  defense  thereof  other  than
reasonable  costs of  investigation  and of liaison  with  counsel so  selected,
provided,  however,  that, if the defendants in any such action include both the
indemnified  party and the  indemnifying  party and the indemnified  party shall
have reasonably  concluded that there may be reasonable defenses available to it
which are different  from or additional to those  available to the  indemnifying
party or if the interests of the indemnified  party  reasonably may be deemed to
conflict with the interests of the indemnifying  party, the indemnified  parties
shall have the right to select one  separate  counsel  and to assume  such legal
defenses and otherwise to  participate  in the defense of such action,  with the
reasonable expenses and fees of such separate counsel and other expenses related
to such participation to be reimbursed by the indemnifying party as incurred.

                           (d) In  order  to  provide  for  just  and  equitable
contribution  in the event of joint liability under the Act in any case in which
either (i) the Seller,  or any controlling  person of the Seller,  makes a claim
for  indemnification  pursuant  to  this  Section  10.6  but  it  is  judicially
determined  (by the entry of a final  judgment or decree by a court of competent
jurisdiction  and the  expiration  of time to appeal  or the  denial of the last
right of appeal)  that such  indemnification  may not be  enforced  in such case
notwithstanding  the fact that this Section 10.6 provides for indemnification in
such case, or (ii) contribution under the Act may be required on the part of the
Seller  or  controlling   person  of  the  Seller  in  circumstances  for  which
indemnification  is provided  under this Section  10.6;  then,  and in each such
case,  the Company  and the Seller  will  contribute  to the  aggregate  losses,
claims,  damages or liabilities to which they may be subject (after contribution
from others) in such  proportion so that the Seller is responsible  only for the
portion  represented  by the  percentage  that the public  offering price of its
securities  offered by the  registration  statement bears to the public offering
price  of all  securities  offered  by such  registration  statement,  provided,
however,  that,  in any  such  case,  (A) the  Seller  will not be  required  to
contribute  any  amount  in  excess  of the  public  offering  price of all such
securities  offered by it pursuant to such  registration  statement;  and (B) no
person or entity guilty of fraudulent  misrepresentation  (within the meaning of
Section  10(f) of the Act) will be entitled to  contribution  from any person or
entity who was not guilty of such fraudulent misrepresentation.

                  11.1.    Obligation To Purchase.
                           ----------------------

                           (a)  The  Subscriber  agrees  to  purchase  from  the
Company  convertible notes ("Put Notes") in up to the principal amount set forth
on the  signature  page  hereto  for  up to the  aggregate  amount  of Put  Note
principal designated on the signature page hereto (the "Put").  Collectively the
Put Notes,  Warrants  issuable  in  connection  with the Put,  and Common  Stock
issuable  upon  conversion  of the Put Notes and  exercise of the  Warrants  are
referred to as the "Put  Securities".)  The Warrants issuable in connection with
the Put Notes are  referred  to herein as Warrants  or Put  Warrants.  Except as
described in Section 11.1(c) hereof, each Put Note will be identical to the Note
except that the Maturity Date will be three years from

                                       17
<PAGE>

each  Put  Closing  Date  (as  hereinafter  defined).  The  Holders  of the  Put
Securities  are  granted  all the  rights,  undertakings,  remedies,  liquidated
damages and  indemnification  granted to the  Subscriber in connection  with the
Note,  including  but not  limited  to, the rights and  procedures  set forth in
Section 9 hereof and the registration rights described in Section 10 hereof.

                           (b)  The  agreement  to  purchase  the Put  Notes  is
contingent  on the  following  any,  some or all of which  may be  waived by the
Subscriber:

                                    (i) As of a Put Date and Put  Closing  Date,
200% of the Common Shares  issuable upon conversion of a Put Note (employing the
Conversion Price as of such date) and sufficient Common Shares to allow the full
exercise of the Put Warrants  issuable in connection with the Put Note (assuming
exercise of such Put  Warrants  on such date) must be  included in an  effective
registration statement described in Section 10 hereof.

                                    (ii) As of a Put Date and Put Closing  Date,
the Company will be a full reporting company with the class of Shares registered
pursuant to Section 12(g) of the Securities Exchange Act of 1934.

                                    (iii)  No  material  adverse  change  in the
Company's  business or business  prospects shall have occurred after the date of
the most recent financial  statements included in the Reports.  Material adverse
change  is  defined  as any  effect  on the  business,  operations,  properties,
prospects, or financial condition of the Company that is material and adverse to
the Company and its  subsidiaries and affiliates,  taken as a whole,  and/or any
condition, circumstance, or situation that would prohibit or otherwise interfere
with the ability of the Company to enter into and perform any of its obligations
under this Agreement,  or any other agreement entered into or to be entered into
in connection  herewith,  in any material  respect.  There shall not have been a
material negative  restatement of the Company's financial statements referred to
in Paragraph 1(a) hereof.

                                    (iv)  The  non-occurrence  (whether  or  not
continuing) of an Event of Default as described in Article III of the Note.

                                    (v)  The   execution  and  delivery  to  the
Subscriber of a certificate  signed by its chief executive officer  representing
the truth and  accuracy  of all the  Company's  representations  and  warranties
contained in this  Subscription  Agreement  as of the Put Date,  and Put Closing
Date and confirming the  undertakings  contained  herein,  and  representing the
satisfaction of all  contingencies  and conditions  required for the exercise of
the Put.

                                    (vi)   The   Company's   listing   on,   and
compliance with the listing  requirements  of a Principal  Market other than the
Pink Sheets.

