Document:

EX-4.1

           NUMBER                                              SHARES
                                [SMARTPROS LOGO]
PRO

                                                          CUSIP 83171G 10 3
INCORPORATED UNDER THE LAWS OF                             SEE REVERSE FOR
     THE STATE OF DELAWARE                               CERTAIN DEFINITIONS

                                 SMARTPROS LTD.

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

This
Certifies
that

is the
owner of

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

  FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF THE PAR VALUE OF
                              $.0001 PER SHARE OF

================================  SMARTPROS LTD. ===============================

(hereinafter  called  the  "Corporation")  transferable  on  the  books  of  the
Corporation  in person or by duly  authorized  attorney  upon  surrender of this
Certificate   properly   endorsed.   This   Certificate   is  not  valid  unless
countersigned and registered by the Transfer Agent and Registrar.

WITNESS the facsimile seal of the  Corporation  and the facsimile  signatures of
its duly authorized officers.

                              CERTIFICATE OF STOCK

Dated:

                                  SMARTPROS LTD.

                                    CORPORATE
       -------------------                              -------------------
        SIGNATURE TO COME             SEAL               SIGNATURE TO COME
       -------------------            1999              -------------------

                                     DELAWARE

           SECRETARY                                      VICE CHAIRMAN OF
                                                          THE BOARD OF
                                                          DIRECTORS

COUNTERSIGNED AND REGISTERED:
        AMERICAN STOCK TRANSFER & TRUST COMPANY
                                          TRANSFER AGENT
                                          AND REGISTRAR
BY

                                      AUTHORIZED OFFICER

<PAGE>

       THE CORPORATION  WILL FURNISH  WITHOUT CHARGE TO EACH  STOCKHOLDER WHO SO
REQUESTS, THE DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR
OTHER  SPECIAL  RIGHTS  OF  EACH  CLASS  OF  STOCK  OR  SERIES  THEREOF  AND THE
QUALIFICATIONS,  LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES  AND/OR RIGHTS.
ANY SUCH REQUEST MAY BE MADE TO THE CORPORATION OR TO THE TRANSFER AGENT.

       The following abbreviations,  when used in the inscription on the face of
this  certificate,  shall be  construed  as though they were written out in full
according to applicable laws or regulations:

<TABLE>
<S>                                           <C>
TEN COM  -as tenants in common                UNIF GIFT MIN ACT- ........ Custodian ...........
TEN ENT  -as tenants by the entireties                           ( Cust )            ( Minor )
JT TEN   -as joint tenants with right of                         under Uniform Gifts to Minors
          survivorship and not as tenants                        Act. .........
          in common                                                    (State)
</TABLE>

    Additional abbreviations may also be used though not in the above list.

For value received _______________ hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER
      IDENTIFYING NUMBER OF ASSIGNEE
_____________________________________________

_____________________________________________

________________________________________________________________________________
[PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE]

________________________________________________________________________________

________________________________________________________________________________

__________________________________________________________________________shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
________________________________________________________________________Attorney
to transfer the said stock of the books of the within named Corporation with
full power of substitution in the premises.

Dated ____________________________

                        ________________________________________________________
                        THE SIGNATURE TO THIS  ASSIGNMENT  MUST  CORRESPOND WITH
                NOTICE: THE NAME AS WRITTEN UPON THE FACE OF THE  CERTIFICATE IN
                        EVERY PARTICULAR,  WITHOUT  ALTERATION OR ENLARGEMENT OR
                        ANY CHANGE WHATEVER.

                Signature(s) Guaranteed:

                ________________________________________________________________
                THE SIGNATURE(S)  SHOULD BE GUARANTEED BY AN ELIGIBLE  GUARANTOR
                INSTITUTION (BANKS, STOCKBROKERS,  SAVINGS AND LOAN ASSOCIATIONS
                AND CREDIT  UNIONS  WITH  MEMBERSHIP  IN AN  APPROVED  SIGNATURE
                GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.EX-4.2

                                WARRANT AGREEMENT

                                     BETWEEN

                                 SMARTPROS LTD.

                                       AND

                    AMERICAN STOCK TRANSFER AND TRUST COMPANY

                        DATED AS OF ______________, 2004

<PAGE>

         This  Agreement,  dated as of ___________,  2004, is between  SmartPros
Ltd., a Delaware  corporation  (the  "Company")  and American Stock Transfer and
Trust Company, a New York corporation (the "Warrant Agent").

         The  Company,  at or  about  the time  that it is  entering  into  this
Agreement,  proposes to issue and sell to public  investors up to 900,000  Units
(together with the additional units issuable as provided  herein,  the "Units").
Each Unit consists of two shares of Common  Stock,  par value $0.0001 per share,
of the Company  ("Common Stock") and one Warrant  ("Warrants").  Each Warrant is
exercisable  to purchase one share of Common Stock upon the terms and conditions
and subject to  adjustment  in certain  circumstances,  all as set forth in this
Agreement.  The  Company  also  proposes to grant to the  Representative  of the
Underwriters  of the public  offering an option to purchase  135,000  additional
Units to cover over-allotments, if any.

         The  Company  also  proposes  to  issue  to the  Representative  of the
Underwriters warrants to purchase up to 90,000 additional Units.

         The Company  wishes to retain the Warrant Agent to act on behalf of the
Company,  and the  Warrant  Agent is willing so to act, in  connection  with the
issuance,  transfer, exchange and replacement of the certificates evidencing the
Warrants to be issued under this Agreement (the "Warrant  Certificates") and the
exercise of the Warrants;

         The Company and the Warrant Agent wish to enter into this  Agreement to
set forth the terms and conditions of the Warrants and the rights of the holders
thereof   ("Warrantholders")   and  to  set  forth  the  respective  rights  and
obligations  of the Company  and the Warrant  Agent.  Each  Warrantholder  is an
intended   beneficiary   of  this  Agreement  with  respect  to  the  rights  of
Warrantholders herein.

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
agreements herein set forth, the parties hereto agree as follows:

SECTION 1.  Appointment of Warrant Agent

         The Company  appoints the Warrant Agent to act as agent for the Company
in  accordance  with the  instructions  in this  Agreement and the Warrant Agent
accepts such appointment.

SECTION 2.  Date, Denomination and Execution of Warrant Certificates

         The Warrant  Certificates (and the Form of Election to Purchase and the
Form of Assignment to be printed on the reverse  thereof) shall be in registered
form only and shall be substantially of the tenor and purport recited in EXHIBIT
A hereto, and may have such letters, numbers or other marks of identification or
designation and such legends, summaries or endorsements printed, lithographed or
engraved thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement,  or as may be required to comply with any
law, or with any rule or regulation made pursuant  thereto,  or with any rule or
regulation  of any stock  exchange on which the Common Stock or the Warrants may
be listed or any  automated  quotation  system,  or to  conform  to usage.  Each
Warrant Certificate shall entitle

                                       1
<PAGE>

the registered  holder thereof,  subject to the provisions of this Agreement and
of the Warrant Certificate, to purchase, on or after ___________, 2004 and on or
before the close of business on ____________,  2009 (the "Expiration Date"), one
fully paid and  non-assessable  share of Common Stock for each Warrant evidenced
by such Warrant  Certificate  for $________.  The exercise price of the Warrants
(the  "Exercise  Price") is  subject to  adjustments  as  provided  in Section 6
hereof.  Each  Warrant  Certificate  issued as a part of a Unit  offered  to the
public as described in the recitals, above, shall be dated _____________,  2004;
each  other  Warrant  Certificate  shall be dated the date on which the  Warrant
Agent receives valid  issuance  instructions  from the Company or a transferring
holder of a Warrant  Certificate or, if such instructions  specify another date,
such other date.

         For  purposes of this  Agreement,  the term "close of  business" on any
given date shall mean 5:00 p.m., Eastern time, on such date; provided,  however,
that if such date is not a business day, it shall mean 5:00 p.m.,  Eastern time,
on the next succeeding  business day. For purposes of this  Agreement,  the term
"business  day" shall mean any day other than a  Saturday,  Sunday,  or a day on
which banking  institutions  in New York, New York (or in the state in which the
Warrant  Agent  maintains  the  principal  office in which it conducts  business
related to the Warrants) are authorized or obligated by law to be closed.

