Document:

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                                                                    Exhibit 10.1

                                                                  EXECUTION COPY

                         COMMON STOCK PURCHASE AGREEMENT

         COMMON STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of December
7, 2000 by and between U.S. PLASTIC LUMBER CORP., a Nevada corporation (the
"Company"), and FUSION CAPITAL FUND II, LLC (together with its permitted
assigns, the "Buyer"). Capitalized terms used herein and not otherwise defined
herein are defined in Section 10 hereof.

                                    WHEREAS:

         Subject to the terms and conditions set forth in this Agreement, the
Company wishes to sell to the Buyer, and the Buyer wishes to buy from the
Company, up to Six Million Dollars ($6,000,000) of the Company's common stock,
par value $.0001 per share (the "Common Stock"). The shares of Common Stock to
be purchased hereunder are referred to herein as the "Purchase Shares." In
addition, as set forth in Section 1(g) hereof, the Company may, in its sole
discretion, at any time after the date hereof and until 20 Trading Days after
such date as the Available Amount is equal to $0, deliver an irrevocable written
notice to the Buyer stating that the Company elects to enter into an additional
Common Stock Purchase Agreement with the Buyer for the purchase of Six Million
Dollars ($6,000,000) of additional Common Stock.

         NOW THEREFORE, the Company and the Buyer hereby agree as follows:

         1.       PURCHASE OF COMMON STOCK.

         Subject to the terms and conditions set forth in Sections 6, 7 and 9
below, the Company hereby agrees to sell to the Buyer, and the Buyer hereby
agrees to purchase from the Company, shares of Common Stock as follows:

         (a) COMMENCEMENT OF PURCHASES OF COMMON STOCK. The purchase and sale of
Common Stock hereunder shall commence (the "Commencement") within five (5)
Trading Days following the date of satisfaction (or waiver) of the conditions to
the Commencement set forth in Sections 6 and 7 below (or such later date as is
mutually agreed to by the Company and the Buyer), (the date of such
Commencement, the "Commencement Date").

         (b) BUYER'S PURCHASE RIGHTS AND OBLIGATIONS. Subject to the provisions
of Sections 1(d), the Buyer: (i) shall purchase shares of Common Stock during
each Monthly Period equal to the Monthly Base Amount at the Purchase Price in
accordance with Section 1(e), and (ii) at any time on or after the Maturity
Date, shall have the right to purchase shares of Common Stock up to the entire
remaining Available Amount at the Purchase Price in accordance with Section
1(e). Within three (3) Trading Days of receipt of Purchase Shares, the Buyer
shall pay to the Company an amount equal to the Purchase Amount with respect to
such Purchase Shares as full payment for the purchase of the Purchase Shares so
received. The Company shall not issue any fraction of a share of Common Stock
upon any purchase. All shares of Common Stock (including fractions thereof)
issuable upon a purchase under this Agreement shall be aggregated for purposes
of determining whether the purchase would result in the issuance of a fraction
of a share of Common Stock. If, after the aforementioned aggregation, the
issuance would result in the issuance of a fraction of a share of Common Stock,
the Company shall round such fraction of a share of Common Stock up or down to
the nearest whole share. All payments made under this Agreement shall be made in
lawful money of the United States of America by check or wire transfer of
immediately available funds to such account as the Company may from time to time
designate by written notice in accordance with the

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provisions of this Agreement. Whenever any amount expressed to be due by the
terms of this Agreement is due on any day which is not a Trading Day, the same
shall instead be due on the next succeeding day which is a Trading Day.

         (c) COMPANY'S MANDATORY PURCHASE RIGHTS. If (A) the Closing Sale Price
of the Common Stock on each of any five (5) consecutive Trading Days is at least
$3.50 and (B) no Event of Default has occurred and is continuing, then the
Company shall have the right, so long as no Event of Default has occurred and is
continuing and so long as the Sale Price of the Common Stock remains at least
$3.50 at all times thereafter , by delivering written notice (a "Mandatory
Purchase Notice") to the Buyer to require that the Buyer purchase at the
Purchase Price such Available Amount as specified by the Company in the
Mandatory Purchase Notice at any time or from time to time during the next sixty
(60) days on such Trading Days during such sixty (60) days as the Buyer shall
determine. The Company acknowledges and agrees that the Company's mandatory
purchase rights represent an agreement by the Buyer to extend financial
accommodations to the Company. Accordingly, it shall be a condition to the
exercise of the Company's Mandatory Purchase Rights that no Event of Default
shall have occurred and is continuing, and the Company's delivery of a Mandatory
Purchase Notice shall be deemed a representation to the Buyer that no Event of
Default has occurred and is continuing. The Company may revoke a Mandatory
Purchase Notice, in whole or in part, by delivering written notice thereof to
the Buyer (a "Revocation of Mandatory Purchase Notice"). A Revocation of
Mandatory Purchase Notice shall be effective only as to Purchase Notices which
have a Purchase Date later than three (3) Trading Days after receipt by the
Buyer of the Revocation of Mandatory Purchase Notice. Any Purchase Notices
submitted by the Buyer which have a Purchase Date on or prior to the third (3rd)
Trading Day after receipt by the Buyer of the Revocation of Mandatory Purchase
Notice must be honored by the Company as otherwise provided herein.

         (d)      LIMITATIONS ON PURCHASES.

                  (i) EXCHANGE CAP LIMITATION. The Company shall not effect any
         purchase under this Agreement and the Buyer shall not have the right to
         purchase shares of Common Stock under this Agreement to the extent that
         after giving effect to such purchase the "Exchange Cap" shall be deemed
         to be reached. The "Exchange Cap" shall be deemed to be reached at such
         time if, upon submission of a Purchase Notice under this Agreement, the
         issuance of such shares of Common Stock would exceed that number of
         shares of Common Stock which the Company may issue under this Agreement
         without breaching the Company's obligations under the rules or
         regulations of the Principal Market.

                  (ii) LIMITATION ON BENEFICIAL OWNERSHIP. The Company shall not
         effect any purchase under this Agreement and the Buyer shall not have
         the right to purchase shares of Common Stock under this Agreement to
         the extent that after giving effect to such purchase the Buyer together
         with its affiliates would beneficially own in excess of 4.99% of the
         outstanding shares of the Common Stock following such purchase. For
         purposes hereof, the number of shares of Common Stock beneficially
         owned by the Buyer and its affiliates or acquired by the Buyer and its
         affiliates, as the case may be, shall include the number of shares of
         Common Stock issuable in connection with a Purchase Notice under this
         Agreement with respect to which the determination is being made, but
         shall exclude the number of shares of Common Stock which would be
         issuable upon (1) a purchase of the remaining Available Amount which
         has not been submitted for purchase, and (2) exercise or conversion of
         the unexercised or unconverted portion of any other securities of the
         Company (including, without limitation, any warrants) subject to a
         limitation on conversion or exercise analogous to the limitation
         contained herein beneficially owned by the Buyer and its affiliates. If
         the 4.99% limitation is ever reached the Company shall have the option
         to increase such limitation

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         to 9.99% by delivery of written notice to the Buyer. Thereafter, if the
         9.99% limitation is ever reached this shall not effect or limit the
         Buyer's obligation to purchase the Monthly Base Amount or the Company's
         Mandatory Purchase Rights as otherwise provided in this Agreement. For
         purposes of this Section, in determining the number of outstanding
         shares of Common Stock the Buyer may rely on the number of outstanding
         shares of Common Stock as reflected in (1) the Company's most recent
         Form 10-Q or Form 10-K, as the case may be, (2) a more recent public
         announcement by the Company or (3) any other written communication by
         the Company or its transfer agent setting forth the number of shares of
         Common Stock outstanding. Upon the reasonable written or oral request
         of the Buyer, the Company shall promptly confirm orally and in writing
         to the Buyer the number of shares of Common Stock then outstanding. In
         any case, the number of outstanding shares of Common Stock shall be
         determined after giving effect to any purchases under this Agreement by
         the Buyer since the date as of which such number of outstanding shares
         of Common Stock was reported. Except as otherwise set forth herein, for
         purposes of this Section 1(d)(ii), beneficial ownership shall be
         determined in accordance with Section 13(d) of the Securities Exchange
         Act of 1934, as amended.

                  (iii) COMPANY'S RIGHT TO SUSPEND PURCHASES. If at any time the
         Closing Sale Price of the Common Stock is below the Fixed Purchase
         Price for three consecutive Trading Days, the Company shall have three
         (3) Trading Days from the last day of such three consecutive Trading
         Day Period to give written notice (a "Purchase Suspension Notice") to
         the Buyer suspending any and all purchases by the Buyer under this
         Agreement. The Purchase Suspension Notice shall be effective only for
         Purchase Notices which have a Purchase Date later than three (3)
         Trading Days after receipt of the Purchase Suspension Notice by the
         Buyer. Any Purchase Notices submitted by the Buyer which have a
         Purchase Date on or prior to the third (3rd) Trading Day after receipt
         by the Buyer of the Company's Purchase Suspension Notice must be
         honored by the Company as otherwise provided herein. Such purchase
         suspension shall continue in effect until the earlier of: (A)
         revocation in writing by the Company, at its sole discretion; or (B)
         such time as the Sale Price of the Common Stock is above the Fixed
         Purchase Price. After the delivery to the Buyer of a Purchase
         Suspension Notice from the Company, the Buyer shall no longer be
         obligated to purchase any Purchase Shares from the Company under
         Section 1 of this Agreement.

         (e) MECHANICS OF PURCHASING. The purchase of shares of Common Stock
under this Agreement shall be conducted in the following manner:

                  (i) BUYER'S DELIVERY REQUIREMENTS. To purchase shares of
         Common Stock under this Agreement on any date, the Buyer shall transmit
         by facsimile (or otherwise deliver) on or prior to 11:59 p.m., Central
         Time on such date, a copy of a fully executed notice of purchase
         substantially in the form attached hereto as EXHIBIT A (the "Purchase
         Notice") to the Company.

                  (ii) COMPANY'S RESPONSE. Upon receipt by the Company of a
         Purchase Notice, so long as a Purchase Suspension Notice is not in
         effect with respect to such Purchase Notice under Section 1(d)(iii)
         hereof, the Company shall as soon as practicable, but in no event later
         than one (1) Trading Day after receipt of such Purchase Notice, send
         via facsimile (or otherwise deliver), a confirmation of receipt of such
         Purchase Notice in the form attached hereto as EXHIBIT B (a "Company
         Confirmation of Purchase Notice") to (1) the Buyer and (2) along with a
         copy of the Purchase Notice, the Company's designated transfer agent
         (the "Transfer Agent"), which confirmation shall constitute an
         irrevocable instruction to the Transfer Agent to process such Purchase
         Notice in accordance with the terms herein. Upon receipt by the
         Transfer Agent of a copy of the executed Purchase Notice and a copy of
         the applicable Company Confirmation of

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         Purchase Notice, the Transfer Agent shall, on the first (1st) Trading
         Day following the date of receipt of the Company Confirmation of
         Purchase Notice, (A) provided the Transfer Agent is participating in
         The Depository Trust Company's ("The DTC") Fast Automated Securities
         Transfer Program, credit such aggregate number of shares of Common
         Stock to which the Buyer shall be entitled to the Buyer's or its
         designee's balance account with The DTC through its Deposit Withdrawal
         At Custodian ("DWAC") system, or (B) if the Transfer Agent is not
         participating in The DTC Fast Automated Securities Transfer Program and
         DWAC system, issue and surrender to a common carrier for overnight
         delivery to the address as specified in the Purchase Notice, a
         certificate, registered in the name of the Buyer or its designee, for
         the number of shares of Common Stock to which the Buyer shall be
         entitled.

                  (iii) DISPUTE RESOLUTION. In the case of a dispute as to the
         determination of the Purchase Price or the arithmetic calculation of
         the Purchase Rate, the Company shall instruct the Transfer Agent to
         issue to the Buyer the number of shares of Common Stock that is not
         disputed and shall submit the disputed determinations or arithmetic
         calculations to the Buyer via facsimile within one (1) Trading Day of
         receipt of the Buyer's Purchase Notice. If the Buyer and the Company
         are unable to agree upon the determination of the Purchase Price or
         arithmetic calculation of the Purchase Rate within one (1) Trading Day
         of such disputed determination or arithmetic calculation being
         submitted to the Buyer, then the Company shall within one (1) Trading
         Day submit via facsimile (A) the disputed determination of the Purchase
         Price to an independent, reputable investment bank selected by the
         Company and approved by the Buyer or (B) the disputed arithmetic
         calculation of the Purchase Rate to the Company's independent, outside
         accountant. The Company shall cause the investment bank or the
         accountant, as the case may be, to perform the determinations or
         calculations and notify the Company and the Buyer of the results no
         later than the fifth (5th) day after the date it receives the disputed
         determinations or calculations. Such investment bank's or accountant's
         determination or calculation, as the case may be, shall be binding upon
         all parties absent manifest error.

                  (iv) RECORD HOLDER. The person or persons entitled to receive
         the shares of Common Stock issuable upon a purchase under this
         Agreement shall be treated for all purposes as the record holder or
         holders of such shares of Common Stock on the Purchase Date.

                  (v) COMPANY'S FAILURE TO TIMELY DELIVER SHARES. If within ten
         (10) Trading Days after the Company's receipt of a copy of the Purchase
         Notice properly submitted in accordance with the term and conditions of
         this Agreement (subject to extension in accordance with Section
         1(e)(iii) for a good faith dispute made in accordance with the terms of
         Section 1(e)(iii)) (the "Share Delivery Period"), the Transfer Agent
         shall fail to issue Purchase Shares via credit to the Buyer's account
         with DTC for the number of Purchase Shares to which such Buyer is
         entitled upon such Buyer's submission of the applicable Purchase Notice
         (a "Purchase Failure"), in addition to all other available remedies
         which such Buyer may pursue under applicable laws and this Agreement
         (including indemnification obligations of the Company set forth in
         Section 8 hereof), the Company shall pay in cash, on demand, additional
         damages to the Buyer for each day after such tenth (10th) Trading Day
         that the issuance of such Purchase Shares is not timely effected, in an
         amount equal to 1.5% of the product of (I) the number of Purchase
         Shares not issued to the Buyer on a timely basis pursuant to Section
         1(e)(ii) and to which such Buyer is entitled and (II) the Closing Sale
         Price of the Common Stock on the Purchase Date.

                  (vi) BOOK ENTRY. Notwithstanding anything to the contrary set
         forth herein, upon purchase of any portion of the Available Amount in
         accordance with the terms hereof, the Buyer

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         shall not be required to physically surrender this Agreement to the
         Company. The Buyer and the Company shall each maintain records showing
         the remaining Available Amount and the dates and Purchase Amounts for
         each purchase or shall use such other method, reasonably satisfactory
         to the Buyer and the Company, so as not to require physical surrender
         of this Agreement upon each purchase. The Buyer and any assignee, by
         acceptance of this Agreement, acknowledge and agree that, by reason of
         the provisions of this paragraph, following purchase of any portion of
         the Available Amount, the remaining Available Amount under this
         Agreement shall be less than the aggregate Available Amount set forth
         on the face hereof.

         (f) TAXES. The Company shall pay any and all taxes that may be payable
with respect to the issuance and delivery of any shares of Common Stock to the
Buyer made under of this Agreement.

         (g) OPTION FOR SECOND TRANCHE; ADDITIONAL COMMON STOCK PURCHASE
AGREEMENT. The Company may, in its sole discretion, at any time after the date
hereof and until 20 Trading Days after such date as the Available Amount is
equal to $0 (the "Second Tranche Expiration Date"), deliver an irrevocable
written notice (the "Second Tranche Notice") to the Buyer stating that the
Company elects to enter into an additional Common Stock Purchase Agreement (the
"Second Common Stock Purchase Agreement") with the Buyer for the purchase of Six
Million Dollars ($6,000,000) of additional Common Stock. It is agreed and
acknowledged by the parties hereto that entering into the Second Common Stock
Purchase Agreement shall be at the option of the Company in its sole discretion
until such time as the Company shall have delivered the Second Tranche Notice to
the Buyer. The Buyer shall not be obligated to enter into the Second Common
Stock Purchase Agreement unless the Company has delivered the Second Tranche
Notice prior to the Second Tranche Expiration Date. The Second Common Stock
Purchase Agreement may not be entered into until the aggregate Available Amount
under this Agreement is fully used to buy Purchase Shares hereunder. Upon
delivery of the Second Tranche Notice to the Buyer prior to the Second Tranche
Expiration Date, the Buyer and the Company shall be obligated to enter into the
Second Common Stock Purchase Agreement no later than the date that is 10 Trading
Days after the Second Tranche Expiration Date. If the Buyer and the Company have
not entered into the Second Common Stock Purchase Agreement by the date that is
10 Trading Days after the Second Tranche Expiration Date, the Buyer shall not be
obligated to enter into such additional Common Stock Purchase Agreement. The
terms and conditions of the Second Common Stock Purchase Agreement shall be in
form and substance identical in all respects to this Agreement, provided,
however, that for purposes of the Second Common Stock Purchase Agreement, (i)
this Section 1(g) shall be omitted, and (ii) for purposes of calculating the
number of Commitment Shares in Sections 7(b), 11(k)(ii) and 11(k)(iii) the
Commitment Shares shall be equal to 8% of Six Million Dollars ($6,000,000)
divided by the arithmetic average of the Closing Bid Prices of the Common Stock
for the ten (10) consecutive Trading Days immediately preceding the date that
the Second Tranche Notice is delivered to the Buyer. Such second tranche
Commitment Shares shall be held by the Buyer until the Second Common Stock
Purchase Agreement has been terminated.

         2.       BUYER'S REPRESENTATIONS AND WARRANTIES.

         The Buyer represents and warrants to the Company that:

         (a) INVESTMENT PURPOSE. The Buyer is entering into this Agreement and
acquiring the Commitment Shares (as defined in Section 7(b) hereof) (this
Agreement and the Commitment Shares are collectively referred to herein as the
"Securities"), for its own account for investment only and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof; provided however, by making the representations herein, the Buyer does
not agree to hold any of the Securities for any minimum or other specific term.

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         (b) ACCREDITED INVESTOR STATUS. The Buyer is an "accredited investor"
as that term is defined in Rule 501(a)(3) of Regulation D.

         (c) RELIANCE ON EXEMPTIONS. The Buyer understands that the Securities
are being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and the
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire the Securities.

         (d) INFORMATION. The Buyer has been furnished with all materials
relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Securities that have been reasonably
requested by the Buyer, including, without limitation, the SEC Documents (as
defined in Section 3(f) hereof). The Buyer understands that its investment in
the Securities involves a high degree of risk. The Buyer (i) is able to bear the
economic risk of an investment in the Securities including a total loss, (ii)
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of the proposed investment in the
Securities and (iii) has had an opportunity to ask questions of and receive
answers from the officers of the Company concerning the financial condition and
business of the Company and others matters related to an investment in the
Securities. Neither such inquiries nor any other due diligence investigations
conducted by the Buyer or its representatives shall modify, amend or affect the
Buyer's right to rely on the Company's representations and warranties contained
in Section 3 below. The Buyer has sought such accounting, legal and tax advice
as it has considered necessary to make an informed investment decision with
respect to its acquisition of the Securities.

         (e) NO GOVERNMENTAL REVIEW. The Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

         (f) TRANSFER OR RESALE. The Buyer understands that except as provided
in the Registration Rights Agreement (as defined in Section 6(a) hereof): (i)
the Securities have not been and are not being registered under the 1933 Act or
any state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder or (B) an exemption
exists permitting such Securities to be sold, assigned or transferred without
such registration; (ii) any sale of the Securities made in reliance on Rule 144
may be made only in accordance with the terms of Rule 144 and further, if Rule
144 is not applicable, any resale of the Securities under circumstances in which
the seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such securities under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder.

         (g) VALIDITY; ENFORCEMENT. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Buyer and is a valid and
binding agreement of the Buyer enforceable against the Buyer in accordance with
its terms, subject as to enforceability to general principles of equity and to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.

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         (h) RESIDENCY. The Buyer is a resident of the State of Illinois.

         (i) NO PRIOR SHORT SELLING. The Buyer represents and warrants to the
Company that at no time prior to the date of this Agreement has any of the
Buyer, its agents, associates, representatives or affiliates engaged in or
effected, in any manner whatsoever, directly or indirectly, any (i) "short sale"
(as such term is defined in Rule 3b-3 of the 1934 Act) of the Common Stock or
(ii) hedging transaction, which establishes a net short position with respect to
the Common Stock.

         3.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company represents and warrants to the Buyer that:

         (a) ORGANIZATION AND QUALIFICATION. The Company and its "Subsidiaries"
(which for purposes of this Agreement means any entity in which the Company,
directly or indirectly, owns 50% or more of the voting stock or capital stock or
other similar equity interests) are corporations duly organized and validly
existing in good standing under the laws of the jurisdiction in which they are
incorporated, and have the requisite corporate power and authority to own their
properties and to carry on their business as now being conducted. Each of the
Company and its Subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which its ownership of
property or the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing could not reasonably be expected to have a Material Adverse
Effect. As used in this Agreement, "Material Adverse Effect" means any material
adverse effect on any of: (i) the business, properties, assets, operations,
results of operations or financial condition of the Company and its
Subsidiaries, if any, taken as a whole, (ii) the value of the Common Stock,
(iii) the transactions contemplated hereby or by the agreements and instruments
to be entered into in connection herewith or (iv) the authority or ability of
the Company to perform its obligations under the Transaction Documents (as
defined in Section 3(b) hereof). The Company has no Subsidiaries except as set
forth on Schedule 3(a).

         (b) AUTHORIZATION; ENFORCEMENT; VALIDITY. (i) The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Registration Rights Agreement (as defined
in Section 6(a) hereof) and each of the other agreements entered into by the
parties hereto in connection with the transactions contemplated by this
Agreement (collectively, the "Transaction Documents"), and to issue the
Securities in accordance with the terms hereof and thereof, (ii) the execution
and delivery of the Transaction Documents by the Company and the consummation by
it of the transactions contemplated hereby and thereby, including without
limitation, the issuance of the Commitment Shares and the reservation for
issuance and the issuance of the Purchase Shares issuable under this Agreement,
have been duly authorized by the Company's Board of Directors and no further
consent or authorization is required by the Company, its Board of Directors or
its shareholders, (iii) this Agreement has been, and each other Transaction
Document shall be on the Commencement Date, duly executed and delivered by the
Company and (iv) this Agreement constitutes, and each other Transaction Document
upon its execution on behalf of the Company, shall constitute, the valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies.

         (c) CAPITALIZATION. As of the date hereof, the authorized capital stock
of the Company consists of (i) 100,000,000 shares of Common Stock, of which as
of November 30, 2000, 34,738,349 shares are issued and outstanding, no shares
are held as treasury shares, 7,048,500 shares are reserved for issuance

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pursuant to the Company's stock option plans of which only approximately
2,465,917 shares remain available and 4,582,583 shares are issuable and reserved
for issuance pursuant to securities (other than stock options issued pursuant to
the Company's stock option plans) exercisable or exchangeable for, or
convertible into, shares of Common Stock and (ii) 5,000,000 shares of Preferred
Stock, $.01 par value with a $_____ per share liquidation preference, of which
as of the date hereof 2,330,142 shares are issued and outstanding. All of such
outstanding shares have been, or upon issuance will be, validly issued and are
fully paid and nonassessable. Except as disclosed in Schedule 3(c), (i) no
shares of the Company's capital stock are subject to preemptive rights or any
other similar rights or any liens or encumbrances suffered or permitted by the
Company, (ii) there are no outstanding debt securities, (iii) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
Subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries, (iv) there
are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act (except the Registration Rights Agreement), (v) there are no
outstanding securities or instruments of the Company or any of its Subsidiaries
which contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries, (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities as described in this Agreement and (vii) the Company does not
have any stock appreciation rights or "phantom stock" plans or agreements or any
similar plan or agreement. The Company has furnished to the Buyer true and
correct copies of the Company's Certificate of Incorporation, as amended and as
in effect on the date hereof (the "Certificate of Incorporation"), and the
Company's By-laws, as amended and as in effect on the date hereof (the
"By-laws"), and summaries of the terms of all securities convertible into or
exercisable for Common Stock, if any, and copies of any documents containing the
material rights of the holders thereof in respect thereto.

         (d) ISSUANCE OF SECURITIES. The Commitment Shares have been duly
authorized and, upon issuance in accordance with the terms hereof, shall be (i)
validly issued, fully paid and non-assessable and (ii) free from all taxes,
liens and charges with respect to the issue thereof. 2,500,000 shares of Common
Stock have been duly authorized and reserved for issuance upon purchase under
this Agreement. Upon issuance and payment therefore in accordance with the terms
and conditions of this Agreement, the Purchase Shares shall be validly issued,
fully paid and nonassessable and free from all taxes, liens and charges with
respect to the issue thereof, with the holders being entitled to all rights
accorded to a holder of Common Stock.

         (e) NO CONFLICTS. Except as disclosed in Schedule 3(e), the execution,
delivery and performance of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
(including, without limitation, the reservation for issuance and issuance of the
Purchase Shares) will not (i) result in a violation of the Certificate of
Incorporation, any Certificate of Designations, Preferences and Rights of any
outstanding series of preferred stock of the Company or the By-laws or (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations and the
rules and regulations of the Principal

                                       8
<PAGE>   9

Market applicable to the Company or any of its Subsidiaries) or by which any
property or asset of the Company or any of its Subsidiaries is bound or
affected, except in the case of conflicts, defaults and violations under clause
(ii), which could not reasonably be expected to result in a Material Adverse
Effect. Except as disclosed in Schedule 3(e), neither the Company nor its
Subsidiaries is in violation of any term of or in default under its Certificate
of Incorporation, any Certificate of Designation, Preferences and Rights of any
outstanding series of preferred stock of the Company or By-laws or their
organizational charter or by-laws, respectively. Except as disclosed in Schedule
3(e), neither the Company nor any of its Subsidiaries is in violation of any
term of or is in default under any material contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company or its Subsidiaries, except for
possible conflicts, defaults, terminations or amendments which could not
reasonably be expected to have a Material Adverse Effect. The business of the
Company and its Subsidiaries is not being conducted, and shall not be conducted,
in violation of any law, ordinance, regulation of any governmental entity,
except for possible violations, the sanctions for which either individually or
in the aggregate could not reasonably be expected to have a Material Adverse
Effect. Except as specifically contemplated by this Agreement and as required
under the 1933 Act, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency or any regulatory or self-regulatory agency in order for it
to execute, deliver or perform any of its obligations under or contemplated by
the Transaction Documents in accordance with the terms hereof or thereof. Except
as disclosed in Schedule 3(e), all consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding
sentence shall be obtained or effected on or prior to the Commencement Date.
Except as disclosed in Schedule 3(e), the Company is not and has not been since
January 1, 1999, in violation of the listing requirements of the Principal
Market.

         (f) SEC DOCUMENTS; FINANCIAL STATEMENTS. Except as disclosed in
Schedule 3(f), since January 1, 1999, the Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "1934 Act") (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein being hereinafter
referred to as the "SEC Documents"). As of their respective dates (except as
they have been correctly amended), the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and regulations of
the SEC promulgated thereunder applicable to the SEC Documents, and none of the
SEC Documents, at the time they were filed with the SEC (except as they may have
been correctly amended), contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. As of their respective dates (except as they
have been correctly amended), the financial statements of the Company included
in the SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto. Such financial statements have been prepared in
accordance with generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).

         (g) ABSENCE OF CERTAIN CHANGES. Except as disclosed in Schedule 3(g),
since September 30, 2000, there has been no material adverse change in the
business, properties, operations, financial condition or results of operations
of the Company or its Subsidiaries. The Company has not taken any steps, and

                                       9
<PAGE>   10

does not currently expect to take any steps, to seek protection pursuant to any
bankruptcy law nor does the Company or any of its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings.

         (h) ABSENCE OF LITIGATION. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened against or affecting the Company,
the Common Stock or any of the Company's Subsidiaries or any of the Company's or
the Company's Subsidiaries' officers or directors in their capacities as such,
which could reasonably be expected to have a Material Adverse Effect. A
description of each action, suit, proceeding, inquiry or investigation before or
by any court, public board, government agency, self-regulatory organization or
body which, as of the date of this Agreement, is pending or threatened in
writing against or affecting the Company, the Common Stock or any of the
Company's Subsidiaries or any of the Company's or the Company's Subsidiaries'
officers or directors in their capacities as such, is set forth in Schedule
3(h).

         (i) ACKNOWLEDGMENT REGARDING BUYER'S STATUS. The Company acknowledges
and agrees that the Buyer is acting solely in the capacity of arm's length
purchaser with respect to the Transaction Documents and the transactions
contemplated hereby and thereby. The Company further acknowledges that the Buyer
is not acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby and any advice given by the Buyer or any of its
representatives or agents in connection with the Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to the Buyer's
purchase of the Securities. The Company further represents to the Buyer that the
Company's decision to enter into the Transaction Documents has been based solely
on the independent evaluation by the Company and its representatives and
advisors.

         (j) NO GENERAL SOLICITATION. Neither the Company, nor any of its
affiliates, nor 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 1933 Act) in connection with the offer or sale of the
Securities.

         (k) 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 require registration of any of
the Securities under the 1933 Act or cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of the 1933 Act or
any applicable shareholder approval provisions, including, without limitation,
under the rules and regulations of any exchange or automated quotation system on
which any of the securities of the Company are listed or designated, nor will
the Company or any of its Subsidiaries take any action or steps that would
require registration of any of the Securities under the 1933 Act or cause the
offering of the Securities to be integrated with other offerings.

         (l) DILUTIVE EFFECT. The Company understands and acknowledges that the
number of Purchase Shares purchasable under this Agreement will increase in
certain circumstances. The Company further acknowledges that its obligation to
issue Purchase Shares under this Agreement in accordance with the term and
conditions hereof is absolute and unconditional regardless of the dilutive
effect that such issuance may have on the ownership interests of other
shareholders of the Company.

         (m) INTELLECTUAL PROPERTY RIGHTS. The Company and its Subsidiaries own
or possess adequate rights or licenses to use all material trademarks, trade
names, service marks, service mark registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental

                                       10
<PAGE>   11

authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. Except as set forth on Schedule 3(m), none of the
Company's material trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, government authorizations, trade secrets or other
intellectual property rights have expired or terminated, or, by the terms and
conditions thereof, could expire or terminate within two years from the date of
this Agreement. The Company and its Subsidiaries do not have any knowledge of
any infringement by the Company or its Subsidiaries of any material trademark,
trade name rights, patents, patent rights, copyrights, inventions, licenses,
service names, service marks, service mark registrations, trade secret or other
similar rights of others, or of any such development of similar or identical
trade secrets or technical information by others and, except as set forth on
Schedule 3(m), there is no claim, action or proceeding being made or brought
against, or to the Company's knowledge, being threatened against, the Company or
its Subsidiaries regarding trademark, trade name, patents, patent rights,
invention, copyright, license, service names, service marks, service mark
registrations, trade secret or other infringement, which could reasonably be
expected to have a Material Adverse Effect.

         (n) ENVIRONMENTAL LAWS. The Company and its Subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where, in each of the
three foregoing clauses, the failure to so comply could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

         (o) TITLE. The Company and its Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and
defects except such as are described in Schedule 3(o) or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and any of its
Subsidiaries. Any real property and facilities held under lease by the Company
and any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its Subsidiaries.

         (p) INSURANCE. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its Subsidiaries, taken as a whole.

         (q) REGULATORY PERMITS. The Company and its Subsidiaries possess all
material certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.

                                       11
<PAGE>   12

         (r) TAX STATUS. The Company and each of its Subsidiaries has made or
filed all federal and state income and all other material tax returns, reports
and declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.

         (s) TRANSACTIONS WITH AFFILIATES. Except as set forth on Schedule 3(s)
and other than the grant or exercise of stock options disclosed on Schedule
3(c), none of the officers, directors, or employees of the Company is presently
a party to any transaction with the Company or any of its Subsidiaries (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has an interest or is an
officer, director, trustee or partner.

         (t) APPLICATION OF TAKEOVER PROTECTIONS. The Company and its board of
directors have taken or will take prior to the Commencement Date all necessary
action, if any, in order to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Certificate of
Incorporation or the laws of the state of its incorporation which is or could
become applicable to the Buyer as a result of the transactions contemplated by
this Agreement, including, without limitation, the Company's issuance of the
Securities and the Buyer's ownership of the Securities.

         (u) FOREIGN CORRUPT PRACTICES. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, the Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or made any unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.

         4.       COVENANTS.

         (a) FILING OF REGISTRATION STATEMENT. The Company shall within five (5)
Trading Days from the date hereof file a new registration statement covering the
sale of the Commitment Shares and at least 2,500,000 Purchase Shares . The Buyer
and its counsel shall have a reasonable opportunity to review and comment upon
such registration statement or amendment to such registration statement and any
related prospectus prior to its filing with the SEC. The Company shall use its
best efforts to have such registration statement or amendment declared effective
by the SEC at the earliest possible date.

         (b) BLUE SKY. The Company shall, on or before the Commencement Date,
take such action, if any, as the Company shall reasonably determine is necessary
in order to obtain an exemption for or to

                                       12
<PAGE>   13

qualify the Commitment Shares and the Purchase Shares for sale to the Buyer
pursuant to this Agreement under applicable securities or "Blue Sky" laws of the
states of the United States, and shall provide evidence of any such action so
taken to the Buyer on or prior to the Commencement Date. The Company shall make
all filings and reports relating to the offer and sale of the Commitment Shares
and the Purchase Shares required under applicable securities or "Blue Sky" laws
of the states of the United States following the Commencement Date.

         (c) NO VARIABLE PRICED FINANCING. Other than pursuant to this
Agreement, the Company agrees that beginning on the date of this Agreement and
ending on the date of termination of this Agreement (as provided in Section
11(k) hereof), neither the Company nor any of its Subsidiaries shall, without
the prior written consent of the Buyer, contract for any equity financing
(including any debt financing with an equity component) or issue any equity
securities of the Company or any Subsidiary or securities convertible or
exchangeable into or for equity securities of the Company or any Subsidiary
(including debt securities with an equity component) which, in any case (i) are
convertible into or exchangeable for an indeterminate number of shares of common
stock, (ii) are convertible into or exchangeable for Common Stock at a price
which varies with the market price of the Common Stock, (iii) provide for any
"re-set" or adjustment of the purchase price, conversion rate or exercise price
after the issuance of the security, or (iv) contain any "make-whole" provision
based upon, directly or indirectly, the market price of the Common Stock after
the issuance of the security, in each case, other than reasonable and customary
anti-dilution adjustments for issuance of shares of Common Stock at a price
which is below the market price of the Common Stock.

         (d) LISTING. The Company shall promptly secure the listing of all of
the Purchase Shares and Commitment Shares upon each national securities exchange
and automated quotation system, if any, upon which shares of Common Stock are
then listed (subject to official notice of issuance) and shall maintain, so long
as any other shares of Common Stock shall be so listed, such listing of all such
securities from time to time issuable under the terms of the Transaction
Documents. The Company shall maintain the Common Stock's authorization for
quotation on the Principal Market. Neither the Company nor any of its
Subsidiaries shall take any action that would be reasonably expected to result
in the delisting or suspension of the Common Stock on the Principal Market. The
Company shall promptly, and in no event later than the following Trading Day,
provide to the Buyer copies of any notices it receives from the Principal Market
regarding the continued eligibility of the Common Stock for listing on such
automated quotation system or securities exchange. The Company shall pay all
fees and expenses in connection with satisfying its obligations under this
Section.

         (e) LIMITATION ON SHORT SALES AND HEDGING TRANSACTIONS. The Buyer
agrees that beginning on the date of this Agreement and ending on the date of
termination of this Agreement as provided in Section 11(k), the Buyer and its
agents, representatives and affiliates shall not in any manner whatsoever enter
into or effect, directly or indirectly, any (i) "short sale" (as such term is
defined in Rule 3b-3 of the 1934 Act) of the Common Stock or (ii) hedging
transaction, which establishes a net short position with respect to the Common
Stock; provided, however, that such restrictions shall not apply (i) if the
Buyer submits after a sale of shares of Common Stock a Purchase Notice entitling
the Buyer to receive a number of shares of Common Stock at least equal to the
number of shares so sold or (ii) if an Event of Default has occurred, including
any failure by the Company to timely issue any Purchase Shares required to be
issued pursuant to the terms of this Agreement.

         (f) LIMITATION ON SALES OF COMMITMENT SHARES. The Buyer agrees that the
Buyer shall not transfer or sell the Commitment Shares (as defined in Section
7(b) hereof) until the Maturity Date or until this Agreement has been
terminated, provided, however, that such restrictions shall not apply: (i) in
connection with any transfers to or among affiliates (as defined in the
Securities Exchange Act of 1934, as

                                       13
<PAGE>   14

amended), (ii) in connection with any pledge in connection with a bona fide loan
or margin account, or (iii) if an Event of Default has occurred, or any event
which, after notice and/or lapse of time, would become an Event of Default,
including any failure by the Company to timely issue Purchase Shares under this
Agreement. Notwithstanding the forgoing, the Buyer may transfer Commitment
Shares to a third party in order to settle a sale made by the Buyer where the
Buyer reasonably expects the Company to deliver Purchase Shares to the Buyer
under this Agreement so long as the Buyer maintains ownership of the same
overall number of shares of Common Stock by "replacing" the Commitment Shares so
transferred with Purchase Shares when the Purchase Shares are actually issued by
the Company to the Buyer.