                                    (vii)  The  Company's  not  having  received
notice from the OTC Bulletin Board (or any Principal Market) that the Company is
not in compliance with the requirements  for continued  listing which notice has
not been  resolved in a manner  affirming  the  Company's  compliance  with such
requirements.

                                       18
<PAGE>

                                    (viii)  The  execution  by the  Company  and
delivery to the Subscriber of all required  documents in relation to the Put set
forth in Section  11.2 below and such other  documents  which may be  reasonably
requested by the Subscriber.

                           (c) Subject to the adjustments set forth in the Note,
the Conversion Price of the Put Note shall be as follows:

                                    (i)  The  Conversion  Price  of the  initial
5.263% of the aggregate Put Note Purchase  Price set forth on the signature page
hereto shall be the lesser of 80% of the average of the three lowest closing bid
prices of the Common Stock on the  Principal  Market for the thirty (30) trading
days prior to the Put  Closing  Date or 70% of the  average of the three  lowest
closing  bid prices of the Common  Stock on the  Principal  Market for the sixty
(60) trading days prior to the Conversion Date.

                                    (ii) The Conversion  Price of the balance of
the Put Note  Purchase  Price  shall be 72% of the  average of the three  lowest
closing bid prices of the Common Stock on the  Principal  Market for the fifteen
(15)  trading  days  prior  to the  Conversion  Date  subject  to the  following
increases for the designated time periods:

                                           (x)  If  during  the  seventh   (7th)
through  twelfth  (12th)  months  after the  effectiveness  of the  registration
statement described in Section 10.1(iv) hereof, the average closing bid price of
the Common Stock for twenty-two (22) consecutive trading days as reported on the
Principal  Market is more than $.40, then for all Put Notices issued during such
period, the Conversion Price shall be 75% of the average of the three (3) lowest
closing bid prices of the Common Stock on the  Principal  Market for the fifteen
(15) trading days prior the Conversion Date of such Put Notes.

                                           (y) If during the  thirteenth  (13th)
through  eighteenth  (18th) months after the  effectiveness  of the registration
statement described in Section 10.1(iv) hereof, the average closing bid price of
the Common Stock for twenty-two (22) consecutive trading days as reported on the
Principal  Market is more than $.70, then for all Put Notices issued during such
period, the Conversion Price shall be 78% of the average of the three (3) lowest
closing bid prices of the Common Stock on the  Principal  Market for the fifteen
(15) trading days prior the Conversion Date of such Put Notes.

                                           (z) If during the  nineteenth  (19th)
through  thirty-sixth  (36th) months after the effectiveness of the registration
statement described in Section 10.1(iv) hereof, the average closing bid price of
the Common Stock for twenty-two (22) consecutive trading days as reported on the
Principal Market is more than $1.00, then for all Put Notices issued during such
period, the Conversion Price shall be 80% of the average of the three (3) lowest
closing bid prices of the Common Stock on the  Principal  Market for the fifteen
(15) trading days prior the Conversion Date of such Put Notes.

                  11.2.    Exercise of Put.
                           ---------------

                           (a) The Company's right to exercise the Put commences
on the actual effective date of the registration  statement described in Section
10.1(iv)  hereof and  expires  three (3) years  after the  Effective  Date ("Put
Exercise Period").

                           (b) The Put may be exercised by the Company by giving
the Subscriber written notice of exercise ("Put Notice") not more often than one
time each thirty (30)  consecutive  calendar days

                                       19
<PAGE>

during the Put Exercise Period in relation to up to the maximum principal amount
of Put Note that the  Subscriber  has agreed to  purchase  subject to the limits
described in this Agreement.  The date a Put Notice is given is a Put Date. Each
Put Notice must be  accompanied  by (i) the officer's  certificate  described in
Section 11.1(b)(v) above; (ii) a legal opinion relating to the Put Securities in
form  reasonably  acceptable to Subscriber;  and (iii) such other  documents and
certificates reasonably requested by the Subscriber.

                           (c) Unless  otherwise  agreed to by the  Subscribers,
Put Notices must be given to all Subscribers in proportion to the amounts agreed
to be  purchased  by all  Subscribers  undertaking  to purchase Put Notes in the
Initial Offering.

                           (d)  Payment by the  Subscriber  in relation to a Put
Notice  relating to a Put must be made within  fourteen (14) business days after
receipt  of a Put  Notice  and the  items set forth in  Section  11.2(b)  above.
Payment will be made against delivery to the Subscriber or an escrow agent to be
agreed upon by the Company and Subscriber,  of the Put Securities,  and delivery
to the Finders of the Put Commissions relating to the Put being exercised.