         Each Warrant  Certificate shall be executed on behalf of the Company by
its  Chairperson  of the Board of Directors or Vice  Chairperson of the Board of
Directors,  or its  President or a Vice  President,  and by its  Treasurer or an
Assistant Treasurer, or its Secretary or an Assistant Secretary, either manually
or by  facsimile  signature  printed  thereon,  and  have  affixed  thereto  the
Company's  seal or a  facsimile  thereof.  Each  Warrant  Certificate  shall  be
manually or by facsimile signature printed thereon  countersigned by the Warrant
Agent and shall not be valid for any purpose  unless so  countersigned.  In case
any officer of the Company who shall have signed any Warrant  Certificate  shall
cease to be such officer of the Company before  countersignature  by the Warrant
Agent and issue and delivery thereof by the Company,  such Warrant  Certificate,
nevertheless,  may be countersigned  by the Warrant Agent,  issued and delivered
with the same force and effect as though  the  person  who signed  such  Warrant
Certificate had not ceased to be such officer of the Company.

SECTION 3.  Subsequent Issue of Warrant Certificates

         Subsequent to their original issuance, no Warrant Certificates shall be
reissued  except:  (i)  Warrant  Certificates  issued upon  transfer  thereof in
accordance  with  Section 4 hereof;  (ii) Warrant  Certificates  issued upon any
combination,  split-up or exchange of Warrant Certificates pursuant to Section 4
hereof;   (iii)  Warrant   Certificates  issued  in  replacement  of  mutilated,
destroyed,  lost or stolen  Warrant  Certificates  pursuant to Section 5 hereof;
(iv)  Warrant   Certificates   issued  upon  the  partial  exercise  of  Warrant
Certificates  pursuant to Section 7 hereof; and (v) Warrant  Certificates issued
to reflect any  adjustment or change in the Exercise Price or the number or kind
of shares  purchasable  thereunder  pursuant  to Section 22 hereof.  The Warrant
Agent is hereby irrevocably authorized to countersign and deliver, in accordance
with  the  provisions  of  said  Sections  4,  5,  7 and  22,  the  new  Warrant
Certificates  required for purposes thereof, and the Company,  whenever required
by the Warrant Agent, will

                                       2
<PAGE>

supply the Warrant  Agent with Warrant  Certificates  duly executed on behalf of
the Company for such purposes.

SECTION 4.  Transfers and Exchanges of Warrant Certificates

         The Warrant Agent will keep or cause to be kept books for  registration
of ownership and transfer of the Warrant  Certificates  issued  hereunder.  Such
registers  shall show the names and addresses of the  respective  holders of the
Warrant  Certificates and the kind and number of Warrants evidenced by each such
Warrant Certificate.

         The Warrant  Agent shall,  from time to time,  register the transfer of
any  outstanding  Warrants  upon the books to be maintained by the Warrant Agent
for that purpose,  upon  surrender of the Warrant  Certificate  evidencing  such
Warrants,  with the Form of  Assignment  duly filled in and  executed  with such
signature guaranteed by a financial institution that is a member of a Securities
Transfer Association approved medallion program,  such as STAMP, SEMP or MSP, to
the Warrant  Agent at its offices  located at 59 Maiden Lane,  Plaza Level,  New
York,  New York  10038,  at any time on or before  the  Expiration  Date of such
Warrant, and upon payment to the Warrant Agent for the account of the Company of
an amount equal to any  applicable  transfer tax.  Payment of the amount of such
tax may be made in cash,  or by  certified  or official  bank check,  payable in
lawful money of the United States of America to the order of the Company.

         Upon receipt of a Warrant Certificate, with the Form of Assignment duly
filled  in and  executed,  accompanied  by  payment  of an  amount  equal to any
applicable transfer tax, the Warrant Agent shall promptly cancel the surrendered
Warrant  Certificate and countersign and deliver to the transferee a new Warrant
Certificate  for the number of full  Warrants  transferred  to such  transferee;
provided, however, that in case the registered holder of any Warrant Certificate
shall elect to transfer fewer than all of the Warrants evidenced by such Warrant
Certificate,  the  Warrant  Agent in addition  shall  promptly  countersign  and
deliver to such registered holder a new Warrant  Certificate or Certificates for
the number of full Warrants not so transferred.

         Any Warrant  Certificate or Certificates may be exchanged at the option
of the holder  thereof  for  another  Warrant  Certificate  or  Certificates  of
different  denominations,  of like tenor and  representing  in the aggregate the
same kind and number of Warrants,  upon surrender of such Warrant Certificate or
Certificates,  with the Form of Assignment  duly filled in and executed,  to the
Warrant  Agent,  at any time or from time to time after the close of business on
the date  hereof  and  prior to the close of  business  on the  Expiration  Date
relating  to  such  Warrant.   The  Warrant  Agent  shall  promptly  cancel  the
surrendered Warrant Certificate and deliver the new Warrant Certificate pursuant
to the provisions of this Section.

SECTION 5.  Mutilated, Destroyed, Lost or Stolen Warrant Certificates

         Upon  receipt  by  the  Company  and  the  Warrant  Agent  of  evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
any  Warrant  Certificate,  and in the case of loss,  theft or  destruction,  of
indemnity or security reasonably satisfactory to them, and reimbursement to them
of all reasonable expenses  incidental thereto,  and, in the case of mutilation,
upon surrender and  cancellation of the Warrant  Certificate,  the Warrant Agent
shall

                                       3
<PAGE>

countersign  and  deliver a new Warrant  Certificate  of like tenor for the same
kind and number of Warrants.

SECTION 6.  Adjustments  of Number and Kind of Shares  Purchasable  and Exercise
Price

         The number and kind of securities or other  property  purchasable  upon
exercise of a Warrant shall be subject to adjustment  from time to time upon the
occurrence, after the date hereof, of any of the following events:

                  A. In case the Company  shall (1) pay a dividend in, or make a
distribution  of, shares of capital stock on its outstanding  Common Stock,  (2)
subdivide its  outstanding  shares of Common Stock into a greater number of such
shares or (3)  combine  its  outstanding  shares of Common  Stock into a smaller
number of such shares,  the total  number of shares of Common Stock  purchasable
upon the exercise of each Warrant outstanding immediately prior thereto shall be
adjusted so that the holder of any Warrant  Certificate  thereafter  surrendered
for exercise shall be entitled to receive at the same  aggregate  Exercise Price
the number of shares of capital stock (of one or more classes) which such holder
would have owned or have been  entitled  to receive  immediately  following  the
happening of any of the events  described  above had such Warrant been exercised
in full  immediately  prior to the record date with  respect to such event.  Any
adjustment  made  pursuant  to this  Subsection  shall,  in the  case of a stock
dividend or  distribution,  become effective as of the record date therefor and,
in the case of a subdivision  or  combination,  be made as of the effective date
thereof. If, as a result of an adjustment made pursuant to this Subsection,  the
holder of any Warrant  Certificate  thereafter  surrendered  for exercise  shall
become entitled to receive shares of two or more classes of capital stock of the
Company,  the Board of Directors of the Company  (whose  determination  shall be
conclusive and shall be evidenced by a Board  resolution  filed with the Warrant
Agent) shall determine the allocation of the adjusted  Exercise Price between or
among shares of such classes of capital stock.

                  B.  In  the   event   of  a   capital   reorganization   or  a
reclassification  of the Common Stock (except as provided in Subsection A. above
or Subsection E. below), any Warrantholder,  upon exercise of Warrants, shall be
entitled to receive, in substitution for the Common Stock to which he would have
become  entitled  upon  exercise  immediately  prior to such  reorganization  or
reclassification,  the shares (of any class or classes) or other  securities  or
property of the Company (or cash) that he would have been entitled to receive at
the same aggregate Exercise Price upon such  reorganization or  reclassification
if such Warrants had been  exercised  immediately  prior to the record date with
respect  to  such  event;  and in  any  such  case,  appropriate  provision  (as
determined by the Board of Directors of the Company,  whose  determination shall
be conclusive and shall be evidenced by a certified Board  resolution filed with
the Warrant  Agent)  shall be made for the  application  of this  Section 6 with
respect to the rights and interests thereafter of the Warrantholders  (including
but not limited to the  allocation of the Exercise Price between or among shares
of classes of capital  stock),  to the end that this  Section 6  (including  the
adjustments  of the  number  of  shares  of  Common  Stock or  other  securities
purchasable  and the Exercise Price thereof) shall  thereafter be reflected,  as
nearly as reasonably  practicable,  in all subsequent  exercises of the Warrants
for any shares or securities or other property (or cash) thereafter  deliverable
upon the exercise of the Warrants.