         (h) DUE DILIGENCE. The Buyer shall have the right, from time to time as
the Buyer may reasonably deem appropriate, to perform reasonable due diligence
on the Company during normal business hours. The Company and its officers and
employees shall reasonably cooperate with the Buyer in connection with any
reasonable request by the Buyer related to the Buyer's due diligence of the
Company.

         (i) RESERVATION OF SHARES. The Company shall, so long as any Available
Amount is outstanding, reserve and keep available out of its authorized and
unissued Common Stock, solely for the purpose of effecting the purchase of the
Available Amount, such number of shares of Common Stock as shall from time to
time be sufficient to effect the purchase of the entire remaining Available
Amount, without regard to any restrictions or limitations on purchases.

         5.       TRANSFER AGENT INSTRUCTIONS.

         All of the Purchase Shares and Commitment Shares to be issued under
this Agreement shall be issued without any restrictive legend and shall be
issued by the Company's transfer agent via The DTC Fast Automated Securities
Transfer Program, by crediting the appropriate number of shares of Common Stock
to which the Buyer shall be entitled to the Buyer's or its designee's balance
account with The DTC through The DTC DWAC system. The Company shall issue
irrevocable instructions to its transfer agent, and any subsequent transfer
agent, to issue Purchase Shares in the name of the Buyer or its respective
nominee(s), for the Purchase Shares (the "Irrevocable Transfer Agent
Instructions"). The Company warrants to the Buyer that no instruction other than
the Irrevocable Transfer Agent Instructions referred to in this Section 5, will
be given by the Company to its transfer agent with respect to the Purchase
Shares and that the Commitment Shares and the Purchase Shares shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the Registration Rights Agreement subject to the
provisions of Section 4(f) in the case of the Commitment Shares.

         6.       CONDITIONS TO THE COMPANY'S OBLIGATION TO COMMENCE
                  SALES OF SHARES OF COMMON STOCK.

         The obligation of the Company hereunder to commence sales of the
Purchase Shares is subject to the satisfaction of each of the following
conditions on or before the Commencement Date, provided that these conditions
are for the Company's sole benefit and may be waived by the Company at any time
in its sole discretion by providing the Buyer with prior written notice thereof:

         (a) The Buyer shall have executed each of the Transaction Documents to
which it is a party and delivered the same to the Company including the
Registration Rights Agreement substantially in the form of EXHIBIT C hereto (the
"Registration Rights Agreement").

         (b) Subject to the Company's compliance with Section 4(a), a
registration statement covering the sale of the Commitment Shares and at least
2,500,000 Purchase Shares shall have been declared

                                       14
<PAGE>   15

effective under the 1933 Act by the SEC and no stop order with respect to the
Registration Statement shall be pending or threatened by the SEC.

         (c) The representations and warranties of the Buyer shall be true and
correct in all material respects as of the date when made and as of the
Commencement Date as though made at that time (except for representations and
warranties that speak as of a specific date), and the Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Buyer at or prior to the Commencement Date.

         7.       CONDITIONS TO THE BUYER'S OBLIGATION TO COMMENCE
                  PURCHASES OF SHARES OF COMMON STOCK.

         The obligation of the Buyer to commence purchases of Purchase Shares
under this Agreement is subject to the satisfaction, on or before the
Commencement Date, of each of the following conditions, provided that these
conditions are for the Buyer's sole benefit and may be waived by the Buyer at
any time in its sole discretion by providing the Company with prior written
notice thereof:

         (a) The Company shall have executed each of the Transaction Documents
and delivered the same to the Buyer including the Registration Rights Agreement
substantially in the form of EXHIBIT C hereto.

         (b) The Company shall have issued to the Buyer 200,000 shares of Common
Stock (the "Commitment Shares") The number of Commitment Shares shall be
appropriately adjusted for any reorganization, recapitalization, non-cash
dividend, stock split or other similar transaction occurring on or prior to the
Commencement Date. The Commitment Shares shall be issued to the Buyer without
any restrictive legend and shall be issued by the Company's transfer agent via
The DTC Fast Automated Securities Transfer Program, by crediting the appropriate
number of shares of Common Stock to which the Buyer shall be entitled to the
Buyer's or its designee's balance account with The DTC through The DTC DWAC
system.

         (c) The Common Stock shall be authorized for quotation on the Principal
Market, trading in the Common Stock shall not have been within the last 365 days
suspended by the SEC or the Principal Market and the Purchase Shares and the
Commitment Shares shall be approved for listing upon the Principal Market.

         (d) The Buyer shall have received the opinions of the Company's legal
counsel dated as of the Commencement Date in the form of EXHIBIT D attached
hereto.

         (e) The representations and warranties of the Company shall be true and
correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in Section
3 above, in which case, such representations and warranties shall be true and
correct without further qualification) as of the date when made and as of the
Commencement Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied with the covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by the Company at or prior to the Commencement Date. The Buyer shall have
received a certificate, executed by the CEO, President or CFO of the Company,
dated as of the Commencement Date, to the foregoing effect in the form attached
hereto as EXHIBIT E.

                                       15
<PAGE>   16

         (f) The Board of Directors of the Company shall have adopted
resolutions in the form attached hereto as EXHIBIT F which shall be in full
force and effect without any amendment or supplement thereto as of the
Commencement Date.

         (g) As of the Commencement Date, the Company shall have reserved out of
its authorized and unissued Common Stock, solely for the purpose of effecting
purchases of Purchase Shares hereunder, at least 2,500,000 shares of Common
Stock.

         (h) The Irrevocable Transfer Agent Instructions, in the form of EXHIBIT
G attached hereto, shall have been delivered to and acknowledged in writing by
the Company and the Company's transfer agent.

         (i) The Company shall have delivered to the Buyer a certificate
evidencing the incorporation and good standing of the Company in the State of
Nevada issued by the Secretary of State of the State of Nevada as of a date
within ten (10) Trading Days of the Commencement Date.

         (j) The Company shall have delivered to the Buyer a certified copy of
the Certificate of Incorporation as certified by the Secretary of the Company
within ten (10) Trading Days of the Commencement Date.

         (k) The Company shall have delivered to the Buyer a secretary's
certificate executed by the Secretary of the Company, dated as of the
Commencement Date, in the form attached hereto as EXHIBIT H.

         (l) A registration statement covering the sale of all of the Commitment
Shares and at least 2,500,000 Purchase Shares shall have been declared effective
under the 1933 Act by the SEC and no stop order with respect to the registration
statement shall be pending or threatened by the SEC. The Company shall have
prepared and delivered to the Buyer a final form of Prospectus to be used by the
Buyer in connection with any sales of any Commitment Shares or any Purchase
Shares. The Company shall have made all filings under all applicable federal and
state securities laws necessary to consummate the issuance of the Commitment
Shares and the Purchase Shares pursuant to this Agreement in compliance with
such laws.

         (m) No Event of Default has occurred, or any event which, after notice
and/or lapse of time, would become an Event of Default has occurred.

         (n) On or prior to the Commencement Date, the Company shall take all
necessary action, if any, and such actions as reasonably requested by the Buyer,
in order to render inapplicable any control share acquisition, business
combination, shareholder rights plan or poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the
Certificate of Incorporation or the laws of the state of its incorporation which
is or could become applicable to the Buyer as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company's
issuance of the Securities and the Buyer's ownership of the Securities.

                                       16
<PAGE>   17

         8.       INDEMNIFICATION.

         In consideration of the Buyer's execution and delivery of the
Transaction Documents and acquiring the Securities hereunder and in addition to
all of the Company's other obligations under the Transaction Documents, the
Company shall defend, protect, indemnify and hold harmless the Buyer and all of
its affiliates, shareholders, officers, directors, employees and direct or
indirect investors and any of the foregoing person's agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"Indemnitees") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby, or
(c) any cause of action, suit or claim brought or made against such Indemnitee
and arising out of or resulting from the execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law.

         9.       EVENTS OF DEFAULT.

         An "Event of Default" shall be deemed to have occurred at any time as
any of the following events occurs:

         (a) while any registration statement is required to be maintained
effective pursuant to the terms of the Registration Rights Agreement, the
effectiveness of such registration statement lapses for any reason (including,
without limitation, the issuance of a stop order) or is unavailable to the Buyer
for sale of all of the Registrable Securities (as defined in the Registration
Rights Agreement) in accordance with the terms of the Registration Rights
Agreement, and such lapse or unavailability continues for a period of ten (10)
consecutive Trading Days or for more than an aggregate of thirty (30) Trading
Days in any 365-day period;

         (b) the suspension from trading or failure of the Common Stock to be
listed on the Principal Market for a period of ten (10) consecutive Trading Days
or for more than an aggregate of thirty (30) Trading Days in any 365-day period;

         (c) the failure of the Company or the Common Stock to fully meet the
requirements for continued listing on the Principal Market for a period of ten
(10) consecutive Trading Days or for more than an aggregate of thirty (30)
Trading Days in any 365-day period;

         (d) the Company's or the Transfer Agent's notice, verbal or written, to
the Buyer, including by way of public announcement, at any time, of its
intention not to comply with a proper request for purchase of Purchase Shares
under this Agreement that is tendered in accordance with the provisions of this
Agreement, or the failure of the Company to deliver a Company Confirmation of
Purchase Notice to the Buyer and to the Transfer Agent in accordance with the
provisions of this Agreement within two (2)

                                       17
<PAGE>   18

Trading Days after the receipt by the Company of a Purchase Notice (subject to
extension in accordance with Section 1(e)(iii) for a good faith dispute made in
accordance with the terms of Section 1(e)(iii)); or the failure for any reason
by the Transfer Agent to issue Purchase Shares to the Buyer within five (5)
Trading Days after the applicable Purchase Date;

         (e) if at any time after the Commencement Date, the "Exchange Cap" is
reached (the "Exchange Cap" shall be deemed to be reached at such time if, upon
submission of a Purchase Notice under this Agreement, the issuance of such
shares of Common Stock would exceed that number of shares of Common Stock which
the Company may issue under this Agreement without breaching the Company's
obligations under the rules or regulations of the Principal Market);

         (f) the Company breaches any representation, warranty, covenant or
other term or condition under any Transaction Document if such breach could have
a Material Adverse Effect and except, in the case of a breach of a covenant
which is reasonably curable, only if such breach continues for a period of at
least ten (10) Trading Days;

         (g) any payment default under any contract whatsoever or any
acceleration prior to maturity of any mortgage, indenture, contract or
instrument under which there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed by the Company or for money
borrowed the repayment of which is guaranteed by the Company, whether such
indebtedness or guarantee now exists or shall be created hereafter, which in any
case, is in excess of $1,500,000;

         (h) if any Person commences a proceeding against the Company pursuant
to or within the meaning of any Bankruptcy Law;

         (i) if the Company pursuant to or within the meaning of any Bankruptcy
Law; (A) commences a voluntary case, (B) consents to the entry of an order for
relief against it in an involuntary case, (C) consents to the appointment of a
Custodian of it or for all or substantially all of its property, (D) makes a
general assignment for the benefit of its creditors, (E) becomes insolvent, or
(F) is generally unable to pay its debts as the same become due; or

         (j) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that; (A) is for relief against the Company in an involuntary
case, (B) appoints a Custodian of the Company or for all or substantially all of
its property, or (C) orders the liquidation of the Company or any Subsidiary.

In addition to any other rights and remedies under applicable law and this
Agreement, including the Buyer termination rights under Section 11(k) hereof, so
long as an Event of Default has occurred and is continuing, or if any event
which, after notice and/or lapse of time, would become an Event of Default, has
occurred and is continuing, the Buyer shall not be obligated to purchase any
shares of Common Stock under this Agreement. If pursuant to or within the
meaning of any Bankruptcy Law, the Company commences a voluntary case or any
Person commences a proceeding against the Company, a Custodian is appointed for
the Company or for all or substantially all of its property, or the Company
makes a general assignment for the benefit of its creditors, (any of which would
be an Event of Default as described in Sections 9(h), 9(i) and 9(j) hereof) this
Agreement shall automatically terminate without any liability or payment to the
Company without further action or notice by any Person. No such termination of
this Agreement under Section 11(k)(i) shall affect the Company's or the Buyer's
obligations under this Agreement with respect to pending purchases and the
Company and the Buyer shall complete their respective obligations with respect
to any pending purchases under this Agreement.

                                       18
<PAGE>   19

         10.      CERTAIN DEFINED TERMS.

         For purposes of this Agreement, the following terms shall have the
following meanings:

         (a)      "1933 Act" means the Securities Act of 1933, as amended.

         (b) "Available Amount" means initially Six Million Dollars ($6,000,000)
in the aggregate which amount shall be reduced by the Purchase Amount as the
Buyer purchases shares of Common Stock pursuant to Section 1 hereof.

         (c) "Bankruptcy Law" means Title 11, U.S. Code, or any similar federal
or state law for the relief of debtors.

         (d) "Closing Bid Price" means, for any security as of any date, the
last closing bid price for such security on the Principal Market as reported by
Bloomberg Financial Markets ("Bloomberg"), or, if the Principal Market is not
the principal securities exchange or trading market for such security, the last
closing bid price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg.

         (e) "Closing Sale Price" means, for any security as of any date, the
last closing trade price for such security on the Principal Market as reported
by Bloomberg, or, if the Principal Market is not the principal securities
exchange or trading market for such security, the last closing trade price of
such security on the principal securities exchange or trading market where such
security is listed or traded as reported by Bloomberg.

         (f) "Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.

         (g) "Fixed Purchase Price" means $15.00, appropriately adjusted for any
reorganization, recapitalization, non-cash dividend, stock split or other
similar transaction.

         (h) "Major Transaction" means any of the following: (A) the
consolidation, merger or other business combination of the Company into another
Person (other than pursuant to a migratory merger effected solely for the
purpose of changing the jurisdiction of incorporation of the Company); (B) any
transaction by the Company, including the contract, license, sale or acquisition
by the Company of securities, services, assets or property, which involves or
which could reasonably be expected to involve a fair value of $5,000,000 or more
in a single transaction or series of related transactions; (C) the issuance of
debt or equity securities in a transaction or a series of related transactions
involving the receipt by the Company of aggregate proceeds of $5,000,000
(including fees and expenses paid with respect to the issuance thereof) or more
with any entity other than the Buyer or any of its affiliates; or (D) a
purchase, tender or exchange offer made by any person other than the Buyer or
any of the Buyer's affiliates to the holders of more than 50% of the outstanding
shares of Common Stock.

         (i) "Mandatory Purchase Rights" means the mandatory purchase rights of
the Company pursuant to Section 1(c).

         (j) "Maturity Date" means the date that is 360 calendar days (12
Monthly Periods) from the Commencement Date which such date may be extended by
up to an additional Six (6) months by the Company, in its sole discretion, by
written notice to the Buyer.

                                       19
<PAGE>   20

         (k) "Monthly Base Amount" means Five Hundred Thousand Dollars
($500,000) per Monthly Period.

         (l) "Monthly Period" means each successive 30 calendar day period
commencing with the Commencement Date.

         (m) "Person" means an individual or entity including any limited
liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.

         (n) "Principal Market" means The Nasdaq National Market.

         (o) "Purchase Amount means the portion of the Available Amount
submitted in a Purchase Notice to be used to purchase Common Stock pursuant to
Section 1 hereof.

         (p) "Purchase Date" means the actual date that the Buyer submits a
Purchase Notice to the Company to purchase Common Stock hereunder so long as the
Buyer shall transmit by facsimile (or otherwise deliver) to the Company on or
prior to 11:59 p.m., Central Time on such date.

         (q) "Purchase Price" means, as of any Purchase Date or other date of
determination, the lower of the (A) Fixed Purchase Price and (B) the Variable
Purchase Price, each in effect as of such date.

         (r) "Purchase Rate" means the number of shares of Common Stock issuable
upon purchase of a Purchase Amount as determined in accordance with the
following formula: Purchase Amount divided by the Purchase Price.

         (s) "Sale Price" means, for any security as of any date, the trade
price for such security on the Principal Market as reported by Bloomberg, or, if
the Principal Market is not the principal securities exchange or trading market
for such security, the trade price of such security on the principal securities
exchange or trading market where such security is listed or traded as reported
by Bloomberg.

         (t) "SEC" means the United States Securities and Exchange Commission.

         (u) "Trading Day" means any day on which the Principal Market is open
for customary trading.

         (v) "Variable Purchase Price" means, as of any Purchase Date or other
date of determination, the lower of: (A) the lowest Sale Price of the Common
Stock on the Purchase Date or such other date of determination or (B) the
arithmetic average of any five (5) Closing Bid Prices for the Common Stock,
selected by the Buyer, during the fifteen (15) consecutive Trading Days ending
on the Trading Day immediately preceding such Purchase Date or other date of
determination (to be appropriately adjusted for any reorganization,
recapitalization, non-cash dividend, stock split or other similar transaction).

                                       20
<PAGE>   21

         11.      MISCELLANEOUS.

         (a) GOVERNING LAW; JURISDICTION; JURY TRIAL. The corporate laws of the
State of Nevada shall govern all issues concerning the relative rights of the
Company and its shareholders. All other questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the other
Transaction Documents shall be governed by the internal laws of the State of
Illinois, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Illinois. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of Chicago, for
the adjudication of any dispute hereunder or under the other Transaction
Documents or in connection herewith or therewith, or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

         (b) COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.

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

         (d) SEVERABILITY. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.

         (e) ENTIRE AGREEMENT; AMENDMENTS. This Agreement supersedes all other
prior oral or written agreements between the Buyer, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement, the other Transaction Documents and the
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Buyer
makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be amended other than by an
instrument in writing signed by the Company and the Buyer, and no provision
hereof may be waived other than by an instrument in writing signed by the party
against whom enforcement is sought.

                                       21
<PAGE>   22

         (f) NOTICES. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Trading Day after deposit with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:

         If to the Company:
                  U.S. Plastic Lumber Corp.
                  2300 Glades Road, Suite 440W
                  Boca Raton, FL 33431
                  Telephone:        561-394-3511
                  Facsimile:        561-394-5335
                  Attention:        Bruce  C. Rosetto

         With a copy to:
                  U.S. Plastic Lumber Corp.
                  2300 Glades Road, Suite 440W
                  Boca Raton, FL 33431
                  Telephone:        561-394-3511
                  Facsimile:        561-394-5335
                  Attention:        John W. Poling

         If to the Buyer:
                  Fusion Capital Fund II, LLC
                  222 Merchandise Mart Plaza, Suite 9-112
                  Chicago, IL 60654
                  Telephone:        312-644-6644
                  Facsimile:        312-644-6244
                  Attention:        Steven G. Martin

         If to the Transfer Agent:
                  Interwest Transfer Co., Inc.
                  1981 E. Murray Holiday Road
                  Salt Lake City, Utah  84117
                  Telephone:        801-272-9294
                  Facsimile:        801-277-3147
                  Attention:        Stacie Nolan

or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party three (3) Trading Days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, and recipient facsimile number or (C) provided by a nationally recognized
overnight delivery service, shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from a nationally recognized overnight delivery
service in accordance with clause (i), (ii) or (iii) above, respectively.

                                       22
<PAGE>   23

         (g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.
The Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Buyer, including by merger or
consolidation. The Buyer may not assign its rights under this Agreement without
the consent of the Company, other than to an affiliate of the Buyer controlled
by Steven G. Martin or Joshua B. Scheinfeld.

         (h) NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

         (i) PUBLICITY. The Buyer shall have the right to approve before
issuance any press releases or any other public disclosure (including any
filings with the SEC) with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the prior
approval of any Buyer, to make any press release or other public disclosure
(including any filings with the SEC) with respect to such transactions as is
required by applicable law and regulations (although the Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a copy
thereof).

         (j) FURTHER ASSURANCES. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

         (k) TERMINATION. This Agreement may be terminated only as follows:

                  (i) By the Buyer any time an Event of Default exists without
         any liability or payment to the Company. However, if pursuant to or
         within the meaning of any Bankruptcy Law, the Company commences a
         voluntary case or any Person commences a proceeding against the
         Company, a Custodian is appointed for the Company or for all or
         substantially all of its property, or the Company makes a general
         assignment for the benefit of its creditors, (any of which would be an
         Event of Default as described in Sections 9(h), 9(i) and 9(j) hereof)
         this Agreement shall automatically terminate without any liability or
         payment to the Company without further action or notice by any Person.
         No such termination of this Agreement under this Section 11(k)(i) shall
         affect the Company's or the Buyer's obligations under this Agreement
         with respect to pending purchases and the Company and the Buyer shall
         complete their respective obligations with respect to any pending
         purchases under this Agreement.

                  (ii) In the event that the Commencement shall not have
         occurred, the Company shall have the option to terminate this Agreement
         for any reason or for no reason without liability of any party to any
         other party. If this Agreement is terminated pursuant to this Section
         11(k)(ii), the Company shall issue to the Buyer the Commitment Shares
         immediately prior to the termination hereof. The number of Commitment
         Shares shall be appropriately adjusted for any reorganization,
         recapitalization, non-cash dividend, stock split or other similar
         transaction.

                  (iii) In the event that the Commencement shall not have
         occurred on or before February 28, 2001, due to the failure to satisfy
         the conditions set forth in Sections 6 and 7 above with respect to the
         Commencement (and the nonbreaching party's failure to waive such
         unsatisfied condition(s)), the nonbreaching party shall have the option
         to terminate this Agreement at the close of business on such date or
         thereafter without liability of any party to any other party. If this

                                       23
<PAGE>   24

         Agreement is terminated pursuant to this Section 11(k)(iii) prior to
         the Commencement other than solely as a result of any material breach
         of the Buyer's obligation hereunder, the Company shall issue to the
         Buyer the Commitment Shares immediately upon the termination hereof.
         The number of Commitment Shares shall be appropriately adjusted for any
         reorganization, recapitalization, non-cash dividend, stock split or
         other similar transaction.

                  (iv) If by the Maturity Date, for any reason or for no reason
         the full Available Amount under this Agreement has not been purchased
         as provided for in Section 1 of this Agreement, by the Buyer without
         any liability or payment to the Company.

                  (v) At any time after the Commencement Date, and so long as
         the Company has provided appropriate notice as described below, if
         during any ten (10) consecutive Trading Days the Closing Sale Price of
         the Common Stock is below the Fixed Purchase Price for each of such ten
         (10) Trading Days, the Company shall have three (3) Trading Days to
         give written notice (a "Company Termination Notice") to the Buyer
         electing to terminate this Agreement without any liability or payment
         to the Buyer (a "Company Termination"). The Company Termination Notice
         shall not be effective until three (3) Trading Days after it has been
         received by the Buyer. Any Purchase Notices submitted by the Buyer
         which have a Purchase Date on or prior to the third (3rd) Trading Day
         after receipt by the Buyer of the Company Termination Notice, must be
         honored by the Company as otherwise provided herein. The Company may
         not deliver a Company Termination Notice or otherwise effect a Company
         Termination in anticipation of or in connection with a Major
         Transaction until such Major Transaction (whether or not consummated)
         has been publicly disclosed for a period of at least sixty (60) Trading
         Days. In the event that within sixty (60) Trading Days of a Company
         Termination, the Company publicly discloses that a Major Transaction
         has been consummated or may be consummated, the Buyer shall be entitled
         to the following payment equal to the Purchase Rate (determined as of
         the date of the Company Termination Notice assuming a Purchase Amount
         equal to the remaining Available Amount) multiplied by the amount, if
         any that (A) the arithmetic average of the Closing Sale Price for the
         Common Stock for the ten (10) Trading Days following either: (1) the
         public disclosure of the Major Transaction or (2) the consummation of
         the Major Transaction, as selected by the Buyer, exceeds (B) the
         Purchase Price determined as of the date the Company Termination is
         effected. Any payments under the previous sentence shall be made either
         in the form of cash or registered, freely tradable shares of Common
         Stock, eleven (11) Trading Days following either: (1) the public
         disclosure of the Major Transaction or (2) the consummation of the
         Major Transaction, as selected by the Buyer. To the extent that such
         payment has not been paid by the fifth (5th) Trading Date after its due
         date, the Buyer shall be entitled to interest in an amount equal to one
         percent (1.0%) of the unpaid amount per day, payable on demand. If paid
         in shares of Common Stock, the "dollar value" per share of Common Stock
         shall be the average of the Closing Bid Prices of the Common Stock for
         the five (5) consecutive Trading Days prior to the payment date.

                  (vi) This Agreement shall automatically terminate on the date
         that the Company sells and the Buyer purchases Six Million Dollars
         ($6,000,000) of Common Stock as provided herein, without any action or
         notice on the part of any party.

Except as set forth in Sections 11(k)(i) and 11(k)(vi), any termination of this
Agreement pursuant to this Section 11(k) shall be effected by written notice
from the Company to the Buyer, or the Buyer to the Company, as the case may be,
setting forth the basis for the termination hereof. The representations and
warranties of the Company and the Buyer contained in Sections 2 and 3 hereof,
the indemnification provisions set forth in Section 8 hereof and the agreements
and covenants set forth in Section 1(g) and 11,

                                       24
<PAGE>   25

shall survive the Commencement and any termination of this Agreement. No
termination of this Agreement shall effect the Company's or the Buyer's
obligations under this Agreement with respect to pending purchases and the
Company and the Buyer shall complete their respective obligations with respect
to any pending purchases under this Agreement.

         (l) NO FINANCIAL ADVISOR, PLACEMENT AGENT, BROKER OR FINDER. The
Company represents and warrants to the Buyer that it has not engaged any
financial advisor, placement agent, broker or finder in connection with the
transactions contemplated hereby. The Buyer represents and warrants to the
Company that it has not engaged any financial advisor, placement agent, broker
or finder in connection with the transactions contemplated hereby. The Company
shall be responsible for the payment of any fees or commissions, if any, of any
financial advisor, placement agent, broker or finder relating to or arising out
of the transactions contemplated hereby. The Company shall pay, and hold the
Buyer harmless against, any liability, loss or expense (including, without
limitation, attorneys' fees and out of pocket expenses) arising in connection
with any such claim.

         (m) NO STRICT CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

         (n) REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The
Buyer's remedies provided in this Agreement shall be cumulative and in addition
to all other remedies available to the Buyer under this Agreement, at law or in
equity (including a decree of specific performance and/or other injunctive
relief), no remedy of the Buyer contained herein shall be deemed a waiver of
compliance with the provisions giving rise to such remedy and nothing herein
shall limit the Buyer's right to pursue actual damages for any failure by the
Company to comply with the terms of this Agreement. The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to
the Buyer and that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach or threatened
breach, the Buyer shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being required.

         (o) CHANGES TO THE TERMS OF THIS AGREEMENT. This Agreement and any
provision hereof may only be amended by an instrument in writing signed by the
Company and the Buyer. The term "Agreement" 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.

         (p) ENFORCEMENT COSTS. If: (i) this Agreement is placed by the Buyer in
the hands of an attorney for enforcement or is enforced by the Buyer through any
legal proceeding; or (ii) an attorney is retained to represent the Buyer in any
bankruptcy, reorganization, receivership or other proceedings affecting
creditors' rights and involving a claim under this Agreement; or (iii) an
attorney is retained to represent the Buyer in any other proceedings whatsoever
in connection with this Agreement, then the Company shall pay to the Buyer, as
incurred by the Buyer, all reasonable costs and expenses including attorneys'
fees incurred in connection therewith, in addition to all other amounts due
hereunder.

         (q) FAILURE OR INDULGENCE NOT WAIVER. No failure or delay 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.

                                       25
<PAGE>   26

         IN WITNESS WHEREOF, the Buyer and the Company have caused this Common
Stock Purchase Agreement to be duly executed as of the date first written above.

                                  THE COMPANY:

                                             U.S. PLASTIC LUMBER CORP.

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

                                     BUYER:

                                             FUSION CAPITAL FUND II, LLC
                                             BY: FUSION CAPITAL PARTNERS II, LLC
                                             BY: SGM HOLDINGS CORP.

                                             By: /s/
                                                -------------------------
                                             Name: Steven G. Martin
                                                  -----------------------
                                             Title: President

                                       26
<PAGE>   27

                                    SCHEDULES

Schedule 3(a)          Subsidiaries
Schedule 3(c)          Capitalization
Schedule 3(e)          Conflicts
Schedule 3(f)          1934 Act Filings
Schedule 3(g)          Material Changes
Schedule 3(h)          Litigation
Schedule 3(m)          Intellectual Property
Schedule 3(o)          Liens
Schedule 3(s)          Certain Transactions

                                    EXHIBITS

Exhibit A              Form of Purchase Notice
Exhibit B              Form of Company Confirmation of Purchase Notice
Exhibit C              Form of Registration Rights Agreement
Exhibit D              Form of Company Counsel Opinion
Exhibit E              Form of Officer's Certificate
Exhibit F              Form of Resolutions of Board of Directors of the Company
Exhibit G              Form of Irrevocable Transfer Agent Instructions
Exhibit H              Form of Secretary's Certificate

<PAGE>   28

                              DISCLOSURE SCHEDULES

                          Schedule 3(a) - Subsidiaries

                         Schedule 3(c) - Capitalization

                          Schedule 3(e) - No Conflicts

                        Schedule 3(f) - 1934 Act Filings

                   Schedule 3(g) - Absence of Certain Changes

                           Schedule 3(h) - Litigation

                  Schedule 3(m) - Intellectual Property Rights

                              Schedule 3(o) - Title

                  Schedule 3(s) - Transactions with Affiliates

<PAGE>   29

                                    EXHIBIT A

                             FORM OF PURCHASE NOTICE

         Reference is made to the Common Stock Purchase Agreement (the "COMMON
STOCK PURCHASE AGREEMENT") between U.S. PLASTIC LUMBER CORP. (the "COMPANY") and
FUSION CAPITAL FUND II, LLC dated ___________. In accordance with and pursuant
to the Common Stock Purchase Agreement, the undersigned hereby elects to
purchase shares of common stock, par value $.0001 per share (the "COMMON
STOCK"), of the Company for the Available Amount indicated below of as of the
date specified below.

         Purchase Date:
                                                  ------------------------------
         Monthly Period Dates:
                                                  ------------------------------
         Initial Available Amount:                $6,000,000
         Monthly Base Amount:                     $500,000

         Remaining Available Amount
         PRIOR TO this purchase:                  $
                                                  ------------------------------

         Remaining Monthly Base Amount
         PRIOR TO this purchase:                  $
                                                  ------------------------------

         Available Amount to be purchased:        $
                                                  ------------------------------

         Remaining Available Amount
         AFTER this purchase:                     $
                                                  ------------------------------

         Remaining Monthly Base Amount
         AFTER this purchase:                     $
         -----                                    ------------------------------

Please confirm the following information:

         Purchase Price per share:
         [ ] Fixed Purchase Price of $____
         [ ] Low Sale Price on Date Hereof
         [ ] Average of 5 Closing Bid  Prices for _______($___), ________($___),
             ________($___), _______($___) and ________($___).

         Number of shares of Common Stock to be issued:
                                                       -------------------------

Please issue the shares of Common Stock in the following name and to the
following address:

         Issue to:
                                               ---------------------------------

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

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

         Authorized Signature:
                                               ---------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------
                                               Phone #:
                                                       -------------------------

         Broker DTC Participant Code:                  -------------------------

         Account Number* :                             -------------------------

         * NOTE THAT RECEIVING BROKER MUST INITIATE TRANSACTION ON DWAC SYSTEM.

<PAGE>   30

                                    EXHIBIT B

                 FORM OF COMPANY CONFIRMATION OF PURCHASE NOTICE

         Reference is made to the Common Stock Purchase Agreement (the "COMMON
STOCK PURCHASE AGREEMENT") between U.S. PLASTIC LUMBER CORP. (the "COMPANY") and
FUSION CAPITAL FUND II, LLC dated ________. In accordance with and pursuant to
the Common Stock Purchase Agreement, the undersigned hereby confirms and
authorizes the issuance of shares of common stock, par value $.0001 per share
(the "COMMON STOCK") of the Company, in connection with the Purchase Notice (as
defined in the Common Stock Purchase Agreement) attached hereto. Specifically,
the Company hereby confirms the following information:

         Purchase Date:                              ---------------------------

         Monthly Period Dates:                       ---------------------------
         Initial Available Amount:                   $6,000,000.00
         Monthly Base Amount:                        $500,000.00

         Remaining Available Amount
         PRIOR TO this purchase:                     $
                                                     ---------------------------

         Remaining Monthly Base Amount
         PRIOR TO this purchase:                     $
                                                     ---------------------------

         Available Amount to be purchased:           $
                                                     ---------------------------

         Remaining Available Amount
         AFTER this purchase:                        $
                                                     ---------------------------

         Remaining Monthly Base Amount
         AFTER this purchase:                        $
                                                     ---------------------------

         Purchase Price per share:                   $
                                                     ---------------------------

         Number of shares of Common
         Stock to be issued:
                                                     ---------------------------

The shares of Common Stock shall be issued in the name and to the address as set
forth in the applicable Purchase Notice.

         Authorized Signature
                                              ----------------------------------
                                              Name:
                                                   -----------------------------
                                              Title:
                                                    ----------------------------
                                              Phone #:
                                                     ---------------------------
                                              Fax #:
                                                    ----------------------------
<PAGE>   31

                                    EXHIBIT C

                      FORM OF REGISTRATION RIGHTS AGREEMENT

[SENT SEPARATELY]

<PAGE>   32

                                    EXHIBIT D

                         FORM OF COMPANY COUNSEL OPINION

         Capitalized terms used herein but not defined herein, have the meaning
set forth in the Common Stock Purchase Agreement. Based on the foregoing, and
subject to the assumptions and qualifications set forth herein, we are of the
opinion that:

1.   The Company is a corporation existing and in good standing under the laws
     of the State of Nevada.

2.   The Company has the corporate power to execute and deliver, and perform its
     obligations under, each Transaction Document to which it is a party. The
     Company has the corporate power to conduct its business as, to the best of
     our knowledge, it is now conducted, and to own and use the properties owned
     and used by it.

3.   The execution, delivery and performance by the Company of the Transaction
     Documents to which it is a party have been duly authorized by all necessary
     corporate action on the part of the Company. The execution and delivery of
     the Transaction Documents by the Company, the performance of the
     obligations of the Company thereunder and the consummation by it of the
     transactions contemplated therein have been duly authorized and approved by
     the Company's Board of Directors and no further consent, approval or
     authorization of the Company, its Board of Directors or its stockholders is
     required. The Transaction Documents to which the Company is a party have
     been duly executed and delivered by the Company and are the valid and
     binding obligations of the Company, enforceable against the Company in
     accordance with their terms except as such enforceability may be limited by
     general principals of equity or applicable bankruptcy, insolvency,
     liquidation or similar laws relating to, or affecting creditor's rights and
     remedies.

4.   The issuance and sale of the Commitment Shares and the Purchase Shares
     pursuant to the terms and conditions of the Common Stock Purchase Agreement
     has been duly authorized. ______ shares of Common Stock have been properly
     reserved for issuance as Purchase Shares in accordance with the Common
     Stock Purchase Agreement. The Commitment Shares have been issued in
     accordance with the Common Stock Purchase Agreement and are validly issued,
     fully paid and non-assessable and free of all taxes, liens, charges,
     restrictions, rights of first refusal and preemptive rights. When issued
     and paid for in accordance with the Common Stock Purchase Agreement, the
     Purchase Shares shall be validly issued, fully paid and non-assessable and
     free of all taxes, liens, charges, restrictions, rights of first refusal
     and preemptive rights. To our knowledge, the execution and delivery of the
     Registration Rights Agreement do not, and the performance by the Company of
     its obligations thereunder shall not, give rise to any rights of any other
     person for the registration under the Securities Act of any shares of
     Common Stock or other securities of the Company which have not been waived.

5.   The execution, delivery and performance by the Company of the Transaction
     Documents, the consummation by the Company of the transactions contemplated
     thereby including the offering, sale and issuance of the Commitment Shares
     and the Purchase Shares in accordance with the terms and conditions of the
     Common Stock Purchase Agreement, and fulfillment and compliance with terms
     of the Transaction Documents, does not and shall not: (i) conflict with,
     constitute a breach of or default (or an event which, with the giving of
     notice or lapse of time or both, constitutes or could constitute a breach
     or a default), under (a) the Certificate of Incorporation or the Bylaws of
     the Company, (b) any material agreement, note, lease, mortgage, deed or
     other material instrument to which to our knowledge

<PAGE>   33

     the Company is a party or by which the Company or any of its assets are
     bound, (ii) result in any violation of any statute, law, rule or regulation
     applicable to the Company, or (iii) to our knowledge, violate any order,
     writ, injunction or decree applicable to the Company or any of its
     subsidiaries.