                           (e)  Maximum Put  Exercise.  The Company may not give
the  Subscriber  a Put Notice in  connection  with that amount of Put Note which
could be  converted  as of the Put Date into a number of shares of Common  Stock
which would be in excess of the sum of (i) the number of shares of Common  Stock
beneficially  owned by the  Subscriber  and its affiliates on such Put Date, and
(ii) the number of shares of Common Stock  issuable  upon the  conversion of the
Put Note with respect to which the  determination  of this proviso is being made
on a Put Date, which would result in beneficial  ownership by the Subscriber and
its affiliates of more than 4.99% of the  outstanding  shares of Common Stock of
the Company on such Put Date. For the purposes of the proviso to the immediately
preceding sentence,  beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation
13d-3 thereunder.  Subject to the foregoing, the Subscriber shall not be limited
to  aggregate   conversions  of  only  4.99%.  The  Subscriber  may  revoke  the
restriction  described  in  this  paragraph  upon 75 days  prior  notice  to the
Company. The Subscriber shall have the right to determine which of the equity of
the Company deemed beneficially owned by the Subscriber shall be included in the
4.99%  described  above and which shall be  allocated to the excess above 4.99%.
The  aggregate  amount of all Put  Notices  to all  Subscribers  of the  Initial
Offering may not exceed  $9,500,000.  The aggregate  maximum principal amount of
Put Notes for which Put Notices may be given during any thirty (30)  consecutive
calendar days to all  Subscribers in the Initial  Offering may not exceed twelve
(12%) of the average of the closing bid prices of the Common Stock reported on a
Principal  Market  (other  than  the  Pink  Sheets),   during  the  thirty  (30)
consecutive  calendar days prior to the giving of the Put Notice,  multiplied by
the aggregate  reported trading volume of the Company's Common Stock during such
prior  month  ("Trading  Volume  Limitation").   The  foregoing  Trading  Volume
Limitation  notwithstanding and provided all other preconditions to Put exercise
are satisfied,  the Company may exercise the Put for up to the amount designated
on the signature  page hereto as "Section  11.2(e) Put Amount" during the thirty
(30)  consecutive  calendar  days  following  the actual  effective  date of the
registration  statement  described in Section 10.1(iv) hereof. In any event, the
Conversion  Price of the initial Put Purchase  Price amount equal to the Section
11.2(e) amount shall be the same Conversion Price as for the Notes issued in the
Initial Offering.

                  11.3. Put Finders Fees.  The Finders  identified on Schedule B
hereto  shall  receive  on each Put  Closing  Date  aggregate  Finder's  Fees as
described in Section 6 hereof in connection  with the closing of each Put as set
forth  on  Schedule  B  hereto.  Put  Finder's  Fees  shall be  payable  only in
connection  with the Put Purchase Price  actually paid by a Subscriber.  The Put
Finder's Fees and reasonable  legal fees for

                                       20
<PAGE>

counsel to the Subscriber  shall be paid at each Put Closing.  The minimum legal
fee to be paid by the Company to one counsel for the  Subscribers to the Initial
Offering is $2,500 per Put Closing.

                  11.4.    Warrants.
                           --------

                           (a) The Company  shall issue  Warrants to the Warrant
Recipients  in the amounts  designated  on Schedule B hereto and as described in
Section 6 of this Subscription  Agreement.  The Put Warrants will be in the form
of Exhibit D hereto.  The Put  Warrants  will be  exercisable  immediately  upon
issuance and for five years thereafter.

                           (b)  In  the  event,   for  any  reason   except  for
Subscriber's  unwillingness  to purchase greater amounts of Put Notes because of
the beneficial  ownership  limitations of Section 11.2(e), the Put in the amount
of at least  21.05% of the Put Note  Purchase  Price set forth on the  signature
page ("Minimum Principal") has not been exercised as of the first anniversary of
the  Effective  Date,  then the Company  will issue Put  Warrants to the Warrant
Recipients in an amount  determined by subtracting the actual amount of Put Note
Principal  for which  Put  Notices  have been  validly  given  from the  Minimum
Principal (the result being the  "Unexercised  Put") and issuing Put Warrants in
connection  with such  Unexercised Put as if the amount of Put Notes issuable in
connection  with  the  Unexercised  Put  were  actually  issued  and  the  first
anniversary of the Closing Date was the Conversion Date of such Put Notes.

                           (c)  In  the  event,   for  any  reason   except  for
Subscriber's  unwillingness  to purchase greater amounts of Put Notes because of
the beneficial  ownership  limitations of Section 11.2(e), the Put in the amount
of 42.1% of the Put Note Purchase  Price set forth on the signature  page hereto
("Majority  Principal")  has not been exercised as of the second  anniversary of
the  Effective  Date,  then the Company  will issue Put  Warrants to the Warrant
Recipients in an amount  determined by subtracting the actual amount of Put Note
Principal  for which Put Notices have been  validly  given and the amount of Put
Note  Principal  deemed  converted  pursuant to Section  11.4(b)  above from the
Majority Principal (the result being the "Interim  Unexercised Put") and issuing
Put Warrants in connection with such Interim Unexercised Put as if the amount of
Put Notes issuable in connection with the Interim  Unexercised Put were actually
issued and the second anniversary of the Closing Date was the Conversion Date of
such Put Notes.

                           (d)  In  the  event,   for  any  reason   except  for
Subscriber's  unwillingness  to purchase greater amounts of Put Notes because of
the beneficial  ownership  limitations of Section 11.2(e), the entire Put in the
amount of 63.157% of the Put Note Purchase Price set forth on the signature page
hereto ("Maximum  Principal") has not been exercised as of the third anniversary
of the Effective  Date,  then the Company will issue Put Warrants to the Warrant
Recipients in an amount  determined by subtracting the actual amount of Put Note
Principal  for which Put Notices have been  validly  given and the amount of Put
Note Principal deemed  converted  pursuant to Sections 11.4(a) and 11.4(b) above
from the Maximum  Principal (the result being the "Unexercised Put Balance") and
issuing Put Warrants in connection  with such  Unexercised Put Balance as if the
amount of Put Notes issuable in connection with the Unexercised Put Balance were
actually issued and the third anniversary of the Closing Date was the Conversion
Date of such Put Notes.

                           (e) In the event the Company has properly given a Put
Notice and the Subscriber  has  wrongfully  failed to comply with the Put Notice
then after such  default  by the  Subscriber  Put  Warrants  otherwise  issuable
pursuant  to  Sections  11.4(b),  11.4(c)  and  11.4(d)  will not be issued with
respect to anniversaries of the Effective Date occurring after such default.