                                       4
<PAGE>

                  C.  Whenever  the  number of  shares of Common  Stock or other
securities  purchasable  upon  exercise  of a Warrant is adjusted as provided in
this  Section  6, the  Company  will  promptly  file  with the  Warrant  Agent a
certificate  signed by of its Chief Executive Officer or its President or a Vice
President of the Company and by the  Treasurer or an Assistant  Treasurer or the
Secretary or an Assistant  Secretary of the Company setting forth the number and
kind of securities or other property  purchasable upon exercise of a Warrant, as
so adjusted,  stating that such  adjustments  in the number or kind of shares or
other  securities or property conform to the requirements of this Section 6, and
setting forth a brief  statement of the facts  accounting for such  adjustments.
Promptly after receipt of such certificate, the Company, or the Warrant Agent at
the Company's  request,  will deliver,  by first-class,  postage prepaid mail, a
brief summary thereof (to be supplied by the Company) to the registered  holders
of the outstanding Warrant Certificates; provided, however, that failure to file
or to give any notice  required under this  Subsection,  or any defect  therein,
shall not affect the  legality or validity  of any such  adjustments  under this
Section 6; and provided,  further,  that, where appropriate,  such notice may be
given  in  advance  and  included  as part of the  notice  required  to be given
pursuant to Section 12 hereof.

                  D. In case of any consolidation of the Company with, or merger
of the Company into,  another  corporation (other than a consolidation or merger
which  does not  result in any  reclassification  or  change of the  outstanding
Common  Stock),  or in case of any sale or conveyance to another  corporation of
the property of the Company as an entirety or substantially as an entirety,  the
corporation  formed by such  consolidation  or merger or the  corporation  which
shall have acquired  such assets,  as the case may be, shall execute and deliver
to the Warrant Agent a supplemental  warrant agreement providing that the holder
of each  Warrant then  outstanding  shall have the right  thereafter  (until the
expiration  of such Warrant) to receive,  upon exercise of such Warrant,  solely
the kind and amount of shares of stock and other  securities  and  property  (or
cash) receivable upon such  consolidation,  merger, sale or transfer by a holder
of the number of shares of Common  Stock of the Company  for which such  Warrant
might have been exercised immediately prior to such consolidation,  merger, sale
or transfer.  Such supplemental  warrant agreement shall provide for adjustments
which shall be as nearly  equivalent as may be  practicable  to the  adjustments
provided in this Section. The above provision of this Subsection shall similarly
apply to successive consolidations, mergers, sales or transfers.

         The Warrant  Agent shall not be under any  responsibility  to determine
the  correctness  of any provision  contained in any such  supplemental  warrant
agreement relating to either the kind or amount of shares of stock or securities
or property (or cash)  purchasable by holders of Warrant  Certificates  upon the
exercise  of their  Warrants  after  any  such  consolidation,  merger,  sale or
transfer or of any  adjustment to be made with respect  thereto,  but subject to
the  provisions of Section 20 hereof,  may accept as conclusive  evidence of the
correctness  of any such  provisions,  and shall be protected in relying upon, a
certificate of a firm of independent  certified  public  accountants (who may be
the accountants regularly employed by the Company) with respect thereto.

                  E.  Irrespective  of any  adjustments in the number or kind of
shares issuable upon exercise of Warrants,  Warrant Certificates  theretofore or
thereafter  issued may continue to

                                       5
<PAGE>

express  the same  price and  number  and kind of  shares  as are  stated in the
similar  Warrant  Certificates  initially  issuable  pursuant  to  this  Warrant
Agreement.

                  F.  The  Company  may  retain  a firm  of  independent  public
accountants of recognized standing,  which may be the firm regularly retained by
the  Company,  selected by the Audit  Committee of the Board of Directors of the
Company,  and not  disapproved  by the Warrant  Agent,  to make any  computation
required under this Section, and a certificate signed by such firm shall, in the
absence of fraud or gross negligence,  be conclusive evidence of the correctness
of any computation made under this Section.

                  G. For the purpose of this  Section,  the term "Common  Stock"
shall mean:  (i) the Common  Stock;  or (ii) any other class of stock  resulting
from successive  changes or  reclassifications  of such Common Stock  consisting
solely of changes in par  value,  or from par value to no par value,  or from no
par  value  to par  value.  In the  event  that at any  time as a  result  of an
adjustment made pursuant to this Section,  the holder of any Warrant  thereafter
surrendered  for exercise shall become entitled to receive any shares of capital
stock of the Company other than shares of Common Stock, thereafter the number of
such other shares so receivable upon exercise of any Warrant shall be subject to
adjustment  from time to time in a manner and on terms as nearly  equivalent  as
practicable to the provisions with respect to the Common Stock contained in this
Section, and all other provisions of this Agreement,  with respect to the Common
Stock, shall apply on like terms to any such other shares.

                  H.  The  Company  may,  from  time to time  and to the  extent
permitted by law,  reduce the Exercise Price of the Warrants by any amount for a
period of not less than 60 days. If the Company so reduces the Exercise Price of
such  Warrants,  it will  give not less than 60 days'  notice of such  decrease,
which  notice may be in the form of a press  release,  and shall take such other
steps as may be required under  applicable law in connection  with any offers or
sales of securities at the reduced price.

SECTION 7.  Exercise and Redemption of Warrants

         Unless the Warrants  have been  redeemed as provided in this Section 7,
the  registered  holder of any Warrant  Certificate  may  exercise  the Warrants
evidenced thereby, in whole at any time or in part from time to time at or prior
to the close of  business,  on the  Expiration  Date  relating to such  Warrant,
subject to the  provisions of Section 9, at which time the Warrant  Certificates
shall be and become  wholly void and of no value.  Warrants  may be exercised by
their holders or redeemed by the Company as follows:

                      A.  Exercise  of  Warrants  shall  be  accomplished   upon
surrender of the Warrant Certificate evidencing such Warrants,  with the Form of
Election to Purchase on the reverse side thereof duly filled in and executed, to
the Warrant Agent at its stock transfer office located at 59 Maiden Lane,  Plaza
Level,  New York,  New York 10038,  together  with payment to the Company of the
Exercise  Price (as of the date of such  surrender)  of the Warrants  then being
exercised and an amount equal to any  applicable  transfer tax and, if requested
by the Company, any other taxes or governmental charges which the Company may be
required by law to collect in respect of such exercise.  Payment of the Exercise
Price and other amounts may be made by wire transfer

                                       6
<PAGE>

of good funds, or by certified or bank cashier's check,  payable in lawful money
of the United States of America to the order of the Company. No adjustment shall
be made for any cash  dividends,  whether  paid or declared,  on any  securities
issuable upon  exercise of a Warrant.  The Warrant Agent shall deposit or invest
any and all funds  received in  connection  with the exercise of the Warrants in
federally  insured,  interest bearing  accounts with a financial  institution or
institutions  designated by the Warrant  Agent.  The Warrant Agent shall have no
liability with respect to the performance of any such investments other than, in
the case of funds  deposited in accounts  maintained by the Warrant  Agent,  the
liability of the Warrant Agent to its depositors in such accounts generally. The
Company shall be entitled to the interest,  if any, on funds  deposited with the
Warrant Agent. At the request of the Company,  the Warrant Agent shall remit any
funds held by it as a result of the exercise of the Warrants to the Company.

                  B. Upon  receipt  of a Warrant  Certificate,  with the Form of
Election to Purchase duly filled in and executed,  accompanied by payment of the
Exercise  Price of the Warrants  being  exercised (and of an amount equal to any
applicable  taxes or government  charges as aforesaid),  the Warrant Agent shall
promptly  request from the Transfer  Agent with respect to the  securities to be
issued and deliver to or upon the order of the registered holder of such Warrant
Certificate,  in such name or names as such registered  holder may designate,  a
certificate or  certificates  for the number of full shares of the securities to
be  purchased,  together  with cash made  available  by the Company  pursuant to
Section  8 hereof  in  respect  of any  fraction  of a share of such  securities
otherwise  issuable upon such  exercise.  If the Warrant is then  exercisable to
purchase   property  other  than  securities,   the  Warrant  Agent  shall  take
appropriate steps to cause such property to be delivered to or upon the order of
the  registered  holder  of such  Warrant  Certificate.  In  addition,  if it is
required by law and upon  instruction  by the  Company,  the Warrant  Agent will
deliver to each Warrantholder a prospectus which complies with the provisions of
Section 9 of the Securities  Act of 1933, as amended,  and the Company agrees to
supply Warrant Agent with  sufficient  number of prospectuses to effectuate that
purpose.

                  C. In case the  registered  holder of any Warrant  Certificate
shall  exercise  fewer  than  all of the  Warrants  evidenced  by  such  Warrant
Certificate,  the Warrant Agent shall  promptly  countersign  and deliver to the
registered  holder  of  such  Warrant  Certificate,  or to his  duly  authorized
assigns,  a new Warrant  Certificate  or  Certificates  evidencing the number of
Warrants that were not so exercised.