6.   As of the date hereof, the authorized capital stock of the Company consists
     of (i) ___________ shares of Common Stock, par value $_____ per share, of
     which to our knowledge ___________ shares are issued and outstanding, and
     (ii) ________ shares of preferred stock, par value $_____ per share of
     which to our knowledge ________ shares are issued and outstanding. Except
     as set forth on Schedule 3(c) of the Common Stock Purchase Agreement, to
     our knowledge, there are no outstanding shares of capital stock or other
     securities convertible into or exchangeable or exercisable for shares of
     the capital stock of the Company.

7.   The Common Stock is registered pursuant to Section 12(g) of the Exchange
     Act. To our knowledge, since January 1, 1999, the Company has been in
     compliance with the reporting requirements of the Exchange Act applicable
     to it. To our knowledge, since January 1, 1999, the Company has not
     received any written notice from the Principal Market stating that the
     Company has not been in compliance with any of the rules and regulations
     (including the requirements for continued listing) of the Principal Market.

8.   Other then which has been obtained and completed prior to the date hereof,
     no authorization, approval, consent, filing or other order of any federal
     or state governmental body, regulatory agency, self-regulatory organization
     or stock exchange or market, or the shareholders of the Company, or any
     court, or, to our knowledge, any third party, is required to be obtained by
     the Company to enter into and perform its obligations under the Transaction
     Documents or for the issuance and sale of the Commitment Shares or the
     Purchase Shares as contemplated by the Transaction Documents.

         We further advise you that to our knowledge, except as disclosed on
Schedule 3(h) in the Common Stock Purchase Agreement, there is no action, suit,
proceeding, inquiry or investigation before or by any court, public board or
body, any governmental agency, any stock exchange or market, or self-regulatory
organization, which has been threatened in writing or which is currently pending
against the Company, any of its subsidiaries, any officers or directors of the
Company or any of its subsidiaries or any of the properties of the Company or
any of its subsidiaries.

         In addition, we have participated in the preparation of the
Registration Statement (SEC File #________) covering the sale of the Purchase
Shares and the Commitment Shares including the prospectus dated ____________,
contained therein and in conferences with officers and other representatives of
the Company (including the Company's independent auditors) during which the
contents of the Registration Statement and related matters were discussed and
reviewed and, although we are not passing upon and do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement, on the basis of the information that
was developed in the course of the performance of the services referred to
above, considered in the light of our understanding of the applicable law,
nothing came to our attention that caused us to believe that the Registration
Statement (other than the financial statements and schedules and the other
financial and statistical data included therein, as to which we express no
belief), as of their dates, contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

<PAGE>   34

                                    EXHIBIT E

                          FORM OF OFFICER'S CERTIFICATE

             This Officer's Certificate ("CERTIFICATE") is being delivered
pursuant to Section 7(e) of that certain Common Stock Purchase Agreement dated
as of December __, 2000 ("COMMON STOCK PURCHASE AGREEMENT"), by and between U.S.
PLASTIC LUMBER CORP., a Nevada corporation (the "COMPANY"), and FUSION CAPITAL
FUND II, LLC (the "BUYER"). Terms used herein and not otherwise defined shall
have the meanings ascribed to them in the Common Stock Purchase Agreement.

             The undersigned, ___________, ______________ of the Company, hereby
certifies as follows:

                  1. I am the _____________ of the Company and make the
         statements contained in this Certificate;

                  2. The representations and warranties of the Company contained
         in the Common Stock Purchase Agreement are true and correct as of the
         date hereof;

                  3. The Company has performed, satisfied and complied in all
         material respects with covenants, agreements and conditions required by
         the Transaction Documents to be performed, satisfied or complied with
         by the Company at or prior to the Commencement Date.

         IN WITNESS WHEREOF, I have hereunder signed my name on this ___ day of
         ___________.

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

         The undersigned as Secretary of ________, a ________ corporation,
hereby certifies that ___________ is the duly elected, appointed, qualified and
acting ________ of _________ and that the signature appearing above is his
genuine signature.

                                             -----------------------------------
                                             Secretary

<PAGE>   35

                                    EXHIBIT F

                           FORM OF COMPANY RESOLUTIONS

         WHEREAS, there has been presented to the Board of Directors of U.S.
PLASTIC LUMBER CORP., (the "Corporation") a draft of a Common Stock Purchase
Agreement (the "Purchase Agreement") by and among the Corporation and Fusion
Capital Fund II, LLC ("Fusion"), providing for the purchase by Fusion of up to
Six Million Dollars ($6,000,000) of the Corporation's common stock, par value
$.0001 (the "Common Stock"); and

         WHEREAS, after careful consideration of the Purchase Agreement, the
documents incident thereto and other factors deemed relevant by the Board of
Directors, the Board of Directors has determined that it is advisable and in the
best interests of the Corporation to engage in to transactions contemplated by
the Purchase Agreement.

                              TRANSACTION DOCUMENTS

         RESOLVED, that the transactions described in the Purchase Agreement are
hereby approved and ____________________________________________ (the
"Authorized Officers") are severally authorized to execute and deliver the
Purchase Agreement, and any other agreements or documents contemplated thereby
(including, without limitation, a registration rights agreement (the
"Registration Rights Agreement") providing for the sale of the shares of the
Company's Common Stock issuable in respect of the Purchase Agreement) on behalf
of the Corporation, with such amendments, changes, additions and deletions as
the Authorized Officers may deem to be appropriate and approve on behalf of, the
Corporation, such approval to be conclusively evidenced by the signature of an
Authorized Officer thereon; and

         FURTHER RESOLVED, that the terms and provisions of the Registration
Rights Agreement by and among the Corporation and Fusion are hereby approved and
the Authorized Officers are authorized to execute and deliver the Registration
Rights Agreement (pursuant to the terms of the Purchase Agreement), with such
amendments, changes, additions and deletions as the Authorized Officer may deem
appropriate and approve on behalf of, an Corporation, such approval to be
conclusively evidenced by the signature of an Authorized Officer thereon; and

         FURTHER RESOLVED, that the terms and provisions of the Form of Transfer
Agent Instructions (the "Instructions") are hereby approved and the Authorized
Officers are authorized to execute and deliver the Instructions (pursuant to the
terms of the Purchase Agreement), with such amendments, changes, additions and
deletions as the Authorized Officers may deem appropriate and approve on behalf
of, the Corporation, such approval to be conclusively evidenced by the signature
of an Authorized Officer thereon; and

                         EXECUTION OF PURCHASE AGREEMENT

         FURTHER RESOLVED, that the Corporation be and it hereby is authorized
to execute the Purchase Agreement providing for the purchase of common stock of
the Corporation having an aggregate value of up to $___________; and

<PAGE>   36

                            ISSUANCE OF COMMON STOCK

         FURTHER RESOLVED, that the Corporation is hereby authorized to issue
the Commitment Shares (as defined in the Purchase Agreement) and that, upon
issuance of the Commitment Shares pursuant to the Purchase Agreement, the
Commitment Shares will be duly authorized, validly issued, fully paid and
nonassessable with no personal liability attaching to the ownership thereof; and

         FURTHER RESOLVED, that the Corporation is hereby authorized to issue
shares of Common Stock upon the purchase of shares of Common Stock up to the
available amount under the Purchase Agreement (the "Purchase Shares") in
accordance with the terms of the Purchase Agreement and that, upon issuance of
the Purchase Shares pursuant to the Purchase Agreement, the Purchase Shares will
be duly authorized, validly issued, fully paid and nonassessable with no
personal liability attaching to the ownership thereof; and

         FURTHER RESOLVED, that the Corporation shall initially reserve
_________ shares of Common Stock for issuance as Purchase Shares under the
Purchase Agreement.

                             REGISTRATION STATEMENT

         The management of the Corporation has prepared an initial draft of a
Registration Statement on Form ___ (the "Registration Statement") in order to
register the sale of the Purchase Shares and the Commitment Shares
(collectively, the "Shares"); and

         The Board of Directors has determined to approve the Registration
Statement and to authorize the appropriate officers of the Corporation to take
all such actions as they may deem appropriate to effect the Offering; and

         NOW, THEREFORE, BE IT RESOLVED, that the officers and directors of the
Corporation be, and each of them hereby is, authorized and directed, with the
assistance of counsel and accountants for the Corporation, to prepare, execute
and file with the Securities and Exchange Commission (the "Commission") the
Registration Statement, which Registration Statement shall be filed
substantially in the form presented to the Board of Directors, with such changes
therein as the Chief Executive Officer of the Corporation or any Vice President
of the Corporation shall deem desirable and in the best interest of the
Corporation and its shareholders (such officer's execution thereof including
such changes shall be deemed to evidence conclusively such determination); and

         FURTHER RESOLVED, that the officers of the Corporation be, and each of
them hereby is, authorized and directed, with the assistance of counsel and
accountants for the Corporation, to prepare, execute and file with the
Commission all amendments, including post-effective amendments, and supplements
to the Registration Statement, and all certificates, exhibits, schedules,
documents and other instruments relating to the Registration Statement, as such
officers shall deem necessary or appropriate (such officer's execution and
filing thereof shall be deemed to evidence conclusively such determination); and

         FURTHER RESOLVED, that the execution of the Registration Statement and
of any amendments and supplements thereto by the officers and directors of the
Corporation be, and the same hereby is, specifically authorized either
personally or by the Authorized Officers as such officer's or director's true
and lawful attorneys-in-fact and agents; and

         FURTHER RESOLVED, that the Authorized Officers are hereby is designated
as "Agent for Service" of the Corporation in connection with the Registration
Statement and the filing thereof with the Commission, and the Authorized
Officers hereby are, authorized to receive communications and notices from the
Commission with respect to the Registration Statement; and

<PAGE>   37

         FURTHER RESOLVED, that the officers of the Corporation be, and each of
them hereby is, authorized and directed to pay all fees, costs and expenses that
may be incurred by the Corporation in connection with the Registration
Statement; and

         FURTHER RESOLVED, that it is desirable and in the best interest of the
Corporation that the Shares be qualified or registered for sale in various
states; that the officers of the Corporation be, and each of them hereby is,
authorized to determine the states in which appropriate action shall be taken to
qualify or register for sale all or such part of the Shares as they may deem
advisable; that said officers be, and each of them hereby is, authorized to
perform on behalf of the Corporation any and all such acts as they may deem
necessary or advisable in order to comply with the applicable laws of any such
states, and in connection therewith to execute and file all requisite papers and
documents, including, but not limited to, applications, reports, surety bonds,
irrevocable consents, appointments of attorneys for service of process and
resolutions; and the execution by such officers of any such paper or document or
the doing by them of any act in connection with the foregoing matters shall
conclusively establish their authority therefor from the Corporation and the
approval and ratification by the Corporation of the papers and documents so
executed and the actions so taken; and

         FURTHER RESOLVED, that if, in any state where the securities to be
registered or qualified for sale to the public, or where the Corporation is to
be registered in connection with the public offering of the Securities, a
prescribed form of resolution or resolutions is required to be adopted by the
Board of Directors, each such resolution shall be deemed to have been and hereby
is adopted, and the Secretary is hereby authorized to certify the adoption of
all such resolutions as though such resolutions were now presented to and
adopted by the Board of Directors; and

         FURTHER RESOLVED, that the officers of the Corporation with the
assistance of counsel be, and each of them hereby is, authorized and directed to
take all necessary steps and do all other things necessary and appropriate to
effect the listing of the Shares on the __________.

                               APPROVAL OF ACTIONS

         RESOLVED, that, without limiting the foregoing, the Authorized Officers
are, and each of them hereby is, authorized and directed to proceed on behalf of
the Corporation and to take all such steps as deemed necessary or appropriate,
with the advice and assistance of counsel, to cause the Corporation to
consummate the agreements referred to herein and to perform its obligations
under such agreements; and

         RESOLVED, that the Authorized Officers be, and each of them hereby is,
authorized, empowered and directed on behalf of and in the name of the
Corporation, to take or cause to be taken all such further actions and to
execute and deliver or cause to be executed and delivered all such further
agreements, amendments, documents, certificates, reports, schedules,
applications, notices, letters and undertakings and to incur and pay all such
fees and expenses as in their judgment shall be necessary, proper or desirable
to carry into effect the purpose and intent of any and all of the foregoing
resolutions, and that all actions heretofore taken by any officer or director of
the Corporation in connection with the transactions contemplated by the
agreements described herein are hereby approved, ratified and confirmed in all
respects.

<PAGE>   38

                                    EXHIBIT G

                       FORM OF TRANSFER AGENT INSTRUCTIONS

                               [COMMENCEMENT DATE]

[TRANSFER AGENT]
[ADDRESS]

Attn:  __________________

Ladies and Gentlemen:

         Reference is made to that certain Common Stock Purchase Agreement (the
"Common Stock Purchase Agreement"), dated as of ___________, 2000, by and
between U.S. PLASTIC LUMBER CORP., a Nevada corporation (the "COMPANY"), and
FUSION CAPITAL FUND II, LLC (together with its assigns, the "BUYER"), pursuant
to which the Company may sell to the Buyer up to Six Million Dollars
($6,000,000) of the Company's common stock, par value $.0001 per share (the
"COMMON STOCK"). The shares of Common Stock to be purchased thereunder are
referred to herein as, the "PURCHASE SHARES." This letter shall serve as our
irrevocable authorization and direction to you (provided that you are the
transfer agent of the Company at such time) to issue the Purchase Shares to the
Buyer from time to time upon surrender to you of a properly completed and duly
executed Purchase Notice, in the form attached hereto as Exhibit I, and a
Company Confirmation of Purchase Notice, in the form attached hereto as Exhibit
II.

         Specifically, upon receipt by the Company of a copy of a Purchase
Notice, the Company shall as soon as practicable, but in no event later than one
(1) Trading Day (as defined below) after receipt of such Purchase Notice, send,
via facsimile, a Company Confirmation of Purchase Notice to the Buyer and to
you, which confirmation shall constitute an irrevocable instruction to you to
process such Purchase Notice in accordance with the terms of these instructions
and the Company Confirmation of Purchase Notice. Upon your receipt of a copy of
the executed Purchase Notice and a copy of the applicable Company Confirmation
of Purchase Notice, you shall use your best efforts to, within one (1) Trading
Day following the date of receipt of the Company Confirmation of Purchase
Notice, (A) issue and surrender to a common carrier for overnight delivery to
the address as specified in the Purchase Notice, a certificate, registered in
the name of the Buyer or its designee, for the number of shares of Common Stock
to which the Buyer shall be entitled as set forth in the Company Confirmation of
Purchase Notice or (B) provided you are participating in The Depository Trust
Company ("DTC") Fast Automated Securities Transfer Program, upon the request of
the Buyer, credit such aggregate number of shares of Common Stock to which the
Buyer shall be entitled to the Buyer's or its designee's balance account with
DTC through its Deposit Withdrawal At Custodian ("DWAC") system provided the
Buyer causes its bank or broker to initiate the DWAC transaction. ("TRADING DAY"
shall mean any day on which the Nasdaq Market is open for customary trading.)

         The Company hereby confirms to you and the Buyer that certificates
representing the Purchase Shares shall not bear any legend restricting transfer
of the Purchase Shares thereby and should not be subject to any stop-transfer
restrictions and shall otherwise be freely transferable on the books and records
of the Company provided that the Company counsel delivers the Notice of
Effectiveness set forth in Exhibit III

<PAGE>   39

attached hereto, and that if the Purchase Shares are not registered for sale
under the Securities Act of 1933, as amended, then the certificates for the
Purchase Shares shall bear the following legend:

         "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
         REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
         STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
         AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
         ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
         THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
         LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE
         COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
         STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
         ACT."

         The Company hereby confirms to you and the Buyer that no instructions
other than as contemplated herein will be given to you by the Company with
respect to the Purchase Shares.

         Please be advised that the Buyer is relying upon this letter as an
inducement to purchase shares of Common Stock under the Common Stock Purchase
Agreement and, accordingly, the Buyer is a third party beneficiary to these
instructions.

         Should you have any questions concerning this matter, please contact me
at (___) ___-____.

                                                     Very truly yours,

                                                By:
                                                   -----------------------------
                                                Name:
                                                     ---------------------------
                                                Its:
                                                   -----------------------------

ACKNOWLEDGED AND AGREED:
[TRANSFER AGENT]
By:
Name:
Title
Date:

CC:      FUSION CAPITAL FUND II, LLC

<PAGE>   40

                                    EXHIBIT I
                         TO TRANSFER AGENT INSTRUCTIONS

                             FORM OF PURCHASE NOTICE

See attached.

[ATTACH EXHIBIT A TO COMMON STOCK PURCHASE AGREEMENT.]

<PAGE>   41

                                   EXHIBIT II

                         TO TRANSFER AGENT INSTRUCTIONS

                 FORM OF COMPANY CONFIRMATION OF PURCHASE NOTICE

See attached.

[ATTACHED EXHIBIT B TO COMMON STOCK PURCHASE AGREEMENT.]

<PAGE>   42

                                   EXHIBIT III
                         TO TRANSFER AGENT INSTRUCTIONS

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

[DATE]

[TRANSFER AGENT]
[ADDRESS]

Attn:
     -------------------

Ladies and Gentlemen:

          We are counsel to U.S. PLASTIC LUMBER CORP., a Nevada corporation (the
"COMPANY"), and have represented the Company in connection with that certain
Common Stock Purchase Agreement (the "COMMON STOCK PURCHASE Agreement") entered
into by and among the Company and FUSION CAPITAL FUND II, LLC (the "BUYER")
pursuant to which (i) the Company may sell to the Buyer up to Six Million
Dollars ($6,000,000) of the Company's common stock, par value $.0001 per share
(the "COMMON STOCK" and the shares of Common Stock to be purchased thereunder
are referred to herein as, the "PURCHASE SHARES"), and (ii) the Company has
agreed to issue to the Buyer 200,000 shares of Common Stock (the "COMMITMENT
SHARES"). Pursuant to the Common Stock Purchase Agreement, the Company also has
entered into a Registration Rights Agreement with the Buyer (the "REGISTRATION
RIGHTS AGREEMENT") pursuant to which the Company agreed, among other things, to
register the Purchase Shares and the Commitment Shares under the Securities Act
of 1933, as amended (the "1933 ACT"). In connection with the Company's
obligations under the Common Stock Purchase Agreement and the Registration
Rights Agreement, on _____________, the Company filed a Registration Statement
(File No. 333-_____________) (the "REGISTRATION STATEMENT") with the Securities
and Exchange Commission (the "SEC") relating to the sale of the Purchase Shares
and the Commitment Shares.

          In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,
after telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Purchase Shares
and the Commitment Shares are available for sale under the 1933 Act pursuant to
the Registration Statement.

          The Buyer has confirmed it shall comply with all securities laws and
regulations applicable to it including applicable prospectus delivery
requirements upon sale of the Commitment Shares or the Purchase Shares.

                                                     Very truly yours,
                                                     [COMPANY COUNSEL]

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

CC:       FUSION CAPITAL FUND II, LLC

<PAGE>   43

                                    EXHIBIT H

                         FORM OF SECRETARY'S CERTIFICATE

         This Secretary's Certificate ("Certificate") is being delivered
pursuant to Section 7(k) of that certain Common Stock Purchase Agreement dated
as of December , 2000 ("Common Stock Purchase Agreement"), by and between U.S.
PLASTIC LUMBER CORP., a Nevada corporation (the "Company") and FUSION CAPITAL
FUND II, LLC (the "Buyer"), pursuant to which the Company may sell to the Buyer
up to Six Million Dollars ($6,000,000) of the Company's Common Stock, par value
$.0001 per share (the "Common Stock"). Terms used herein and not otherwise
defined shall have the meanings ascribed to them in the Common Stock Purchase
Agreement.

The undersigned, ____________, Secretary of the Company, hereby certifies as
follows:

                  1. I am the Secretary of the Company and make the statements
         contained in this Secretary's Certificate.

                  2. Attached hereto as EXHIBIT A and EXHIBIT B are true,
         correct and complete copies of the Company's bylaws ("Bylaws") and
         Certificate of Incorporation ("Articles"), in each case, as amended
         through the date hereof, and no action has been taken by the Company,
         its directors, officers or shareholders, in contemplation of the filing
         of any further amendment relating to or affecting the Bylaws or
         Articles.

                  3. Attached hereto as EXHIBIT C are true, correct and complete
         copies of the resolutions duly adopted by the Board of Directors of the
         Company on _____________, at which a quorum was present and acting
         throughout. Such resolutions have not been amended, modified or
         rescinded and remain in full force and effect and such resolutions are
         the only resolutions adopted by the Company's Board of Directors, or
         any committee thereof, or the shareholders of the Company relating to
         or affecting (i) the entering into and performance of the Common Stock
         Purchase Agreement, or the issuance, offering and sale of the Purchase
         Shares and the Commitment Shares and (ii) and the performance of the
         Company of its obligation under the Transaction Documents as
         contemplated therein.

                  4. As of the date hereof, the authorized, issued and reserved
         capital stock of the Company is as set forth on EXHIBIT D hereto.

<PAGE>   44

         IN WITNESS WHEREOF, I have hereunder signed my name on this ___ day of
____________.

                                             -----------------------------------
                                             Secretary

         The undersigned as ___________ of __________, a ________ corporation,
hereby certifies that ____________ is the duly elected, appointed, qualified and
acting Secretary of _________, and that the signature appearing above is his
genuine signature.

                                             -----------------------------------Exhibit 4.11

                        DIMENSIONAL VISIONS INCORPORATED

                    AMENDED AND RESTATED INVESTMENT AGREEMENT

     THE SECURITIES  OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES
     AND EXCHANGE COMMISSION OR ANY STATE OR OTHER SECURITIES AUTHORITIES.  THEY
     MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
     STATEMENT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE FEDERAL
     AND STATE SECURITIES LAWS.

     THIS  INVESTMENT  AGREEMENT  DOES NOT  CONSTITUTE  AN  OFFER TO SELL,  OR A
     SOLICITATION  OF AN  OFFER TO  PURCHASE,  ANY OF THE  SECURITIES  DESCRIBED
     HEREIN  BY OR TO ANY  PERSON IN ANY  JURISDICTION  IN WHICH  SUCH  OFFER OR
     SOLICITATION WOULD BE UNLAWFUL.  THESE SECURITIES HAVE NOT BEEN RECOMMENDED
     BY ANY FEDERAL OR STATE SECURITIES  AUTHORITIES,  NOR HAVE SUCH AUTHORITIES
     CONFIRMED THE ACCURACY OR  DETERMINED  THE ADEQUACY OF THIS  DOCUMENT.  ANY
     REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

     AN  INVESTMENT  IN THESE  SECURITIES  INVOLVES A HIGH  DEGREE OF RISK.  THE
     INVESTOR MUST RELY ON ITS OWN ANALYSIS OF THE  INVESTMENT AND ASSESSMENT OF
     THE  RISKS  INVOLVED.  SEE THE  RISK  FACTORS  SET  FORTH  IN THE  ATTACHED
     DISCLOSURE DOCUMENTS AS EXHIBIT J.

     SEE ADDITIONAL LEGENDS AT SECTIONS 4.7.

          THIS AMENDED AND RESTATED  INVESTMENT  AGREEMENT (this  "Agreement" or
"Investment Agreement") is made as of the 2nd day of March, 2001, by and between
Dimensional  Visions  Incorporated,  a corporation  duly  organized and existing
under the laws of the State of Delaware  (the  "Company"),  and the  undersigned
Investor  executing  this  Agreement  ("Investor")  and amends and  restates the
Investment Agreement between the parties dated on or about December 22, 2000.

                                    RECITALS:

     WHEREAS,  the  parties  desire  that,  upon the  terms and  subject  to the
conditions  contained herein,  the Company shall issue to the Investor,  and the
Investor shall purchase from the Company,  from time to time as provided herein,
shares of the Company's  Common Stock, as part of an offering of Common Stock by
the  Company to  Investor,  for a maximum  aggregate  offering  amount of Twenty
Million Dollars ($20,000,000) (the "Maximum Offering Amount"); and

     WHEREAS,  the solicitation of this Investment Agreement and, if accepted by
the  Company,  the offer and sale of the Common Stock are being made in reliance

                                       1
<PAGE>
upon the provisions of Regulation D ("Regulation D") promulgated  under the Act,
Section 4(2) of the Act, and/or upon such other exemption from the  registration
requirements  of the Act as may be  available  with respect to any or all of the
purchases of Common Stock to be made hereunder.

                                     TERMS:

     NOW, THEREFORE, the parties hereto agree as follows:

     1. CERTAIN  DEFINITIONS.  As used in this Agreement (including the recitals
above),  the following terms shall have the following meanings (such meanings to
be  equally  applicable  to both the  singular  and  plural  forms of the  terms
defined):

     "20% Approval" shall have the meaning set forth in Section 5.25.

     "9.9% Limitation" shall have the meaning set forth in Section 2.3.1(f).

     "Accredited Investor" shall have the meaning set forth in Section 3.1.

     "Act" shall mean the Securities Act of 1933, as amended.

     "Advance Put Notice" shall have the meaning set forth in Section  2.3.1(a),
the form of which is attached hereto as EXHIBIT E.

     "Advance  Put  Notice  Confirmation"  shall have the  meaning  set forth in
Section 2.3.1(a), the form of which is attached hereto as EXHIBIT F.

     "Advance  Put  Notice  Date"  shall have the  meaning  set forth in Section
2.3.1(a).

     "Affiliate" shall have the meaning as set forth Section 6.4.

     "Aggregate  Issued Shares" equals the aggregate  number of shares of Common
Stock  issued  to  Investor  pursuant  to the  terms  of this  Agreement  or the
Registration  Rights  Agreement  as of a given  date,  including  Put Shares and
Warrant Shares.

     "Agreed Upon Procedures Report" shall have the meaning set forth in Section
2.5.3(b).

     "Agreement" shall mean this Investment Agreement.

     "Automatic Termination" shall have the meaning set forth in Section 2.3.2.

     "Bring  Down Cold  Comfort  Letters"  shall have the  meaning  set forth in
Section 2.3.7(b).

     "Business Day" shall mean any day during which the Principal Market is open
for trading.

     "Calendar Month" shall mean the period of time beginning on the numeric day
in question in a calendar month and for Calendar Months thereafter, beginning on
the earlier of (i) the same numeric day of the next  calendar  month or (ii) the
last day of the next calendar  month.  Each Calendar  Month shall end on the day
immediately preceding the beginning of the next succeeding Calendar Month.

                                       2
<PAGE>
     "Cap Amount" shall have the meaning set forth in Section 2.3.11.

     "Capital Raising  Limitations"  shall have the meaning set forth in Section
6.5.1.

     "Capitalization  Schedule"  shall  have the  meaning  set forth in  Section
3.2.4, attached hereto as EXHIBIT K.

     "Change in Control"  shall have the meaning set forth within the definition
of Major Transaction, below.

     "Closing" shall mean one of (i) the Investment  Commitment Closing and (ii)
each closing of a purchase and sale of Common Stock pursuant to Section 2.

     "Closing  Bid  Price"  means,  for any  security  as of any date,  the last
closing bid price for such security during Normal Trading on the O.T.C. Bulletin
Board, or, if the O.T.C. Bulletin Board is not the principal securities exchange
or trading  market for such  security,  the last closing bid price during Normal
Trading of such security on the principal  securities exchange or trading market
where such security is listed or traded as reported by such principal securities
exchange or trading market,  or if the foregoing do not apply,  the last closing
bid price during Normal Trading of such security in the over-the-counter  market
on the electronic bulletin board for such security,  or, if no closing bid price
is  reported  for such  security,  the  average  of the bid prices of any market
makers for such  security  as  reported  in the "pink  sheets"  by the  National
Quotation  Bureau,  Inc. If the Closing Bid Price cannot be calculated  for such
security on such date on any of the  foregoing  bases,  the Closing Bid Price of
such security on such date shall be the fair market value as mutually determined
by the  Company  and the  Investor  in this  Offering.  If the  Company  and the
Investor in this  Offering are unable to agree upon the fair market value of the
Common Stock, then such dispute shall be resolved by an investment  banking firm
mutually  acceptable  to the Company and the  Investor in this  offering and any
fees and costs associated therewith shall be paid by the Company.

     "Commitment  Evaluation Period" shall have the meaning set forth in Section
2.6.

     "Commitment Period" shall have the meaning set forth in Section 2.3.2(d).

     "Commitment  Warrants"  shall have the meaning set forth in Section  2.4.1,
the form of which is attached hereto as EXHIBIT U.

     "Common Shares" shall mean the shares of Common Stock of the Company.

     "Common Stock" shall mean the common stock of the Company.

     "Company" shall mean Dimensional Visions  Incorporated,  a corporation duly
organized and existing under the laws of the State of Delaware.

                                       3
<PAGE>
     "Company  Designated  Maximum Put Dollar Amount" shall have the meaning set
forth in Section 2.3.1(a).

     "Company  Designated  Minimum Put Share  Price"  shall have the meaning set
forth in Section 2.3.1(a).

     "Company Termination" shall have the meaning set forth in Section 2.3.12.

     "Conditions to Investment Commitment Closing" shall have the meaning as set
forth in Section 2.2.2.

     "Delisting  Event"  shall mean any time during the term of this  Investment
Agreement,  that the  Company's  Common  Stock is not  listed  for and  actively
trading on the O.T.C.  Bulletin Board,  the Nasdaq Small Cap Market,  the Nasdaq
National Market, the American Stock Exchange,  or the New York Stock Exchange or
is  suspended  or delisted  with  respect to the trading of the shares of Common
Stock on such market or exchange.

     "Disclosure  Documents"  shall  have the  meaning  as set forth in  Section
3.2.4.

     "Due Diligence Review" shall have the meaning as set forth in Section 2.5.

     "DWAC Put  Shares"  shall mean Put  Shares,  in  electronic  form,  without
restriction on resale,  that are delivered to the Depository  Trust Company DWAC
account specified by the Investor for the Put Shares.

     "Effective Date" shall have the meaning set forth in Section 2.3.1.

     "Equity Securities" shall have the meaning set forth in Section 6.5.1.

     "Evaluation Day" shall have the meaning set forth in Section 2.3.1(b).

     "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

     "Excluded Day" shall have the meaning set forth in Section 2.3.1(b).

     "Extended Put Period" shall mean the period of time between the Advance Put
Notice Date until the Pricing Period End Date.

     "Impermissible  Put  Cancellation"  shall  have the  meaning  set  forth in
Section 2.3.1(e).

     "Indemnified Liabilities" shall have the meaning set forth in Section 9.

     "Indemnities" shall have the meaning set forth in Section 9.

     "Indemnitor" shall have the meaning set forth in Section 9.

     "Individual  Put Limit"  shall have the meaning set forth in Section  2.3.1
(b).

                                       4
<PAGE>
     "Ineffective Period" shall have the meaning given to it in the Registration
Rights Agreement.

     "Ineffective  Registration  Payment"  shall have the meaning given to it in
the Registration Rights Agreement.

     "Intended  Put Share  Amount"  shall have the  meaning set forth in Section
2.3.1(a).

     "Investment Commitment Closing" shall have the meaning set forth in Section
2.2.1.

     "Investment Agreement" shall mean this Investment Agreement.

     "Investment  Commitment  Opinion of  Counsel"  shall  mean an opinion  from
Company's independent counsel,  substantially in the form attached as EXHIBIT B,
or  such  other  form  as  agreed  upon  by the  parties,  as to the  Investment
Commitment Closing.

     "Investment Date" shall mean the date of the Investment Commitment Closing.

     "Investor" shall have the meaning set forth in the preamble hereto.

     "Key  Employee"  shall have the meaning set forth in Section  5.17,  as set
forth in EXHIBIT N.

     "Late Payment Amount" shall have the meaning set forth in Section 2.3.9.

     "Legend" shall have the meaning set forth in Section 4.7.

     "Major Transaction" shall mean and shall be deemed to have occurred at such
time upon any of the following events:

          (i) a consolidation,  merger or other business combination or event or
transaction  following  which  the  holders  of  Common  Stock  of  the  Company
immediately  preceding such consolidation,  merger,  combination or event either
(i) no longer  hold a majority  of the shares of Common  Stock of the Company or
(ii) no longer have the ability to elect the board of  directors  of the Company
(a "Change of Control");

          (ii) the sale or transfer of a portion of in excess of $500,000  worth
of the Company's assets, not in the ordinary course of business;

          (iii)  the  purchase  of  assets  by the  Company  totaling  more than
$500,000 in value, not in the ordinary course of business; or

          (iv) a  purchase,  tender or  exchange  offer  made to the  holders of
outstanding shares of Common Stock such that following such purchase,  tender or
exchange offer, a change in control shall have occurred.

     "Market  Price"  shall  equal the lowest  Closing  Bid Price for the Common
Stock on the Principal Market during the Pricing Period for the applicable Put.

                                       5
<PAGE>
     "Material Facts" shall have the meaning set forth in Section 2.3.7(a).

     "Maximum  Put  Dollar  Amount"  shall  mean the  lesser of (i) the  Company
Designated  Maximum Put Dollar Amount, if any, specified by the Company in a Put
Notice, and (ii) $2 million.

     "Maximum  Offering  Amount"  shall mean have the  meaning  set forth in the
recitals hereto.

     "NASD" shall have the meaning set forth in Section 6.9.

     "Nasdaq 20% Rule" shall have the meaning set forth in Section 2.3.11.

     "Non-Usage Fee" shall have the meaning set forth in Section 2.6.

     "Normal  Trading"  shall mean trading that occurs  between 9:30 AM and 4:00
PM, New York City Time, on any Business Day, and shall expressly  exclude "after
hours" trading.

     "Numeric Day" shall mean the  numerical day of the month of the  Investment
Date or the last day of the calendar month in question, whichever is less.

     "NYSE" shall have the meaning set forth in Section 6.9.

     "Offering"  shall mean the Company's  offering of Common Stock and Warrants
issued under this Investment Agreement.

     "Officer's  Certificate" shall mean a certificate,  signed by an officer of
the  Company,  to the effect  that the  representations  and  warranties  of the
Company in this  Agreement  required to be true for the  applicable  Closing are
true  and  correct  in all  material  respects  and  all of the  conditions  and
limitations  set  forth  in  this  Agreement  for  the  applicable  Closing  are
satisfied.

     "Opinion of Counsel" shall mean, as applicable,  the Investment  Commitment
Opinion of Counsel, the Put Opinion of Counsel, and the Registration Opinion.

     "Payment Due Date" shall have the meaning set forth in Section 2.3.9.

     "Pricing Period" shall mean, unless otherwise  shortened under the terms of
this Agreement,  the period beginning on the Business Day immediately  following
the Put Date and  ending on and  including  the date which is 20  Business  Days
after such Put Date.

     "Pricing  Period End Date" shall mean the last  Business Day of any Pricing
Period.

     "Principal  Market" shall mean the O.T.C.  Bulletin Board, the Nasdaq Small
Cap Market,  the Nasdaq National Market,  the American Stock Exchange or the New
York Stock Exchange,  whichever is at the time the principal trading exchange or
market for the Common Stock.

     "Proceeding" shall have the meaning as set forth Section 5.1.

                                       6
<PAGE>
     "Purchase" shall have the meaning set forth in Section 2.3.8.

     "Put" shall have the meaning set forth in Section 2.3.1(d).

     "Put Closing" shall have the meaning set forth in Section 2.3.9.

     "Put Closing Date" shall have the meaning set forth in Section 2.3.9.

     "Put Date" shall mean the date that is  specified by the Company in any Put
Notice for which the  Company  intends to  exercise a Put under  Section  2.3.1,
unless the Put Date is postponed pursuant to the terms hereof, in which case the
"Put Date" is such postponed date.

     "Put Dollar Amount" shall be determined by multiplying the Put Share Amount
by the respective  Put Share Prices with respect to such Put Shares,  subject to
the limitations herein.

     "Put Interruption Date" shall have the meaning set forth in Section 2.3.4.

     "Put Interruption Event" shall have the meaning set forth in Section 2.3.4.

     "Put  Interruption  Notice"  shall  have the  meaning  set forth in Section
2.3.4.

     "Put Notice" shall have the meaning set forth in Section 2.3.1(d), the form
of which is attached hereto as EXHIBIT G.

     "Put  Notice  Confirmation"  shall  have the  meaning  set forth in Section
2.3.1(d), the form of which is attached hereto as EXHIBIT H.

     "Put Opinion of Counsel" shall mean an opinion from  Company's  independent
counsel, in the form attached as EXHIBIT I, or such other form as agreed upon by
the parties, as to any Put Closing.

     "Put Share Amount" shall have the meaning as set forth Section 2.3.1(b).

     "Put Share Price" shall have the meaning set forth in Section 2.3.1(c).

     "Put Shares"  shall mean shares of Common  Stock that are  purchased by the
Investor pursuant to a Put.

     "Registrable  Securities"  shall  have  the  meaning  as set  forth  in the
Registration Rights Agreement.