                                       21
<PAGE>

                           (f)  The   Conversion   Price  to  be  employed  when
calculating  the number of Common Shares  issuable upon exercise of Put Warrants
described in Sections  11.4(b),  11.4(c) and 11.4(d) shall be 78% of the average
of the three  lowest  closing bid prices of the Common  Stock as reported on the
Principal  Market  for the  fifteen  (15)  trading  days  prior  to the  assumed
Conversion Date.

                           (g) Failure to timely pay Finder's  Fees,  legal fees
or deliver any Warrants issuable in connection with the Initial Offering and Put
shall be deemed an Event of Default under the Note and a material  breach of the
Company's obligations hereunder, for which no notice to cure is required.

                  11.5  Assignment  of  Put.  Anything  to the  contrary  herein
notwithstanding,  the  Subscriber  may assign to another  party either before or
after exercise of the Put by the Company,  the Subscriber's  right to pay all or
some of the Put Purchase  Price and receive the  corresponding  Put  Securities.
Such assignment must be in writing. The assignment will be effective only if the
assignee consents in writing to be bound by all of the Subscriber's  obligations
to the Company in connection with such assignment. Upon an effective assignment,
the  assignee  will  succeed  to all  of  the  Subscriber's  rights  under  this
Subscription  Agreement,  and all  other  agreements  relating  to the  assigned
portion of the Put.

                  12.  (a)  Right of First  Refusal.  Until  120 days  after the
actual  effective  date  of the  Registration  Statement  described  in  Section
10.1(iv) hereof ("Actual  Effective  Date"),  the Subscriber  shall be given not
less than ten (10) business  days prior  written  notice of any proposed sale by
the Company of its common stock or other securities or debt  obligations  except
as  disclosed  in the  Reports or Other  Written  Information  or stock or stock
options  granted to employees  or  directors  of the Company;  or equity or debt
issued  in  connection  wit h an  acquisition  of a  business  or  assets by the
Company;  or the Notes,  Warrants or any shares of Common  Stock  issuable  upon
conversion of the Notes or exercise of the Warrants;  or any Permitted Financing
Warrants as hereinafter  defined, or equity issued upon any exercise thereof; or
the issuance by the Company of stock in connection with the  establishment  of a
joint  venture,   partnership  or  licensing   arrangement   (these   exceptions
hereinafter referred to as the "Excepted Issuances").  The Subscriber shall have
the right during the ten (10) business days  following  receipt of the notice to
agree to purchase an amount of Company  Shares in the same  proportion  as being
purchased in the Initial Offering of those securities  proposed to be issued and
sold, in  accordance  with the terms and  conditions  set forth in the notice of
sale.  In the event such terms and  conditions  are  modified  during the notice
period,  the Subscriber  shall be given prompt notice of such  modification  and
shall have the right  during the original  notice  period or for a period of ten
(10) business days following the notice of modification, whichever is longer, to
exercise such right.  In the event the right of first refusal  described in this
Section is  exercised by the  Subscriber  and the Company  thereby  receives net
proceeds  from  such  exercise,  then  commissions  and fees will be paid by the
Company to the Finders in the same amounts as specified in the notice of sale.

                           (b) Offering Restrictions. Except with respect to the
Excepted  Issuances and securities  otherwise  disclosed in the Reports or Other
Written Information,  the Company will not issue any equity, convertible debt or
other  securities  which  are  or  could  be  (by  conversion  or  registration)
free-trading  securities  prior to the  expiration  of 180 days after the Actual
Effective Date (the "Exclusion Period"). This restriction shall not prohibit the
Company from issuing any equity,  convertible  debt or other securities prior to
the expiration of the Exclusion Period,  provided that such equity,  convertible
debt or other  securities  are not  free-trading  when  issued  and  remain  not
free-trading  until  the  expiration  of the  Exclusion  Period.  The  foregoing
notwithstanding,  the Company may issue up to 8,333,333  common  stock  purchase
warrants in connection  with any equity or debt  financing of the Company and/or
any  subsidiary  for not less than

                                       22
<PAGE>

$500,000 of gross  proceeds to the Company  and/or any  subsidiary  provided (i)
that the per share exercise prices of such warrants is not less than $.10, $.15,
$.20 and $.25, respectively, for each one-quarter of such warrants, and (ii) the
Common Stock  issuable upon  exercise of such warrants will not be  free-trading
until 90, 150, 210 and 270 days,  respectively,  after the Actual Effective Date
for each  one-quarter  of such warrants  (warrants  meeting  these  criteria are
referred to herein as "Permitted Financing Warrants").

                  13.      Miscellaneous.
                           -------------

                           (a)  Notices.  All  notices  or other  communications
given or made hereunder shall be in writing and shall be personally delivered or
deemed delivered the first business day after being telecopied  (provided that a
copy is  delivered  by first class mail) to the party to receive the same at its
address set forth below or to such other address as either party shall hereafter
give to the other by notice duly made under this Section: (i) if to the Company,
to ICOA,  Inc.,  111 Airport Road,  Suite 1,  Warwick,  R.I.  02889,  telecopier
number: (401) 739-9215, with a copy by telecopier only to Parker Chapin LLP, 405
Lexington Avenue,  New York, NY 10174,  telecopier number:  (212) 704-6288,  and
(ii) if to the Subscriber, to the name, address and telecopy number set forth on
the signature page hereto,  with a copy by telecopier only to Grushko & Mittman,
P.C., 551 Fifth Avenue, Suite 1601, New York, New York 10176, telecopier number:
(212) 697-3575. Any notice that may be given pursuant to this Agreement,  or any
document  delivered  in  connection  with  the  foregoing  may be  given  by the
Subscriber on the first  business day after the  observance  dates in the United
States of America by Orthodox Jewry of Rosh Hashanah,  Yom Kippur, the first two
days of the Feast of Tabernacles,  Shemini Atzeret, Simchat Torah, the first two
and final two days of  Passover  and  Pentecost,  with such  notice to be deemed
given and  effective,  at the election of the  Subscriber on a holiday date that
precedes  such  notice.  Any notice  received  by the  Subscriber  on any of the
aforedescribed  holidays  may be deemed by the  Subscriber  to be  received  and
effective  as if such notice had been  received on the first  business day after
the holiday.