                  D. Each person in whose name any certificate for securities is
issued upon the  exercise of Warrants  shall for all  purposes be deemed to have
become the  holder of record of the  securities  represented  thereby as of, and
such certificate shall be dated, the date upon which the Warrant Certificate was
duly  surrendered  in proper form and payment of the Exercise  Price (and of any
applicable taxes or other  governmental  charges) was made;  provided,  however,
that if the date of such  surrender  and  payment  is a date on which  the stock
transfer  books of the Company are closed,  such person  shall be deemed to have
become the record  holder of such  shares as of,  and the  certificate  for such
shares  shall be  dated,  the next  succeeding  business  day on which the stock
transfer  books  of the  Company  are open  (whether  before,  on or  after  the
Expiration  Date  relating to such Warrant) and the Warrant Agent shall be under
no duty to deliver the  certificate for such shares until such date. The Company
covenants and agrees that it shall not cause its

                                       7
<PAGE>

stock  transfer  books to be closed  for a period  of more  than 20  consecutive
business days except upon  consolidation,  merger,  sale of all or substantially
all of its assets, dissolution or liquidation or as otherwise provided by law.

                  E. The Warrants  outstanding  at the time of redemption may be
redeemed at the option of the Company,  [beginning  six months after the date of
the final  prospectus  prepared in connection with the Company's  initial public
offering],  in whole or in part on a pro-rata  basis, by giving not less than 30
days prior  notice as provided in Section  7(F) below,  which  notice may not be
give before, but may be given at any time after, the closing price of the Common
Stock on the principal market on which it is then traded has equaled or exceeded
$_____ per share on each of five consecutive  trading days that occur subsequent
to the date of this  Warrant  Agreement.  The  price at  which  Warrants  may be
redeemed  (the  "REDEMPTION  PRICE")  is $0.25  per  Warrant.  On and  after the
redemption date the holders of record of redeemed  Warrants shall be entitled to
payment of the Redemption Price upon surrender of such redeemed  Warrants to the
Company at the office of the Warrant Agent designated for that purpose.

                  F. Notice of redemption of Warrants shall be given at least 30
days prior to the redemption date by first class mail,  postage prepaid,  a copy
of such  notice  to the  Warrant  Agent and to all of the  holders  of record of
Warrants  at their  respective  addresses  appearing  on the  books or  transfer
records of the Company or such other address designated in writing by the holder
of record to the  Warrant  Agent not less than 40 days  prior to the  redemption
date.

                  G. From and  after  the  Redemption  Date,  all  rights of the
Warrantholders  (except  the  right  to  receive  the  Redemption  Price)  shall
terminate,  but only if: (a) no later than one day prior to the redemption  date
the Company shall have  irrevocably  deposited  with the Warrant Agent as paying
agent a sufficient amount to pay on the redemption date the Redemption Price for
all Warrants called for redemption;  and (b) the notice of redemption shall have
stated  the name and  address  of the  Warrant  Agent and the  intention  of the
Company to deposit  such  amount  with the  Warrant  Agent no later than one day
prior to the redemption date.

                  H. On the redemption  date, the Warrant Agent shall pay to the
holders of record of redeemed  Warrants all monies received by the Warrant Agent
for the  redemption  of Warrants to which the holders of record of such redeemed
Warrants who shall have  surrendered  their  Warrants are entitled.  The Warrant
Agent shall have no obligation to pay for the redemption of the Warrants  except
to the  extent  that  funds for such  payment  have been  provided  to it by the
Company.

                  I. Any amounts  deposited  with the Warrant Agent that are not
required for redemption of Warrants may be withdrawn by the Company. Any amounts
deposited with the Warrant Agent that shall be unclaimed  after six months after
the redemption date shall be redelivered back to the Company, and thereafter the
holders  of the  Warrants  called  for  redemption  for which  such  funds  were
deposited  shall look solely to the Company for  payment.  The Company  shall be
entitled to the interest,  if any, on funds deposited with the Warrant Agent and
the holders of redeemed  Warrants shall have no right to any such interest.  The
Warrant Agent shall deposit or invest any and all funds deposited with it by the
Company in connection with any redemption in federally insured, interest bearing
accounts with a financial institution or

                                       8
<PAGE>

institutions  designated by the Warrant  Agent but shall have no liability  with
respect to the  performance of any such  investments  other than, in the case of
funds  deposited in accounts  maintained by the Warrant Agent,  the liability of
the Warrant Agent to its depositors in such accounts, generally.

                  J. If the Company fails to make a sufficient  deposit with the
Warrant  Agent  as  provided  above,  the  holder  of any  Warrants  called  for
redemption may at the option of the holder (a) by notice to the Company  declare
the notice of redemption a nullity as to such holder,  or (b) maintain an action
against the  Company  for the  Redemption  Price.  If the holder  brings such an
action,  the Company will pay reasonable  attorneys' fees of the holder.  If the
holder  fails to bring an action  against the Company for the  Redemption  Price
within 60 days after the  redemption  date,  the holder  shall be deemed to have
elected to declare  the notice of  redemption  to be a nullity as to such holder
and such notice shall be without any force or effect as to such  holder.  Except
as otherwise  specifically provided in this Paragraph J, a notice of redemption,
once mailed by the Company as provided in Paragraph F, shall be irrevocable.

SECTION 8.  Fractional Interests

         The Company  shall not be  required  to issue any  Warrant  Certificate
evidencing a fraction of a Warrant or to issue fractions of shares of securities
on the  exercise of the  Warrants.  If any fraction  (calculated  to the nearest
one-hundredth)  of a Warrant  or a share of  securities  would,  except  for the
provisions  of this  Section,  be issuable on the exercise of any  Warrant,  the
Company,  at its option,  eithaer shall  purchase such fraction for an amount in
cash equal to the current  value of such  fraction  computed on the basis of the
closing market price (as quoted on the principal market or exchange on which the
Common Stock then trades)on the trading day  immediately  preceding the day upon
which such Warrant  Certificate  was surrendered for exercise in accordance with
Section 7 hereof or issue the required fractional Warrant or Share. By accepting
a Warrant Certificate,  the holder thereof expressly waives any right to receive
a Warrant  Certificate  evidencing  any  fraction of a Warrant or to receive any
fractional  share of securities upon exercise of a Warrant,  except as expressly
provided in this Section 8.

SECTION 9.  Reservation of Equity Securities

         The  Company  covenants  that it will at all  times  reserve  and  keep
available,  free from any pre-emptive rights, out of its authorized and unissued
equity  securities,  solely  for the  purpose  of  issue  upon  exercise  of the
Warrants,  such  number of shares of equity  securities  of the Company as shall
then  be  issuable  upon  the  exercise  of all  outstanding  Warrants  ("Equity
Securities"). The Company covenants that all Equity Securities which shall be so
issuable shall, upon such issue, be duly authorized,  validly issued, fully paid
and non-assessable.

         The Company  covenants  that if any equity  securities,  required to be
reserved  for the  purpose of issue upon  exercise  of the  Warrants  hereunder,
require  registration  with or approval of any governmental  authority under any
federal or state law before such shares may be issued upon exercise of Warrants,
the  Company  will  use  all  commercially  reasonable  efforts  to  cause  such
securities to be duly registered,  or approved,  as the case may be, and, to the
extent  practicable,  take all such action in  anticipation  of and prior to the
exercise of the Warrants,

                                       9
<PAGE>

including,  without limitation,  filing any and all post-effective amendments to
the   Company's   Registration   Statement  on  Form  SB-2   (Registration   No.
333-_________)   necessary  to  permit  a  public  offering  of  the  securities
underlying the Warrants at any and all times during the term of this  Agreement,
provided,  however,  that in no event shall such  securities be issued,  and the
Company is  authorized  to refuse to honor the exercise of any Warrant,  if such
exercise would result in the opinion of the Company's  Board of Directors,  upon
advice of counsel,  in the  violation of any law; and provided  further that, in
the case of a Warrant  exercisable  solely for securities listed on a securities
exchange or for which there are at least two independent  market makers, in lieu
of obtaining  such  registration  or  approval,  the Company may elect to redeem
Warrants  submitted  to the Warrant  Agent for exercise for a price equal to the
difference  between the aggregate low asked price, or closing price, as the case
may be, of the  securities  for which such Warrant is exercisable on the date of
such  submission and the Exercise  Price of such Warrants;  in the event of such
redemption,   the  Company  will  pay  to  the  holder  of  such   Warrants  the
above-described  redemption  price in cash within 10 business days after receipt
of notice from the Warrant  Agent that such  Warrants  have been  submitted  for
exercise.