     "Registration  Opinion"  shall  have  the  meaning  set  forth  in  Section
2.3.7(a), the form of which is attached hereto as EXHIBIT R.

     "Registration Opinion Deadline" shall have the meaning set forth in Section
2.3.7(a).

                                       7
<PAGE>
     "Registration Rights Agreement" shall mean that certain registration rights
agreement entered into by the Company and Investor on even date herewith, in the
form  attached  hereto as EXHIBIT  A, or such  other form as agreed  upon by the
parties.

     "Registration  Statement"  shall  have  the  meaning  as set  forth  in the
Registration Rights Agreement.

     "Regulation D" shall have the meaning set forth in the recitals hereto.

     "Reporting Issuer" shall have the meaning set forth in Section 6.2.

     "Restrictive Legend" shall have the meaning set forth in Section 4.7.

     "Required Put Documents" shall have the meaning set forth in Section 2.3.6.

     "Right of First Refusal" shall have the meaning set forth in Section 6.5.2.

     "Risk Factors" shall have the meaning set forth in Section 3.2.4,  attached
hereto as EXHIBIT J.

     "Schedule of Exceptions" shall have the meaning set forth in Section 5, and
is attached hereto as Exhibit C.

     "SEC" shall mean the Securities and Exchange Commission.

     "Securities" shall mean this Investment Agreement, together with the Common
Stock of the Company,  the Warrants and the Warrant Shares issuable  pursuant to
this Investment Agreement.

     "Share Authorization Increase Approval" shall have the meaning set forth in
Section 5.25.

     "Stockholder  20%  Approval"  shall have the  meaning  set forth in Section
6.11.

     "Supplemental  Registration  Statement" shall have the meaning set forth in
the Registration Rights Agreement.

     "Term"  shall mean the term of this  Agreement,  which shall be a period of
time beginning on the date of this Agreement and ending on the Termination Date.

     "Termination Date" shall mean the earlier of (i) the date that is three (3)
years after the  Effective  Date,  or (ii) the date that is thirty (30) Business
Days  after  the  later  of (a) the Put  Closing  Date on  which  the sum of the
aggregate Put Share Price for all Put Shares equal the Maximum  Offering Amount,
(b) the date  that  the  Company  has  delivered  a  Termination  Notice  to the
Investor, (c) the date of an Automatic Termination, and (d) the date that all of
the Warrants have been exercised.

     "Termination Fee" shall have the meaning as set forth in Section 2.6.

                                       8
<PAGE>
     "Termination Notice" shall have the meaning as set forth in Section 2.3.12.

     "Third Party Report" shall have the meaning set forth in Section 3.2.4.

     "Trading  Volume " shall mean the volume of shares of the Company's  Common
Stock  that  trade  between  9:30 AM and 4:00 PM,  New York  City  Time,  on any
Business  Day, and shall  expressly  exclude any shares  trading  during  "after
hours" trading.

     "Transaction Documents" shall have the meaning set forth in Section 9.

     "Transfer Agent" shall have the meaning set forth in Section 6.10.

     "Transfer Agent Instructions" shall mean the Company's  instructions to its
transfer agent,  substantially  in the form attached as EXHIBIT T, or such other
form as agreed upon by the parties.

     "Trigger Price" shall have the meaning set forth in Section 2.3.1(b).

     "Unlegended  Share  Certificates"  shall mean a certificate or certificates
(or  electronically  delivered  shares,  as appropriate)  (in  denominations  as
instructed  by  Investor)  representing  the shares of Common Stock to which the
Investor is then entitled to receive,  registered in the name of Investor or its
nominee (as instructed by Investor) and not  containing a restrictive  legend or
stop  transfer  order,  including  but not  limited  to the Put  Shares  for the
applicable Put and Warrant Shares.

     "Use of Proceeds  Schedule"  shall have the meaning as set forth in Section
3.2.4, attached hereto as EXHIBIT L.

     "Volume Limitations" shall have the meaning set forth in Section 2.3.1(b).

     "Warrant   Antidilution   Agreement"   shall  mean  that  certain   Warrant
Antidilution  Agreement  entered  into by the Company and  Investor on even date
herewith, in the form attached hereto as EXHIBIT O, or such other form as agreed
upon by the parties.

     "Warrant  Shares"  shall  mean the Common  Stock  issued or  issuable  upon
exercise of the Warrants.

     "Warrants" shall mean, the Commitment Warrants.

     2. PURCHASE AND SALE OF COMMON STOCK.

          2.1 OFFER TO SUBSCRIBE.

          Subject to the terms and conditions herein and the satisfaction of the
conditions to closing set forth in Sections 2.2 and 2.3 below,  Investor  hereby
agrees to purchase  such amounts of Common Stock as the Company may, in its sole
and absolute  discretion,  from time to time elect to issue and sell to Investor
according to one or more Puts pursuant to Section 2.3 below.

                                       9
<PAGE>
          2.2 INVESTMENT COMMITMENT.

               2.2.1  INVESTMENT   COMMITMENT  CLOSING.   The  closing  of  this
Agreement (the  "Investment  Commitment  Closing") shall be deemed to occur when
this Agreement,  the Registration  Rights Agreement,  the Commitment Warrant and
the Warrant Antidilution  Agreement have been duly executed by both Investor and
the Company, the Transfer Agent Instructions have been duly executed by both the
Company and the  Transfer  Agent,  and the other  Conditions  to the  Investment
Commitment Closing set forth in Section 2.2.2 below have been met.

               2.2.2  CONDITIONS  TO  INVESTMENT   COMMITMENT   CLOSING.   As  a
prerequisite  to the Investment  Commitment  Closing,  all of the following (the
"Conditions to Investment  Commitment  Closing") shall have been satisfied prior
to or concurrently with the Company's execution and delivery of this Agreement:

               (a)  the  following  documents  shall have been  delivered to the
                    Investor: (i) the Registration Rights Agreement (executed by
                    the  Company and  Investor),  (ii) the  Commitment  Warrant,
                    (iii) the Investment  Commitment  Opinion of Counsel (signed
                    by the  Company's  counsel),  (iv) the Warrant  Antidilution
                    Agreement  (executed by the Company and  Investor),  (v) the
                    Transfer Agent Instructions (executed by the Company and the
                    Transfer  Agent),  and (vi) a Secretary's  Certificate as to
                    (A) the  resolutions  of the  Company's  board of  directors
                    authorizing this transaction,  (B) the Company's Certificate
                    of Incorporation, and (C) the Company's Bylaws;

               (b)  this Investment  Agreement,  accepted by the Company,  shall
                    have been received by the Investor;

               (c)  the  Company's  Common Stock shall be listed for trading and
                    actually  trading on the O.T.C.  Bulletin Board,  the Nasdaq
                    Small Cap Market,  the Nasdaq National Market,  the American
                    Stock Exchange or the New York Stock Exchange;

               (d)  other than continuing  losses  described in the Risk Factors
                    set  forth  in the  Disclosure  Documents  (provided  for in
                    Section 3.2.4), up through the Investment Commitment Closing
                    there have been no material adverse changes in the Company's
                    business prospects or financial  condition since the date of
                    the last balance sheet included in the Disclosure Documents,
                    including but not limited to incurring material liabilities;
                    and

               (e)  the  representations  and  warranties of the Company in this
                    Agreement shall be true and correct in all material respects
                    and the  Conditions  to  Investment  Commitment  Closing set
                    forth in this Section 2.2.2 shall have been satisfied on the
                    date of such Investment  Commitment Closing; and the Company
                    shall deliver an Officer's Certificate, signed by an officer
                    of the Company, to such effect to the Investor.

                                       10
<PAGE>
          2.3 PUTS OF COMMON SHARES TO THE INVESTOR.

               2.3.1 PROCEDURE TO EXERCISE A PUT.  Subject to the Individual Put
Limit, the Maximum  Offering Amount and the Cap Amount (if applicable),  and the
other  conditions  and  limitations  set  forth in this  Agreement,  at any time
beginning on the date on which the Registration  Statement is declared effective
by the SEC (the  "Effective  Date"),  the Company  may, in its sole and absolute
discretion,  elect to  exercise  one or more  Puts  according  to the  following
procedure, provided that each subsequent Put Date after the first Put Date shall
be no sooner than five (5) Business Days following the preceding  Pricing Period
End Date:

                    (a)  DELIVERY  OF  ADVANCE  PUT  NOTICE.At  least  ten  (10)
Business  Days but not more than twenty (20) Business Days prior to any intended
Put Date,  the Company shall deliver  advance  written  notice (the "Advance Put
Notice,"  the form of which is  attached  hereto as  EXHIBIT E, the date of such
Advance Put Notice being the "Advance Put Notice Date") to Investor  stating the
Put  Date  for  which  the  Company  shall,   subject  to  the  limitations  and
restrictions  contained herein,  exercise a Put and stating the number of shares
of Common Stock  (subject to the Individual Put Limit and the Maximum Put Dollar
Amount)  which the  Company  intends  to sell to the  Investor  for the Put (the
"Intended Put Share Amount").

     The Company  may, at its option,  also  designate in any Advance Put Notice
(i) a maximum dollar amount of Common Stock, not to exceed $2,000,000,  which it
shall sell to  Investor  during the Put (the  "Company  Designated  Maximum  Put
Dollar Amount") and/or (ii) a minimum  purchase price per Put Share at which the
Investor  may  purchase  shares of Common  Stock  pursuant to such Put Notice (a
"Company  Designated  Minimum Put Share Price").  The Company Designated Minimum
Put Share Price,  if applicable,  shall be no greater than the lesser of (i) 80%
of the Closing  Bid Price of the  Company's  common  stock on the  Business  Day
immediately preceding the Advance Put Notice Date, or (ii) the Closing Bid Price
of the  Company's  common stock on the Business Day  immediately  preceding  the
Advance  Put  Notice  Date minus  $0.125.  The  Company  may  decrease  (but not
increase) the Company  Designated  Minimum Put Share Price for a Put at any time
by giving the  Investor  written  notice of such  decrease  not later than 12:00
Noon, New York City time, on the Business Day immediately preceding the Business
Day that such decrease is to take effect.  A decrease in the Company  Designated
Minimum Put Share Price shall have no retroactive effect on the determination of
Trigger  Prices and Excluded Days for days  preceding the Business Day that such
decrease takes effect, provided that the Put Share Price for all shares in a Put
shall be calculated using the lowest Company Designated Minimum Put Share Price,
as decreased.

     Notwithstanding  the above,  if, at the time of  delivery of an Advance Put
Notice,  more than two (2)  Calendar  Months have  passed  since the date of the
previous Put Closing, such Advance Put Notice shall provide at least twenty (20)
Business  Days notice of the intended Put Date,  unless waived in writing by the
Investor.  In order to effect  delivery of the  Advance Put Notice,  the Company
shall (i) send the  Advance  Put Notice by  facsimile  on such date so that such
notice is received by the  Investor by 6:00 p.m.,  New York,  NY time,  and (ii)
surrender  such notice on such date to a courier for  overnight  delivery to the
Investor (or two (2) day delivery in the case of an Investor residing outside of
the U.S.).  Upon receipt by the Investor of a facsimile  copy of the Advance Put
Notice, the Investor shall, within two (2) Business Days, send, via facsimile, a
confirmation  of receipt  (the  "Advance Put Notice  Confirmation,"  the form of
which is attached  hereto as EXHIBIT F) of the Advance Put Notice to the Company
specifying  that the  Advance Put Notice has been  received  and  affirming  the
intended Put Date and the Intended Put Share Amount.

                                       11
<PAGE>
                    (b) PUT SHARE  AMOUNT.  The "Put Share Amount" is the number
of shares of Common Stock that the Investor  shall be obligated to purchase in a
given Put, and shall equal the lesser of (i) the Intended Put Share Amount,  and
(ii) the Individual Put Limit. The "Individual Put Limit" shall equal the lesser
of (A)  1,500,000  shares,  (B) 15% of the sum of the aggregate  daily  reported
Trading  Volumes in the  outstanding  Common  Stock on the  Company's  Principal
Market, excluding any block trades of 20,000 or more shares of Common Stock, for
all Evaluation Days (as defined below) in the Pricing Period,  (C) the number of
Put Shares which,  when multiplied by their respective Put Share Prices,  equals
the  Maximum Put Dollar  Amount,  and (D) the 9.9%  Limitation,  but in no event
shall the  Individual  Put Limit  exceed 15% of the sum of the  aggregate  daily
reported  Trading  Volumes  in the  outstanding  Common  Stock on the  Company's
Principal Market,  excluding any block trades of 20,000 or more shares of Common
Stock, for the twenty (20) Business Days  immediately  preceding the Advance Put
Notice Date (this  limitation,  together with the limitation in (B)  immediately
above are collectively referred to herein as the "Volume Limitations").  Company
agrees not to trade  Common  Stock or arrange for Common  Stock to be traded for
the purpose of artificially increasing the Volume Limitations.

     For purposes of this Agreement:

          "Trigger  Price" for any Pricing  Period shall mean the greater of (i)
the Company  Designated Minimum Put Share Price, plus $.075, or (ii) the Company
Designated Minimum Put Share Price divided by .91.

          An "Excluded Day" shall mean each Business Day during a Pricing Period
where the lowest  intra-day  trading  price of the Common Stock is less than the
Trigger  Price and each  Business  Day defined in Section  2.3.4 as an "Excluded
Day".

          An  "Evaluation  Day"  shall mean each  Business  Day during a Pricing
Period that is not an Excluded Day.

                    (c) PUT SHARE PRICE.  The purchase  price for the Put Shares
(the "Put Share  Price") shall equal the lesser of (i) the Market Price for such
Put, minus $.075,  or (ii) 91% of the Market Price for such Put, but shall in no
event be less than the Company  Designated Minimum Put Share Price for such Put,
if applicable.

                    (d) DELIVERY OF PUT NOTICE. After delivery of an Advance Put
Notice,  on the Put Date  specified in the Advance Put Notice the Company  shall
deliver  written notice (the "Put Notice," the form of which is attached  hereto
as EXHIBIT G) to Investor  stating (i) the Put Date, (ii) the Intended Put Share
Amount as specified in the Advance Put Notice (such exercise a "Put"), (iii) the
Company  Designated  Maximum  Put Dollar  Amount (if  applicable),  and (iv) the
Company Designated  Minimum Put Share Price (if applicable).  In order to effect
delivery  of the Put  Notice,  the  Company  shall  (i) send the Put  Notice  by
facsimile  on the Put Date so that such notice is  received  by the  Investor by
6:00 p.m.,  New York, NY time, and (ii) surrender such notice on the Put Date to
a courier for overnight delivery to the Investor (or two (2) day delivery in the
case of an Investor  residing outside of the U.S.). Upon receipt by the Investor
of a  facsimile  copy of the Put  Notice,  the  Investor  shall,  within two (2)
Business  Days, send,  via facsimile, a confirmation of receipt (the "Put Notice

                                       12
<PAGE>
Confirmation,"  the form of which is  attached  hereto as  EXHIBIT H) of the Put
Notice to Company specifying that the Put Notice has been received and affirming
the Put Date and the Intended Put Share Amount.

                    (e) DELIVERY OF REQUIRED PUT DOCUMENTS. On or before the Put
Date for such Put, the Company  shall  deliver the Required  Put  Documents  (as
defined in Section 2.3.6 below) to the Investor (or to an agent of Investor,  if
Investor so directs).  Unless otherwise  specifically requested by the Investor,
the Put Shares shall be  transmitted  electronically  pursuant to the Depository
Trust  Company  DWAC  system or such  other  electronic  delivery  system as the
Investor shall request. If the Company has not delivered all of the Required Put
Documents  to the  Investor  on or  before  the  Put  Date,  the  Put  shall  be
automatically  cancelled (an  "Impermissible  Put Cancellation") and the Company
shall pay the Investor $5,000 for its reasonable due diligence expenses incurred
in  preparation  for the canceled Put and the Company may deliver an Advance Put
Notice for the  subsequent  Put no sooner than ten (10)  Business Days after the
date that such Put was canceled. Also, in the event of a Put Interruption Notice
that occurs prior to the Put Date, the Company shall pay the Investor $5,000 for
its  reasonable  due  diligence   expenses   incurred  in  preparation  for  the
interrupted Put.

                    (f) Limitation on Investor's  Obligation to Purchase Shares.
Notwithstanding  anything to the contrary in this  Agreement,  in no event shall
the Investor be required to  purchase,  and an Intended Put Share Amount may not
include,  an amount of Put Shares,  which when added to the number of Put Shares
acquired by the Investor pursuant to this Agreement during the 61 days preceding
the Put Date with respect to which this  determination of the permitted Intended
Put Share  Amount is being  made,  would  exceed 9.9% of the number of shares of
Common Stock outstanding (on a fully diluted basis, to the extent that inclusion
of unissued  shares is mandated by Section 13(d) of the Exchange Act) on the Put
Date for such Pricing Period,  as determined in accordance with Section 13(d) of
the Exchange Act (the "Section 13(d) Outstanding Share Amount"). Each Put Notice
shall  include  a  representation  of  the  Company  as  to  the  Section  13(d)
Outstanding  Share Amount on the related Put Date. In the event that the Section
13(d)  Outstanding Share Amount is different on any date during a Pricing Period
than on the Put Date  associated  with such Pricing  Period,  then the number of
shares of Common Stock outstanding on such date during such Pricing Period shall
govern for purposes of determining  whether the Investor,  when  aggregating all
purchases  of Shares made  pursuant to this  Agreement  in the 61 calendar  days
preceding  such date,  would have  acquired  more than 9.9% of the Section 13(d)
Outstanding  Share Amount.  The limitation set forth in this Section 2.3.1(f) is
referred to as the "9.9% Limitation."

               2.3.2  TERMINATION  OF  RIGHT  TO PUT.  The  Company's  right  to
initiate  subsequent Puts to the Investor shall terminate  permanently (each, an
"Automatic Termination") upon the occurrence of any of the following:

                    (a) if, at any time,  either the Company or any  director or
executive officer of the Company has engaged in a transaction or conduct related
to the Company  that has resulted in (i) a  Securities  and Exchange  Commission
enforcement action, or (ii) a civil judgment or criminal conviction for fraud or
misrepresentation,  or for any other offense  that,  if  prosecuted  criminally,
would constitute a felony under applicable law;

                                       13
<PAGE>
                    (b) on any date after a cumulative  time period or series of
time periods,  consisting only of Ineffective Periods and Delisting Events, that
lasts for an aggregate of four (4) months;

                    (c) if at any time the  Company  has  filed  for  and/or  is
subject to any bankruptcy, insolvency, reorganization or liquidation proceedings
or other  proceedings  for relief  under any  bankruptcy  law or any law for the
relief of debtors  instituted by or against the Company or any subsidiary of the
Company;

                    (d) after the sooner of (i) the date that is three (3) years
after the Effective Date, or (ii) the Put Closing Date on which the aggregate of
the Put Dollar  Amounts  for all Puts equal the  Maximum  Offering  Amount  (the
"Commitment Period");

                    (e) the Company has  breached  any covenant in Section 6- or
Section 9 hereof; or

                    (f) if no Registration Statement has been declared effective
by the date that is one (1) year after the date of this Agreement, the Automatic
Termination  shall occur on the date that is one (1) year after the date of this
Agreement.

               2.3.3  MAXIMUM  OFFERING  AMOUNT.   The  Investor  shall  not  be
obligated to purchase any  additional  Put Shares once the  aggregate Put Dollar
Amount paid by Investor equals the Maximum Offering Amount.

               2.3.4 PUT INTERRUPTION.  Once the Company delivers an Advance Put
Notice to the  Investor,  the  Company may not cancel the Put. In the event of a
"Put  Interruption  Event" (as defined  below),  in each case during any Pricing
Period,  then (A) the  Company  shall  notify  the  Investor  in writing (a "Put
Interruption  Notice") as soon as possible by facsimile and  overnight  courier,
but no later than the end of the Business Day in which the Company becomes aware
of such  facts,  (B) the Pricing  Period  shall be  extended  or  shortened,  as
applicable,  such that the Pricing Period End Date is the tenth (10th)  Business
Day after the date of such Put  Interruption  Notice from the Company  (the "Put
Interruption   Date"),  (C)  each  Business  Day  from  and  including  the  Put
Interruption  Date  through and  including  the Pricing  Period End Date for the
applicable Put (as extended or shortened, if applicable), shall be considered to
be an  "Excluded  Day,"  as that  term is  used in this  Agreement,  and (D) the
Company  Designated  Minimum  Put Share  Price,  if any,  shall not apply to the
affected Put. In the event that a Put Interruption Event occurs after an Advance
Put Notice Date, but before the applicable Put Date, that Put shall be deemed to
be  terminated,  and the Company may deliver an Advance Put Notice for a new Put
anytime beginning on the following Business Day, if otherwise allowed under this
Agreement.  A "Put Interruption  Event" shall mean any of the following:  (i) an
Automatic Termination, (ii) the failure of one of the items specified in Section
2.3.5 below to be true and correct on any day during an Extended Pricing Period,
or (iii) the occurrence of one of the following events:

                    (a) the Company has announced a subdivision or  combination,
including a reverse split, of its Common Stock or has subdivided or combined its
Common Stock;

                                       14
<PAGE>
                    (b) the Company  has paid a dividend of its Common  Stock or
has made any other distribution of its Common Stock;

                    (c)  the  Company  has  made  a  distribution  of all or any
portion of its assets or evidences of  indebtedness to the holders of its Common
Stock;

                    (d) a Major Transaction has occurred; or

                    (e) the Company discovers the existence of Material Facts or
any Ineffective Period or Delisting Event occurs.

               2.3.5 CONDITIONS PRECEDENT TO THE RIGHT OF THE COMPANY TO DELIVER
AN ADVANCE  PUT NOTICE OR A PUT  NOTICE.  The right of the Company to deliver an
Advance Put Notice or a Put Notice is subject to the  satisfaction,  on the date
of delivery of such Advance Put Notice or Put Notice,  of each of the  following
conditions:

                    (a)  the  Company's  Common  Stock  shall be listed  for and
                         actively  trading on the  O.T.C.  Bulletin  Board,  the
                         Nasdaq Small Cap Market,  the Nasdaq National Market or
                         the New York Stock Exchange and the Put Shares shall be
                         so listed,  and to the Company's  knowledge there is no
                         notice of any  suspension or delisting  with respect to
                         the  trading  of the  shares  of  Common  Stock on such
                         market or exchange;

                    (b)  the   Company   shall  have   satisfied   any  and  all
                         obligations   pursuant  to  the   Registration   Rights
                         Agreement, including, but not limited to, the filing of
                         the Registration Statement with the SEC with respect to
                         the  resale  of  all  Registrable  Securities  and  the
                         requirement that the Registration  Statement shall have
                         been  declared  effective  by the SEC for the resale of
                         all  Registrable  Securities and the Company shall have
                         satisfied and shall be in  compliance  with any and all
                         obligations   pursuant  to  this   Agreement   and  the
                         Warrants;

                    (c)  the  representations  and  warranties of the Company in
                         Sections 5.1, 5.3, 5.4,  5.5, 5.6,  5.10,  5.13,  5.14,
                         5.15,  5.16, 5.18, 5.19, 5.21, and 5.25 hereof are true
                         and correct in all material respects as if made on such
                         date, the Company has satisfied its  obligations  under
                         Section  2.6 hereof and the  conditions  to  Investor's
                         obligations   set  forth  in  this  Section  2.3.5  are
                         satisfied  as of such  Closing,  and the Company  shall
                         deliver  a  certificate,  signed by an  officer  of the
                         Company,  to  such  effect  to the  Investor;  (d)  the
                         Company  shall have  reserved for issuance a sufficient
                         number of Common Shares for the purpose of enabling the
                         Company  to  satisfy  any  obligation  to issue  Common
                         Shares  pursuant  to any Put and to effect  exercise of
                         the Warrants;

                    (e)  the  Registration   Statement  is  not  subject  to  an
                         Ineffective  Period  as  defined  in  the  Registration
                         Rights  Agreement,  the prospectus  included therein is
                         current and deliverable, and to the Company's knowledge
                         there is no  notice  of any  investigation  or  inquiry
                         concerning   any  stop  order   with   respect  to  the
                         Registration Statement;

                                       15
<PAGE>
                    (f)  if the Aggregate Issued Shares after the Closing of the
                         Put would exceed the Cap Amount, the Company shall have
                         obtained the  Stockholder  20% Approval as specified in
                         Section 6.11,  if the Company's  Common Stock is listed
                         on the NASDAQ  Small Cap Market or the NASDAQ  National
                         Market  System  (the  "NMS"),   and  such  approval  is
                         required by the rules of the NASDAQ;

                    (g)  the Company  shall have no knowledge of any event that,
                         in the  Company's  opinion,  is more likely than not to
                         have the effect of causing any  Registration  Statement
                         to be suspended or otherwise  ineffective  (which event
                         is more  likely  than not to occur  within  the  thirty
                         Business Days  following the date on which such Advance
                         Put Notice and Put Notice is deemed delivered);

                    (h)  there is not then in effect any law, rule or regulation
                         prohibiting    or    restricting    the    transactions
                         contemplated   hereby,  or  requiring  any  consent  or
                         approval  which  shall not have been  obtained,  nor is
                         there  any   pending  or   threatened   proceeding   or
                         investigation  which may have the effect of prohibiting
                         or  adversely   affecting   any  of  the   transactions
                         contemplated by this Agreement;

                    (i)  no statute, rule, regulation,  executive order, decree,
                         ruling or injunction shall have been enacted,  entered,
                         promulgated  or  adopted  by any court or  governmental
                         authority of competent  jurisdiction that prohibits the
                         transactions  contemplated  by this  Agreement,  and no
                         actions,  suits or  proceedings  shall be in  progress,
                         pending or  threatened  by any person  (other  than the
                         Investor or any affiliate of the  Investor),  that seek
                         to enjoin or prohibit the transactions  contemplated by
                         this Agreement.  For purposes of this paragraph (i), no
                         proceeding shall be deemed pending or threatened unless
                         one  of  the  parties  has  received  written  or  oral
                         notification  thereof prior to the  applicable  Closing
                         Date;

                    (j)  the  Put  Shares  delivered  to the  Investor  are  DTC
                         eligible  and  can  be   immediately   converted   into
                         electronic form; and

                    (k)  the  Company   shall  have  obtained  all  permits  and
                         qualifications   (if  any)   required   by  any   state
                         securities laws or Blue Sky laws for the offer and sale
                         of the Common Stock to the Investor and by the Investor
                         or shall have the availability of exemptions therefrom.

               2.3.6  DOCUMENTS  REQUIRED  TO BE  DELIVERED  ON THE PUT  DATE AS
CONDITIONS  TO  CLOSING  OF ANY  PUT.  The  Closing  of any Put  and  Investor's
obligations hereunder shall additionally be conditioned upon the delivery to the
Investor of each of the following  (the  "Required Put  Documents") on or before
the applicable Put Date:

                                       16
<PAGE>
                    (a) a number of DWAC Put Shares  equal to the  Intended  Put
Share Amount  shall have been  delivered to the  Depository  Trust  Company DWAC
account  specified by the  Investor for the Put Shares  (unless the Investor has
requested  physical stock  certificates,  in writing,  in which case the Company
shall have  delivered  to the  Investor a number of  physical  Unlegended  Share
Certificates  equal to the Intended Put Share Amount,  in  denominations  of not
more than 50,000 shares per certificate);

                    (b)  the  following  documents:   Put  Opinion  of  Counsel,
Officer's  Certificate,  Put  Notice,  Registration  Opinion,  and any report or
disclosure required under Section 2.3.7 or Section 2.5; and

                    (c) all documents,  instruments and other writings  required
to be  delivered  on or before the Put Date  pursuant to any  provision  of this
Agreement in order to implement and effect the transactions contemplated herein.

               2.3.7 ACCOUNTANT'S LETTER AND REGISTRATION OPINION.

                    (a) The  Company  shall have caused to be  delivered  to the
Investor,  (i) whenever  required by Section  2.3.7(b) or by Section 2.5.3,  and
(ii) on the date that is three  (3)  Business  Days  prior to each Put Date (the
"Registration  Opinion  Deadline"),  an  opinion  of the  Company's  independent
counsel,  in substantially the form of EXHIBIT R (the  "Registration  Opinion"),
addressed to the Investor stating,  inter alia, that no facts ("Material Facts")
have come to such  counsel's  attention  that have caused it to believe that the
Registration  Statement is subject to an  Ineffective  Period or to believe that
the Registration Statement, any Supplemental Registration Statement (as each may
be amended,  if  applicable),  and any related  prospectuses,  contain an untrue
statement  of  material  fact or  omits a  material  fact  required  to make the
statements  contained  therein,  in light of the circumstances  under which they
were made, not misleading.  If a Registration Opinion cannot be delivered by the
Company's  independent  counsel  to the  Investor  on the  Registration  Opinion
Deadline due to the existence of Material  Facts or an Ineffective  Period,  the
Company  shall  promptly  notify the Investor and as promptly as possible  amend
each of the Registration Statement and any Supplemental Registration Statements,
as applicable,  and any related  prospectus or cause such Ineffective  Period to
terminate, as the case may be, and deliver such Registration Opinion and updated
prospectus  as soon as  possible  thereafter.  If at any time after a Put Notice
shall have been delivered to Investor but before the related  Pricing Period End
Date, the Company  acquires  knowledge of such Material Facts or any Ineffective
Period occurs,  the Company shall promptly notify the Investor and shall deliver
a Put Interruption Notice to the Investor pursuant to Section 2.3.4 by facsimile
and overnight courier by the end of that Business Day.

                    (b) (i) the Company shall engage its independent auditors to
perform the  procedures  in  accordance  with the  provisions  of  Statement  on
Auditing  Standards No. 71, as amended,  as agreed to by the parties hereto, and
reports  thereon  (the "Bring  Down Cold  Comfort  Letters")  as shall have been
reasonably   requested  by  the  Investor  with  respect  to  certain  financial
information contained in the Registration  Statement and shall have delivered to
the Investor such a report addressed to the Investor,  on the date that is three
(3) Business Days prior to each Put Date.

                                       17
<PAGE>
                         (ii)  in  the  event  that  the  Investor   shall  have
requested  delivery  of an Agreed  Upon  Procedures  Report  pursuant to Section
2.5.3,  the Company  shall engage its  independent  auditors to perform  certain
agreed  upon  procedures  and  report  thereon  as shall  have  been  reasonably
requested by the Investor with respect to certain  financial  information of the
Company  and the  Company  shall  deliver to the  Investor a copy of such report
addressed to the Investor. In the event that the report required by this Section
2.3.7(b) cannot be delivered by the Company's independent auditors,  the Company
shall, if necessary,  promptly revise the Registration Statement and the Company
shall not deliver a Put Notice until such report is delivered.

               2.3.8 INVESTOR'S OBLIGATION AND RIGHT TO PURCHASE SHARES. Subject
to the conditions set forth in this Agreement,  following the Investor's receipt
of a validly  delivered Put Notice,  the Investor  shall be required to purchase
(each a  "Purchase")  from the  Company a number of Put Shares  equal to the Put
Share Amount, in the manner described below.

               2.3.9  MECHANICS  OF PUT  CLOSING.  Each of the  Company  and the
Investor shall deliver all documents,  instruments  and writings  required to be
delivered  by  either of them  pursuant  to this  Agreement  at or prior to each
Closing.  Subject to such delivery and the  satisfaction  of the  conditions set
forth in this  Section 2, the closing of the  purchase by the Investor of Shares
shall  occur  by 5:00 PM,  New York  City  Time,  on the date  which is five (5)
Business Days following the applicable Pricing Period End Date (the "Payment Due
Date") at the offices of Investor.  On each or before each Payment Due Date, the
Investor  shall  deliver to the  Company,  in the manner  specified in Section 8
below,  the Put  Dollar  Amount to be paid for such Put  Shares,  determined  as
aforesaid.  The closing  (each a "Put  Closing") for each Put shall occur on the
date that both (i) the Company has  delivered  to the  Investor all Required Put
Documents,  and (ii) the Investor  has  delivered to the Company such Put Dollar
Amount and any Late Payment Amount, if applicable (each a "Put Closing Date").

     If the Investor  does not deliver to the Company the Put Dollar  Amount for
such Put Closing on or before the Payment Due Date,  then the Investor shall pay
to the  Company,  in  addition  to the Put Dollar  Amount,  an amount (the "Late
Payment Amount") at a rate of X% per month,  accruing daily,  multiplied by such
Put  Dollar  Amount,  where "X"  equals  one  percent  (1%) for the first  month
following the date in question,  and increases by an additional one percent (1%)
for each month that passes after the date in  question,  up to a maximum of five
percent (5%) per month; provided,  however, that in no event shall the amount of
interest that shall become due and payable  hereunder  exceed the maximum amount
permissible under applicable law.

     In addition to any other  remedies the Company may have,  in the event that
the Investor fails to make payment for any shares put to it by the Company under
this  Agreement  within five (5) Business  Days of the date that the Company has
notified  the  Investor,  in  writing,  that such  payment is past due,  and the
Company has complied with this Agreement in all material  respects,  neither the
Commitment  Warrant nor any Purchase  Warrants shall be exerciseable  until such
payment is made.

               2.3.10 LIMITATION ON SHORT SALES. The Investor and its affiliates
shall  not  engage  in short  sales of the  Company's  Common  Stock;  provided,
however,  that the  Investor  may enter into any short  exempt sale or any short
sale or other hedging or similar  arrangement it deems  appropriate with respect

                                       18
<PAGE>
to Put Shares  after it receives a Put Notice with respect to such Put Shares so
long as such sales or  arrangements  do not involve more than the number of such
Put Shares specified in the Put Notice.

               2.3.11 CAP AMOUNT.  If the Company  becomes  listed on the Nasdaq
Small Cap Market or the Nasdaq  National  Market,  then,  unless the Company has
obtained  Stockholder  20%  Approval  as set  forth in  Section  6.11 or  unless
otherwise  permitted by Nasdaq,  in no event shall the  Aggregate  Issued Shares
exceed the maximum  number of shares of Common Stock (the "Cap Amount") that the
Company can,  without  stockholder  approval,  so issue  pursuant to Nasdaq Rule
4460(i)(1)(d)(ii)  (or any other applicable  Nasdaq Rules or any successor rule)
(the "Nasdaq 20% Rule").

               2.3.12  INVESTMENT   AGREEMENT   TERMINATION.   The  Company  may
terminate  (a  "Company  Termination")  its  right to  initiate  future  Puts by
providing written notice  ("Termination  Notice") to the Investor,  by facsimile
and  overnight  courier,  at any time other than during an Extended  Put Period,
provided that such termination shall have no effect on the parties' other rights
and obligations under this Agreement,  the Registration  Rights Agreement or the
Warrants.  Notwithstanding  the above,  any Put  Interruption  Notice  occurring
during an Extended Put Period is governed by Section 2.3.4.

               2.3.13  RETURN OF EXCESS  COMMON  SHARES.  In the event  that the
number of Shares purchased by the Investor pursuant to its obligations hereunder
is less than the Intended Put Share Amount,  the Investor shall promptly  return
to the Company any shares of Common Stock in the Investor's  possession that are
not being purchased by the Investor.

          2.4 WARRANTS.

               2.4.1  COMMITMENT  WARRANTS.  In  partial  consideration  hereof,
following the execution of the Letter of Agreement  dated on or about  September
5, 2000 between the Company and the Investor,  the Company  issued and delivered
to Investor warrants (the "Commitment  Warrants") in the form attached hereto as
EXHIBIT  U, or such  other  form as  agreed  upon by the  parties,  to  purchase
1,309,000 shares of Common Stock.  Each Commitment  Warrant shall be immediately
exercisable in accordance with its terms, and shall have a term beginning on the
date of  issuance  and  ending on date that is seven (7) years  thereafter.  The
Warrant  Shares  shall be  registered  for resale  pursuant to the  Registration
Rights Agreement.  The Investment  Commitment Opinion of Counsel shall cover the
issuance of the  Commitment  Warrant and the  issuance of the common  stock upon
exercise of the Commitment Warrant.

     Notwithstanding any Termination or Automatic Termination of this Agreement,
regardless of whether or not the Registration  Statement is or is not filed, and
regardless of whether or not the Registration Statement is approved or denied by
the SEC, the Investor shall retain full  ownership of the Commitment  Warrant as
partial consideration for its commitment hereunder.

               2.4.2 [Intentionally Left Blank].

          2.5 DUE  DILIGENCE  REVIEW.  The  Company  shall  make  available  for
inspection and review by the Investor (the "Due Diligence Review"),  advisors to
and  representatives  of the Investor (who may or may not be affiliated with the

                                       19
<PAGE>
Investor and who are  reasonably  acceptable  to the Company),  any  underwriter
participating  in any  disposition  of Common  Stock on  behalf of the  Investor
pursuant to the Registration Statement, any Supplemental Registration Statement,
or amendments or supplements  thereto or any blue sky, NASD or other filing, all
financial and other records,  all filings with the SEC, and all other  corporate
documents and  properties of the Company as may be reasonably  necessary for the
purpose  of such  review,  and  cause  the  Company's  officers,  directors  and
employees to supply all such information reasonably requested by the Investor or
any  such  representative,  advisor  or  underwriter  in  connection  with  such
Registration  Statement  (including,  without  limitation,  in  response  to all
questions  and other  inquiries  reasonably  made or  submitted by any of them),
prior to and  from  time to time  after  the  filing  and  effectiveness  of the
Registration  Statement  for the sole  purpose of enabling the Investor and such
representatives,  advisors and underwriters and their respective accountants and
attorneys  to conduct  initial  and ongoing due  diligence  with  respect to the
Company and the accuracy of the Registration Statement.