                           (b) Closing.  The  consummation  of the  transactions
contemplated herein shall take place at the offices of Grushko & Mittman,  P.C.,
551 Fifth Avenue, Suite 1601, New York, New York 10176, upon the satisfaction of
all conditions to Closing set forth in this Agreement. The closing date shall be
the date that subscriber funds  representing the net amount due the Company from
the Purchase Price are transmitted by wire transfer to the Company (the "Closing
Date"). The closing date for the Put shall be the date on which Subscriber funds
representing  the net  amount due the  Company  from the Put  Purchase  Price is
transmitted to or on behalf of the Company ("Put Closing Date").

                           (c)  Entire  Agreement;  Assignment.  This  Agreement
represents the entire  agreement  between the parties hereto with respect to the
subject  matter  hereof and may be amended  only by a writing  executed  by both
parties.  No right or obligation of either party shall be assigned by that party
without prior notice to and the written consent of the other party.

                           (d)  Execution.  This  Agreement  may be  executed by
facsimile  transmission,  and in  counterparts,  each of which will be deemed an
original.

                           (e) Law  Governing  this  Agreement.  This  Agreement
shall be governed by and construed in  accordance  with the laws of the State of
New York without  regard to principles of conflicts of laws.  Any action brought
by either party against the other  concerning the  transactions  contemplated by
this  Agreement  shall be brought only in the state courts of New York or in the
federal  courts  located  in the  state  of  New  York.  Both  parties  and  the
individuals  executing  this  Agreement  and other  agreements  on behalf of the
Company  agree to submit to the  jurisdiction  of such courts and waive trial by
jury. The prevailing

                                       23
<PAGE>

party  shall  be  entitled  to  recover  from the  other  party  its  reasonable
attorney's  fees and costs. In the event that any provision of this Agreement or
any other agreement delivered in connection herewith is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed
inoperative  to the extent that it may  conflict  therewith  and shall be deemed
modified to conform with such statute or rule of law. Any such  provision  which
may prove invalid or  unenforceable  under any law shall not affect the validity
or enforceability of any other provision of any agreement.

                           (f) Specific  Enforcement,  Consent to  Jurisdiction.
The Company and Subscriber  acknowledge and agree that irreparable  damage would
occur  in the  event  that  any of the  provisions  of this  Agreement  were not
performed in accordance with their specific terms or were otherwise breached. It
is  accordingly  agreed that the parties  shall be entitled to an  injunction or
injunctions  to prevent or cure breaches of the provisions of this Agreement and
to enforce  specifically the terms and provisions hereof or thereof,  this being
in addition  to any other  remedy to which any of them may be entitled by law or
equity.  Subject to Section  13(e)  hereof,  each of the Company and  Subscriber
hereby waives,  and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally  subject to the  jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient  forum or that
the venue of the suit, action or proceeding is improper. Nothing in this Section
shall affect or limit any right to serve  process in any other manner  permitted
by law.

                           (g) Confidentiality.  The Company agrees that it will
not  disclose  publicly  or  privately  the  identity of the  Subscriber  unless
expressly  agreed to in writing by the Subscriber or only to the extent required
by law.

                           (h)  Automatic  Termination.   This  Agreement  shall
automatically terminate without any further action of either party hereto if the
Closing shall not have  occurred by the tenth (10th)  business day following the
date this Agreement is accepted by the Subscriber.

                     [THIS SPACE INTENTIONALLY LEFT BLANK]

                                       24
<PAGE>

         Please  acknowledge  your  acceptance  of  the  foregoing  Subscription
Agreement by signing and returning a copy to the undersigned  whereupon it shall
become a binding agreement between us.

                                            ICOA, INC.

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

                                            Dated: August  ____, 2000

Purchase Price:

PUT
---

Put Note Purchase Price (aggregate):

Section 11.2(e) Put Amount:

ACCEPTED: Dated as of August ____, 2000

By:
   ------------------------------THIS NOTE AND THE COMMON SHARES  ISSUABLE UPON  CONVERSION OF THIS NOTE HAVE NOT
BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"),
OR APPLICABLE STATE OR FOREIGN  SECURITIES LAWS. THIS NOTE AND THE COMMON SHARES
ISSUABLE UPON  CONVERSION OF THIS NOTE MAY NOT BE  TRANSFERRED  OR RESOLD IN THE
UNITED  STATES,  OR TO A U.S.  PERSON,  OR TO OR FOR THE ACCOUNT OR BENEFIT OF A
U.S.  PERSON (AS SUCH TERMS ARE  DEFINED IN RULE 902 OF  REGULATION  S UNDER THE
1933  ACT) FOR A PERIOD  OF ONE YEAR  EXPIRING  ON AUGUST  28,  2001,  EXCEPT IN
ACCORDANCE  WITH THE  PROVISIONS  OF  REGULATION  S UNDER THE 1933 ACT OR UNLESS
REGISTERED UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE
HOLDER  PROVIDES  THE COMPANY WITH AN OPINION  FROM  COUNSEL  ACCEPTABLE  TO THE
COMPANY STATING THAT AN EXEMPTION FROM  REGISTRATION IS AVAILABLE AT THE TIME OF
SUCH  TRANSFER.  HEDGING  TRANSACTIONS  INVOLVING THIS NOTE OR THE COMMON SHARES
ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE CONDUCTED  UNLESS IN COMPLIANCE
WITH THE 1933 ACT.