SECTION 10.  Reduction of Exercise Price Below Par Value

         Before  taking any action  that would cause an  adjustment  pursuant to
Section 6 hereof reducing the portion of the Exercise Price required to purchase
one share of capital  stock below the then par value (if any) of a share of such
capital  stock,  the  Company  will use its best  efforts to take any  corporate
action which, in the opinion of its counsel,  may be necessary in order that the
Company may validly and legally  issue fully paid and  non-assessable  shares of
such capital stock.

SECTION 11.  Payment of Taxes

         The Company  covenants and agrees that it will pay when due and payable
any and all federal and state documentary,  stamp and other original issue taxes
which  may be  payable  in  respect  of the  original  issuance  of the  Warrant
Certificates,  or any  shares  of  Common  Stock  or other  securities  upon the
exercise of Warrants. The Company shall not, however, be required (i) to pay any
tax which may be payable in respect of any transfer involved in the transfer and
delivery of Warrant Certificates or the issuance or delivery of certificates for
Common  Stock or other  securities  in a name other than that of the  registered
holder of the Warrant  Certificate  surrendered for purchase or (ii) to issue or
deliver any certificate for shares of Common Stock or other  securities upon the
exercise of any Warrant Certificate until any such tax shall have been paid, all
such tax being payable by the holder of such Warrant  Certificate at the time of
surrender.

SECTION 12.  Notice of Certain Corporate Action

         In case the Company after the date hereof shall propose (i) to offer to
the holders of Common Stock,  generally,  rights to subscribe to or purchase any
additional  shares of any  class of its  capital  stock,  any  evidences  of its
indebtedness  or  assets,  or any other  rights or options or (ii) to effect any
reclassification of Common Stock (other than a reclassification involving merely
the  subdivision or  combination  of outstanding  shares of Common Stock) or any
capital

                                       10
<PAGE>

reorganization,  or any  consolidation or merger to which the Company is a party
and for which approval of any  stockholders  of the Company is required,  or any
sale, transfer or other disposition of its property and assets  substantially as
an  entirety,  or the  liquidation,  voluntary  or  involuntary  dissolution  or
winding-up of the Company,  then, in each such case, the Company shall file with
the Warrant Agent and the Company,  or the Warrant Agent on the Company's behalf
and at the Company's request, shall mail (by first-class,  postage prepaid mail)
to all registered  holders of the Warrant  Certificates  notice of such proposed
action,  which notice  shall  specify the date on which the books of the Company
shall  close or a record be taken for such  offer of rights or  options,  or the
date on which  such  reclassification,  reorganization,  consolidation,  merger,
sale,  transfer,  other  disposition,   liquidation,  voluntary  or  involuntary
dissolution or winding-up shall take place or commence,  as the case may be, and
which shall also specify any record date for  determination of holders of Common
Stock entitled to vote thereon or  participate  therein and shall set forth such
facts with  respect  thereto as shall be  reasonably  necessary  to indicate any
adjustments  in the  Exercise  Price  and the  number or kind of shares or other
securities  purchasable  upon  exercise of Warrants  which will be required as a
result of such action.  Such notice shall be filed and mailed in the case of any
action  covered by clause (i) above,  at least ten days prior to the record date
for determining holders of the Common Stock for purposes of such action or, if a
record is not to be taken,  the date as of which the holders of shares of Common
Stock of record are to be  entitled  to such  offering;  and, in the case of any
action  covered by clause (ii)  above,  at least 20 days prior to the earlier of
the date on which such reclassification,  reorganization, consolidation, merger,
sale,  transfer,  other  disposition,   liquidation,  voluntary  or  involuntary
dissolution or winding-up is expected to become  effective and the date on which
it is  expected  that  holders of shares of Common  Stock of record on such date
shall be entitled to exchange  their  shares for  securities  or other  property
deliverable upon such reclassification,  reorganization,  consolidation, merger,
sale,  transfer,  other  disposition,   liquidation,  voluntary  or  involuntary
dissolution or winding-up.

         Failure to give any such notice or any defect  therein shall not affect
the legality or validity of any transaction listed in this Section 12.

SECTION 13.  Disposition of Proceeds on Exercise of Warrant Certificates, etc.

         The Warrant Agent shall account promptly to the Company with respect to
Warrants  exercised and  concurrently  pay to the Company all monies received by
the Warrant Agent for the purchase of securities or other  property  through the
exercise of such Warrants.

         The Warrant  Agent shall keep copies of this  Agreement  available  for
inspection by Warrantholders  during normal business hours at its stock transfer
office.  Copies of this Agreement may be obtained upon written request addressed
to the Warrant Agent at its stock transfer office at 6201 15th Avenue, Brooklyn,
New York 11219.

SECTION 14.  Warrantholder Not Deemed a Stockholder

         No Warrantholder, as such, shall be entitled to vote, receive dividends
or be deemed the holder of Common Stock or any other  securities  of the Company
which may at any time be issuable on the  exercise of the  Warrants  represented
thereby for any purpose whatever, nor shall

                                       11
<PAGE>

anything  contained herein or in any Warrant  Certificate be construed to confer
upon any  Warrantholder,  as such,  any of the  rights of a  stockholder  of the
Company or any right to vote for the  election of  directors  or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent
to any corporate action (whether upon any  recapitalization,  issuance of stock,
reclassification  of  stock,  change  of par  value or change of stock to no par
value, consolidation,  merger, conveyance or otherwise), or to receive notice of
meetings or other actions affecting  stockholders (except as provided in Section
12 hereof), or to receive dividend or subscription  rights, or otherwise,  until
such  Warrant  Certificate  shall have been  exercised  in  accordance  with the
provisions  hereof and the receipt of the Exercise  Price and any other  amounts
payable upon such exercise by the Warrant Agent.

SECTION 15.  Right of Action

         All  rights of action in respect  to this  Agreement  are vested in the
respective  registered holders of the Warrant  Certificates;  and any registered
holder of any Warrant  Certificate,  without the consent of the Warrant Agent or
of any other holder of a Warrant Certificate, may, in his own behalf for his own
benefit,  enforce, and may institute and maintain any suit, action or proceeding
against the Company  suitable to enforce,  or otherwise in respect of, his right
to exercise the Warrants evidenced by such Warrant Certificate, for the purchase
of shares of the Common Stock in the manner provided in the Warrant  Certificate
and in this Agreement.

SECTION 16.  Agreement of Holders of Warrant Certificates

         Every holder of a Warrant  Certificate  by accepting  the same consents
and agrees with the Company,  the Warrant Agent and with every other holder of a
Warrant Certificate that:

                  A. the Warrant  Certificates  are transferable on the registry
books of the Warrant Agent only upon the terms and  conditions set forth in this
Agreement; and

                  B. the Company  and the  Warrant  Agent may deem and treat the
person in whose name the Warrant Certificate is registered as the absolute owner
of the Warrant  (notwithstanding  any  notation of  ownership  or other  writing
thereon  made by anyone  other than the  Company or the  Warrant  Agent) for all
purposes  whatever  and  neither  the  Company  nor the  Warrant  Agent shall be
affected by any notice to the contrary.

SECTION 17.  Cancellation of Warrant Certificates

         In the event that the Company shall  purchase or otherwise  acquire any
Warrant  Certificate or Certificates  after the issuance  thereof,  such Warrant
Certificate or  Certificates  shall  thereupon be delivered to the Warrant Agent
and be  canceled  by it and  retired.  The  Warrant  Agent shall also cancel any
Warrant  Certificate  delivered  to it for  exercise,  in whole  or in part,  or
delivered  to it  for  transfer,  split-up,  combination  or  exchange.  Warrant
Certificates  so canceled  shall be retained by the Warrant Agent or disposed of
in accordance with its customary  business  practices  relating to such matters;
provided  that the  Warrant  Agent shall give the  Company  notice  prior to its
disposition or destruction of the Warrant  Certificates.

                                       12
<PAGE>

SECTION 18. Concerning the Warrant Agent

         The Company agrees to pay to the Warrant Agent from time to time,  upon
receipt of a written demand of the Warrant Agent,  reasonable  compensation  for
all  services  rendered  by it  hereunder  and  also  its  reasonable  expenses,
including counsel fees, and other  disbursements  incurred in the administration
and execution of this  Agreement and the exercise and  performance of its duties
hereunder. The Warrant Agent agrees to use its best efforts to submit in advance
a written  estimate of any costs in excess of $2,500 that it expects to incur in
the exercise and performance of its duties hereunder. The Company also agrees to
indemnify  the Warrant  Agent for,  and to hold it harmless  against,  any loss,
liability or expense,  incurred without gross  negligence,  bad faith or willful
misconduct  on the part of the Warrant  Agent,  arising out of or in  connection
with the acceptance and administration of this Agreement.