               2.5.1 TREATMENT OF NONPUBLIC  INFORMATION.  The Company shall not
disclose   nonpublic   information  to  the  Investor  or  to  its  advisors  or
representatives  unless  prior to  disclosure  of such  information  the Company
identifies  such  information as being  nonpublic  information  and provides the
Investor and such advisors and representatives with the opportunity to accept or
refuse to accept such nonpublic  information  for review.  The Company may, as a
condition  to  disclosing  any  nonpublic  information  hereunder,  require  the
Investor and its advisors and  representatives  to enter into a  confidentiality
agreement  (including  an  agreement  with  such  advisors  and  representatives
prohibiting them from trading in Common Stock during such period of time as they
are in possession of nonpublic  information) in form reasonably  satisfactory to
the Company and the Investor.

     Nothing herein shall require the Company to disclose nonpublic  information
to the Investor or its advisors or  representatives,  and the Company represents
that it does not disseminate nonpublic information to any investors who purchase
stock in the Company in a public  offering,  to money  managers or to securities
analysts,  provided,  however,  that  notwithstanding  anything  herein  to  the
contrary,  the Company will, as  hereinabove  provided,  immediately  notify the
advisors and representatives of the Investor and, if any,  underwriters,  of any
event or the existence of any  circumstance  (without any obligation to disclose
the specific  event or  circumstance)  of which it becomes  aware,  constituting
nonpublic  information  (whether or not requested of the Company specifically or
generally  during the course of due  diligence by and such persons or entities),
which,  if  not  disclosed  in  the  Prospectus  included  in  the  Registration
Statement,  would cause such Prospectus to include a material misstatement or to
omit a  material  fact  required  to be  stated  therein  in  order  to make the
statements  therein,  in light of the circumstances in which they were made, not
misleading.  Nothing  contained  in this  Section 2.5 shall be construed to mean
that such  persons or  entities  other than the  Investor  (without  the written
consent of the Investor prior to disclosure of such  information) may not obtain
nonpublic  information  in the course of conducting  due diligence in accordance
with the terms of this Agreement;  provided, however, that in no event shall the
Investor's  advisors or  representatives  disclose to the Investor the nature of
the specific  event or  circumstances  constituting  any  nonpublic  information
discovered  by such  advisors  or  representatives  in the  course  of their due
diligence  without the written  consent of the Investor  prior to  disclosure of
such information.

                                       20
<PAGE>
               2.5.2 DISCLOSURE OF MISSTATEMENTS  AND OMISSIONS.  The Investor's
advisors or  representatives  shall make complete  disclosure to the  Investor's
counsel  of all  events  or  circumstances  constituting  nonpublic  information
discovered  by such  advisors  or  representatives  in the  course  of their due
diligence upon which such advisors or representatives  form the opinion that the
Registration  Statement contains an untrue statement of a material fact or omits
a material fact required to be stated in the Registration Statement or necessary
to make the statements  contained therein,  in the light of the circumstances in
which they were made,  not  misleading.  Upon  receipt of such  disclosure,  the
Investor's counsel shall consult with the Company's independent counsel in order
to address the concern raised as to the existence of a material  misstatement or
omission and to discuss appropriate  disclosure with respect thereto;  provided,
however, that such consultation shall not constitute the advice of the Company's
independent  counsel to the  Investor  as to the  accuracy  of the  Registration
Statement and related Prospectus.

               2.5.3  PROCEDURE IF MATERIAL FACTS ARE REASONABLY  BELIEVED TO BE
UNTRUE OR ARE Omitted.  In the event after such consultation the Investor or the
Investor's counsel reasonably believes that the Registration  Statement contains
an untrue  statement of a material  fact or omits a material fact required to be
stated  in the  Registration  Statement  or  necessary  to make  the  statements
contained  therein,  in light of the  circumstances in which they were made, not
misleading,

                    (a) the Company  shall file with the SEC an amendment to the
Registration  Statement  responsive to such alleged untrue statement or omission
and  provide  the  Investor,  as  promptly  as  practicable,  with copies of the
Registration Statement and related Prospectus, as so amended, or

                    (b)  if the  Company  disputes  the  existence  of any  such
material  misstatement or omission,  (i) the Company's independent counsel shall
provide the Investor's counsel with a Registration Opinion and (ii) in the event
the dispute  relates to the  adequacy of financial  disclosure  and the Investor
shall reasonably request,  the Company's  independent  auditors shall provide to
the Company a letter ("Agreed Upon Procedures Report") outlining the performance
of such  "agreed  upon  procedures"  as shall  be  reasonably  requested  by the
Investor and the Company shall provide the Investor with a copy of such letter.

          2.6 COMMITMENT PAYMENTS.

     On the last  Business  Day of the  first  one  year  period  following  the
Effective Date (a "Commitment Evaluation Period"), if the Company has not Put at
least $500,000 in aggregate Put Dollar Amount during that Commitment  Evaluation
Period, the Company, in consideration of Investor's commitment costs, including,
but not limited to, due diligence expenses,  shall pay to the Investor an amount
(the "Non-Usage Fee") equal to the difference of (i) $50,000,  minus (ii) 10% of
the aggregate Put Dollar Amount of the Put Shares  purchased by Investor  during
that Commitment  Evaluation  Period.  On the last Business Day of the second one
year period and the third one year period  following  the  Effective  Date (each
such one year period also a "Commitment  Evaluation Period"), if the Company has
not  Put at  least  $1,000,000  in  aggregate  Put  Dollar  Amount  during  that
Commitment  Evaluation  Period,  the Company,  in  consideration  of  Investor's
commitment costs, including,  but not limited to, due diligence expenses,  shall
pay to the Investor an amount (the  "Non-Usage  Fee") equal to the difference of
(i)  $100,000,  minus (ii) 10% of the  aggregate  Put  Dollar  Amount of the Put
Shares purchased by Investor during that Commitment  Evaluation  Period.  In the

                                       21
<PAGE>
event that the  Company  delivers a  Termination  Notice to the  Investor  or an
Automatic  Termination  occurs,  the  Company  shall  pay to the  Investor  (the
"Termination  Fee") the  greater  of (i) the  Non-Usage  Fee for the  applicable
Commitment Evaluation Period, or (ii) the difference of (x) $200,000,  minus (y)
10% of the aggregate Put Dollar Amount of the Put Shares put to Investor  during
all Puts to date, and the Company shall not be required to pay the Non-Usage Fee
thereafter.

     Each Non-Usage Fee or Termination Fee is payable,  in cash, within five (5)
business  days of the date it  accrued.  The  Company  shall not be  required to
deliver any payments to Investor under this  subsection  until Investor has paid
all Put Dollar Amounts that are then due.

     3. REPRESENTATIONS,  WARRANTIES AND COVENANTS OF INVESTOR.  Investor hereby
represents and warrants to and agrees with the Company as follows:

          3.1   ACCREDITED   INVESTOR.   Investor  is  an  accredited   investor
("Accredited Investor"), as defined in Rule 501 of Regulation D, and has checked
the applicable box set forth in Section 10 of this Agreement.

          3.2  INVESTMENT   EXPERIENCE;   ACCESS  TO  INFORMATION;   INDEPENDENT
INVESTIGATION.

               3.2.1 ACCESS TO INFORMATION.  Investor or Investor's professional
advisor has been granted the opportunity to ask questions of and receive answers
from  representatives  of the Company,  its officers,  directors,  employees and
agents concerning the terms and conditions of this Offering, the Company and its
business and prospects,  and to obtain any additional information which Investor
or Investor's  professional  advisor deems  necessary to verify the accuracy and
completeness of the information received.

               3.2.2 RELIANCE ON OWN ADVISORS. Investor has relied completely on
the advice of, or has consulted with,  Investor's own personal tax,  investment,
legal  or  other  advisors  and  has not  relied  on the  Company  or any of its
affiliates, officers, directors, attorneys, accountants or any affiliates of any
thereof and each other person, if any, who controls any of the foregoing, within
the  meaning of Section 15 of the Act for any tax or legal  advice  (other  than
reliance on information in the Disclosure  Documents as defined in Section 3.2.4
below and on the Opinion of Counsel). The foregoing,  however, does not limit or
modify Investor's right to rely upon covenants,  representations  and warranties
of the Company in this Agreement.

               3.2.3  CAPABILITY  TO EVALUATE.  Investor has such  knowledge and
experience  in financial  and business  matters so as to enable such Investor to
utilize the information  made available to it in connection with the Offering in
order to evaluate the merits and risks of the prospective investment,  which are
substantial,  including  without  limitation  those set forth in the  Disclosure
Documents (as defined in Section 3.2.4 below).

               3.2.4  DISCLOSURE  DOCUMENTS.   Investor,  in  making  Investor's
investment  decision  to  subscribe  for  the  Investment  Agreement  hereunder,
represents  that (a) Investor has received and had an  opportunity to review (i)
the  Company's  Annual  Report on Form 10-KSB for the year ended June 30,  2000,
(ii) the  Company's  quarterly  report on Form  10-QSB  for the  quarters  ended
December  31,  1999,  and March 31, 2000,  (iii) the Risk  Factors,  attached as
EXHIBIT J, (the "Risk Factors") (iv) the  Capitalization  Schedule,  attached as
EXHIBIT K, (the "Capitalization Schedule") and (v) the Use of Proceeds Schedule,
attached as EXHIBIT L, (the "Use of Proceeds Schedule");  (b) Investor has read,

                                       22
<PAGE>
reviewed,  and  relied  solely on the  documents  described  in (a)  above,  the
Company's   representations   and  warranties  and  other  information  in  this
Agreement,  including the exhibits, documents prepared by the Company which have
been  specifically  provided to Investor in  connection  with this Offering (the
documents described in this Section 3.2.4 (a) and (b) are collectively  referred
to as the  "Disclosure  Documents"),  and an independent  investigation  made by
Investor and Investor's representatives,  if any; (c) Investor has, prior to the
date of this Agreement,  been given an opportunity to review material  contracts
and  documents of the Company which have been filed as exhibits to the Company's
filings  under the Act and the  Exchange Act and has had an  opportunity  to ask
questions of and receive answers from the Company's officers and directors;  and
(d) is not  relying  on any oral  representation  of the  Company  or any  other
person, nor any written  representation or assurance from the Company other than
those contained in the Disclosure  Documents or incorporated  herein or therein.
The foregoing,  however,  does not limit or modify Investor's right to rely upon
covenants,  representations and warranties of the Company in Sections 5 and 6 of
this  Agreement.  Investor  acknowledges  and  agrees  that the  Company  has no
responsibility  for, does not ratify, and is under no responsibility  whatsoever
to comment upon or correct any reports,  analyses or other  comments  made about
the Company by any third  parties,  including,  but not  limited  to,  analysts'
research reports or comments (collectively, "Third Party Reports"), and Investor
has not relied upon any Third Party Reports in making the decision to invest.

               3.2.5  INVESTMENT   EXPERIENCE;   FEND  FOR  SELF.  Investor  has
substantial experience in investing in securities and it has made investments in
securities other than those of the Company.  Investor acknowledges that Investor
is able to fend for  Investor's  self in the  transaction  contemplated  by this
Agreement, that Investor has the ability to bear the economic risk of Investor's
investment  pursuant  to this  Agreement  and that  Investor  is an  "Accredited
Investor" by virtue of the fact that Investor  meets the investor  qualification
standards  set forth in Section 3.1 above.  Investor has not been  organized for
the purpose of investing in securities of the Company,  although such investment
is consistent with Investor's purposes.

                                       23
<PAGE>
          3.3 EXEMPT OFFERING UNDER REGULATION D.

               3.3.1 NO GENERAL  SOLICITATION.  The Investment Agreement was not
offered to Investor  through,  and Investor is not aware of, any form of general
solicitation or general  advertising,  including,  without  limitation,  (i) any
advertisement,   article,   notice  or  other  communication  published  in  any
newspaper,  magazine or similar media or broadcast over television or radio, and
(ii) any seminar or meeting  whose  attendees  have been  invited by any general
solicitation or general advertising.

               3.3.2  RESTRICTED  SECURITIES.   Investor  understands  that  the
Investment  Agreement  is, the Common  Stock issued at each Put Closing will be,
and the Warrant Shares will be,  characterized as "restricted  securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a  transaction  exempt  from the  registration  requirements  of the  federal
securities  laws and  that  under  such  laws and  applicable  regulations  such
securities may not be transferred or resold without  registration  under the Act
or pursuant to an exemption therefrom.  In this connection,  Investor represents
that  Investor is familiar  with Rule 144 under the Act, as presently in effect,
and understands the resale limitations imposed thereby and by the Act.

               3.3.3   DISPOSITION.    Without   in   any   way   limiting   the
representations  set forth above,  Investor agrees that until the Securities are
sold  pursuant to an  effective  Registration  Statement  or an  exemption  from
registration,  they  will  remain  in the  name  of  Investor  and  will  not be
transferred to or assigned to any broker, dealer or depositary. Investor further
agrees not to sell,  transfer,  assign, or pledge the Securities (except for any
bona fide  pledge  arrangement  to the extent  that such pledge does not require
registration  under the Act or unless an  exemption  from such  registration  is
available  and  provided  further  that if such  pledge is  realized  upon,  any
transfer to the pledgee shall comply with the requirements set forth herein), or
to otherwise dispose of all or any portion of the Securities unless and until:

                    (a) There is then in effect a registration  statement  under
the Act  and  any  applicable  state  securities  laws  covering  such  proposed
disposition and such  disposition is made in accordance  with such  registration
statement and in compliance with applicable prospectus delivery requirements; or

                    (b) (i)  Investor  shall have  notified  the  Company of the
proposed  disposition  and shall have  furnished the Company with a statement of
the  circumstances  surrounding the proposed  disposition to the extent relevant
for  determination  of the availability of an exemption from  registration,  and
(ii) if reasonably  requested by the Company,  Investor shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition  will not require  registration of the Securities under the Act
or state  securities  laws.  It is agreed that the Company  will not require the
Investor to provide opinions of counsel for  transactions  made pursuant to Rule
144 provided  that Investor and  Investor's  broker,  if necessary,  provide the
Company with the necessary  representations  for counsel to the Company to issue
an opinion with respect to such transaction.

          The Investor is entering  into this  Agreement for its own account and
the Investor has no present arrangement  (whether or not legally binding) at any
time to sell the  Common  Stock to or through  any  person or entity;  provided,

                                       24
<PAGE>
however, that by making the representations  herein, the Investor does not agree
to hold the Common Stock for any minimum or other specific term and reserves the
right to dispose of the Common Stock at any time in accordance  with federal and
state securities laws applicable to such disposition.

          3.4 DUE AUTHORIZATION.

               3.4.1 AUTHORITY.  The person executing this Investment Agreement,
if executing this Agreement in a representative or fiduciary capacity,  has full
power and  authority  to  execute  and  deliver  this  Agreement  and each other
document  included herein for which a signature is required in such capacity and
on behalf of the subscribing individual, partnership, trust, estate, corporation
or other entity for whom or which Investor is executing this Agreement. Investor
has reached the age of majority (if an individual)  according to the laws of the
state in which he or she resides.

               3.4.2 DUE AUTHORIZATION.  Investor is duly and validly organized,
validly existing and in good standing as a limited  liability  company under the
laws of Georgia with full power and  authority to purchase the  Securities to be
purchased by Investor and to execute and deliver this Agreement.

               3.4.3   PARTNERSHIPS.   If   Investor  is  a   partnership,   the
representations,  warranties,  agreements and understandings set forth above are
true with respect to all partners of Investor (and if any such partner is itself
a partnership, all persons holding an interest in such partnership,  directly or
indirectly,  including  through  one  or  more  partnerships),  and  the  person
executing this Agreement has made due inquiry to determine the  truthfulness  of
the representations and warranties made hereby.

               3.4.4   REPRESENTATIVES.   If   Investor  is   purchasing   in  a
representative or fiduciary  capacity,  the representations and warranties shall
be deemed to have been made on behalf of the person or persons for whom Investor
is so purchasing.

     4. ACKNOWLEDGMENTS. Investor is aware that:

          4.1 RISKS OF INVESTMENT. Investor recognizes that an investment in the
Company involves  substantial risks,  including the potential loss of Investor's
entire investment  herein.  Investor  recognizes that the Disclosure  Documents,
this  Agreement  and the  exhibits  hereto do not  purport  to  contain  all the
information, which would be contained in a registration statement under the Act;

          4.2 NO GOVERNMENT APPROVAL. No federal or state agency has passed upon
the  Securities,  recommended  or endorsed the Offering,  or made any finding or
determination as to the fairness of this transaction;

          4.3 NO REGISTRATION,  RESTRICTIONS ON TRANSFER. As of the date of this
Agreement,  the  Securities and any component  thereof have not been  registered
under the Act or any applicable  state  securities  laws by reason of exemptions
from the  registration  requirements  of the Act and such  laws,  and may not be
sold, pledged (except for any limited pledge in connection with a margin account
of Investor to the extent that such pledge does not require  registration  under
the Act or unless an exemption from such  registration is available and provided

                                       25
<PAGE>
further that if such pledge is realized  upon, any transfer to the pledgee shall
comply with the requirements set forth herein),  assigned or otherwise  disposed
of in the  absence  of an  effective  registration  of the  Securities  and  any
component thereof under the Act or unless an exemption from such registration is
available;

          4.4  RESTRICTIONS  ON  TRANSFER.  Investor  may not  attempt  to sell,
transfer,  assign,  pledge or  otherwise  dispose  of all or any  portion of the
Securities  or any  component  thereof  in the  absence  of either an  effective
registration statement or an exemption from the registration requirements of the
Act and applicable state securities laws;

          4.5 NO ASSURANCES OF REGISTRATION.  There can be no assurance that any
registration  statement will become effective at the scheduled time, or ever, or
remain  effective  when  required,  and  Investor  acknowledges  that  it may be
required to bear the economic  risk of Investor's  investment  for an indefinite
period of time;

          4.6 EXEMPT TRANSACTION.  Investor  understands that the Securities are
being offered and sold in reliance on specific  exemptions from the registration
requirements of federal and state law and that the representations,  warranties,
agreements, acknowledgments and understandings set forth herein are being relied
upon by the Company in determining the  applicability of such exemptions and the
suitability of Investor to acquire such Securities.

          4.7 LEGENDS.  The  certificates  representing the Put Shares shall not
bear a legend restricting the sale or transfer thereof  ("Restrictive  Legend").
The  certificates  representing  the Warrant Shares shall not bear a Restrictive
Legend unless they are issued at a time when the  Registration  Statement is not
effective for resale.  It is understood  that the  certificates  evidencing  any
Warrant Shares issued at a time when the Registration Statement is not effective
for  resale,  subject to legend  removal  under the terms of Section  6.8 below,
shall bear the following legend (the "Legend"):

          "The securities  represented hereby have not been registered under the
          Securities  Act of 1933, as amended,  or applicable  state  securities
          laws, nor the securities laws of any other jurisdiction.  They may not
          be sold or  transferred  in the absence of an  effective  registration
          statement  under those  securities  laws or  pursuant to an  exemption
          therefrom."

     5.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby makes
the following representations and warranties to Investor (which shall be true at
the  signing  of this  Agreement,  and as of any such  later  date as  specified
hereunder) and agrees with Investor  that,  except as set forth in the "Schedule
of Exceptions" attached hereto as EXHIBIT C:

          5.1 ORGANIZATION,  GOOD STANDING, AND QUALIFICATION.  The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the  State  of  Delaware,  USA and  has all  requisite  corporate  power  and
authority  to carry on its  business  as now  conducted  and as  proposed  to be
conducted.  The Company is duly  qualified  to transact  business and is in good
standing in each  jurisdiction  in which the failure to so qualify would, in the
Company's opinion,  have a material adverse effect on the business or properties
of the Company  and its  subsidiaries  taken as a whole.  The Company is not the
subject  of  any  pending,   threatened  or,  to  its  knowledge,   contemplated
investigation  or  administrative  or legal  proceeding (a  "Proceeding") by the

                                       26
<PAGE>
Internal  Revenue  Service,  the  taxing  authorities  of  any  state  or  local
jurisdiction,   or  the  Securities  and  Exchange   Commission,   the  National
Association of Securities  Dealers,  Inc., the Nasdaq Stock Market,  Inc. or any
state securities  commission,  or any other governmental  entity, which have not
been disclosed in the Disclosure Documents.  None of the disclosed  Proceedings,
if any, will, in the Company's opinion,  have a material adverse effect upon the
Company. The Company has the following subsidiaries: InfoPak, Inc.

          5.2 CORPORATE  CONDITION.  The Company's condition is, in all material
respects,  as described in the Disclosure Documents (as further set forth in any
subsequently filed Disclosure Documents,  if applicable),  except for changes in
the ordinary course of business and normal year-end adjustments that are not, in
the aggregate,  materially adverse to the Company. Except for continuing losses,
there have been no material adverse changes to the Company's business, financial
condition,  or prospects from the dates of such Disclosure Documents through the
date of the Investment Commitment Closing. The financial statements as contained
in the  10-KSB  and 10-QSB  have been  prepared  in  accordance  with  generally
accepted  accounting  principles,  consistently  applied  (except  as  otherwise
permitted  by  Regulation  S-X  of  the  Exchange  Act,  or  Generally  Accepted
Accounting Principles, as applicable), subject, in the case of unaudited interim
financial  statements,  to  customary  year end  adjustments  and the absence of
certain footnotes,  and fairly present the financial condition of the Company as
of the dates of the balance sheets included therein and the consolidated results
of its  operations and cash flows for the periods then ended.  Without  limiting
the foregoing, there are no material liabilities, contingent or actual, that are
not disclosed in the Disclosure  Documents (other than  liabilities  incurred by
the Company in the ordinary  course of its  business,  consistent  with its past
practice, after the period covered by the Disclosure Documents). The Company has
paid all  material  taxes  that are due,  except  for taxes  that it  reasonably
disputes. There is no material claim, litigation,  or administrative  proceeding
pending  or, to the best of the  Company's  knowledge,  threatened  against  the
Company, except as disclosed in the Disclosure Documents. This Agreement and the
Disclosure  Documents do not contain any untrue statement of a material fact and
do not omit to state any material fact  required to be stated  therein or herein
necessary to make the statements  contained  therein or herein not misleading in
the  light  of the  circumstances  under  which  they  were  made.  No  event or
circumstance  exists  relating  to the  Company  which,  under  applicable  law,
requires  public  disclosure  but which has not been so  publicly  announced  or
disclosed.

          5.3 AUTHORIZATION.  All corporate action on the part of the Company by
its  officers,  directors  and  stockholders  necessary  for the  authorization,
execution and delivery of this Agreement,  the performance of all obligations of
the Company hereunder and the authorization, issuance and delivery of the Common
Stock  being  sold  hereunder  and the  issuance  (and/or  the  reservation  for
issuance)  of the  Warrants  and the Warrant  Shares  have been taken,  and this
Agreement and the  Registration  Rights  Agreement  constitute valid and legally
binding obligations of the Company,  enforceable in accordance with their terms,
except insofar as the  enforceability  may be limited by applicable  bankruptcy,
insolvency,  reorganization,  or other similar laws affecting  creditors' rights
generally or by principles governing the availability of equitable remedies. The
Company has  obtained all  consents  and  approvals  required for it to execute,
deliver and perform each agreement referenced in the previous sentence.

          5.4 VALID ISSUANCE OF COMMON STOCK. The Common Stock and the Warrants,
when issued,  sold and  delivered in accordance  with the terms hereof,  for the
consideration   expressed  herein,  will  be  validly  issued,  fully  paid  and
nonassessable  and, based in part upon the  representations  of Investor in this
Agreement,  will be issued in compliance  with all applicable  U.S.  federal and

                                       27
<PAGE>
state  securities  laws. The Warrant Shares,  when issued in accordance with the
terms of the Warrants,  shall be duly and validly issued and outstanding,  fully
paid and nonassessable,  and based in part on the representations and warranties
of Investor,  will be issued in compliance with all applicable U.S.  federal and
state securities laws. The Put Shares,  the Warrants and the Warrant Shares will
be issued free of any preemptive rights.

          5.5 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation
or default of any provisions of its Certificate of Incorporation or Bylaws, each
as  amended  and in  effect  on and as of the date of the  Agreement,  or of any
material  provision of any material  instrument or material contract to which it
is a party or by which it is bound or of any  provision  of any federal or state
judgment,   writ,  decree,  order,  statute,  rule  or  governmental  regulation
applicable  to the  Company,  which  would,  in the  Company's  opinion,  have a
material  adverse  effect on the  Company's  business  or  prospects,  or on the
performance of its obligations  under this Agreement or the Registration  Rights
Agreement.  The  execution,  delivery and  performance of this Agreement and the
other  agreements  entered  into  in  conjunction  with  the  Offering  and  the
consummation of the  transactions  contemplated  hereby and thereby will not (a)
result in any such  violation  or be in  conflict  with or  constitute,  with or
without  the  passage of time and giving of notice,  either a default  under any
such provision, instrument or contract or an event which results in the creation
of any lien, charge or encumbrance upon any assets of the Company,  which would,
in the  Company's  opinion,  have a  material  adverse  effect on the  Company's
business or  prospects,  or on the  performance  of its  obligations  under this
Agreement,  the  Registration  Rights  Agreement,  or (b) violate the  Company's
Certificate  of  Incorporation  or By-Laws or (c) violate any  statute,  rule or
governmental  regulation applicable to the Company which violation would, in the
Company's  opinion,  have a material adverse effect on the Company's business or
prospects.

          5.6  REPORTING  COMPANY.  The  Company  is  subject  to the  reporting
requirements  of the Exchange  Act, has a class of securities  registered  under
Section  12 of the  Exchange  Act,  and has filed all  reports  required  by the
Exchange Act since the date the Company first became  subject to such  reporting
obligations.  The Company  undertakes  to furnish  Investor  with copies of such
reports as may be reasonably requested by Investor prior to consummation of this
Offering and thereafter,  to make such reports  available,  for the full term of
this Agreement,  including any extensions  thereof,  and for as long as Investor
holds the Securities.  The Common Stock is duly listed or approved for quotation
on the O.T.C.  Bulletin  Board.  The Company is not in  violation of the listing
requirements  of the O.T.C.  Bulletin Board and does not  reasonably  anticipate
that the Common  Stock will be  delisted  by the O.T.C.  Bulletin  Board for the
foreseeable  future.  The  Company  has filed  all  reports  required  under the
Exchange  Act.  The Company  has not  furnished  to the  Investor  any  material
nonpublic information concerning the Company.

          5.7  CAPITALIZATION.  The capitalization of the Company as of the date
hereof,  subject to exercise of any outstanding  warrants and/or exercise of any
outstanding  stock  options,  and after  taking into account the offering of the
Securities  contemplated  by  this  Agreement  and  all  other  share  issuances
occurring prior to this Offering, is as set forth in the Capitalization Schedule
as set forth in EXHIBIT K. There are no  securities  or  instruments  containing
anti-dilution  or similar  provisions  that will be triggered by the issuance of
the Securities.  Except as disclosed in the Capitalization  Schedule,  as of the
date of this Agreement, (i) there are no outstanding options,  warrants,  scrip,
rights to  subscribe  for,  calls or  commitments  of any  character  whatsoever

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<PAGE>
relating  to,  or  securities  or  rights  convertible  into or  exercisable  or
exchangeable  for,  any  shares of  capital  stock of the  Company or any of its
subsidiaries, or arrangements by which the Company or any of its subsidiaries is
or may become bound to issue  additional  shares of capital stock of the Company
or any of its  subsidiaries,  and (ii) there are no agreements  or  arrangements
under which the Company or any of its  subsidiaries is obligated to register the
sale of any of its or their  securities  under the Act (except the  Registration
Rights Agreement).

          5.8  INTELLECTUAL  PROPERTY.  The Company has valid,  unrestricted and
exclusive  ownership  of or rights  to use the  patents,  trademarks,  trademark
registrations,   trade  names,  copyrights,   know-how,   technology  and  other
intellectual property necessary to the conduct of its business.  EXHIBIT M lists
all patents, trademarks, trademark registrations,  trade names and copyrights of
the Company.  The Company has granted such licenses or has assigned or otherwise
transferred  a portion of (or all of) such  valid,  unrestricted  and  exclusive
patents, trademarks, trademark registrations, trade names, copyrights, know-how,
technology  and other  intellectual  property  necessary  to the  conduct of its
business  as set forth in  EXHIBIT M. The  Company  has been  granted  licenses,
know-how, technology and/or other intellectual property necessary to the conduct
of its  business  as set  forth  in  EXHIBIT  M. To the  best  of the  Company's
knowledge after due inquiry,  the Company is not infringing on the  intellectual
property  rights of any third party,  nor is any third party  infringing  on the
Company's  intellectual  property  rights.  There  are  no  restrictions  in any
agreements, licenses, franchises, or other instruments that preclude the Company
from engaging in its business as presently conducted.

          5.9 USE OF PROCEEDS. As of the date hereof, the Company expects to use
the proceeds from this Offering (less fees and expenses) for the purposes and in
the approximate  amounts set forth on the Use of Proceeds  Schedule set forth as
EXHIBIT L hereto.  These  purposes and amounts are  estimates and are subject to
change without notice to any Investor.

          5.10 NO RIGHTS OF PARTICIPATION.  No person or entity,  including, but
not limited to,  current or former  stockholders  of the Company,  underwriters,
brokers,  agents  or other  third  parties,  has any  right  of  first  refusal,
preemptive right, right of participation, or any similar right to participate in
the financing contemplated by this Agreement which has not been waived.

          5.11 COMPANY  ACKNOWLEDGMENT.  The Company  hereby  acknowledges  that
Investor  may elect to hold the  Securities  for  various  periods  of time,  as
permitted by the terms of this  Agreement,  the Warrants,  and other  agreements
contemplated hereby, and the Company further acknowledges that Investor has made
no  representations  or  warranties,  either written or oral, as to how long the
Securities will be held by Investor or regarding  Investor's  trading history or
investment strategies.

          5.12 NO ADVANCE  REGULATORY  APPROVAL.  The Company  acknowledges that
this  Investment  Agreement,   the  transaction   contemplated  hereby  and  the
Registration Statement contemplated hereby have not been approved by the SEC, or
any  other  regulatory  body and  there is no  guarantee  that  this  Investment
Agreement,  the transaction  contemplated hereby and the Registration  Statement
contemplated  hereby will ever be  approved  by the SEC or any other  regulatory
body.  The  Company  is relying on its own  analysis  and is not  relying on any
representation   by  Investor  that  either  this  Investment   Agreement,   the
transaction  contemplated  hereby  or the  Registration  Statement  contemplated
hereby has been or will be approved by the SEC or other  appropriate  regulatory
body.

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<PAGE>
          5.13  UNDERWRITER'S  FEES AND RIGHTS OF FIRST REFUSAL.  The Company is
not  obligated  to  pay  any  compensation  or  other  fees,  costs  or  related
expenditures in cash or securities to any  underwriter,  broker,  agent or other
representative in connection with this Offering.

          5.14  AVAILABILITY OF SUITABLE FORM FOR  REGISTRATION.  The Company is
currently eligible and agrees to maintain its eligibility to register the resale
of its Common Stock on a  registration  statement  on a suitable  form under the
Act.

          5.15 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 of the  Company's  securities  or
solicited any offers to buy any security under  circumstances that would prevent
the parties  hereto  from  consummating  the  transactions  contemplated  hereby
pursuant to an  exemption  from  registration  under  Regulation D of the Act or
would require the issuance of any other  securities  to be integrated  with this
Offering  under the Rules of the SEC. The Company has not engaged in any form of
general  solicitation  or  advertising  in  connection  with the offering of the
Common Stock or the Warrants.

          5.16 FOREIGN CORRUPT  PRACTICES.  Neither the Company,  nor any of its
subsidiaries,  nor any director, officer, agent, employee or other person acting
on behalf of the  Company or any  subsidiary  has,  in the course of its actions
for, or on behalf of, the  Company,  used any  corporate  funds for any unlawful
contribution,  gift,  entertainment  or  other  unlawful  expenses  relating  to
political activity;  made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,
as amended; or made any bribe, rebate,  payoff,  influence payment,  kickback or
other  unlawful  payment  to any  foreign or  domestic  government  official  or
employee.

          5.17  KEY  EMPLOYEES.  As of the  date of this  Agreement,  each  "Key
Employee"  (as  defined in EXHIBIT N) is  currently  serving  the Company in the
capacity  disclosed in EXHIBIT N. No Key Employee,  to the best knowledge of the
Company and its subsidiaries,  is, or is now expected to be, in violation of any
material  term  of  any  employment  contract,  confidentiality,  disclosure  or
proprietary  information  agreement,  non-competition  agreement,  or any  other
contract or agreement or any restrictive covenant,  and the continued employment
of each Key Employee does not subject the Company or any of its  subsidiaries to
any liability with respect to any of the foregoing matters. No Key Employee has,
to the best  knowledge  of the Company and its  subsidiaries,  any  intention to
terminate  his  employment  with,  or  services  to,  the  Company or any of its
subsidiaries.

          5.18   REPRESENTATIONS   CORRECT.   The   foregoing   representations,
warranties  and  agreements  are true,  correct  and  complete  in all  material
respects,  and shall  survive any Put Closing and the  issuance of the shares of
Common Stock thereby.

          5.19 TAX  STATUS.  The Company has made or filed all federal and state
income and all other tax  returns,  reports  and  declarations  required  by any
jurisdiction  to which it is subject  (unless  and only to the  extent  that the
Company  has set  aside on its  books  provisions  reasonably  adequate  for the
payment  of all unpaid  and  unreported  taxes) and has paid all taxes and other
governmental  assessments  and charges  that are  material  in amount,  shown or
determined to be due on such  returns,  reports and  declarations,  except those

                                       30
<PAGE>
being  contested  in good  faith  and  has  set  aside  on its  books  provision
reasonably  adequate for the payment of all taxes for periods  subsequent to the
periods  to which such  returns,  reports or  declarations  apply.  There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction,  and the officers of the Company know of no basis for any such
claim.

          5.20  TRANSACTIONS  WITH  AFFILIATES.  Except  as  set  forth  in  the
Disclosure  Documents,  none of the  officers,  directors,  or  employees of the
Company is presently a party to any transaction with the Company (other than for
services  as  employees,  officers  and  directors),   including  any  contract,
agreement or other  arrangement  providing for the  furnishing of services to or
by,  providing for rental of real or personal  property to or from, or otherwise
requiring payments to or from any officer,  director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer,  director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.

          5.21 APPLICATION OF TAKEOVER PROTECTIONS. The Company and its board of
directors  have  taken  all  necessary  action,  if  any,  in  order  to  render
inapplicable  any  control  share  acquisition,  business  combination  or other
similar  anti-takeover  provision  under  Delaware  law which is or could become
applicable to the Investor as a result of the transactions  contemplated by this
Agreement,  including, without limitation, the issuance of the Common Stock, any
exercise of the Warrants and ownership of the Common Shares and Warrant  Shares.
The Company has not adopted and will not adopt any "poison pill"  provision that
will be applicable to Investor as a result of transactions  contemplated by this
Agreement.

          5.22 OTHER  AGREEMENTS.  The Company has not,  directly or indirectly,
made any agreements  with the Investor under a subscription  in the form of this
Agreement for the purchase of Common Stock,  relating to the terms or conditions
of the transactions contemplated hereby or thereby except as expressly set forth
herein, respectively, or in exhibits hereto or thereto.

          5.23  MAJOR  TRANSACTIONS.  There  are  no  other  Major  Transactions
currently pending or contemplated by the Company.

          5.24 FINANCINGS.  There are no other financings  currently  pending or
contemplated by the Company.

          5.25 SHAREHOLDER AUTHORIZATION.  The Company shall, at its next annual
shareholder  meeting following its listing on either the Nasdaq Small Cap Market
or the Nasdaq  National  Market,  or at a special  meeting to be held as soon as
practicable  thereafter,  use  its  best  efforts  to  obtain  approval  of  its
shareholders  to (i)  authorize  the  issuance  of the full  number of shares of
Common Stock which would be issuable  under this  Agreement  and  eliminate  any
prohibitions  under  applicable  law or the  rules or  regulations  of any stock
exchange,  interdealer  quotation system or other  self-regulatory  organization
with  jurisdiction over the Company or any of its securities with respect to the
Company's  ability to issue  shares of Common  Stock in excess of the Cap Amount
(such  approvals  being the "20%  Approval")  and (ii)  increase  the  number of
authorized  shares of Common  Stock of the  Company  (the  "Share  Authorization
Increase  Approval")  such that at least  25,000,000  shares can be reserved for
this Offering.  In connection with such shareholder  vote, the Company shall use
its best efforts to cause all officers and  directors of the Company to promptly

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<PAGE>
enter  into  irrevocable  agreements  to vote  all of their  shares  in favor of
eliminating such prohibitions. As soon as practicable after the 20% Approval and
the Share  Authorization  Increase Approval,  the Company agrees to use its best
efforts to reserve  25,000,000  shares of Common Stock for  issuance  under this
Agreement.