                                CONVERTIBLE NOTE
                                ----------------

                  FOR  VALUE  RECEIVED,   ICOA,   INC.,  a  Nevada   corporation
(hereinafter    called    "Borrower"),     hereby    promises    to    pay    to
__________________________,  _______________________________________,  Fax  No.:
_________________   (the  "Holder")  or  order,   without  demand,  the  sum  of
$_____________,  with  simple  interest  accruing  at the annual  rate of 9%, on
August 28, 2003 (the "Maturity Date").

                  The following terms shall apply to this Note:

                                    ARTICLE I

                           DEFAULT RELATED PROVISIONS

                  1.1 Payment Grace Period.  The Borrower  shall have a ten (10)
day grace  period to pay any monetary  amounts due and payable  under this Note,
after which grace period a default interest rate of 15% per annum shall apply to
the amounts owed hereunder.

                  1.2 Conversion Privileges. The Conversion Privileges set forth
in Article II shall  remain in full force and effect  immediately  from the date
hereof and until the Note is paid in full.

                  1.3 Interest  Rate.  Subject to the Holder's right to convert,
interest  payable on this Note shall  accrue at the annual rate of nine  percent
(9%) and be payable annually  commencing one year from the date of this Note and
on the Maturity Date, accelerated or otherwise, when the principal and remaining
accrued but unpaid interest shall be due and payable.

                                   ARTICLE II

                                CONVERSION RIGHTS

                  The  Holder  shall  have the right to  convert  the  principal
amount and  interest  due under this Note into Shares of the  Borrower's  Common
Stock as set forth below.

                                       1

<PAGE>

                  2.1.     Conversion into the Borrower's Common Stock.
                           -------------------------------------------

                  (a) The  Holder  shall  have  the  right  from and  after  the
issuance  of this Note and then at any time  until this Note is fully  paid,  to
convert any outstanding and unpaid principal  portion of this Note of $25,000 or
greater amount, or any lesser amount representing the full remaining outstanding
and unpaid principal portion and at the Holder's  election,  the unpaid interest
accrued on the Note,  (the date of giving of such notice of  conversion  being a
"Conversion Date") into fully paid and non-assessable  shares of common stock of
Borrower  as such stock  exists on the date of  issuance  of this  Note,  or any
shares of capital  stock of Borrower  into which such stock shall  hereafter  be
changed or reclassified  (the "Common Stock") at the conversion price as defined
in Section  2.1(b)  hereof  (the  "Conversion  Price"),  determined  as provided
herein.  Upon  delivery to the Company of a Notice of Conversion as described in
Section 9 of the  subscription  agreement  entered  into between the Company and
Holder  relating to this Note (the  "Subscription  Agreement")  of the  Holder's
written request for  conversion,  Borrower shall issue and deliver to the Holder
within  five  business  days from the  Conversion  Date that number of shares of
Common  Stock for the  portion  of the Note  converted  in  accordance  with the
foregoing.  At the election of the Holder,  the Company will deliver accrued but
unpaid interest on the converted portion of the Note through the Conversion Date
directly  to the  Holder  on or  before  the  Delivery  Date as  defined  in the
Subscription  Agreement.  The number of shares of Common Stock to be issued upon
each conversion of this Note shall be determined by dividing that portion of the
principal  on the  Note  (and  any  interest,  if any) to be  converted,  by the
Conversion Price.

                  (b)  Subject to  adjustment  as  provided  in  Section  2.1(c)
hereof,  the Conversion Price per share shall be the lesser of: (i) eighty (80%)
percent of the  average of the three  lowest  closing  bid prices for the Common
Stock as  reported  on the  Principal  Market (as  defined  in the  Subscription
Agreement)  for the thirty (30) trading days prior to but not including the date
of this Note ("Maximum Base Price"), or (ii) seventy (70%) of the average of the
three lowest closing bid prices for the Common Stock on the Principal Market for
the sixty (60) trading days prior to the Conversion Date.

                  (c) The Conversion Price described in Section  2.1(b)(i) above
and number and kind of shares or other  securities to be issued upon  conversion
determined pursuant to Section 2.1(a) and 2.1(b), shall be subject to adjustment
from time to time upon the  happening of certain  events  while this  conversion
right remains outstanding, as follows:

<PAGE>

                           A.  Merger,  Sale of Assets,  etc. If the Borrower at
any  time  shall  consolidate  with or  merge  into or  sell  or  convey  all or
substantially  all its assets to any other  corporation,  this  Note,  as to the
unpaid principal portion thereof and accrued interest thereon,  shall thereafter
be deemed to evidence  the right to  purchase  such number and kind of shares or
other  securities and property as would have been issuable or  distributable  on
account of such consolidation,  merger, sale or conveyance, upon or with respect
to the securities  subject to the conversion or purchase right immediately prior
to such consolidation, merger, sale or conveyance. The foregoing provision shall
similarly  apply to  successive  transactions  of a  similar  nature by any such
successor or purchaser.  Without  limiting the generality of the foregoing,  the
anti-dilution  provisions of this Section shall apply to such securities of such
successor or purchaser after any such consolidation, merger, sale or conveyance.

                           B. Reclassification, etc. If the Borrower at any time
shall, by reclassification  or otherwise,  change the Common Stock into the same
or a different  number of securities  of any class or classes,  this Note, as to
the unpaid  principal  portion  thereof  and  accrued  interest  thereon,  shall
thereafter  be deemed to evidence the right to purchase  such number and kind of
securities as would have been issuable

                                        2
<PAGE>

as the result of such change with respect to the Common Stock  immediately prior
to such reclassification or other change.