SECTION 19.  Merger or Consolidation or Change of Name of Warrant Agent

         Any  corporation  into  which the  Warrant  Agent may be merged or with
which it may be  consolidated,  or any corporation  resulting from any merger or
consolidation  to which the Warrant Agent shall be a party,  or any  corporation
succeeding to the corporate  trust business of the Warrant  Agent,  shall be the
successor to the Warrant Agent hereunder  without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided that
such corporation  would be eligible for appointment as a successor warrant agent
under the provisions of Section 21 hereof. In case at the time such successor to
the Warrant Agent shall succeed to the agency created by this Agreement,  any of
the Warrant  Certificates shall have been  countersigned but not delivered,  any
such  successor  to the  Warrant  Agent may adopt  the  countersignature  of the
original Warrant Agent and deliver such Warrant  Certificates so  countersigned;
and in case at that  time any of the  Warrant  Certificates  shall not have been
countersigned,  any successor to the Warrant Agent may countersign  such Warrant
Certificates  either in the name of the predecessor Warrant Agent or in the name
of the successor Warrant Agent; and in all such cases such Warrant  Certificates
shall have the full  force  provided  in the  Warrant  Certificates  and in this
Agreement.

         In case at any time the name of the Warrant  Agent shall be changed and
at such time any of the Warrant  Certificates  shall have been countersigned but
not delivered,  the Warrant Agent may adopt the countersignature under its prior
name and deliver Warrant Certificates so countersigned; and in case at that time
any of the Warrant  Certificates shall not have been countersigned,  the Warrant
Agent may countersign such Warrant  Certificates  either in its prior name or in
its changed name; and in all such cases such Warrant Certificates shall have the
full force provided in the Warrant Certificates and in this Agreement.

SECTION 20.  Duties of Warrant Agent

         The Warrant Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and  conditions,  by all of which the Company
and the holders of Warrant Certificates,  by their acceptance thereof,  shall be
bound:

                  A. The Warrant Agent may consult with counsel  satisfactory to
it (who may be counsel for the  Company),  and the opinion of such counsel shall
be full and complete

                                       13
<PAGE>

authorization  and  protection  to the  Warrant  Agent as to any  action  taken,
suffered  or omitted by it in good faith and in  accordance  with such  opinion;
provided,  however,  that the Warrant Agent shall have exercised reasonable care
in the  selection of such  counsel.  Fees and expenses of such  counsel,  to the
extent reasonable,  shall be paid by the Company,  and subject to the provisions
of Section 18 hereof.

                  B.  Whenever  in the  performance  of its  duties  under  this
Agreement,  the Warrant Agent shall deem it necessary or desirable that any fact
or matter be proved or  established  by the Company prior to taking or suffering
any action  hereunder,  such fact or matter  (unless  other  evidence in respect
thereof  be herein  specifically  prescribed)  may be deemed to be  conclusively
proved and  established by a certificate  signed by a Chairman or co-Chairman of
the Board or the  President or a Vice  President or the Secretary of the Company
and  delivered  to the  Warrant  Agent;  and  such  certificate  shall  be  full
authorization  to the  Warrant  Agent for any action  taken or  suffered in good
faith by it under  the  provisions  of this  Agreement  in  reliance  upon  such
certificate.

                  C. The Warrant  Agent shall be liable  hereunder  only for its
own gross negligence, bad faith or willful misconduct.

                  D. The  Warrant  Agent shall not be liable for or by reason of
any of the statements of fact or recitals  contained in this Agreement or in the
Warrant  Certificates  (except its  countersignature on the Warrant Certificates
and such statements or recitals as describe the Warrant Agent or action taken or
to be taken by it) or be  required to verify the same,  but all such  statements
and recitals are and shall be deemed to have been made by the Company only.

                  E. The Warrant Agent shall not be under any  responsibility in
respect of the validity of this  Agreement or the execution and delivery  hereof
(except  the due  execution  hereof by the  Warrant  Agent) or in respect of the
validity or execution of any Warrant  Certificate  (except its  countersignature
thereof);  nor shall it be  responsible  for any  breach by the  Company  of any
covenant or condition contained in this Agreement or in any Warrant Certificate;
nor shall it be responsible for the making of any change in the number of shares
of Common Stock for which a Warrant is exercisable required under the provisions
of Section 6 or responsible for the manner,  method or amount of any such change
or the  ascertaining  of the  existence  of facts  that would  require  any such
adjustment   or  change   (except  with  respect  to  the  exercise  of  Warrant
Certificates  after actual notice of any adjustment of the Exercise Price);  nor
shall it by any act hereunder be deemed to make any  representation  or warranty
as to the  authorization  or  reservation  of any  shares of Common  Stock to be
issued  pursuant to this  Agreement or any Warrant  Certificate or as to whether
any shares of Common Stock will, when issued, be validly issued,  fully paid and
non-assessable.

                  F. The Warrant Agent shall be under no obligation to institute
any action,  suit or legal proceeding or take any other action likely to involve
expense  unless  the  Company  or one or  more  registered  holders  of  Warrant
Certificates  shall  furnish  the Warrant  Agent with  reasonable  security  and
indemnity for any costs and expenses which may be incurred. All rights of action
under this Agreement or under any of the Warrants may be enforced by the Warrant
Agent without the possession of any of the Warrants or the production thereof at
any trial or other

                                       14
<PAGE>

proceeding relative thereto, and any such action, suit or proceeding  instituted
by the  Warrant  Agent  shall be brought in its name as Warrant  Agent,  and any
recovery of judgment shall be for the ratable benefit of the registered  holders
of the Warrant Certificates, as their respective rights or interests may appear.

                  G. The Warrant Agent and any stockholder, director, officer or
employee of the Warrant  Agent may buy,  sell or deal in any of the  Warrants or
other  securities  of  the  Company  or  become  pecuniarily  interested  in any
transaction  in which the Company may be  interested,  or contract  with or lend
money to or  otherwise  act as fully and  freely  as though it were not  Warrant
Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from
acting in any other capacity for the Company or for any other legal entity.

                  H. The  Warrant  Agent is hereby  authorized  and  directed to
accept instructions with respect to the performance of its duties hereunder from
a Chairman or  co-Chairman  of the Board or President or a Vice President or the
Secretary or the  Controller  of the Company,  and to apply to such officers for
advice or instructions  in connection  with the Warrant  Agent's duties,  and it
shall not be liable for any action  taken or  suffered  or omitted by it in good
faith in accordance with instructions of any such officer.

                  I. The Warrant Agent will not be  responsible  for any failure
of the Company to comply with any of the covenants  contained in this  Agreement
or in the Warrant Certificates to be complied with by the Company.

                  J. The  Warrant  Agent may  execute  and  exercise  any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys,  agents or employees and the Warrant Agent shall
not be answerable or accountable for any act, default,  neglect or misconduct of
any such attorneys, agents or employees or for any loss to the Company resulting
from such neglect or misconduct;  provided,  however, that reasonable care shall
have been exercised in the selection and continued employment of such attorneys,
agents and employees.

                  K.  The  Warrant   Agent  will  not  incur  any  liability  or
responsibility  to the Company or to any holder of any Warrant  Certificate  for
any action  taken,  or any  failure to take  action,  in reliance on any notice,
resolution,  waiver,  consent, order,  certificate,  or other paper, document or
instrument  reasonably  believed by the Warrant  Agent to be genuine and to have
been signed, sent or presented by the proper party or parties.

                  L. The Warrant Agent will act hereunder solely as agent of the
Company in a ministerial  capacity,  and its duties will be determined solely by
the provisions  hereof.  The Warrant Agent will not be liable for anything which
it may do or refrain from doing in connection with this Agreement except for its
own gross negligence, bad faith or willful conduct.

SECTION 21.  Change of Warrant Agent

         The Warrant  Agent may resign and be  discharged  from its duties under
this  Agreement upon 30 days' prior notice in writing  mailed,  by registered or
certified mail, to the Company.

                                       15
<PAGE>

The Company may remove the Warrant Agent or any successor  warrant agent upon 30
days' prior notice in writing,  mailed to the Warrant Agent or successor warrant
agent, as the case may be, by registered or certified mail. If the Warrant Agent
shall resign or be removed or shall otherwise  become  incapable of acting,  the
Company shall appoint a successor to the Warrant Agent and shall, within 15 days
following such  appointment,  give notice thereof in writing to each  registered
holder of the  Warrant  Certificates.  If the  Company  shall  fail to make such
appointment  within a period of 15 days after  giving  notice of such removal or
after it has been notified in writing of such  resignation  or incapacity by the
resigning or incapacitated Warrant Agent, then the Company agrees to perform the
duties  of the  Warrant  Agent  hereunder  until a  successor  Warrant  Agent is
appointed. After appointment and execution of a copy of this Agreement in effect
at that time, the successor  Warrant Agent shall be vested with the same powers,
rights,  duties  and  responsibilities  as if it had  been  originally  named as
Warrant Agent without  further act or deed;  but the former  Warrant Agent shall
deliver and transfer to the successor  Warrant Agent,  within a reasonable time,
any  property  at the time held by it  hereunder,  and  execute  and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Failure to
give any notice  provided for in this Section,  however,  or any defect  therein
shall not affect the legality or validity of the  resignation  or removal of the
Warrant Agent or the appointment of the successor warrant agent, as the case may
be.