          5.26  ACKNOWLEDGMENT  OF  LIMITATIONS  ON  PUT  AMOUNTS.  The  Company
understands and  acknowledges  that the amounts  available under this Investment
Agreement  are  limited,  among other  things,  based upon the  liquidity of the
Company's Common Stock traded on its Principal Market.

          5.27  DILUTION.  The number of shares of Common Stock  issuable as Put
Shares may increase substantially in certain circumstances,  including,  but not
necessarily limited to, the circumstance wherein the trading price of the Common
Stock  declines  during the period between the Effective Date and the end of the
Commitment  Period.  The  Company's   executive  officers  and  directors  fully
understand  the nature of the  transactions  contemplated  by this Agreement 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, whenever the Company elects to initiate a Put, its obligation
to issue the Put Shares is binding upon the Company and  enforceable  regardless
of the  dilution  such  issuance  may have on the  ownership  interests of other
shareholders of the Company.

     6. COVENANTS OF THE COMPANY.

          6.1  INDEPENDENT  AUDITORS.  The  Company  shall,  until at least  the
Termination  Date,  maintain  as its  independent  auditors an  accounting  firm
authorized to practice before the SEC.

          6.2 CORPORATE  EXISTENCE AND TAXES;  CHANGE IN CORPORATE  ENTITY.  The
Company  shall,  until at least the  Termination  Date,  maintain its  corporate
existence in good standing and, once it becomes a "Reporting Issuer" (defined as
a Company  which  files  periodic  reports  under the  Exchange  Act),  remain a
Reporting Issuer and shall pay all its taxes when due except for taxes which the
Company  disputes.  The Company  shall not,  at any time after the date  hereof,
enter into any merger,  consolidation or corporate reorganization of the Company
with or into, or transfer all or substantially  all of the assets of the Company
to,  another entity unless the resulting  successor or acquiring  entity in such
transaction,  if not the Company (the "Surviving Entity"),  (i) has Common Stock
listed for  trading on the OTC  Bulletin  Board,  Nasdaq or on another  national
stock exchange and is a Reporting Issuer, (ii) assumes by written instrument the
Company's   obligations   with  respect  to  this  Investment   Agreement,   the
Registration  Rights  Agreement,  the Transfer Agent  Instructions,  the Warrant
Antidilution  Agreement,  the  Warrants  and the other  agreements  referred  to
herein,  including but not limited to the obligations to deliver to the Investor
shares of Common Stock and/or  securities  that  Investor is entitled to receive
pursuant to this  Investment  Agreement  and upon  exercise of the  Warrants and
agrees by written  instrument to reissue,  in the name of the Surviving  Entity,
any  Warrants  (each in the same  terms,  including  but not limited to the same
reset provisions,  as the applicable Warrant originally issued or required to be
issued  by  the  Company)  that  are  outstanding   immediately  prior  to  such
transaction, making appropriate proportional adjustments to the number of shares
represented  by such  Warrants  and the  exercise  prices  of such  Warrants  to
accurately reflect the exchange represented by the transaction.

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<PAGE>
          6.3  REGISTRATION  RIGHTS.  The Company will enter into a registration
rights agreement covering the resale of the Common Shares and the Warrant Shares
substantially  in the form of the  Registration  Rights  Agreement  attached  as
EXHIBIT A.

          6.4 ASSET TRANSFERS.  The Company shall not (i) transfer, sell, convey
or otherwise  dispose of any of its material assets to any subsidiary except for
a cash or cash equivalent  consideration  and for a proper  business  purpose or
(ii) transfer,  sell,  convey or otherwise dispose of any of its material assets
to any  Affiliate,  as defined  below,  during the Term of this  Agreement.  For
purposes hereof,  "Affiliate" shall mean any officer of the Company, director of
the  Company or owner of twenty  percent  (20%) or more of the  Common  Stock or
other securities of the Company.

          6.5 CAPITAL RAISING LIMITATIONS AND RIGHTS OF FIRST REFUSAL.

               6.5.1  CAPITAL  RAISING  LIMITATIONS.  During the period from the
date of this  Agreement  until  the  date  that is sixty  (60)  days  after  the
Termination Date, the Company shall not issue or sell, or agree to issue or sell
Equity  Securities  (as  defined  below),  for cash in private  capital  raising
transactions without obtaining the prior written approval of the Investor of the
Offering (the limitations  referred to in this subsection 6.5.1 are collectively
referred to as the "Capital  Raising  Limitations").  For purposes  hereof,  the
following shall be collectively  referred to herein as, the "Equity Securities":
(i)  Common  Stock or any  other  equity  securities,  (ii)  any debt or  equity
securities which are convertible into, exercisable or exchangeable for, or carry
the  right to  receive  additional  shares  of  Common  Stock  or  other  equity
securities,  or (iii) any  securities of the Company  pursuant to an equity line
structure or format similar in nature to this Offering.

               6.5.2 INVESTOR'S RIGHT OF FIRST REFUSAL.  For any private capital
raising  transactions of Equity Securities which close after the date hereof and
on or prior to the date that is sixty  (60) days after the  Termination  Date of
this  Agreement,  not including  any warrants  issued in  conjunction  with this
Investment  Agreement,  the Company agrees to deliver to Investor,  at least ten
(10) days prior to the closing of such  transaction,  written notice  describing
the  proposed  transaction,  including  the terms and  conditions  thereof,  and
providing  the  Investor  and its  affiliates  an  option  (the  "Right of First
Refusal")  during the ten (10) day period  following  delivery of such notice to
purchase the securities  being offered in such  transaction on the same terms as
contemplated by such transaction.

               6.5.3  EXCEPTIONS TO CAPITAL  RAISING  LIMITATIONS  AND RIGHTS OF
FIRST  REFUSAL.   Notwithstanding   the  above,   neither  the  Capital  Raising
Limitations  nor the  Rights of First  Refusal  shall  apply to any  transaction
involving  issuances of securities by the Company to a company being acquired by
the Company,  as payment to such company for such acquisition,  or in connection
with the exercise of options by  employees  or  directors  of the Company,  or a
primary underwritten offering of the Company's Common Stock. The Capital Raising
Limitations and Rights of First Refusal also shall not apply to (a) the issuance

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<PAGE>
of securities upon exercise or conversion of the Company's options,  warrants or
other convertible securities outstanding as of the date hereof, (b) the grant of
additional options or warrants, or the issuance of additional securities,  under
any  Company  stock  option or  restricted  stock  plan for the  benefit  of the
Company's employees or directors,  or (c) the issuance of debt securities,  with
no equity feature, incurred solely for working capital purposes.

          6.6 FINANCIAL 10-KSB STATEMENTS, ETC. AND CURRENT REPORTS ON FORM 8-K.
The Company shall deliver to the Investor  copies of its annual  reports on Form
10-KSB,  and quarterly  reports on Form 10-QSB and shall deliver to the Investor
current  reports  on Form 8-K within two (2) days of filing for the Term of this
Agreement.

          6.7 OPINION OF COUNSEL. Investor shall, concurrent with the Investment
Commitment Closing,  receive an opinion letter from the Company's legal counsel,
in the  form  attached  as  EXHIBIT  B, or in such  form as  agreed  upon by the
parties,  and shall,  concurrent  with each Put Date,  receive an opinion letter
from the Company's  legal counsel,  in the form attached as EXHIBIT I or in such
form as agreed upon by the parties.

          6.8 REMOVAL OF LEGEND. If the certificates representing any Securities
are  issued  with a  restrictive  Legend  in  accordance  with the terms of this
Agreement, the Legend shall be removed and the Company shall issue a certificate
without such Legend to the holder of any Security upon which it is stamped,  and
a certificate for a security shall be originally  issued without the Legend,  if
(a) the sale of such  Security is  registered  under the Act, or (b) such holder
provides the Company with an opinion of counsel,  in form,  substance  and scope
customary for opinions of counsel in  comparable  transactions  (the  reasonable
cost of which shall be borne by the Investor),  to the effect that a public sale
or transfer of such Security may be made without  registration under the Act, or
(c) such  holder  provides  the Company  with  reasonable  assurances  that such
Security  can be sold  pursuant to Rule 144.  Each  Investor  agrees to sell all
Securities,  including  those  represented  by a  certificate(s)  from which the
Legend has been removed,  or which were  originally  issued  without the Legend,
pursuant to an effective  registration  statement and to deliver a prospectus in
connection  with  such  sale  or  in  compliance  with  an  exemption  from  the
registration requirements of the Act.

          6.9 LISTING. Subject to the remainder of this Section 6.9, the Company
shall ensure that its shares of Common Stock  (including  all Warrant Shares and
Put Shares) are listed and available for trading on the O.T.C.  Bulletin  Board.
Thereafter,  the Company  shall (i) use its best efforts to continue the listing
and  trading  of its  Common  Stock on the  O.T.C.  Bulletin  Board or to become
eligible  for and  listed and  available  for  trading  on the Nasdaq  Small Cap
Market, the NMS, or the New York Stock Exchange ("NYSE"); and (ii) comply in all
material  respects with the Company's  reporting,  filing and other  obligations
under the By-Laws or rules of the National  Association  of  Securities  Dealers
("NASD") and such exchanges, as applicable.

          6.10 THE COMPANY'S  INSTRUCTIONS TO TRANSFER  AGENT.  The Company will
instruct  the  Transfer  Agent of the Common Stock (the  "Transfer  Agent"),  by
delivering  instructions in the form of EXHIBIT T hereto, to issue certificates,
registered in the name of each  Investor or its nominee,  for the Put Shares and
Warrant  Shares in such  amounts as  specified  from time to time by the Company
upon any exercise by the Company of a Put and/or exercise of the Warrants by the
holder thereof. Such certificates shall not bear a Legend unless issuance with a
Legend is permitted  by the terms of this  Agreement  and Legend  removal is not
permitted by Section 6.8 hereof and the Company  shall cause the Transfer  Agent
to issue  such  certificates  without a Legend.  Nothing in this  Section  shall
affect in any way  Investor's  obligations  and  agreement set forth in Sections
3.3.2  or 3.3.3  hereof  to  resell  the  Securities  pursuant  to an  effective
registration  statement and to deliver a prospectus in connection with such sale
or in  compliance  with an  exemption  from  the  registration  requirements  of
applicable  securities  laws.  If (a) an Investor  provides  the Company with an
opinion of counsel,  which  opinion of counsel  shall be in form,  substance and
scope  customary  for  opinions of counsel in  comparable  transactions,  to the

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<PAGE>
effect that the Securities to be sold or transferred  may be sold or transferred
pursuant  to an  exemption  from  registration  or  (b)  an  Investor  transfers
Securities,  pursuant  to Rule  144,  to a  transferee  which  is an  accredited
investor, the Company shall permit the transfer,  and, in the case of Put Shares
and Warrant  Shares,  promptly  instruct its transfer agent to issue one or more
certificates  in  such  name  and in  such  denomination  as  specified  by such
Investor.  The  Company  acknowledges  that a  breach  by it of its  obligations
hereunder will cause irreparable harm to an Investor by vitiating the intent and
purpose  of  the  transaction  contemplated  hereby.  Accordingly,  the  Company
acknowledges  that the remedy at law for a breach of its obligations  under this
Section  6.10  will be  inadequate  and  agrees,  in the  event of a  breach  or
threatened breach by the Company of the provisions of this Section 6.10, that an
Investor shall be entitled,  in addition to all other available remedies,  to an
injunction restraining any breach and requiring immediate issuance and transfer,
without the  necessity  of showing  economic  loss and without any bond or other
security being required.

          6.11  STOCKHOLDER  20% APPROVAL.  Prior to the closing of any Put that
would cause the Aggregate Issued Shares to exceed the Cap Amount, if required by
the rules of NASDAQ because the Company's Common Stock is listed on NASDAQ,  the
Company shall obtain approval of its  stockholders to authorize (i) the issuance
of the full number of shares of Common Stock which would be issuable pursuant to
this  Agreement  but for the Cap Amount and  eliminate  any  prohibitions  under
applicable law or the rules or regulations  of any stock  exchange,  interdealer
quotation system or other  self-regulatory  organization  with jurisdiction over
the Company or any of its  securities  with respect to the Company's  ability to
issue shares of Common Stock in excess of the Cap Amount (such  approvals  being
the "Stockholder 20% Approval").

          6.12 PRESS RELEASE. Any public announcement relating to this financing
(a "Press  Release")  shall be submitted to the Investor for review at least two
(2) business days prior to the planned  release.  The Company shall not disclose
the Investor's  name in any press release or other public  announcement  without
the Investor's prior written  approval.  The Company shall obtain the Investor's
written approval of the Press Release prior to issuance by the Company.

          6.13  CHANGE IN LAW OR  POLICY.  In the  event of a change in law,  or
policy  of the  SEC,  as  evidenced  by a  No-Action  letter  or  other  written
statements  of the SEC or the NASD  which  causes the  Investor  to be unable to
perform  its  obligations  hereunder,  this  Agreement  shall  be  automatically
terminated and no Termination  Fee shall be due,  provided that  notwithstanding
any  termination  under this  section  6.13,  the  Investor  shall  retain  full
ownership of the Commitment Warrant as partial  consideration for its commitment
hereunder.

          6.14. NOTICE OF CERTAIN EVENTS AFFECTING  REGISTRATION;  SUSPENSION OF
RIGHT TO MAKE A PUT. The Company shall immediately  notify the Investor,  but in
no event later than two (2) business days by facsimile and by overnight courier,
upon the occurrence of any of the following  events in respect of a Registration
Statement  or  related  prospectus  in  respect of an  offering  of  Registrable
Securities:  (i) receipt of any request for additional information by the SEC or
any  other  federal  or  state  governmental  authority  during  the  period  of
effectiveness of the Registration Statement for amendments or supplements to the
Registration  Statement or related  prospectus;  (ii) the issuance by the SEC or
any other federal or state  governmental  authority of any stop order suspending
the  effectiveness  of  a  Registration  Statement  or  the  initiation  of  any
proceedings for that purpose;  (iii) receipt of any notification with respect to

                                       35
<PAGE>
the suspension of the  qualification  or exemption from  qualification of any of
the  Registrable  Securities for sale in any  jurisdiction  or the initiation or
threatening of any proceeding for such purpose;  (iv) the happening of any event
that  makes  any  statement  made  in such  Registration  Statement  or  related
prospectus or any document  incorporated or deemed to be incorporated therein by
reference  untrue in any  material  respect or that  requires  the making of any
changes in the Registration Statement,  related prospectus or documents so that,
in the  case  of a  Registration  Statement,  it will  not  contain  any  untrue
statement of a material  fact or omit to state any material  fact required to be
stated therein or necessary to make the statements  therein not misleading,  and
that in the case of the  related  prospectus,  it will not  contain  any  untrue
statement of a material  fact or omit to state any material  fact required to be
stated therein or necessary to make the statements  therein, in the light of the
circumstances under which they were made, not misleading; (v) the declaration by
the SEC of the effectiveness of a Registration Statement; and (vi) the Company's
reasonable  determination  that a  post-effective  amendment to the Registration
Statement would be appropriate, and the Company shall promptly make available to
the Investor any such  supplement  or amendment to the related  prospectus.  The
Company shall not deliver to the Investor any Put Notice during the continuation
of any of the foregoing events.

          6.15 ACKNOWLEDGMENT  REGARDING  INVESTOR'S PURCHASE OF THE SECURITIES.
The Company  acknowledges  and agrees that the Investor is acting  solely in the
capacity of arm's length purchaser with respect to the Transaction Documents and
the  transactions   contemplated   hereby  and  thereby.   The  Company  further
acknowledges that the Investor is not acting as a financial advisor or fiduciary
of the Company  (or in any similar  capacity)  with  respect to the  Transaction
Documents and the  transactions  contemplated  hereby and thereby and any advice
given by the Investor or any of its representatives or agents in connection with
the Transaction  Documents and the transactions  contemplated hereby and thereby
is merely incidental to the Investor's  purchase of the Securities.  The Company
further represents to the Investor that the Company's decision to enter into the
Transaction Documents has been based solely on the independent evaluation by the
Company and its representatives and advisors.

          6.16.  LIQUIDATED  DAMAGES.  The parties hereto  acknowledge and agree
that the sums  payable  as  Non-Usage  Fees,  Termination  Fees and  Ineffective
Registration  Payments  shall  each  give  rise to  liquidated  damages  and not
penalties.  The  parties  further  acknowledge  that (a) the  amount  of loss or
damages  likely to be incurred by the  Investor is  incapable or is difficult to
precisely estimate,  (b) the amounts specified bear a reasonable  proportion and
are not plainly or grossly  disproportionate  to the probable  loss likely to be
incurred by the Investor, and (c) the parties are sophisticated business parties
and have been represented by sophisticated  and able legal and financial counsel
and negotiated this Agreement at arm's length.

          6.17.  COPIES OF FINANCIAL  STATEMENTS,  REPORTS AND PROXY STATEMENTS.
Promptly upon the mailing thereof to the shareholders of the Company  generally,
the Company  shall deliver to the Investor  copies of all financial  statements,
reports  and  proxy  statements  so  mailed  and any  other  document  generally
distributed to shareholders.

                                       36
<PAGE>
          6.18.   NOTICE  OF  CERTAIN   LITIGATION.   Promptly   following   the
commencement  thereof, the Company shall provide the Investor written notice and
a description in reasonable  detail of any litigation or proceeding to which the
Company  or any  subsidiary  of the  Company  is a party,  in which  the  amount
involved is $250,000 or more and which is not covered by  insurance  or in which
injunctive or similar relief is sought.

     7. MISCELLANEOUS.

          7.1 REPRESENTATIONS AND WARRANTIES SURVIVE THE CLOSING;  SEVERABILITY.
Investor's and the Company's  representations  and warranties  shall survive the
Investment   Date  and  any  Put   Closing   contemplated   by  this   Agreement
notwithstanding  any due  diligence  investigation  made by or on  behalf of the
party seeking to rely thereon. In the event that any provision of this Agreement
becomes or is  declared  by a court of  competent  jurisdiction  to be  illegal,
unenforceable  or void,  or is  altered  by a term  required  by the  Securities
Exchange Commission to be included in the Registration Statement, this Agreement
shall continue in full force and effect without said provision; provided that if
the removal of such provision  materially  changes the economic  benefit of this
Agreement to the Investor, this Agreement shall terminate.

          7.2 SUCCESSORS AND ASSIGNS.  This Agreement shall not be assignable by
either party.

          7.3  EXECUTION  IN  COUNTERPARTS  PERMITTED.  This  Agreement  may  be
executed  in any  number of  counterparts,  each of which  shall be  enforceable
against the  parties  actually  executing  such  counterparts,  and all of which
together shall constitute one (1) instrument.

          7.4 TITLES AND  SUBTITLES;  GENDER.  The titles and subtitles  used in
this  Agreement  are used for  convenience  only and are not to be considered in
construing  or  interpreting  this  Agreement.  The use in this  Agreement  of a
masculine,  feminine or neuter pronoun shall be deemed to include a reference to
the others.

          7.5 WRITTEN  NOTICES,  ETC. Any notice,  demand or request required or
permitted  to be given by the Company or Investor  pursuant to the terms of this
Agreement  shall  be in  writing  and  shall  be  deemed  given  when  delivered
personally,  or by  facsimile  or upon  receipt if by  overnight  or two (2) day
courier,  addressed to the parties at the addresses and/or  facsimile  telephone
number of the  parties  set  forth at the end of this  Agreement  or such  other
address as a party may  request by  notifying  the other in  writing;  provided,
however,  that in order for any notice to be effective  as to the Investor  such
notice shall be delivered  and sent, as specified  herein,  to all the addresses
and  facsimile  telephone  numbers of the  Investor set forth at the end of this
Agreement or such other address and/or  facsimile  telephone  number as Investor
may request in writing.

          7.6  EXPENSES.   Except  as  set  forth  in  the  Registration  Rights
Agreement,  each of the Company and  Investor  shall pay all costs and  expenses
that  it  respectively  incurs,  with  respect  to the  negotiation,  execution,
delivery and performance of this Agreement.

          7.7 ENTIRE AGREEMENT;  WRITTEN  AMENDMENTS  REQUIRED.  This Agreement,
including  the Exhibits  attached  hereto,  the Common Stock  certificates,  the
Warrants,  the Registration Rights Agreement,  and the other documents delivered
pursuant  hereto  constitute  the full and entire  understanding  and  agreement
between the parties with regard to the subjects hereof and thereof, and no party
shall be  liable or bound to any other  party in any  manner by any  warranties,

                                       37
<PAGE>
representations  or covenants,  whether oral,  written,  or otherwise  except as
specifically set forth herein or therein.  Except as expressly  provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written  instrument  signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought.

          7.8  ACTIONS AT LAW OR EQUITY;  JURISDICTION  AND VENUE.  The  parties
acknowledge that any and all actions,  whether at law or at equity,  and whether
or not said actions are based upon this  Agreement  between the parties  hereto,
shall be filed in any  state or  federal  court  sitting  in  Atlanta,  Georgia.
Georgia law shall govern both the proceeding as well as the  interpretation  and
construction of the Transaction Documents and the transaction as a whole. In any
litigation  between the parties  hereto,  the prevailing  party, as found by the
court,  shall be entitled to an award of all attorney's fees and costs of court.
Should the court  refuse to find a prevailing  party,  each party shall bear its
own legal fees and costs.

          7.9 REPORTING ENTITY FOR THE COMMON STOCK. The reporting entity relied
upon for the  determination of the trading price or trading volume of the Common
Stock on the Principal  Market on any given Trading Day for the purposes of this
Agreement shall be the Bloomberg L.P. The written mutual consent of the Investor
and the Company shall be required to employ any other reporting entity.

     8. SUBSCRIPTION AND WIRING INSTRUCTIONS; IRREVOCABILITY.

          (a)  WIRE TRANSFER OF SUBSCRIPTION  FUNDS.  Investor shall deliver Put
               Dollar  Amounts (as payment  towards any Put Share Price) by wire
               transfer, to the Company pursuant to a wire instruction letter to
               be provided by the Company, and signed by the Company.

          (b)  IRREVOCABLE   SUBSCRIPTION.   Investor  hereby  acknowledges  and
               agrees,   subject  to  the  provisions  of  any  applicable  laws
               providing  for the refund of  subscription  amounts  submitted by
               Investor, that this Agreement is irrevocable and that Investor is
               not entitled to cancel, terminate or revoke this Agreement or any
               other agreements executed by such Investor and delivered pursuant
               hereto,  and that this Agreement and such other  agreements shall
               survive the death or  disability  of such  Investor  and shall be
               binding  upon and inure to the  benefit of the  parties and their
               heirs,    executors,     administrators,     successors,    legal
               representatives and assigns. If the Securities subscribed for are
               to be owned by more than one person,  the obligations of all such
               owners under this Agreement  shall be joint and several,  and the
               agreements,   representations,   warranties  and  acknowledgments
               herein  contained  shall be deemed  to be made by and be  binding
               upon each such person and his heirs,  executors,  administrators,
               successors, legal representatives and assigns.

                                       38
<PAGE>
     9. INDEMNIFICATION AND REIMBURSEMENT.

               (a) INDEMNIFICATION. In consideration of the Investor's execution
and delivery of the Investment Agreement,  the Registration Rights Agreement and
the  Warrants  (the  "Transaction   Documents")  and  acquiring  the  Securities
thereunder and in addition to all of the Company's other  obligations  under the
Transaction  Documents,  the Company shall defend,  protect,  indemnify and hold
harmless Investor and all of its stockholders,  officers,  directors,  employees
and direct or  indirect  investors  and any of the  foregoing  person's  agents,
members, partners or other representatives (including, without limitation, those
retained in connection  with the  transactions  contemplated  by this Agreement)
(collectively,  the "Indemnitees") from and against any and all actions,  causes
of action,  suits,  claims,  losses,  costs,  penalties,  fees,  liabilities and
damages, and expenses in connection therewith  (irrespective of whether any such
Indemnitee  is a party to the  action  for which  indemnification  hereunder  is
sought),  and  including  reasonable  attorney's  fees  and  disbursements  (the
"Indemnified  Liabilities"),  incurred  by any  Indemnitee  as a result  of,  or
arising  out of,  or  relating  to (a) any  misrepresentation  or  breach of any
representation  or warranty made by the Company in the Transaction  Documents or
any other certificate,  instrument or documents  contemplated hereby or thereby,
(b) any breach of any covenant, agreement or obligation of the Company contained
in the Transaction  Documents or any other  certificate,  instrument or document
contemplated  hereby  or  thereby,  (c) any  cause  of  action,  suit or  claim,
derivative or otherwise,  by any stockholder of the Company based on a breach or
alleged  breach by the  Company or any of its  officers  or  directors  of their
fiduciary or other obligations to the stockholders of the Company, or (d) claims
made by third  parties  against any of the  Indemnitees  based on a violation of
Section 5 of the Securities Act caused by the integration of the private sale of
common  stock  to  the  Investor  and  the  public  offering   pursuant  to  the
Registration Statement.

     To  the  extent  that  the  foregoing  undertaking  by the  Company  may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and  satisfaction  of each of the Indemnified  Liabilities  which it
would be required to make if such foregoing undertaking was enforceable which is
permissible under applicable law.

     Promptly  after  receipt  by  an   Indemnified   Party  of  notice  of  the
commencement of any action pursuant to which indemnification may be sought, such
Indemnified  Party will, if a claim in respect thereof is to be made against the
other party  (hereinafter  "Indemnitor")  under this  Section 9,  deliver to the
Indemnitor a written notice of the commencement thereof and the Indemnitor shall
have the right to participate in and to assume the defense  thereof with counsel
reasonably selected by the Indemnitor,  provided,  however,  that an Indemnified
Party  shall  have the  right to retain  its own  counsel,  with the  reasonably
incurred  fees and  expenses of such  counsel to be paid by the  Indemnitor,  if
representation  of  such  Indemnified  Party  by  the  counsel  retained  by the
Indemnitor  would be  inappropriate  due to actual  or  potential  conflicts  of
interest between such Indemnified  Party and any other party represented by such
counsel  in such  proceeding.  The  failure  to  deliver  written  notice to the
Indemnitor  within a reasonable time of the commencement of any such action,  if
prejudicial to the Indemnitor's ability to defend such action, shall relieve the
Indemnitor of any liability to the  Indemnified  Party under this Section 9, but
the omission to so deliver  written notice to the Indemnitor will not relieve it
of any liability that it may have to any Indemnified Party other than under this
Section 9 to the extent it is prejudicial.

               (b) REIMBURSEMENT.  If (i) the Investor,  other than by reason of
its gross negligence or willful misconduct,  becomes involved in any capacity in
any  action,  proceeding  or  investigation  brought by any  stockholder  of the
Company,  in  connection  with  or  as a  result  of  the  consummation  of  the

                                       39
<PAGE>
transactions  contemplated by the Transaction  Documents,  or if the Investor is
impleaded  in any such  action,  proceeding  or  investigation  by any person or
entity,  or (ii) the Investor,  other than by reason of its gross  negligence or
willful misconduct,  becomes involved in any capacity in any action,  proceeding
or  investigation  brought by the SEC  against or  involving  the  Company or in
connection  with  or  as a  result  of  the  consummation  of  the  transactions
contemplated  by the Transaction  Documents,  or if the Investor is impleaded in
any such action,  proceeding or investigation  by any person or entity,  then in
any such case, the Company will reimburse the Investor for its reasonable  legal
and other expenses  (including the cost of any  investigation  and preparation )
incurred in connection  therewith,  as such expenses are incurred.  In addition,
other than with  respect to any matter in which the  Investor is a named  party,
the Company will pay the Investor the charges,  as reasonably  determined by the
Investor,  for the time of any officers or employees of the Investor  devoted to
appearing  and preparing to appear as witnesses,  assisting in  preparation  for
hearing,  trials or pretrial  matters,  or otherwise  with respect to inquiries,
hearing,  trials,  and other proceedings  relating to the subject matter of this
Agreement.  The  reimbursement  obligations  of the Company under this paragraph
shall be in addition to any  liability  which the  Company may  otherwise  have,
shall  extend  upon the same  terms  and  conditions  to any  Affiliates  of the
Investor who are actually named in such action, proceeding or investigation, and
partners,  directors, agents, employees and controlling persons (if any), as the
case may be, of the Investor and any such  Affiliate,  and shall be binding upon
and  inure  to the  benefit  of any  successors,  assigns,  heirs  and  personal
representatives of the Company, the Investor and any such Affiliate and any such
person or entity. The Company also agrees that neither the Investor nor any such
Affiliate,  partners,  directors, agents, employees or controlling persons shall
have any liability to the Company or any person asserting claims on behalf of or
in right of the Company in connection with or as a result of the consummation of
the Transaction Documents except to the extent that any losses, claims, damages,
liabilities or expenses incurred by the Company result from the gross negligence
or willful misconduct of the Investor or any inaccuracy in any representation or
warranty of the Investor  contained  herein or any breach by the Investor of any
of the provisions hereof.

                                       40
<PAGE>
     10.  ACCREDITED  INVESTOR.  Investor is an  "accredited  investor"  because
(check all applicable boxes):

          (a)  [ ]  it is an organization  described in Section 501(c)(3) of the
                    Internal  Revenue Code, or a corporation,  limited  duration
                    company,  limited  liability  company,  business  trust,  or
                    partnership not formed for the specific purpose of acquiring
                    the  securities  offered,  with  total  assets  in excess of
                    $5,000,000.

          (b)  [ ]  any trust,  with total assets in excess of  $5,000,000,  not
                    formed for the specific  purpose of acquiring the securities
                    offered,  whose  purchase  is  directed  by a  sophisticated
                    person who has such  knowledge  and  experience in financial
                    and business  matters that he is capable of  evaluating  the
                    merits and risks of the prospective investment.

          (c)  [ ]  a natural person, who

               [ ]  is  a director,  executive officer or general partner of the
                    issuer  of  the  securities  being  offered  or  sold  or  a
                    director,  executive officer or general partner of a general
                    partner of that issuer.

               [ ]  has an  individual  net worth,  or joint net worth with that
                    person's  spouse,  at the  time  of his  purchase  exceeding
                    $1,000,000.

               [ ]  had an  individual  income in excess of  $200,000 in each of
                    the two most recent years or joint income with that person's
                    spouse in excess of  $300,000 in each of those years and has
                    a reasonable  expectation  of reaching the same income level
                    in the current year.

          (d)  [ ]  an entity each equity owner of which is an entity  described
                    in a - b above or is an  individual  who could check one (1)
                    of the last three (3) boxes under subparagraph (c) above.

         (e)   [ ]  other [specify] ___________________________________________.

                                       41
<PAGE>
     The  undersigned   hereby   subscribes  the  Maximum  Offering  Amount  and
acknowledges that this Agreement and the subscription  represented  hereby shall
not be effective unless accepted by the Company as indicated below.

     IN WITNESS  WHEREOF,  the  undersigned  Investor does represent and certify
under penalty of perjury that the foregoing  statements are true and correct and
that Investor by the following signature(s) executed this Agreement.

Dated this 2nd day of MARCH, 2001.

SWARTZ PRIVATE EQUITY, LLC

By: /s/ Eric S. Swartz
   --------------------------------
   Eric S. Swartz, Manager

SECURITY DELIVERY INSTRUCTIONS:
Swartz Private Equity, LLC
c/o Eric S. Swartz
300 Colonial Center Parkway
Suite 300
Roswell, GA 30076
Telephone: (770) 640-8130

THIS AGREEMENT IS ACCEPTED BY THE COMPANY IN THE AMOUNT OF THE MAXIMUM  OFFERING
AMOUNT ON THE 2ND DAY OF MARCH, 2001.

                                        DIMENSIONAL VISIONS INCORPORATED

                                        By: /s/ John D. McPhilimy
                                           -------------------------------------
                                           John D. McPhilimy, President

                                        Address:
                                              Attn: John D. McPhilimy, President
                                              2301 W. Dunlap Ave., Ste. 207
                                              Phoenix, AZ  85021
                                              Telephone (602) 997-1990
                                              Facsimile  (602) 997-5658

                                       42
<PAGE>
                               ADVANCE PUT NOTICE

DIMENSIONAL VISIONS INCORPORATED (the "Company") hereby intends,  subject to the
Individual  Put Limit (as  defined  in the  Investment  Agreement),  to elect to
exercise  a Put to sell the  number of shares  of  Common  Stock of the  Company
specified  below,  to  _____________________________,  the  Investor,  as of the
Intended  Put Date  written  below,  all  pursuant  to that  certain  Investment
Agreement  (the  "Investment  Agreement")  by and between the Company and Swartz
Private Equity, LLC dated on or about March 2, 2001.

                       Date of Advance Put Notice: ___________________

                       Intended Put Date: ____________________________

                       Intended Put Share Amount: ____________________

                       Company Designation Maximum Put Dollar Amount (Optional):

                       --------------------------------------------------------.

                       Company Designation Minimum Put Share Price (Optional):

                       --------------------------------------------------------.

                                        DIMENSIONAL VISIONS INCORPORATED

                                        By:
                                           -------------------------------------
                                           John D. McPhilimy, President

                                        Address:
                                              Attn: John D. McPhilimy, President
                                              2301 W. Dunlap Ave., Ste. 207
                                              Phoenix, AZ  85021
                                              Telephone (602) 997-1990
                                              Facsimile  (602) 997-5658

                                       43

                                   EXHIBIT E
<PAGE>
                       CONFIRMATION of ADVANCE PUT NOTICE

_________________________________,  the  Investor,  hereby  confirms  receipt of
DIMENSIONAL  VISIONS  INCORPORATED's  (the "Company")  Advance Put Notice on the
Advance Put Date written below,  and its intention to elect to exercise a Put to
sell shares of common stock  ("Intended Put Share Amount") of the Company to the
Investor,  as of the  intended  Put Date  written  below,  all  pursuant to that
certain  Investment  Agreement (the  "Investment  Agreement") by and between the
Company and Swartz Private Equity, LLC dated on or about March 2, 2001.

                   Date of Confirmation: _____________________

                   Date of Advance Put Notice: _______________

                   Intended Put Date: ________________________

                   Intended Put Share Amount: ________________

                   Company Designation Maximum Put Dollar Amount (Optional):

                   ------------------------------------------------------------.

                   Company Designation Minimum Put Share Price (Optional):

                   ------------------------------------------------------------.

                                        INVESTOR(S)

                                        ----------------------------------------
                                        Investor's Name

                                        By:
                                           -------------------------------------
                                          (Signature)
                                        Address:
                                                --------------------------------

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

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

                                        Telephone No.:
                                                      --------------------------

                                        Facsimile No.:
                                                      --------------------------

                                       44

                                    EXHIBIT F
<PAGE>
                                   PUT NOTICE

DIMENSIONAL VISIONS INCORPORATED (the "Company") hereby elects to exercise a Put
to  sell   shares  of  common   stock   ("Common   Stock")  of  the  Company  to
_____________________________,  the  Investor,  as of the Put  Date,  at the Put
Share Price and for the number of Put Shares written below, all pursuant to that
certain  Investment  Agreement (the  "Investment  Agreement") by and between the
Company and Swartz Private Equity, LLC dated on or about March 2, 2001.

                   Put Date: _________________

                   Intended Put Share Amount (from Advance Put Notice):
                   _________________  Common Shares

                   Company Designation Maximum Put Dollar Amount (Optional):

                   ------------------------------------------------------------.

                   Company Designation Minimum Put Share Price (Optional):

                   ------------------------------------------------------------.

Note:  Capitalized  terms  shall  have  the  meanings  ascribed  to them in this
Investment Agreement.

                                        DIMENSIONAL VISIONS INCORPORATED

                                        By:
                                           -------------------------------------
                                           John D. McPhilimy, President

                                        Address:
                                              Attn: John D. McPhilimy, President
                                              2301 W. Dunlap Ave., Ste. 207
                                              Phoenix, AZ  85021
                                              Telephone (602) 997-1990
                                              Facsimile  (602) 997-5658

                                       45
<PAGE>
                           CONFIRMATION of PUT NOTICE

_________________________________,  the  Investor,  hereby  confirms  receipt of
Dimensional  Visions  Incorporated  (the  "Company")  Put Notice and election to
exercise  a Put to  sell  ___________________________  shares  of  common  stock
("Common Stock") of the Company to Investor, as of the Put Date, all pursuant to
that certain  Investment  Agreement (the "Investment  Agreement") by and between
the Company and Swartz Private Equity, LLC dated on or about March 2, 2001.