                           C. Stock Splits,  Combinations and Dividends.  If the
shares of Common  Stock are  subdivided  or  combined  into a greater or smaller
number of shares of Common  Stock,  or if a dividend is paid on the Common Stock
in shares of Common  Stock,  the  Maximum  Base Price  shall be  proportionately
reduced in case of subdivision  of shares or stock  dividend or  proportionately
increased in the case of combination  of shares,  in each such case by the ratio
which the total number of shares of Common Stock  outstanding  immediately after
such  event  bears to the total  number of  shares of Common  Stock  outstanding
immediately prior to such event.

                           D. Share Issuance.  Subject to the provisions of this
Section,  if the  Borrower  at any time shall  issue any shares of Common  Stock
prior to the conversion of the entire  principal  amount of the Note  (otherwise
than  as:  (i)  provided  in  Sections  2.1(c)A,  2.1(c)B  or  2.1(c)C  or  this
subparagraph  D; (ii) pursuant to options,  warrants,  or other  obligations  to
issue  shares,  outstanding  on the date hereof as  described in the Reports and
Other  Written  Information,  as such  terms  are  defined  in the  Subscription
Agreement (which agreement is incorporated  herein by this reference);  or (iii)
employee  incentive  stock or stock options granted to employees or directors of
the Company,  or equity or debt issued in connection  with an  acquisition  of a
business or assets by the Company,  or the Notes (as defined in the Subscription
Agreement), Warrants (as defined in the Subscription Agreement) or any shares of
Common Stock issuable upon  conversion of the Notes or exercise of the Warrants,
or any Permitted Financing Warrants (as defined in the Subscription  Agreement),
or equity  issued upon any exercise  thereof,  or the issuance by the Company of
its stock in connection with the  establishment of a joint venture,  partnership
or licensing  arrangement;  [(i), (ii) and (iii) above, are hereinafter referred
to as the "Excepted  Issuance  Obligations"]  for a consideration  less than the
Maximum Base Price that would be in effect at the time of such issue,  then, and
thereafter  successively  upon each such issue,  the Maximum Base Price shall be
reduced  as  follows:  (i) the  number of shares  of  Common  Stock  outstanding
immediately prior to such issue shall be multiplied by the Maximum Base Price in
effect at the time of such issue and the product shall be added to the aggregate
consideration,  if any,  received by the Borrower  upon such issue of additional
shares of Common  Stock;  and (ii) the sum so  obtained  shall be divided by the
number of shares of Common Stock  outstanding  immediately after such issue. The
resulting  quotient  shall be the adjusted  Maximum  Base Price.  Except for the
Excepted Issuance  Obligations and options that may be issued under any employee
incentive  stock option  and/or any  qualified  stock option plan adopted by the
Company,  for purposes of this  adjustment,  the issuance of any security of the
Borrower carrying the right to convert such security into shares of Common Stock
or of any warrant,  right or option to purchase  Common Stock shall result in an
adjustment to the Maximum Base Price upon the issuance of shares of Common Stock
upon exercise of such conversion or purchase  rights,  the  consideration  being
both  the  purchase  price  and any  additional  price  paid  upon  exercise  or
conversion.

                  (d) During the period the  conversion  right exists,  Borrower
will reserve from its authorized and unissued  Common Stock a sufficient  number
of shares to provide for the issuance of Common  Stock upon the full  conversion
of this Note. Borrower  represents that upon issuance,  such shares will be duly
and validly  issued,  fully paid and  non-assessable.  Borrower  agrees that its
issuance of this Note shall  constitute full authority to its officers,  agents,
and transfer agents who are charged with the duty of executing and issuing stock
certificates  to  execute  and issue the  necessary  certificates  for shares of
Common Stock upon the conversion of this Note.

                  2.2 Method of  Conversion.  This Note may be  converted by the
Holder  in  whole or in part as  described  in  Section  2.1(a)  hereof  and the
Subscription  Agreement.  Upon  partial  conversion  of this

                                       3
<PAGE>

Note, a new Note  containing  the same date and provisions of this Note shall be
issued by the Borrower to the Holder for the principal  balance of this Note and
interest which shall not have been converted or paid.

                                   ARTICLE III

                                EVENT OF DEFAULT

                  The  occurrence  of any of the  following  events  of  default
("Event of Default") shall, at the option of the Holder hereof, make all sums of
principal  and  interest  then  remaining  unpaid  hereon and all other  amounts
payable hereunder  immediately due and payable, all without demand,  presentment
or notice, or grace period, all of which hereby are expressly waived,  except as
set forth below:

                  3.1 Failure to Pay Principal or Interest.  The Borrower  fails
to pay any installment of principal or interest hereon when due and such failure
continues for a period of ten (10) days.

                  3.2 Breach of  Covenant.  The  Borrower  breaches any material
covenant or other term or condition of this Note and such breach,  if subject to
cure,  continues  for a period of seven  (7) days  after  written  notice to the
Borrower from the Holder.

                  3.3 Breach of  Representations  and  Warranties.  Any material
representation  or warranty of the  Borrower  made herein,  in the  Subscription
Agreement  entered into by the Holder and Borrower in connection with this Note,
or in any agreement,  statement or certificate  given in writing pursuant hereto
or in connection therewith shall be false or misleading.

                  3.4 Receiver or Trustee. The Borrower shall make an assignment
for the benefit of creditors,  or apply for or consent to the  appointment  of a
receiver  or  trustee  for it or for a  substantial  part  of  its  property  or
business; or such a receiver or trustee shall otherwise be appointed.