SECTION 22.  Issuance of New Warrant Certificates

         Notwithstanding  any of the provisions of this Agreement or the several
Warrant Certificates to the contrary,  the Company may, at its option, issue new
Warrant  Certificates  in such form as may be approved by its Board of Directors
to reflect any  adjustment or change in the Exercise Price or the number or kind
of shares purchasable under the several Warrant  Certificates made in accordance
with the provisions of this Agreement.

SECTION 23.  Notices

         Notice or demand  pursuant to this Agreement to be given or made on the
Company  by  the  Warrant  Agent  or by the  registered  holder  of any  Warrant
Certificate  shall be  sufficiently  given or made if sent by first  class mail,
postage  prepaid,  addressed  (until another  address is filed in writing by the
Company with the Warrant Agent) as follows:

         SmartPros Ltd.
         12 Skyline Drive
         Hawthorne, NY  10532
         Attention:  President

         Subject to the  provisions  of Section 21, any notice  pursuant to this
Agreement  to be given or made by the  Company or by the  holder of any  Warrant
Certificate  to or on the Warrant Agent shall be  sufficiently  given or made if
sent by  first-class  or registered  mail,  postage  prepaid,  addressed  (until
another  address is filed in writing by the Warrant  Agent with the  Company) as
follows:

                                       16
<PAGE>

         American Stock Transfer and Trust Company
         59 Maiden Lane, Plaza Level
         New York, NY  10038
         Attn: Office of the General Counsel

         Any notice or demand  authorized to be given or made to the  registered
holder of any Warrant  Certificate  under this Agreement  shall be  sufficiently
given or made if sent by first-class or registered mail, postage prepaid, to the
last address of such holder as it shall appear on the  registers  maintained  by
the Warrant Agent.

SECTION 24.  Modification of Agreement

         The  Warrant  Agent may,  without  the  consent or  concurrence  of the
Warrantholders,  by supplemental agreement or otherwise, concur with the Company
in making any changes or  corrections  in this  Agreement that the Warrant Agent
shall have been  advised by counsel  (who may be counsel  for the  Company)  are
necessary  or desirable  to cure any  ambiguity  or to correct any  defective or
inconsistent  provision or clerical omission or mistake or manifest error herein
contained,  or to make any other  provisions  in regard to matters or  questions
arising hereunder and which shall not be inconsistent with the provisions of the
Warrant  Certificates  and which shall not adversely affect the interests of the
Warrantholders.  As of the date hereof,  this Agreement  contains the entire and
only agreement, understanding,  representation,  condition, warranty or covenant
between the parties  hereto with respect to the matters  herein,  supersedes any
and all other  agreements  between the parties hereto  relating to such matters,
and may be  modified  or  amended  only by a  written  agreement  signed by both
parties hereto  pursuant to the authority  granted by the first sentence of this
Section.

SECTION 25.  Successors

         All  the  covenants  and  provisions  of this  Agreement  by or for the
benefit of the Company or the Warrant  Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.

SECTION 26.  New York Contract

         This Agreement and each Warrant  Certificate  issued hereunder shall be
deemed to be a contract made under the laws of the State of New York and for all
purposes shall be construed in accordance with the laws of said State.

SECTION 27.  Termination

         This  Agreement  shall  terminate  as of the close of  business  on the
Expiration  Date,  or such earlier date upon which all Warrants  shall have been
exercised  or  redeemed,  except  that the Warrant  Agent  shall  account to the
Company as to all Warrants  outstanding  and all cash held by it as of the close
of business on the Expiration Date.

                                       17
<PAGE>

SECTION 28.  Benefits of this Agreement

         Nothing  in this  Agreement  or in the  Warrant  Certificates  shall be
construed  to give to any  person or  corporation  other than the  Company,  the
Warrant Agent,  and their  respective  successors and assigns  hereunder and the
registered  holders of the Warrant  Certificates  any legal or equitable  right,
remedy or claim under this  Agreement;  but this Agreement shall be for the sole
and  exclusive  benefit of the  Company,  the Warrant  Agent,  their  respective
successors  and  assigns  hereunder  and the  registered  holders of the Warrant
Certificates.

SECTION 29.  Descriptive Headings

         The descriptive  headings of the several Sections of this Agreement are
inserted  for  convenience  only and shall not  control or affect the meaning or
construction of any of the provisions hereof.

SECTION 30.  Counterparts

         This Agreement may be executed in any number of  counterparts,  each of
which shall be an original,  but such counterparts shall together constitute one
and the same instrument.

      (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS)

                                       18
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.

                                       SMARTPROS LTD.

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

                                       AMERICAN STOCK TRANSFER AND TRUST COMPANY

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

                                       19
<PAGE>

                                    EXHIBIT A

              VOID AFTER 5 P.M. EASTERN TIME ON _____________, 2009

                        WARRANTS TO PURCHASE COMMON STOCK

No. PRO.WS-___________                                      ___________ Warrants

                                [SMART PROS LOGO]

                                                            CUSIP 83171G111

                                 SmartPros Ltd.

THIS CERTIFIES THAT

or  registered  assigns,  is the  registered  holder of the  number of  Warrants
("WARRANTS")  set forth above.  Each Warrant,  unless and until  redeemed by the
Company as provided in the Warrant  Agreement,  hereinafter more fully described
(the  "WARRANT  AGREEMENT"),  entitles  the  holder  thereof  to  purchase  from
SmartPros  Ltd.,  a  corporation  incorporated  under  the laws of the  State of
Delaware  (the  "COMPANY"),  subject  to the  terms  and  conditions  set  forth
hereinafter and in the Warrant  Agreement,  at any time on or after ___________,
2004 and before the close of business on ___________,  2009 ("EXPIRATION DATE"),
one fully paid and  non-assessable  share of Common Stock, par value $0.0001 per
share, of the Company ("COMMON  STOCK") upon  presentation and surrender of this
Warrant Certificate,  with the instructions for the registration and delivery of
Common Stock filled in, at the stock transfer  office located at 59 Maiden Lane,
New York, New York, 10038 of American Stock Transfer and Trust Company,  Warrant
Agent of the Company  ("WARRANT AGENT") or of its successor warrant agent or, if
there be no successor  warrant agent,  at the corporate  offices of the Company,
and upon payment of the Exercise Price (as defined in the Warrant Agreement) and
any  applicable  taxes paid either in cash,  or by  certified  or official  bank
check,  payable in lawful money of the United  States of America to the order of
the Company. Each Warrant initially entitles the holder to purchase one share of
Common Stock for $_______.  The number and kind of securities or other  property
for which the  Warrants are  exercisable  are subject to  adjustment  in certain
events, such as mergers,  splits, stock dividends,  reverse splits and the like,
to prevent dilution.  Beginning on _____________ __, 200_ the Company may redeem
any or all outstanding and unexercised  warrants by giving not less than 30 days
prior  notice at any time after the  closing  price of the  Common  Stock on the
principal  market or  exchange  on which it is traded has  equaled  or  exceeded
$_____  per  share  on each of  five  consecutive  trading  days  subsequent  to
______________,  2004.  The  Redemption  Price is $0.25 per Warrant  (subject to
adjustment  in the event of a stock split,  dividend or the like).  All Warrants
not theretofore exercised will expire on the Expiration Date.

         This Warrant Certificate is subject to all of the terms, provisions and
conditions of the Warrant Agreement, dated as of ____________, 2004, between the
Company and the Warrant

<PAGE>

Agent, to all of which terms, provisions and conditions the registered holder of
this Warrant Certificate consents by acceptance hereof. The Warrant Agreement is
incorporated herein by reference and made a part hereof and reference is made to
the Warrant  Agreement  for a full  description  of the rights,  limitations  of
rights, obligations, duties and immunities of the Warrant Agent, the Company and
the holders of the Warrant  Certificates.  Copies of the Warrant  Agreement  are
available for  inspection at the stock  transfer  office of the Warrant Agent or
may be obtained upon written request addressed to the Company at SmartPros Ltd.,
12 Skyline Drive, Hawthorne, NY 10532, Attention: Chief Financial Officer.