                   Date of Confirmation: _____________________

                   Date of Advance Put Notice: _______________

                   Put Date: _________________________________

                   Intended Put Share Amount: ________________

                   Company Designation Maximum Put Dollar Amount (Optional):

                   ------------------------------------------------------------.

                   Company Designation Minimum Put Share Price (Optional):

                   ------------------------------------------------------------.

                                        INVESTOR(S)

                                        ----------------------------------------
                                        Investor's Name

                                        By:
                                           -------------------------------------
                                          (Signature)
                                        Address:
                                                --------------------------------

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

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

                                        Telephone No.:
                                                      --------------------------

                                        Facsimile No.:
                                                      --------------------------

                                       46

                                   EXHIBIT G
<PAGE>
THIS WARRANT AND THE  SECURITIES  ISSUABLE  UPON  EXERCISE  HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES  ACT"),
OR ANY  STATE  SECURITIES  LAW,  AND  MAY  NOT BE  SOLD,  TRANSFERRED,  PLEDGED,
HYPOTHECATED  OR OTHERWISE  DISPOSED OF OR EXERCISED  UNLESS (i) A  REGISTRATION
STATEMENT  UNDER THE SECURITIES ACT AND APPLICABLE  STATE  SECURITIES LAWS SHALL
HAVE  BECOME   EFFECTIVE  WITH  REGARD  THERETO,   OR  (ii)  AN  EXEMPTION  FROM
REGISTRATION  UNDER THE SECURITIES ACT AND APPLICABLE  STATE  SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.

AN INVESTMENT IN THESE SECURITIES  INVOLVES A HIGH DEGREE OF RISK.  HOLDERS MUST
RELY ON THEIR  OWN  ANALYSIS  OF THE  INVESTMENT  AND  ASSESSMENT  OF THE  RISKS
INVOLVED.

Warrant to Purchase
1,190,000 shares

                        WARRANT TO PURCHASE COMMON STOCK
                                       OF
                        DIMENSIONAL VISIONS INCORPORATED

     THIS  CERTIFIES that Swartz Private  Equity,  LLC or any subsequent  holder
hereof pursuant to Section 8 hereof  ("Holder"),  has the right to purchase from
DIMENSIONAL VISIONS INCORPORATED,  a Delaware corporation (the "Company"), up to
1,190,000  fully paid and  nonassessable  shares of the Company's  common stock,
$.001 par value per share  ("Common  Stock"),  subject to adjustment as provided
herein, at a price equal to the Exercise Price as defined in Section 3 below, at
any time  beginning on the Date of Issuance  (defined  below) and ending at 5:00
p.m., New York, New York time the date that is seven (7) years after the Date of
Issuance (the "Exercise Period").

     Holder  agrees with the Company that this Warrant to Purchase  Common Stock
of the Company (this "Warrant") is issued and all rights hereunder shall be held
subject to all of the conditions, limitations and provisions set forth herein.

     1.   DATE OF ISSUANCE AND TERM.

     This  Warrant  shall be deemed to be issued on  September 5, 2000 ("Date of
Issuance").  The  term of this  Warrant  is  seven  (7)  years  from the Date of
Issuance.

     Of this  Warrant to  purchase  one  million  one  hundred  ninety  thousand
(1,190,000) shares of Common Stock of the Company, the Warrant is exercisable as
to three hundred  ninety-six  thousand  (396,000)  shares of Common Stock of the
Company after the fifteen (15) business day document  review period (the "Review
Period")  referenced  in the Equity Line Letter of  Agreement  dated on or about
September 5, 2000,  between Holder and Company (the "Letter of  Agreement")  has
ended, shall be further exercisable as to an additional three hundred ninety-six
thousand  (396,000)  shares of Common Stock of the Company upon the execution by
<PAGE>
the Company and Swartz Private Equity, LLC of an Investment Agreement,  pursuant
to the  Letter  of  Agreement  ("Investment  Agreement")  and  shall be  further
exercisable as to the remaining three hundred  ninety-eight  (398,000) shares of
Common Stock of the Company upon the earlier of (i) the date of effectiveness of
Company's  registration  statement  (the  "Registration  Statement") to be filed
pursuant to the  Investment  Agreement and related  documents,  or (ii) March 5,
2001.

          Anything  in this  Warrant  to the  contrary  notwithstanding,  if the
Company  delivers  written  notice to Swartz  Private  Equity,  LLC prior to the
expiration of the Review Period that the legal documents for the transaction are
unacceptable  and the Company  wishes to terminate the  transaction  (a "Company
Termination Notice"), Holder shall return this Warrant to the Company and all of
Holder's  rights  under  this  Warrant  shall be null and void and of no effect,
provided that, if the Company has not delivered a Company  Termination Notice to
Swartz  Private  Equity,  LLC,  prior to the  expiration  of the Review  Period,
ownership of this Warrant shall  irrevocably  vest to the Holder,  regardless of
whether a Company Termination Notice is delivered anytime thereafter.

     Notwithstanding  anything to the contrary herein, the applicable portion of
this  Warrant  shall not be  exercisable  during any time that,  and only to the
extent  that,  the number of shares of Common  Stock to be issued to Holder upon
such exercise,  when added to the number of shares of Common Stock, if any, that
the Holder otherwise beneficially owns at the time of such exercise, would equal
or exceed  4.99% of the number of shares of Common  Stock then  outstanding,  as
determined  in  accordance  with  Section  13(d) of the Exchange Act (the "4.99%
Limitation").  The  4.99%  Limitation  shall be  conclusively  satisfied  if the
applicable  Exercise Notice includes a signed  representation by the Holder that
the  issuance of the shares in such  Exercise  Notice will not violate the 4.99%
Limitation,  and  the  Company  shall  not be  entitled  to  require  additional
documentation of such satisfaction.

     2.   EXERCISE.

     (a) MANNER OF  EXERCISE.  During the Exercise  Period,  this Warrant may be
exercised as to all or any lesser  number of full shares of Common Stock covered
hereby (the "Warrant Shares") upon surrender of this Warrant,  with the Exercise
Form  attached  hereto as Exhibit A (the  "Exercise  Form") duly  completed  and
executed,  together  with the full  Exercise  Price (as defined  below) for each
share of Common  Stock as to which this Warrant is  exercised,  at the office of
the  Company,  Attention:  John D.  McPhilimy,  President,  Dimensional  Visions
Incorporated,  2301 W. Dunlap Avenue,  Suite 207, Phoenix, AZ 85021;  Telephone:
(602) 997-1990,  Facsimile: (602) 997-5658, or at such other office or agency as
the Company may designate in writing, by overnight mail, with an advance copy of
the Exercise Form sent to the Company and its Transfer Agent by facsimile  (such
surrender and payment of the Exercise Price hereinafter  called the "Exercise of
this Warrant").

     (b) DATE OF  EXERCISE.  The  "Date of  Exercise"  of the  Warrant  shall be
defined as the date that the advance copy of the completed and executed Exercise
Form is sent by facsimile to the Company, provided that the original Warrant and
Exercise  Form are  received by the Company as soon as  practicable  thereafter.
Alternatively,  the Date of Exercise  shall be defined as the date the  original
Exercise Form is received by the Company,  if Holder has not sent advance notice
by facsimile.

                                       2
<PAGE>

     (c) DELIVERY OF SHARES OF COMMON STOCK UPON EXERCISE.  Upon any exercise of
this Warrant,  the Company shall use its reasonable best efforts to deliver,  or
shall cause its transfer agent to deliver,  a stock  certificate or certificates
representing  the number of shares of Common  Stock into which this  Warrant was
exercised,  within three (3) trading days of the date that all of the  following
have been  received by the  Company:  (i) the  original  completed  and executed
Exercise  Form,  (ii) the  original  Warrant  and (iii) the  Exercise  Price (if
applicable)(collectively, the "Receipt Date"). Such stock certificates shall not
contain a legend restricting  transfer if a registration  statement covering the
resale of such shares of Common Stock is in effect at the time of such  exercise
or if such shares of Common Stock may be resold  pursuant to an  exemption  from
registration,  including but not limited to Rule 144 under the Securities Act of
1933.

     (d) ECONOMIC LOSS DUE TO LATE DELIVERY OF SHARES.  If the Company fails for
any  reason  to  deliver  the  requisite   number  of  shares  of  Common  Stock
(unlegended,  if so required by the terms of this Warrant)(the "Warrant Shares")
to a Holder upon an exercise of this Warrant  within  fifteen (15) business days
of the Receipt Date (the "Late Delivery  Deadline"),  the Company shall pay such
Holder (in addition to any other  remedies  available to Holder) an amount equal
to  ("Non-Delivery  Payment") the number of Warrant Shares for which delivery is
late, multiplied by the difference of:

          (x) the highest  closing price for the Company's  Common Stock for any
          trading day during the period  beginning on and  including the Date of
          Exercise  and ending on the earlier of (i) the date that the  Investor
          receives from the Company certificates (unlegended,  if so required by
          the terms of this Warrant)  representing  the Warrant Shares of Common
          Stock  issuable in conjunction  with such  Exercise,  or (ii) the date
          that  the  Investor  receives  the  full  amount  of the  Non-Delivery
          Payment, whichever is earlier,

          minus

          (y) the  Exercise  Price per share  (which,  in the case of a Cashless
          Exercise,  shall be deemed to equal  zero),  or, if the  Investor  has
          received the Warrant Shares  (unlegended,  if so required by the terms
          of  this  Warrant)  from  the  Company  prior  to the  payment  of the
          Non-Delivery Payment, the lowest closing price of the Company's Common
          Stock for the five (5) trading  days  immediately  preceding  the date
          that such Warrant Shares are delivered to the Holder.

          Non-Delivery  Payments shall be payable,  in cash or cash  equivalent,
          within five (5) business days of the Late Delivery Deadline.

     (e) LIQUIDATED  DAMAGES.  The parties hereto acknowledge and agree that the
sums payable as Non-Delivery  Payments shall give rise to liquidated damages and
not penalties.  The parties further  acknowledge  that (i) the amount of loss or
damages  likely to be incurred by the Holder is  incapable  or is  difficult  to
precisely estimate,  (ii) the amounts specified bear a reasonable proportion and

                                       3
<PAGE>
are not plainly or grossly  disproportionate  to the probable  loss likely to be
incurred  by the  Investor,  and (iii) the parties  are  sophisticated  business
parties and have been represented by sophisticated  and able legal and financial
counsel and negotiated this Agreement at arm's length.

     (f)  CANCELLATION  OF WARRANT.  This  Warrant  shall be  canceled  upon the
Exercise of this Warrant,  and, as soon as practical after the Date of Exercise,
Holder  shall be  entitled  to  receive  Common  Stock for the  number of shares
purchased  upon  such  Exercise  of this  Warrant,  and if this  Warrant  is not
exercised in full, Holder shall be entitled to receive a new Warrant (containing
terms identical to this Warrant)  representing  any unexercised  portion of this
Warrant in addition to such Common Stock.

     (g) HOLDER OF RECORD.  Each  person in whose name any Warrant for shares of
Common Stock is issued shall,  for all  purposes,  be deemed to be the Holder of
record of such shares on the Date of Exercise of this Warrant,  irrespective  of
the date of delivery of the Common  Stock  purchased  upon the  Exercise of this
Warrant.  Nothing in this Warrant shall be construed as  conferring  upon Holder
any rights as a stockholder of the Company.

     3.   PAYMENT OF WARRANT EXERCISE PRICE.

     The Exercise Price per share ("Exercise  Price") shall initially equal (the
"Initial Exercise Price") the lowest Closing Price for the five (5) trading days
immediately  preceding September 5, 2000, which is $0.375. If the lowest Closing
Price of the  Company's  Common Stock for the five (5) trading days  immediately
preceding  the date,  if any,  that  Swartz  Private  Equity,  LLC  executes  an
Investment  Agreement  pursuant to the Letter of Agreement (the "Closing  Market
Price") is less than the Initial  Exercise  Price,  the Exercise  Price shall be
reset to equal the  Closing  Market  Price,  or, if the Date of Exercise is more
than six (6) months  after the Date of  Issuance,  the  Exercise  Price shall be
reset to equal the lesser of (i) the Exercise Price then in effect,  or (ii) the
"Lowest Reset Price," as that term is defined below. The Company shall calculate
a "Reset Price" on each six-month anniversary date of the Date of Issuance which
shall equal the lowest Closing Price of the Company's  Common Stock for the five
(5)  trading  days  ending  on such  six-month  anniversary  date of the Date of
Issuance. The "Lowest Reset Price" shall equal the lowest Reset Price determined
on any six-month  anniversary date of the Date of Issuance preceding the Date of
Exercise, taking into account, as appropriate,  any adjustments made pursuant to
Section 5 hereof.

     For purposes hereof,  the term "Closing Price" shall mean the closing price
on the Nasdaq Small Cap Market, the National Market System ("NMS"), the New York
Stock  Exchange,  or the O.T.C.  Bulletin  Board,  or if no longer traded on the
Nasdaq Small Cap Market, the National Market System ("NMS"),  the New York Stock
Exchange,  or the O.T.C.  Bulletin  Board,  the "Closing  Price" shall equal the
closing   price  on  the   principal   national   securities   exchange  or  the
over-the-counter  system on which the  Common  Stock is so  traded  and,  if not
available,  the  mean of the  high  and low  prices  on the  principal  national
securities exchange on which the Common Stock is so traded.

     Payment of the Exercise Price may be made by either of the following,  or a
combination thereof, at the election of Holder:

                                       4
<PAGE>
     (i) CASH EXERCISE: cash, bank or cashiers check or wire transfer; or

     (ii)  CASHLESS  EXERCISE:  The Holder,  at its option,  may  exercise  this
Warrant  in a  cashless  exercise  transaction.  In order to  effect a  Cashless
Exercise, the Holder shall surrender this Warrant at the principal office of the
Company  together with notice of cashless  election,  in which event the Company
shall  issue  Holder a number  of  shares of  Common  Stock  computed  using the
following formula:

                                  X = Y (A-B)/A

where:   X = the number of shares of Common Stock to be issued to Holder.

         Y = the  number of shares of Common  Stock for which  this  Warrant  is
             being exercised.

               A = the  Market  Price of one (1)  share  of  Common  Stock  (for
               purposes  of this  Section  3(ii),  the "Market  Price"  shall be
               defined as the average  Closing Price of the Common Stock for the
               five (5)  trading  days  prior to the  Date of  Exercise  of this
               Warrant (the "Average Closing Price"),  as reported by the O.T.C.
               Bulletin  Board,   National  Association  of  Securities  Dealers
               Automated Quotation System ("Nasdaq") Small Cap Market, or if the
               Common  Stock is not traded on the Nasdaq  Small Cap Market,  the
               Average  Closing  Price  in any  other  over-the-counter  market;
               provided,  however, that if the Common Stock is listed on a stock
               exchange,  the Market Price shall be the Average Closing Price on
               such  exchange for the five (5) trading days prior to the date of
               exercise of the  Warrants.  If the Common Stock is/was not traded
               during the five (5) trading  days prior to the Date of  Exercise,
               then the closing price for the last publicly  traded day shall be
               deemed to be the  closing  price for any and all (if  applicable)
               days during such five (5) trading day period.

               B = the Exercise Price.

     For  purposes  of  Rule  144  and  sub-section  (d)(3)(ii)  thereof,  it is
intended,  understood  and  acknowledged  that the Common  Stock  issuable  upon
exercise of this Warrant in a cashless  exercise  transaction shall be deemed to
have  been  acquired  at the time  this  Warrant  was  issued.  Moreover,  it is
intended,  understood  and  acknowledged  that the holding period for the Common
Stock issuable upon exercise of this Warrant in a cashless exercise  transaction
shall be deemed to have commenced on the date this Warrant was issued.

     4.   TRANSFER AND REGISTRATION.

     (a)  TRANSFER  RIGHTS.  Subject  to the  provisions  of  Section  8 of this
Warrant,  this Warrant may be transferred on the books of the Company,  in whole
or in part, in person or by attorney,  upon  surrender of this Warrant  properly
completed and endorsed.  This Warrant shall be canceled upon such surrender and,
as soon as  practicable  thereafter,  the person to whom such  transfer  is made

                                       5
<PAGE>
shall be entitled to receive a new Warrant or Warrants as to the portion of this
Warrant transferred, and Holder shall be entitled to receive a new Warrant as to
the portion hereof retained.

     (b) REGISTRABLE SECURITIES. In addition to any other registration rights of
the Holder,  if the Common Stock  issuable  upon exercise of this Warrant is not
registered  for resale at the time the Company  proposes to register  (including
for this purpose a registration  effected by the Company for stockholders  other
than  the  Holders)  any of  its  Common  Stock  under  the  Act  (other  than a
registration  relating  solely for the sale of securities to  participants  in a
Company stock plan or a registration  on Form S-4  promulgated  under the Act or
any   successor   or   similar   form   registering   stock   issuable   upon  a
reclassification,   upon  a  business  combination   involving  an  exchange  of
securities  or upon an exchange  offer for  securities  of the issuer or another
entity)(a  "Piggyback  Registration  Statement"),  the Company shall cause to be
included in such Piggyback Registration Statement ("Piggyback Registration") all
of the Common Stock  issuable  upon the  exercise of this Warrant  ("Registrable
Securities")  to the extent such  inclusion  does not  violate the  registration
rights of any other  securityholder  of the  Company  granted  prior to the date
hereof.  Nothing herein shall prevent the Company from withdrawing or abandoning
the Piggyback Registration Statement prior to its effectiveness.

     (c) LIMITATION ON  OBLIGATIONS TO REGISTER UNDER A PIGGYBACK  REGISTRATION.
In the case of a  Piggyback  Registration  pursuant  to an  underwritten  public
offering by the Company, if the managing  underwriter  determines and advises in
writing that the  inclusion  in the  registration  statement of all  Registrable
Securities proposed to be included would interfere with the successful marketing
of the securities  proposed to be registered by the Company,  then the number of
such  Registrable  Securities  to be  included  in  the  Piggyback  Registration
Statement,  to the extent such  Registrable  Securities  may be included in such
Piggyback Registration  Statement,  shall be allocated among all Holders who had
requested Piggyback Registration pursuant to the terms hereof, in the proportion
that the  number of  Registrable  Securities  which  each such  Holder  seeks to
register  bears to the  total  number  of  Registrable  Securities  sought to be
included by all  Holders.  If required by the  managing  underwriter  of such an
underwritten  public  offering,  the  Holders  shall  enter  into  a  reasonable
agreement  limiting the number of Registrable  Securities to be included in such
Piggyback  Registration  Statement and the terms,  if any,  regarding the future
sale of such Registrable Securities.

     5.   ANTI-DILUTION ADJUSTMENTS.

         (a) STOCK DIVIDEND. If the Company shall at any time declare a dividend
payable in shares of Common  Stock,  then Holder,  upon Exercise of this Warrant
after the record date for the  determination of holders of Common Stock entitled
to receive such  dividend,  shall be entitled to receive  upon  Exercise of this
Warrant,  in addition  to the number of shares of Common  Stock as to which this
Warrant is  exercised,  such  additional  shares of Common  Stock as such Holder
would have received had this Warrant been  exercised  immediately  prior to such
record date and the Exercise Price will be proportionately adjusted.

                                       6
<PAGE>
     (b) RECAPITALIZATION OR RECLASSIFICATION.

          (i)  Stock  Split.   If  the  Company  shall  at  any  time  effect  a
recapitalization,   reclassification   or  other  similar  transaction  of  such
character  that the  shares  of Common  Stock  shall be  changed  into or become
exchangeable  for a larger  number of shares  (a "Stock  Split"),  then upon the
effective date thereof,  the number of shares of Common Stock which Holder shall
be entitled to purchase  upon  Exercise of this  Warrant  shall be  increased in
direct  proportion  to the  increase in the number of shares of Common  Stock by
reason of such  recapitalization,  reclassification or similar transaction,  and
the Exercise Price shall be proportionally decreased.

          (ii) Reverse  Stock Split.  If the Company  shall at any time effect a
recapitalization,   reclassification   or  other  similar  transaction  of  such
character  that the  shares  of Common  Stock  shall be  changed  into or become
exchangeable for a smaller number of shares (a "Reverse Stock Split"), then upon
the effective  date  thereof,  the number of shares of Common Stock which Holder
shall  be  entitled  to  purchase   upon  Exercise  of  this  Warrant  shall  be
proportionately  decreased  and  the  Exercise  Price  shall  be  proportionally
increased.  The Company shall give Holder the same notice it provides to holders
of Common Stock of any transaction described in this Section 5(b).

     (c)  DISTRIBUTIONS.  If the  Company  shall at any time  distribute  for no
consideration  to holders of Common  Stock cash,  evidences of  indebtedness  or
other securities or assets (other than cash dividends or  distributions  payable
out of earned  surplus or net profits for the current or preceding  years) then,
in any such case,  Holder  shall be entitled to receive,  upon  Exercise of this
Warrant, with respect to each share of Common Stock issuable upon such exercise,
the amount of cash or evidences of  indebtedness  or other  securities or assets
which Holder would have been entitled to receive with respect to each such share
of Common Stock as a result of the happening of such event had this Warrant been
exercised immediately prior to the record date or other date fixing shareholders
to be affected by such event (the "Determination  Date") or, in lieu thereof, if
the Board of  Directors  of the Company  should so determine at the time of such
distribution,  a reduced  Exercise Price  determined by multiplying the Exercise
Price on the  Determination  Date by a fraction,  the  numerator of which is the
result  of such  Exercise  Price  reduced  by the  value  of  such  distribution
applicable  to one share of Common  Stock  (such value to be  determined  by the
Board of  Directors of the Company in its  discretion)  and the  denominator  of
which is such Exercise Price.

     (d) NOTICE OF  CONSOLIDATION  OR MERGER AND WARRANT  EXCHANGE.  The Company
shall not, at any time after the date  hereof,  effect a merger,  consolidation,
exchange of shares, recapitalization, reorganization, or other similar event, as
a result of which  shares of Common  Stock  shall be changed  into the same or a
different  number of shares of the same or another  class or classes of stock or
securities  or other assets of the Company or another  entity or there is a sale
of all or substantially all the Company's assets (a "Corporate Change"),  unless
the resulting  successor or acquiring entity (the "Resulting Entity") assumes by
written instrument the Company's  obligations under this Warrant,  including but
not limited to the Exercise Price reset provisions as provided herein during the
term of the resultant warrants,  and agrees in such written instrument that this
Warrant  shall be  exerciseable  into such class and type of securities or other
assets  of the  Resulting  Entity as  Holder  would  have  received  had  Holder

                                       7
<PAGE>
exercised  this Warrant  immediately  prior to such  Corporate  Change,  and the
Exercise  Price of this  Warrant  shall be  proportionately  increased  (if this
Warrant shall be changed into or become exchangeable for a warrant to purchase a
smaller  number of shares of Common Stock of the  Resulting  Entity) or shall be
proportionately   decreased   (if  this  Warrant  shall  be  changed  or  become
exchangeable for a warrant to purchase a larger number of shares of Common Stock
of the Resulting  Entity);  provided,  however,  that Company may not affect any
Corporate  Change  unless it first  shall have given  thirty (30) days notice to
Holder hereof of any Corporate Change.

     (e) EXERCISE PRICE  ADJUSTED.  As used in this Warrant,  the term "Exercise
Price"  shall mean the purchase  price per share  specified in Section 3 of this
Warrant,  until the occurrence of an event stated in subsection (a), (b), (c) or
(d) of this  Section 5, and  thereafter  shall mean said price as adjusted  from
time to  time in  accordance  with  the  provisions  of  this  Warrant.  No such
adjustment  under this  Section 5 shall be made  unless  such  adjustment  would
change the Exercise Price at the time by $0.01 or more; provided,  however, that
all  adjustments  not so made  shall be  deferred  and made  when the  aggregate
thereof would change the Exercise Price at the time by $0.01 or more.

     (f) ADJUSTMENTS: ADDITIONAL SHARES, SECURITIES OR ASSETS. In the event that
at any time,  as a result of an  adjustment  made  pursuant  to this  Section 5,
Holder shall,  upon Exercise of this Warrant,  become entitled to receive shares
and/or other  securities  or assets  (other than Common  Stock)  then,  wherever
appropriate,  all references herein to shares of Common Stock shall be deemed to
refer to and  include  such  shares  and/or  other  securities  or  assets;  and
thereafter the number of such shares and/or other  securities or assets shall be
subject  to  adjustment  from time to time in a manner  and upon terms as nearly
equivalent as practicable to the provisions of this Section 5.

     6.   FRACTIONAL INTERESTS.

     No  fractional  shares or scrip  representing  fractional  shares  shall be
issuable  upon the Exercise of this  Warrant,  but on Exercise of this  Warrant,
Holder  may  purchase  only a whole  number of shares  of Common  Stock.  If, on
Exercise of this  Warrant,  Holder  would be entitled to a  fractional  share of
Common  Stock or a right to acquire a  fractional  share of Common  Stock,  such
fractional  share shall be disregarded  and the number of shares of Common Stock
issuable upon exercise shall be the next higher number of shares.

     7.   RESERVATION OF SHARES.

     The  Company  shall at all  times  reserve  for  issuance  such  number  of
authorized and unissued shares of Common Stock (or other securities  substituted
therefor as herein above  provided) as shall be  sufficient  for the Exercise of
this Warrant and payment of the Exercise Price. The Company covenants and agrees
that upon the Exercise of this Warrant, all shares of Common Stock issuable upon
such exercise shall be duly and validly issued,  fully paid,  nonassessable  and
not subject to preemptive  rights,  rights of first refusal or similar rights of
any person or entity.

                                       8
<PAGE>
     8.   RESTRICTIONS ON TRANSFER.

     (a) REGISTRATION OR EXEMPTION  REQUIRED.  This Warrant has been issued in a
transaction  exempt from the  registration  requirements of the Act by virtue of
Regulation D and exempt from state registration under applicable state laws. The
Warrant and the Common Stock  issuable upon the Exercise of this Warrant may not
be pledged,  transferred,  sold or  assigned  except  pursuant  to an  effective
registration  statement  or unless the Company has  received an opinion from the
Company's counsel to the effect that such  registration is not required,  or the
Holder has  furnished to the Company an opinion of the Holder's  counsel,  which
counsel shall be reasonably satisfactory to the Company, to the effect that such
registration is not required;  the transfer  complies with any applicable  state
securities  laws;  and, if no  registration  covering  the resale of the Warrant
Shares is  effective  at the time the  Warrant  Shares  are  issued,  the Holder
consents to a legend being placed on certificates for the Warrant Shares stating
that the  securities  have not been  registered  under  the  Securities  Act and
referring to such restrictions on transferability and sale.

     (b)  ASSIGNMENT.   If  Holder  can  provide  the  Company  with  reasonably
satisfactory evidence that the conditions of (a) above regarding registration or
exemption have been  satisfied,  Holder may sell,  transfer,  assign,  pledge or
otherwise  dispose of this Warrant,  in whole or in part. Holder shall deliver a
written notice to Company,  substantially in the form of the Assignment attached
hereto as Exhibit B,  indicating the person or persons to whom the Warrant shall
be  assigned  and the  respective  number of  warrants  to be  assigned  to each
assignee.  The Company  shall effect the  assignment  within ten (10) days,  and
shall deliver to the  assignee(s)  designated by Holder a Warrant or Warrants of
like tenor and terms for the appropriate number of shares.

     9.   BENEFITS OF THIS WARRANT.

     Nothing in this Warrant  shall be construed to confer upon any person other
than the Company and Holder any legal or equitable right,  remedy or claim under
this Warrant and this Warrant shall be for the sole and exclusive benefit of the
Company and Holder.

     10.  APPLICABLE LAW.

     This  Warrant is issued under and shall for all purposes be governed by and
construed in accordance  with the laws of the state of Georgia,  without  giving
effect to conflict of law provisions thereof.

     11.  LOSS OF WARRANT.

     Upon receipt by the Company of evidence of the loss, theft,  destruction or
mutilation of this Warrant,  and (in the case of loss,  theft or destruction) of
indemnity or security reasonably satisfactory to the Company, and upon surrender
and  cancellation of this Warrant,  if mutilated,  the Company shall execute and
deliver a new Warrant of like tenor and date.

                                       9
<PAGE>
     12.  NOTICE OR DEMANDS.

Notices or demands  pursuant to this Warrant to be given or made by Holder to or
on the  Company  shall be  sufficiently  given or made if sent by  certified  or
registered mail, return receipt requested, postage prepaid, and addressed, until
another  address is  designated  in writing by the  Company,  to the address set
forth in Section 2(a) above.  Notices or demands  pursuant to this Warrant to be
given or made by the Company to or on Holder shall be sufficiently given or made
if sent by certified or  registered  mail,  return  receipt  requested,  postage
prepaid,  and  addressed,  to the  address of Holder set forth in the  Company's
records, until another address is designated in writing by Holder.

     IN WITNESS  WHEREOF,  the  undersigned  has executed this Warrant as of the
13th day of October, 2000.

                                        DIMENSIONAL VISIONS INCORPORATED

                                        By: /s/ John D. McPhilimy
                                            ------------------------------------
                                            John D. McPhilimy, President

                                       10
<PAGE>
                                    EXHIBIT A

                            EXERCISE FORM FOR WARRANT

                      TO: DIMENSIONAL VISIONS INCORPORATED

     The  undersigned  hereby  irrevocably   exercises  the  right  to  purchase
____________  of the shares of Common Stock (the "Common  Stock") of DIMENSIONAL
VISIONS  INCORPORATED a Delaware  corporation (the "Company"),  evidenced by the
attached  warrant (the  "Warrant"),  and herewith  makes payment of the exercise
price with respect to such shares in full, all in accordance with the conditions
and provisions of said Warrant.

1. The undersigned agrees not to offer,  sell,  transfer or otherwise dispose of
any  of the  Common  Stock  obtained  on  exercise  of the  Warrant,  except  in
accordance with the provisions of Section 8(a) of the Warrant.

2. The undersigned  requests that stock  certificates  for such shares be issued
free of any restrictive legend, if appropriate,  and a warrant  representing any
unexercised portion hereof be issued, pursuant to the Warrant in the name of the
undersigned and delivered to the undersigned at the address set forth below:

Dated: _________

--------------------------------------------------------------------------------
                                    Signature

--------------------------------------------------------------------------------
                                   Print Name

--------------------------------------------------------------------------------
                                     Address

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

NOTICE

The  signature to the  foregoing  Exercise  Form must  correspond to the name as
written  upon the face of the  attached  Warrant  in every  particular,  without
alteration or enlargement or any change whatsoever.

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

                                       11
<PAGE>
                                    EXHIBIT B

                                   ASSIGNMENT

                    (To be executed by the registered holder
                        desiring to transfer the Warrant)

FOR  VALUE  RECEIVED,  the  undersigned  holder  of the  attached  warrant  (the
"Warrant") hereby sells,  assigns and transfers unto the person or persons below
named the right to purchase  _______  shares of the Common Stock of  DIMENSIONAL
VISIONS  INCORPORATED,  evidenced  by  the  attached  Warrant  and  does  hereby
irrevocably constitute and appoint _______________________  attorney to transfer
the said Warrant on the books of the Company, with full power of substitution in
the premises.

Dated:                                  ________________________________________
                                                       Signature

Fill in for new registration of Warrant:

-----------------------------------
               Name

-----------------------------------
              Address

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

Please print name and address of assignee
(including zip code number)

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

NOTICE

The signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached Warrant in every particular, without alteration or
enlargement or any change whatsoever.

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

                                       12
<PAGE>
THIS WARRANT AND THE  SECURITIES  ISSUABLE  UPON  EXERCISE  HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES  ACT"),
OR ANY  STATE  SECURITIES  LAW,  AND  MAY  NOT BE  SOLD,  TRANSFERRED,  PLEDGED,
HYPOTHECATED  OR OTHERWISE  DISPOSED OF OR EXERCISED  UNLESS (i) A  REGISTRATION
STATEMENT  UNDER THE SECURITIES ACT AND APPLICABLE  STATE  SECURITIES LAWS SHALL
HAVE  BECOME   EFFECTIVE  WITH  REGARD  THERETO,   OR  (ii)  AN  EXEMPTION  FROM
REGISTRATION  UNDER THE SECURITIES ACT AND APPLICABLE  STATE  SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.

AN INVESTMENT IN THESE SECURITIES  INVOLVES A HIGH DEGREE OF RISK.  HOLDERS MUST
RELY ON THEIR  OWN  ANALYSIS  OF THE  INVESTMENT  AND  ASSESSMENT  OF THE  RISKS
INVOLVED.

Warrant to Purchase
119,000 shares

                        WARRANT TO PURCHASE COMMON STOCK
                                       OF
                        DIMENSIONAL VISIONS INCORPORATED

     THIS CERTIFIES that SWARTZ PRIVATE  EQUITY,  LLC, or any subsequent  holder
hereof pursuant to Section 8 hereof  ("Holder"),  has the right to purchase from
DIMENSIONAL VISIONS INCORPORATED,  a Delaware corporation (the "Company"), up to
119,000  fully paid and  nonassessable  shares of the  Company's  common  stock,
$0.001 par value per share ("Common  Stock"),  subject to adjustment as provided
herein,  at a price equal to the Exercise  Price, as defined in Section 3 below,
at any time beginning on the Date of Issuance (defined below) and ending at 5:00
p.m.,  New York,  New York time,  on the date that is seven (7) years  after the
Date of Issuance (the "Exercise Period").

     Holder  agrees with the Company that this Warrant to Purchase  Common Stock
of the Company (this "Warrant") is issued and all rights hereunder shall be held
subject to all of the  conditions,  limitations and provisions set forth herein.
This  Warrant is issued in addition  to, and not in the place of, the Warrant to
Swartz Private Equity,  LLC for 1,190,000 shares issued on or about September 5,
2000.

     1.   DATE OF ISSUANCE AND TERM.

     This  Warrant  shall be deemed  to be  issued  on March 2,  2001  ("Date of
Issuance").  The  term of this  Warrant  is  seven  (7)  years  from the Date of
Issuance.

     Of this Warrant to purchase one hundred nineteen thousand  (119,000) shares
of Common Stock of the Company,  the Warrant is exercisable  as to  seventy-nine
thousand  three  hundred  thirty-four  (79,334)  shares of  Common  Stock of the
Company anytime during the Exercise  Period and shall be further  exercisable as
to the remaining  thirty-nine  thousand six hundred sixty-six (39,666) shares of
Common Stock of the Company upon the earlier of (i) the date of effectiveness of
Company's  registration  statement  (the  "Registration  Statement") to be filed
<PAGE>
pursuant  to the  Amended  and  Restated  Investment  Agreement  executed by the
Company and Swartz Private  Equity,  LLC ("Swartz")  pursuant to the Equity Line
Letter of Agreement dated on or about September 5, 2000, between the Company and
Swartz, or (ii) March 5, 2001.

     Notwithstanding  anything to the contrary herein, the applicable portion of
this  Warrant  shall not be  exercisable  during any time that,  and only to the
extent  that,  the number of shares of Common  Stock to be issued to Holder upon
such exercise,  when added to the number of shares of Common Stock, if any, that
the Holder otherwise beneficially owns at the time of such exercise, would equal
or exceed  4.99% of the number of shares of Common  Stock then  outstanding,  as
determined  in  accordance  with  Section  13(d) of the Exchange Act (the "4.99%
Limitation").  The  4.99%  Limitation  shall be  conclusively  satisfied  if the
applicable  Exercise Notice includes a signed  representation by the Holder that
the  issuance of the shares in such  Exercise  Notice will not violate the 4.99%
Limitation,  and  the  Company  shall  not be  entitled  to  require  additional
documentation of such satisfaction.

     2.   EXERCISE.

     (a) MANNER OF  EXERCISE.  During the Exercise  Period,  this Warrant may be
exercised as to all or any lesser  number of full shares of Common Stock covered
hereby (the "Warrant Shares") upon surrender of this Warrant,  with the Exercise
Form  attached  hereto as EXHIBIT A (the  "Exercise  Form") duly  completed  and
executed,  together  with the full  Exercise  Price (as defined  below) for each
share of Common  Stock as to which this Warrant is  exercised,  at the office of
the  Company,  Attention:  John D.  McPhilimy,  President,  Dimensional  Visions
Incorporated,  2301 W. Dunlap Avenue,  Suite 207, Phoenix, AZ 85021;  Telephone:
(602) 997-1990,  Facsimile: (602) 997-5658, or at such other office or agency as
the Company may designate in writing, by overnight mail, with an advance copy of
the Exercise Form sent to the Company and its Transfer Agent by facsimile  (such
surrender and payment of the Exercise Price hereinafter  called the "Exercise of
this Warrant").

     (b) DATE OF  EXERCISE.  The  "Date of  Exercise"  of the  Warrant  shall be
defined as the date that the advance copy of the completed and executed Exercise
Form is sent by facsimile to the Company, provided that the original Warrant and
Exercise  Form are  received by the Company as soon as  practicable  thereafter.
Alternatively,  the Date of Exercise  shall be defined as the date the  original
Exercise Form is received by the Company,  if Holder has not sent advance notice
by facsimile.