                  3.5  Judgments.  Except as set forth in  Schedule  2(h) to the
Subscription Agreement,  any money judgment, writ or similar final process shall
be entered or filed against  Borrower or any of its property or other assets for
more than  $50,000,  and shall  remain  unvacated,  unbonded  and unstayed for a
period of forty-five (45) days.

                  3.6  Bankruptcy.  Bankruptcy,  insolvency,  reorganization  or
liquidation  proceedings or other proceedings or relief under any bankruptcy law
or any law for the  relief of debtors  shall be  instituted  by or  against  the
Borrower.

                  3.7  Delisting.   Delisting  of  the  Common  Stock  from  any
Principal Market,  Borrower's  failure to comply with the conditions for listing
on a  Principal  Market or  notification  from such  Principal  Market  that the
Borrower is not in compliance with the conditions for such continued  listing on
the Principal Market.

                  3.8  Concession.  A  concession  by the  Borrower or a default
under any one or more  obligations in an aggregate  monetary amount in excess of
$50,000.

                  3.9 Stop  Trade.  An SEC stop  trade  order or NASDAQ  trading
suspension.

                                        4
<PAGE>

                  3.10  Failure to Deliver  Common  Stock or  Replacement  Note.
Borrower's  failure to timely deliver Common Stock to the Holder pursuant to and
in the form required by this Note and Section 9 of the  Subscription  Agreement,
or if required a replacement Note.

                  3.11    Registration    Default.    The    occurrence   of   a
Non-Registration  Event  as  described  in  Section  10.4  of  the  Subscription
Agreement,  but only if such  Non-Registration  Event is continuing on or occurs
after a date  which  is 240  days  after  the  Closing  Date as  defined  in the
Subscription Agreement.

                                   ARTICLE IV

                                  MISCELLANEOUS

                  4.1 Failure or Indulgence  Not Waiver.  No failure or delay on
the part of Holder  hereof in the  exercise  of any  power,  right or  privilege
hereunder  shall  operate as a waiver  thereof,  nor shall any single or partial
exercise  of any  such  power,  right or  privilege  preclude  other or  further
exercise  thereof  or of any other  right,  power or  privilege.  All rights and
remedies existing  hereunder are cumulative to, and not exclusive of, any rights
or remedies otherwise available.

                  4.2  Notices.  Any notice  herein  required or permitted to be
given  shall  be in  writing  and  may  be  personally  served  or  sent  by fax
transmission  (with copy sent by regular,  certified  or  registered  mail or by
overnight  courier).  For the purposes hereof, the address and fax number of the
Holder is as set forth on the first page  hereof.  The address and fax number of
the Borrower  shall be ICOA,  Inc.,  111 Airport Road,  Suite 1,  Warwick,  R.I.
02889,  telecopier number:  (401) 739-9215.  Both Holder and Borrower may change
the  address  and fax  number  for  service by service of notice to the other as
herein  provided.  Notice of  Conversion  shall be deemed given when made to the
Company pursuant to the Subscription Agreement.

                  4.3  Amendment  Provision.  The term "Note" and all  reference
thereto,  as used  throughout  this  instrument,  shall mean this  instrument as
originally executed, or if later amended or supplemented,  then as so amended or
supplemented.

                  4.4  Assignability.  This  Note  shall  be  binding  upon  the
Borrower and its successors  and assigns,  and shall inure to the benefit of the
Holder and its successors and assigns, and may be assigned by the Holder.

                  4.5 Cost of  Collection.  If default is made in the payment of
this Note,  Borrower shall pay the Holder hereof reasonable costs of collection,
including reasonable attorneys' fees.

                  4.6  Governing  Law.  This  Note  shall  be  governed  by  and
construed  in  accordance  with the laws of the  State of New York.  Any  action
brought  by  either  party  against  the  other   concerning  the   transactions
contemplated  by this Agreement shall be brought only in the state courts of New
York or in the federal  courts  located in the state of New York.  The Borrower,
and, by accepting this Note, the Holder agree to submit to the  jurisdiction  of
such courts.  The  prevailing  party shall be entitled to recover from the other
party its reasonable attorney's fees and costs.

                  4.7 Maximum Payments. Nothing contained herein shall be deemed
to  establish  or require the payment of a rate of interest or other  charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest  required  to be paid or other  charges  hereunder  exceed the  maximum

                                        5
<PAGE>

permitted by such law, any payments in excess of such maximum  shall be credited
against  amounts  owed by the  Borrower  to the Holder and thus  refunded to the
Borrower.

                  4.8  Prepayment.  This  Note  may  not be  paid  prior  to the
Maturity Date without the consent of the Holder.

         IN WITNESS  WHEREOF,  Borrower has caused this Note to be signed in its
name by its Chief Executive Officer on this _____ day of ____________, 2000.

                                                     ICOA, INC.

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

WITNESS:

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

                                       6

<PAGE>

                              NOTICE OF CONVERSION
                              --------------------

(To be executed by the Registered Holder in order to convert the Note)

         The  undersigned  hereby elects to convert  $_________ of the principal
and  $_________  of the interest due on the Note issued by ICOA,  INC. on August
28, 2000 into Shares of Common Stock of ICOA, INC. (the "Company")  according to
the conditions set forth in such Note, as of the date written below.

Date of Conversion:_____________________________________________________________

Conversion Price:_______________________________________________________________

Shares To Be Delivered:_________________________________________________________

Signature:______________________________________________________________________

Print Name:_____________________________________________________________________

Address:________________________________________________________________________

________________________________________________________________________________

                                       7

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