         The Company  shall not be required  upon the  exercise of the  Warrants
evidenced by this Warrant  Certificate  to issue  fractions of Warrants,  Common
Stock or other  securities,  but shall make  adjustment  therefor in cash on the
basis of the current market value of any fractional  interest as provided in the
Warrant Agreement.

         In certain  cases,  the sale of securities by the Company upon exercise
of Warrants may violate the securities laws of the United States, certain states
thereof or other  jurisdictions.  The Company has agreed to use all commercially
reasonable efforts to cause a registration statement to continue to be effective
during the term of the Warrants with respect to such sales under the  Securities
Act of 1933,  and to take such action under the laws of various states as may be
required to cause the sale of securities  upon  exercise to be lawful.  However,
the Company  will not be required to honor the  exercise of Warrants  if, in the
opinion  of the  Board  of  Directors,  upon  advice  of  counsel,  the  sale of
securities upon such exercise would be unlawful.  In certain cases,  the Company
may, but is not required to, purchase Warrants submitted for exercise for a cash
price  equal to the  difference  between  the  market  price  of the  securities
obtainable upon such exercise and the exercise price of such Warrants.

         This Warrant  Certificate,  with or without  other  Certificates,  upon
surrender to the Warrant Agent,  any successor  warrant agent or, in the absence
of any successor warrant agent, at the corporate offices of the Company,  may be
exchanged for another  Warrant  Certificate  or  Certificates  evidencing in the
aggregate the same number of Warrants as the Warrant Certificate or Certificates
so surrendered.  If the Warrants evidenced by this Warrant  Certificate shall be
exercised in part, the holder hereof shall be entitled to receive upon surrender
hereof  another  Warrant  Certificate or  Certificates  evidencing the number of
Warrants not so exercised.

         No holder of this Warrant  Certificate,  as such,  shall be entitled to
vote,  receive  dividends  or be deemed the holder of Common  Stock or any other
securities  of the Company  which may at any time be  issuable  on the  exercise
hereof for any purpose  whatsoever,  nor shall anything contained in the Warrant
Agreement  or herein be  construed  to confer  upon the  holder of this  Warrant
Certificate,  as such,  any of the rights of a stockholder of the Company or any
right to vote for the  election of  directors  or upon any matter  submitted  to
stockholders at any meeting thereof or give or withhold consent to any corporate
action  (whether  upon any  matter  submitted  to  stockholders  at any  meeting
thereof, or give or withhold consent to any merger,  recapitalization,  issuance
of stock,  reclassification  of stock, change of par value or change of stock to
no par value,  consolidation,  conveyance or otherwise) or to receive  notice of
meetings  or other  actions  affecting  stockholders  (except as provided in the
Warrant  Agreement) or to receive dividends or subscription  rights or otherwise
until  the  Warrants  evidenced  by this  Warrant  Certificate  shall  have been
exercised and the Common Stock  purchasable upon the exercise

<PAGE>

thereof shall have become deliverable as provided in the Warrant Agreement.

         If this Warrant  Certificate  shall be surrendered  for exercise within
any period  during which the transfer  books for the  Company's  Common Stock or
other class of stock purchasable upon the exercise of the Warrants  evidenced by
this Warrant  Certificate  are closed for any purpose,  the Company shall not be
required  to make  delivery of  certificates  for shares  purchasable  upon such
transfer until the date of the reopening of said transfer books.

         Every holder of this Warrant Certificate by accepting the same consents
and agrees with the Company, the Warrant Agent, and with every other holder of a
Warrant Certificate that:

         (a) this Warrant  Certificate is  transferable on the registry books of
the Warrant  Agent only upon the terms and  conditions  set forth in the Warrant
Agreement, and

         (b) the Company and the Warrant  Agent may deem and treat the person in
whose name this Warrant  Certificate  is registered as the absolute owner hereof
(notwithstanding  any  notation of ownership  or other  writing  thereon made by
anyone other than the Company or the Warrant Agent) for all purposes  whatsoever
and neither the Company nor the Warrant Agent shall be affected by any notice to
the  contrary.  The  Company  shall  not be  required  to issue or  deliver  any
certificate for shares of Common Stock or other  securities upon the exercise of
Warrants  evidenced  by this  Warrant  Certificate  until  any tax  which may be
payable in respect thereof by the holder of this Warrant Certificate pursuant to
the Warrant Agreement shall have been paid, such tax being payable by the holder
of this Warrant Certificate at the time of surrender.

         This  Warrant  Certificate  shall  not be valid or  obligatory  for any
purpose until it shall have been countersigned by the Warrant Agent.

<PAGE>

         WITNESS the facsimile  signatures of the proper officers of the Company
and its corporate seal.

Dated:

                                  SMARTPROS LTD.

                                    CORPORATE
       -------------------                              -------------------
        SIGNATURE TO COME             SEAL               SIGNATURE TO COME
       -------------------            1999              -------------------

                                     DELAWARE

           SECRETARY                                      VICE CHAIRMAN OF
                                                          THE BOARD OF
                                                          DIRECTORS

Countersigned:
AMERICAN STOCK TRANSFER AND TRUST COMPANY
              WARRANT AGENT

By:
   --------------------------------------
   Authorized Officer

<PAGE>

         The following  abbreviations,  when used in the inscription on the face
of this certificate,  shall be construed as though they were written out in full
according to applicable laws or regulations.

         TEN COM    --  as tenants in common
         TEN ENT    --  as tenants by the entireties
         JT TEN     --  as joint tenants with rights of survivorship and not  as
                        tenants in common
         COM PROP   --  as community property

<TABLE>
<S>                     <C>    <C>                                        <C>         <C>
UNIF GIFT MIN ACT       --                                                Custodian
                               ------------------------------------------             ---------------------------------
                                                (Cust)                                             (minor)

                               under Uniform Gifts to Minors Act
                               ------------------------------------------
                                                (State)

UNIF TRF MIN ACT        --                                                Custodian
                               ------------------------------------------             ---------------------------------
                                                (Cust)                                             (minor)

                                  under Uniform Transfers to Minors Act

                               ------------------------------------------
                                                (State)
</TABLE>

<PAGE>

                                FORM OF EXERCISE
                    (To be executed upon exercise of Warrant)

To:  SmartPros Ltd.

         The  undersigned,  pursuant to the  provisions  set forth in the within
Warrant Certificate, hereby irrevocably elects to exercise the right of purchase
represented  thereby,  and hereby agrees to subscribe for and to purchase shares
of the Common  Stock of  SmartPros  Ltd.  ("Common  Shares"),  as  provided  for
therein,  and tenders  herewith payment of the purchase price in full in cash or
by wire transfer, check, draft, money order or certified or bank cashier's check
in the amount of $___________

         Please issue a certificate  or  certificates  for such Common Shares in
the name of the  undersigned.  If the number of Common Shares  purchased  hereby
shall  not be all  the  Common  Shares  purchasable  under  the  within  Warrant
Certificate,  a new  Warrant  Certificate  is to be  issued  in the  name of the
undersigned  for  the  balance  remaining  of  the  Common  Shares   purchasable
thereunder.

Name:
             --------------------------------------
             (Please Print Name and Address)

Address:
             --------------------------------------

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

Signature:
             --------------------------------------
             Note:   This  above   signature   must
             correspond  with  the name of the face
             of this  Warrant  Certificate  or with
             the name of the assignee  appearing in
             the assignment form below.

Date:
             --------------------------------------

<PAGE>

                               FORM OF ASSIGNMENT
                       (TO BE SIGNED ONLY UPON ASSIGNMENT)

FOR VALUE RECEIVED, the undersigned Registered Holder (________________________)

--------------------------------------------------
(Please  insert  social  security or other  identification  number of Registered
Holder)

hereby sells, assigns and transfers unto

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

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

--------------------------------------------------
(Please Print Name and Address including Zip Code)

Warrants   evidenced  by  the  within  Warrant   Certificate,   and  irrevocably
constitutes  and  appoints   _____________________________________  attorney  to
transfer this Warrant  Certificate  on the books of SmartPros Ltd. with the full
power of substitution in the premises.

Dated:
--------------------------------------------------

Signature:

--------------------------------------------------
(Signature must conform in all respects to the name
of  Registered  Holder as  specified on the face of
this  Warrant   Certificate  in  every  particular,
without  alteration or any change  whatsoever,  and
the  signature  must  be  guaranteed  in the  usual
manner.)

Signatures Guaranteed:

--------------------------------------------------
The signatures  should be guaranteed by an eligible
institution (banks, stockbrokers,  savings and loan
association and credit unions with membership in an
approved signature medallion program),  pursuant to
S.E.C. Rule 17Ad-15.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00068-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00068-of-00352.parquet"}]]