     (c) DELIVERY OF SHARES OF COMMON STOCK UPON EXERCISE.  Upon any exercise of
this Warrant,  the Company shall use its reasonable best efforts to deliver,  or
shall cause its transfer agent to deliver,  a stock  certificate or certificates
representing  the number of shares of Common  Stock into which this  Warrant was
exercised,  within three (3) trading days of the date that all of the  following
have been  received by the  Company:  (i) the  original  completed  and executed
Exercise  Form,  (ii) the  original  Warrant  and (iii) the  Exercise  Price (if
applicable)(collectively, the "Receipt Date"). Such stock certificates shall not
contain a legend restricting  transfer if a registration  statement covering the
resale of such shares of Common Stock is in effect at the time of such  exercise

                                       2
<PAGE>
or if such shares of Common Stock may be resold  pursuant to an  exemption  from
registration,  including but not limited to Rule 144 under the Securities Act of
1933.

     (d) ECONOMIC LOSS DUE TO LATE DELIVERY OF SHARES.  If the Company fails for
any  reason  to  deliver  the  requisite   number  of  shares  of  Common  Stock
(unlegended,  if so required by the terms of this Warrant)(the "Warrant Shares")
to a Holder upon an exercise of this Warrant  within  fifteen (15) business days
of the Receipt Date (the "Late Delivery  Deadline"),  the Company shall pay such
Holder (in addition to any other  remedies  available to Holder) an amount equal
to  ("Non-Delivery  Payment") the number of Warrant Shares for which delivery is
late, multiplied by the difference of:

          (x) the highest  closing price for the Company's  Common Stock for any
          trading day during the period  beginning on and  including the Date of
          Exercise  and ending on the earlier of (i) the date that the  Investor
          receives from the Company certificates (unlegended,  if so required by
          the terms of this Warrant)  representing  the Warrant Shares of Common
          Stock  issuable in conjunction  with such  Exercise,  or (ii) the date
          that  the  Investor  receives  the  full  amount  of the  Non-Delivery
          Payment, whichever is earlier,

          minus

          (y) the  Exercise  Price per share  (which,  in the case of a Cashless
          Exercise,  shall be deemed to equal  zero),  or, if the  Investor  has
          received the Warrant Shares  (unlegended,  if so required by the terms
          of  this  Warrant)  from  the  Company  prior  to the  payment  of the
          Non-Delivery Payment, the lowest closing price of the Company's Common
          Stock for the five (5) trading  days  immediately  preceding  the date
          that such Warrant Shares are delivered to the Holder.

          Non-Delivery  Payments shall be payable,  in cash or cash  equivalent,
          within five (5) business days of the Late Delivery Deadline.

     (e) LIQUIDATED  DAMAGES.  The parties hereto acknowledge and agree that the
sums payable as Non-Delivery  Payments shall give rise to liquidated damages and
not penalties.  The parties further  acknowledge  that (i) the amount of loss or
damages  likely to be incurred by the Holder is  incapable  or is  difficult  to
precisely estimate,  (ii) the amounts specified bear a reasonable proportion and
are not plainly or grossly  disproportionate  to the probable  loss likely to be
incurred  by the  Investor,  and (iii) the parties  are  sophisticated  business
parties and have been represented by sophisticated  and able legal and financial
counsel and negotiated this Agreement at arm's length.

     (f)  CANCELLATION  OF WARRANT.  This  Warrant  shall be  canceled  upon the
Exercise of this Warrant,  and, as soon as practical after the Date of Exercise,
Holder  shall be  entitled  to  receive  Common  Stock for the  number of shares
purchased  upon  such  Exercise  of this  Warrant,  and if this  Warrant  is not
exercised in full, Holder shall be entitled to receive a new Warrant (containing
terms identical to this Warrant)  representing  any unexercised  portion of this
Warrant in addition to such Common Stock.

                                       3
<PAGE>
     (g) HOLDER OF RECORD.  Each  person in whose name any Warrant for shares of
Common Stock is issued shall,  for all  purposes,  be deemed to be the Holder of
record of such shares on the Date of Exercise of this Warrant,  irrespective  of
the date of delivery of the Common  Stock  purchased  upon the  Exercise of this
Warrant.  Nothing in this Warrant shall be construed as  conferring  upon Holder
any rights as a stockholder of the Company.

     3.   PAYMENT OF WARRANT EXERCISE PRICE.

     The Exercise  Price per share  ("Exercise  Price")  shall  initially  equal
$0.125 (the "Initial Exercise Price").  If the Date of Exercise is more than six
(6) months  after the Date of  Issuance,  the  Exercise  Price shall be reset to
equal the lesser of (i) the Exercise  Price then in effect,  or (ii) the "Lowest
Reset  Price," as that term is defined  below.  The  Company  shall  calculate a
"Reset Price" on each six-month  anniversary  date of the Date of Issuance which
shall equal the lowest Closing Price of the Company's  Common Stock for the five
(5)  trading  days  ending  on such  six-month  anniversary  date of the Date of
Issuance. The "Lowest Reset Price" shall equal the lowest Reset Price determined
on any six-month  anniversary date of the Date of Issuance preceding the Date of
Exercise, taking into account, as appropriate,  any adjustments made pursuant to
Section 5 hereof.

     For purposes hereof,  the term "Closing Price" shall mean the closing price
on the Nasdaq Small Cap Market, the National Market System ("NMS"), the New York
Stock  Exchange,  or the O.T.C.  Bulletin  Board,  or if no longer traded on the
Nasdaq Small Cap Market, the National Market System ("NMS"),  the New York Stock
Exchange,  or the O.T.C.  Bulletin  Board,  the "Closing  Price" shall equal the
closing   price  on  the   principal   national   securities   exchange  or  the
over-the-counter  system on which the  Common  Stock is so  traded  and,  if not
available,  the  mean of the  high  and low  prices  on the  principal  national
securities exchange on which the Common Stock is so traded.

     Payment of the Exercise Price may be made by either of the following,  or a
combination thereof, at the election of Holder:

     (i) CASH EXERCISE: cash, bank or cashiers check or wire transfer; or

     (ii)  CASHLESS  EXERCISE:  The Holder,  at its option,  may  exercise  this
Warrant  in a  cashless  exercise  transaction.  In order to  effect a  Cashless
Exercise, the Holder shall surrender this Warrant at the principal office of the
Company  together with notice of cashless  election,  in which event the Company
shall  issue  Holder a number  of  shares of  Common  Stock  computed  using the
following formula:

                                  X = Y (A-B)/A

where:   X = the number of shares of Common Stock to be issued to Holder.

         Y = the  number of shares of Common  Stock for which  this  Warrant  is
             being exercised.

               A = the  Market  Price of one (1)  share  of  Common  Stock  (for
               purposes  of this  Section  3(ii),  the "Market  Price"  shall be
               defined as the average  Closing Price of the Common Stock for the
               five (5)  trading  days  prior to the  Date of  Exercise  of this

                                       4
<PAGE>
               Warrant (the "Average Closing Price"),  as reported by the O.T.C.
               Bulletin  Board,   National  Association  of  Securities  Dealers
               Automated Quotation System ("Nasdaq") Small Cap Market, or if the
               Common  Stock is not traded on the Nasdaq  Small Cap Market,  the
               Average  Closing  Price  in any  other  over-the-counter  market;
               provided,  however, that if the Common Stock is listed on a stock
               exchange,  the Market Price shall be the Average Closing Price on
               such  exchange for the five (5) trading days prior to the date of
               exercise of the  Warrants.  If the Common Stock is/was not traded
               during the five (5) trading  days prior to the Date of  Exercise,
               then the closing price for the last publicly  traded day shall be
               deemed to be the  closing  price for any and all (if  applicable)
               days during such five (5) trading day period.

               B = the Exercise Price.

     For  purposes  of  Rule  144  and  sub-section  (d)(3)(ii)  thereof,  it is
intended,  understood  and  acknowledged  that the Common  Stock  issuable  upon
exercise of this Warrant in a cashless  exercise  transaction shall be deemed to
have  been  acquired  at the time  this  Warrant  was  issued.  Moreover,  it is
intended,  understood  and  acknowledged  that the holding period for the Common
Stock issuable upon exercise of this Warrant in a cashless exercise  transaction
shall be deemed to have commenced on the date this Warrant was issued.

     4.   TRANSFER AND REGISTRATION.

     (a)  TRANSFER  RIGHTS.  Subject  to the  provisions  of  Section  8 of this
Warrant,  this Warrant may be transferred on the books of the Company,  in whole
or in part, in person or by attorney,  upon  surrender of this Warrant  properly
completed and endorsed.  This Warrant shall be canceled upon such surrender and,
as soon as  practicable  thereafter,  the person to whom such  transfer  is made
shall be entitled to receive a new Warrant or Warrants as to the portion of this
Warrant transferred, and Holder shall be entitled to receive a new Warrant as to
the portion hereof retained.

     (b) REGISTRABLE SECURITIES. In addition to any other registration rights of
the Holder,  if the Common Stock  issuable  upon exercise of this Warrant is not
registered  for resale at the time the Company  proposes to register  (including
for this purpose a registration  effected by the Company for stockholders  other
than  the  Holders)  any of  its  Common  Stock  under  the  Act  (other  than a
registration  relating  solely for the sale of securities to  participants  in a
Company stock plan or a registration  on Form S-4  promulgated  under the Act or
any   successor   or   similar   form   registering   stock   issuable   upon  a
reclassification,   upon  a  business  combination   involving  an  exchange  of
securities  or upon an exchange  offer for  securities  of the issuer or another
entity)(a  "Piggyback  Registration  Statement"),  the Company shall cause to be
included in such Piggyback Registration Statement ("Piggyback Registration") all
of the Common Stock  issuable  upon the  exercise of this Warrant  ("Registrable
Securities")  to the extent such  inclusion  does not  violate the  registration

                                       5
<PAGE>
rights of any other  securityholder  of the  Company  granted  prior to the date
hereof.  Nothing herein shall prevent the Company from withdrawing or abandoning
the Piggyback Registration Statement prior to its effectiveness.

     (c) LIMITATION ON  OBLIGATIONS TO REGISTER UNDER A PIGGYBACK  REGISTRATION.
In the case of a  Piggyback  Registration  pursuant  to an  underwritten  public
offering by the Company, if the managing  underwriter  determines and advises in
writing that the  inclusion  in the  registration  statement of all  Registrable
Securities proposed to be included would interfere with the successful marketing
of the securities  proposed to be registered by the Company,  then the number of
such  Registrable  Securities  to be  included  in  the  Piggyback  Registration
Statement,  to the extent such  Registrable  Securities  may be included in such
Piggyback Registration  Statement,  shall be allocated among all Holders who had
requested Piggyback Registration pursuant to the terms hereof, in the proportion
that the  number of  Registrable  Securities  which  each such  Holder  seeks to
register  bears to the  total  number  of  Registrable  Securities  sought to be
included by all  Holders.  If required by the  managing  underwriter  of such an
underwritten  public  offering,  the  Holders  shall  enter  into  a  reasonable
agreement  limiting the number of Registrable  Securities to be included in such
Piggyback  Registration  Statement and the terms,  if any,  regarding the future
sale of such Registrable Securities.

     5.   ANTI-DILUTION ADJUSTMENTS.

     (a) STOCK  DIVIDEND.  If the Company  shall at any time  declare a dividend
payable in shares of Common  Stock,  then Holder,  upon Exercise of this Warrant
after the record date for the  determination of holders of Common Stock entitled
to receive such  dividend,  shall be entitled to receive  upon  Exercise of this
Warrant,  in addition  to the number of shares of Common  Stock as to which this
Warrant is  exercised,  such  additional  shares of Common  Stock as such Holder
would have received had this Warrant been  exercised  immediately  prior to such
record date and the Exercise Price will be proportionately adjusted.

     (b) RECAPITALIZATION OR RECLASSIFICATION.

          (i)  STOCK  SPLIT.   If  the  Company  shall  at  any  time  effect  a
recapitalization,   reclassification   or  other  similar  transaction  of  such
character  that the  shares  of Common  Stock  shall be  changed  into or become
exchangeable  for a LARGER  number of shares  (a "Stock  Split"),  then upon the
effective date thereof,  the number of shares of Common Stock which Holder shall
be entitled to purchase  upon  Exercise of this  Warrant  shall be  increased in
direct  proportion  to the  increase in the number of shares of Common  Stock by
reason of such  recapitalization,  reclassification or similar transaction,  and
the Exercise Price shall be proportionally decreased.

          (ii) REVERSE  STOCK SPLIT.  If the Company  shall at any time effect a
recapitalization,   reclassification   or  other  similar  transaction  of  such
character  that the  shares  of Common  Stock  shall be  changed  into or become
exchangeable for a SMALLER number of shares (a "Reverse Stock Split"), then upon
the effective  date  thereof,  the number of shares of Common Stock which Holder
shall  be  entitled  to  purchase   upon  Exercise  of  this  Warrant  shall  be
proportionately  decreased  and  the  Exercise  Price  shall  be  proportionally
increased.  The Company shall give Holder the same notice it provides to holders
of Common Stock of any transaction described in this Section 5(b).

                                       6
<PAGE>
     (c)  DISTRIBUTIONS.  If the  Company  shall at any time  distribute  for no
consideration  to holders of Common  Stock cash,  evidences of  indebtedness  or
other securities or assets (other than cash dividends or  distributions  payable
out of earned  surplus or net profits for the current or preceding  years) then,
in any such case,  Holder  shall be entitled to receive,  upon  Exercise of this
Warrant, with respect to each share of Common Stock issuable upon such exercise,
the amount of cash or evidences of  indebtedness  or other  securities or assets
which Holder would have been entitled to receive with respect to each such share
of Common Stock as a result of the happening of such event had this Warrant been
exercised immediately prior to the record date or other date fixing shareholders
to be affected by such event (the "Determination  Date") or, in lieu thereof, if
the Board of  Directors  of the Company  should so determine at the time of such
distribution,  a reduced  Exercise Price  determined by multiplying the Exercise
Price on the  Determination  Date by a fraction,  the  numerator of which is the
result  of such  Exercise  Price  reduced  by the  value  of  such  distribution
applicable  to one share of Common  Stock  (such value to be  determined  by the
Board of  Directors of the Company in its  discretion)  and the  denominator  of
which is such Exercise Price.

     (d) NOTICE OF  CONSOLIDATION  OR MERGER AND WARRANT  EXCHANGE.  The Company
shall not, at any time after the date  hereof,  effect a merger,  consolidation,
exchange of shares, recapitalization, reorganization, or other similar event, as
a result of which  shares of Common  Stock  shall be changed  into the same or a
different  number of shares of the same or another  class or classes of stock or
securities  or other assets of the Company or another  entity or there is a sale
of all or substantially all the Company's assets (a "Corporate Change"),  unless
the resulting  successor or acquiring entity (the "Resulting Entity") assumes by
written instrument the Company's  obligations under this Warrant,  including but
not limited to the Exercise Price reset provisions as provided herein during the
term of the resultant warrants,  and agrees in such written instrument that this
Warrant  shall be  exerciseable  into such class and type of securities or other
assets  of the  Resulting  Entity as  Holder  would  have  received  had  Holder
exercised  this Warrant  immediately  prior to such  Corporate  Change,  and the
Exercise  Price of this  Warrant  shall be  proportionately  increased  (if this
Warrant shall be changed into or become exchangeable for a warrant to purchase a
smaller  number of shares of Common Stock of the  Resulting  Entity) or shall be
proportionately   decreased   (if  this  Warrant  shall  be  changed  or  become
exchangeable for a warrant to purchase a larger number of shares of Common Stock
of the Resulting  Entity);  provided,  however,  that Company may not affect any
Corporate  Change  unless it first  shall have given  thirty (30) days notice to
Holder hereof of any Corporate Change.

     (e) EXERCISE PRICE  ADJUSTED.  As used in this Warrant,  the term "Exercise
Price"  shall mean the purchase  price per share  specified in Section 3 of this
Warrant,  until the occurrence of an event stated in subsection (a), (b), (c) or
(d) of this  Section 5, and  thereafter  shall mean said price as adjusted  from
time to  time in  accordance  with  the  provisions  of  this  Warrant.  No such
adjustment  under this  Section 5 shall be made  unless  such  adjustment  would
change the Exercise Price at the time by $0.01 or more; provided,  however, that
all  adjustments  not so made  shall be  deferred  and made  when the  aggregate
thereof would change the Exercise Price at the time by $0.01 or more.

                                       7
<PAGE>
     (f) ADJUSTMENTS: ADDITIONAL SHARES, SECURITIES OR ASSETS. In the event that
at any time,  as a result of an  adjustment  made  pursuant  to this  Section 5,
Holder shall,  upon Exercise of this Warrant,  become entitled to receive shares
and/or other  securities  or assets  (other than Common  Stock)  then,  wherever
appropriate,  all references herein to shares of Common Stock shall be deemed to
refer to and  include  such  shares  and/or  other  securities  or  assets;  and
thereafter the number of such shares and/or other  securities or assets shall be
subject  to  adjustment  from time to time in a manner  and upon terms as nearly
equivalent as practicable to the provisions of this Section 5.

     6.   FRACTIONAL INTERESTS.

     No  fractional  shares or scrip  representing  fractional  shares  shall be
issuable  upon the Exercise of this  Warrant,  but on Exercise of this  Warrant,
Holder  may  purchase  only a whole  number of shares  of Common  Stock.  If, on
Exercise of this  Warrant,  Holder  would be entitled to a  fractional  share of
Common  Stock or a right to acquire a  fractional  share of Common  Stock,  such
fractional  share shall be disregarded  and the number of shares of Common Stock
issuable upon exercise shall be the next higher number of shares.

     7.   RESERVATION OF SHARES.

     The  Company  shall at all  times  reserve  for  issuance  such  number  of
authorized and unissued shares of Common Stock (or other securities  substituted
therefor as herein above  provided) as shall be  sufficient  for the Exercise of
this Warrant and payment of the Exercise Price. The Company covenants and agrees
that upon the Exercise of this Warrant, all shares of Common Stock issuable upon
such exercise shall be duly and validly issued,  fully paid,  nonassessable  and
not subject to preemptive  rights,  rights of first refusal or similar rights of
any person or entity.

     8.   RESTRICTIONS ON TRANSFER.

     (a) REGISTRATION OR EXEMPTION  REQUIRED.  This Warrant has been issued in a
transaction  exempt from the  registration  requirements of the Act by virtue of
Regulation D and exempt from state registration under applicable state laws. The
Warrant and the Common Stock  issuable upon the Exercise of this Warrant may not
be pledged,  transferred,  sold or  assigned  except  pursuant  to an  effective
registration  statement  or unless the Company has  received an opinion from the
Company's counsel to the effect that such  registration is not required,  or the
Holder has  furnished to the Company an opinion of the Holder's  counsel,  which
counsel shall be reasonably satisfactory to the Company, to the effect that such
registration is not required;  the transfer  complies with any applicable  state
securities  laws;  and, if no  registration  covering  the resale of the Warrant
Shares is  effective  at the time the  Warrant  Shares  are  issued,  the Holder
consents to a legend being placed on certificates for the Warrant Shares stating
that the  securities  have not been  registered  under  the  Securities  Act and
referring to such restrictions on transferability and sale.

                                       8
<PAGE>
     (b)  ASSIGNMENT.   If  Holder  can  provide  the  Company  with  reasonably
satisfactory evidence that the conditions of (a) above regarding registration or
exemption have been  satisfied,  Holder may sell,  transfer,  assign,  pledge or
otherwise  dispose of this Warrant,  in whole or in part. Holder shall deliver a
written notice to Company,  substantially in the form of the Assignment attached
hereto as EXHIBIT B,  indicating the person or persons to whom the Warrant shall
be  assigned  and the  respective  number of  warrants  to be  assigned  to each
assignee.  The Company  shall effect the  assignment  within ten (10) days,  and
shall deliver to the  assignee(s)  designated by Holder a Warrant or Warrants of
like tenor and terms for the appropriate number of shares.

     9.   BENEFITS OF THIS WARRANT.

     Nothing in this Warrant  shall be construed to confer upon any person other
than the Company and Holder any legal or equitable right,  remedy or claim under
this Warrant and this Warrant shall be for the sole and exclusive benefit of the
Company and Holder.

     10.  APPLICABLE LAW.

     This  Warrant is issued under and shall for all purposes be governed by and
construed in accordance  with the laws of the state of Georgia,  without  giving
effect to conflict of law provisions thereof.

     11.  LOSS OF WARRANT.

     Upon receipt by the Company of evidence of the loss, theft,  destruction or
mutilation of this Warrant,  and (in the case of loss,  theft or destruction) of
indemnity or security reasonably satisfactory to the Company, and upon surrender
and  cancellation of this Warrant,  if mutilated,  the Company shall execute and
deliver a new Warrant of like tenor and date.

     12.  NOTICE OR DEMANDS.

Notices or demands  pursuant to this Warrant to be given or made by Holder to or
on the  Company  shall be  sufficiently  given or made if sent by  certified  or
registered mail, return receipt requested, postage prepaid, and addressed, until
another  address is  designated  in writing by the  Company,  to the address set
forth in Section 2(a) above.  Notices or demands  pursuant to this Warrant to be
given or made by the Company to or on Holder shall be sufficiently given or made

                                       9
<PAGE>
if sent by certified or  registered  mail,  return  receipt  requested,  postage
prepaid,  and  addressed,  to the  address of Holder set forth in the  Company's
records, until another address is designated in writing by Holder.

     IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the 2nd
day of March, 2001.

                                        DIMENSIONAL VISIONS INCORPORATED

                                        By: /s/ John D. Mcphilimy
                                            ------------------------------------
                                            John D. McPhilimy, President

                                       10
<PAGE>
                                    EXHIBIT A

                            EXERCISE FORM FOR WARRANT

                      TO: DIMENSIONAL VISIONS INCORPORATED

     The  undersigned  hereby  irrevocably   exercises  the  right  to  purchase
____________  of the shares of Common Stock (the "Common  Stock") of DIMENSIONAL
VISIONS  INCORPORATED a Delaware  corporation (the "Company"),  evidenced by the
attached  warrant (the  "Warrant"),  and herewith  makes payment of the exercise
price with respect to such shares in full, all in accordance with the conditions
and provisions of said Warrant.

1. The undersigned agrees not to offer,  sell,  transfer or otherwise dispose of
any  of the  Common  Stock  obtained  on  exercise  of the  Warrant,  except  in
accordance with the provisions of Section 8(a) of the Warrant.

2. The undersigned  requests that stock  certificates  for such shares be issued
free of any restrictive legend, if appropriate,  and a warrant  representing any
unexercised portion hereof be issued, pursuant to the Warrant in the name of the
undersigned and delivered to the undersigned at the address set forth below:

Dated: _________

--------------------------------------------------------------------------------
                                    Signature

--------------------------------------------------------------------------------
                                   Print Name

--------------------------------------------------------------------------------
                                     Address

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

NOTICE

The  signature to the  foregoing  Exercise  Form must  correspond to the name as
written  upon the face of the  attached  Warrant  in every  particular,  without
alteration or enlargement or any change whatsoever.

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

                                       11
<PAGE>
                                    EXHIBIT B

                                   ASSIGNMENT

                    (To be executed by the registered holder
                        desiring to transfer the Warrant)

FOR  VALUE  RECEIVED,  the  undersigned  holder  of the  attached  warrant  (the
"Warrant") hereby sells,  assigns and transfers unto the person or persons below
named the right to purchase  _______  shares of the Common Stock of  DIMENSIONAL
VISIONS  INCORPORATED,  evidenced  by  the  attached  Warrant  and  does  hereby
irrevocably constitute and appoint _______________________  attorney to transfer
the said Warrant on the books of the Company, with full power of substitution in
the premises.

Dated:                                  ________________________________________
                                                      Signature

Fill in for new registration of Warrant:

-----------------------------------
              Name

-----------------------------------
             Address

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

Please print name and address of assignee
(including zip code number)

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

NOTICE

The signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached Warrant in every particular, without alteration or
enlargement or any change whatsoever.

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

                                       12
<PAGE>
               AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

     THIS AMENDED AND RESTATED  REGISTRATION RIGHTS AGREEMENT (this "Agreement")
is  entered  into  as of  March  2,  2001,  by  and  among  Dimensional  Visions
Incorporated, a corporation duly incorporated and existing under the laws of the
State of Delaware  (the  "Company"),  and the investor as named on the signature
page hereto (hereinafter  referred to as "Investor") and amends and restates the
Registration Rights Agreement between the parties dated on or about December 22,
2000.

                                    RECITALS:

     WHEREAS,  pursuant to the Company's  offering  ("Offering") of up to Twenty
Million Dollars  ($20,000,000) of Common Stock of the Company,  pursuant to that
certain  Amemded and Restated  Investment  Agreement of even date  herewith (the
"Investment  Agreement")  between the Company and the Investor,  the Company has
agreed to sell and the  Investor  has agreed to  purchase,  from time to time as
provided in the Investment Agreement, shares of the Company's Common Stock for a
maximum aggregate offering amount as described above;

     WHEREAS, pursuant to the terms of the Investment Agreement, the Company has
agreed to issue to the Investor the  Commitment  Warrants and in certain  events
Additional  Warrants (as defined in the Warrant  Antidilution  Agreement between
the Company and the  Investor)  to purchase a number of shares of Common  Stock,
exercisable  for  ten  (10)  years  from  their  respective  dates  of  issuance
(collectively, the "Warrants"); and

     WHEREAS, pursuant to the terms of the Investment Agreement, the Company has
agreed to provide the Investor with certain  registration rights with respect to
the Common Stock to be issued in the Offering and the Common Stock issuable upon
exercise of the Warrants as set forth in this Agreement.

                                     TERMS:

     NOW, THEREFORE,  in consideration of the mutual promises,  representations,
warranties,  covenants and  conditions set forth in this Agreement and for other
good and valuable consideration,  the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

     1. CERTAIN  DEFINITIONS.  As used in this Agreement (including the Recitals
above),  the following terms shall have the following meanings (such meanings to
be equally applicable to both singular and plural forms of the terms defined):

          "Additional  Registration  Statement" shall have the meaning set forth
in Section 3(b).

          "Additional  Warrants"  shall  have  the  meaning  ascribed  to it the
Warrant Antidilution Agreement between the Company and the Investor.

          "Additional Warrant Shares" shall mean shares of Common Stock issuable
upon exercise of any Additional Warrant.

                                       1
<PAGE>
          "Amended  Registration  Statement" shall have the meaning set forth in
Section 3(b).

          "Business  Day" shall  have the  meaning  set forth in the  Investment
Agreement.

          "Closing Bid Price" shall have the meaning set forth in the Investment
Agreement.

          "Commitment  Warrant"  shall  have  the  meaning  as set  forth in the
Investment Agreement.

          "Common  Stock" shall mean the common stock,  par value $0.01,  of the
Company.

          "Due Date" shall mean the date that is one hundred  twenty  (120) days
after the date of this Agreement.

          "Effective Date" shall have the meaning set forth in Section 2.3.

          "Exchange  Act" shall mean the  Securities  Exchange  Act of 1934,  as
amended, together with the rules and regulations promulgated thereunder.

          "Filing Deadline" shall mean March 7, 2001.

          "Ineffective Period" shall mean any period of time after the Effective
Date during the term hereof that the Registration  Statement or any Supplemental
Registration   Statement  (each  as  defined  herein)  becomes   ineffective  or
unavailable for use for the sale or resale, as applicable,  of any or all of the
Registrable  Securities (as defined  herein) for any reason (or in the event the
prospectus under either of the above is not current and deliverable).

          "Investment  Agreement"  shall  have  the  meaning  set  forth  in the
Recitals hereto.

          "Investor"  shall have the meaning  set forth in the  preamble to this
Agreement.

          "Holder" shall mean Investor, and any other person or entity owning or
having the right to acquire Registrable Securities or any permitted assignee.

          "Piggyback  Registration" and "Piggyback Registration Statement" shall
have the meaning set forth in Section 4.

          "Put" shall have the meaning as set forth in the Investment Agreement.

          "Register," "Registered," and "Registration" shall mean and refer to a
registration  effected  by  preparing  and filing a  registration  statement  or
similar  document in compliance with the Securities Act and pursuant to Rule 415
under the Securities Act or any successor  rule, and the declaration or ordering
of effectiveness of such registration statement or document.

          "Registrable  Securities"  shall have the meaning set forth in Section
2.1.

                                       2
<PAGE>
          "Registration  Statement"  shall have the meaning set forth in Section
2.2.

          "Rule 144"  shall mean Rule 144,  as  amended,  promulgated  under the
Securities Act.

          "Securities  Act" shall mean the  Securities  Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.

          "Supplemental Registration Statement" shall have the meaning set forth
in Section 3(b).

          "Warrants" shall have the meaning set forth in the above Recitals.

          "Warrant  Shares"  shall mean  shares of Common  Stock  issuable  upon
exercise of any Warrant.

     2.   REQUIRED REGISTRATION.

          2.1 REGISTRABLE SECURITIES.  "Registrable Securities" shall mean those
shares of the Common Stock of the Company together with any capital stock issued
in replacement of, in exchange for or otherwise in respect of such Common Stock,
that are:  (i)  issuable or issued to the  Investor  pursuant to the  Investment
Agreement,  or (ii) issuable or issued upon exercise of the Commitment Warrants;
provided,  however,  that  notwithstanding the above, the following shall not be
considered Registrable Securities:

               (a) any  Common  Stock  which  would  otherwise  be  deemed to be
Registrable  Securities,  if and to the extent that those shares of Common Stock
may be  resold  in a public  transaction  without  volume  limitations  or other
material  restrictions  without registration under the Securities Act, including
without limitation, pursuant to Rule 144 under the Securities Act; and

               (b) any shares of Common  Stock which have been sold in a private
transaction  in which the  transferor's  rights  under  this  Agreement  are not
assigned.

          2.2 FILING OF INITIAL  REGISTRATION  STATEMENT.  The Company shall, by
the Filing Deadline, file a registration statement ("Registration Statement") on
Form SB-2 (or other suitable form, at the Company's  discretion,  but subject to
the reasonable approval of Investor),  covering the resale of a number of shares
of Common Stock as Registrable  Securities equal to at least Twenty Five Million
(25,000,000)  shares of Common Stock and shall cover,  to the extent  allowed by
applicable law, such  indeterminate  number of additional shares of Common Stock
that may be issued or become  issuable as Registrable  Securities by the Company
pursuant  to Rule 416 of the  Securities  Act. In the event that the Company has
not filed the Registration  Statement by the Filing  Deadline,  then the Company
shall pay to INVESTOR an amount equal to $500,  in cash,  FOR EACH  BUSINESS DAY
AFTER THE FILING DEADLINE until such  Registration  Statement is filed,  payable
within ten (10) BUSINESS DAYS  following the end of each calendar month in which
such payments  accrue.  In addition,  anytime the Company has issued  Additional
Warrants to the Investor  totaling  250,000  shares which are not registered for
resale, the Company shall promptly file a registration  statement (on Form SB-2,
or  other  suitable  form,  at the  Company's  discretion,  but  subject  to the
reasonable  approval of Investor),  covering the resale of a number of shares of

                                       3
<PAGE>
Common  Stock  as  Registrable  Securities  equal  to at  least  the  number  of
Additional Warrant shares that are not registered for resale and shall cover, to
the extent allowed by applicable  law, such  indeterminate  number of additional
shares of Common  Stock  that may be issued or become  issuable  as  Registrable
Securities by the Company pursuant to Rule 416 of the Securities Act.

          2.3  REGISTRATION  EFFECTIVE  DATE.  The  Company  shall  use its best
efforts to have the Registration  Statement  declared  effective by the SEC (the
date of such effectiveness is referred to herein as the "Effective Date") by the
Due Date.

          2.4 SHELF REGISTRATION.  The Registration  Statement shall be prepared
as a "shelf"  registration  statement  under Rule 415,  and shall be  maintained
effective  until  all   Registrable   Securities  are  resold  pursuant  to  the
Registration Statement.

          2.5  SUPPLEMENTAL  REGISTRATION  STATEMENT.  Anytime the  Registration
Statement does not cover a sufficient  number of shares of Common Stock to cover
all outstanding Registrable  Securities,  the Company shall promptly prepare and
file with the SEC such  Supplemental  Registration  Statement and the prospectus
used in  connection  with such  registration  statement  as may be  necessary to
comply with the provisions of the Securities Act with respect to the disposition
of all such Registrable  Securities and shall use its best efforts to cause such
Supplemental  Registration  Statement  to  be  declared  effective  as  soon  as
possible.

     3.  OBLIGATIONS OF THE COMPANY.  Whenever  required under this Agreement to
effect the  registration  of any Registrable  Securities,  the Company shall, as
expeditiously and reasonably possible:

          (a)  Prepare  and file with the  Securities  and  Exchange  Commission
("SEC") a Registration Statement with respect to such Registrable Securities and
use its best efforts to cause such  Registration  Statement to become  effective
and to remain  effective  until the earlier of (i) the date that all Registrable
Securities are resold pursuant to such Registration  Statement, or (ii) the date
that is one (1) year after the  Termination  Date (as defined in the  Investment
Agreement).

          (b) Prepare and file with the SEC such  amendments and  supplements to
such  Registration  Statement and the  prospectus  used in connection  with such
Registration  Statement ("Amended  Registration  Statement") or prepare and file
any additional  registration  statement  ("Additional  Registration  Statement,"
together with the Amended  Registration  Statement,  "Supplemental  Registration
Statements") as may be necessary to comply with the provisions of the Securities
Act  with  respect  to  the  disposition  of  all  securities  covered  by  such
Supplemental Registration Statements or such prior registration statement and to
cover the resale of all Registrable Securities.

          (c) Furnish to the  Holders  such  numbers of copies of a  prospectus,
including a preliminary  prospectus  (if  applicable),  in  conformity  with the
requirements  of the  Securities  Act,  and  such  other  documents  as they may
reasonably  request  in order  to  facilitate  the  disposition  of  Registrable
Securities owned by them.

          (d) Use its best  efforts  to  register  and  qualify  the  securities
covered by such  Registration  Statement under such other securities or Blue Sky
laws of the  jurisdictions  in which the  Holders  are  located,  of such  other

                                       4
<PAGE>
jurisdictions as shall be reasonably requested by the Holders of the Registrable
Securities covered by such Registration Statement and of all other jurisdictions
where  legally  required,  provided  that the  Company  shall not be required in
connection  therewith or as a condition  thereto to qualify to do business or to
file  a  general   consent  to  service  of  process  in  any  such   states  or
jurisdictions.

          (e) [Intentionally Left Blank].

          (f) As promptly as  practicable  after  becoming  aware of such event,
notify each Holder of  Registrable  Securities  of the happening of any event of
which the Company has knowledge, as a result of which the prospectus included in
the 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,  in light of the circumstances  under
which they were made, not misleading, use its best efforts promptly to prepare a
supplement  or  amendment to the  Registration  Statement to correct such untrue
statement  or  omission,  and deliver a number of copies of such  supplement  or
amendment to each Holder as such Holder may reasonably request.

          (g)  Provide  Holders  with  notice  of the date  that a  Registration
Statement or any Supplemental  Registration  Statement registering the resale of
the  Registrable  Securities  is declared  effective by the SEC, and the date or
dates when the Registration Statement is no longer effective.

          (h) Provide  Holders and their  representatives  the opportunity and a
reasonable  amount  of time,  based  upon  reasonable  notice  delivered  by the
Company,  to conduct a reasonable due diligence  inquiry of Company's  pertinent
financial  and other  records and make  available its officers and directors for
questions  regarding such information as it relates to information  contained in
the Registration Statement.

          (i)  Provide  Holders and their  representatives  the  opportunity  to
review the  Registration  Statement and all  amendments or  supplements  thereto
prior to their  filing  with the SEC by  giving  the  Holder  at least  five (5)
business days advance written notice prior to such filing.

          (j) Provide each Holder with prompt  notice of the issuance by the SEC
or any state  securities  commission or agency of any stop order  suspending the
effectiveness of the Registration  Statement or the initiation of any proceeding
for such purpose. The Company shall use its best efforts to prevent the issuance
of any stop order and, if any is issued,  to obtain the  removal  thereof at the
earliest possible date.

          (k) Use its best efforts to list the Registrable Securities covered by
the Registration Statement with all securities exchanges or markets on which the
Common  Stock is then listed and prepare and file any  required  filing with the
NASD,  American Stock  Exchange,  NYSE and any other exchange or market on which
the Common Stock is listed.

     4. INEFFECTIVE PERIOD.

          (a) Ineffective  Period Payment.  Within five (5) Business Days of the
last day of any Ineffective Period, the Company will pay to the Investor in cash
("Ineffective  Period Payments"),  as liquidated damages for such suspension and

                                       5
<PAGE>
not as a penalty, an amount equal to the number of shares of Common Stock issued
to the  Investor  in any Put with a Pricing  Period End Date (as  defined in the
Investment  Agreement)  that is thirty (30)  business  days or less prior to the
date that the Ineffective Period commences, multiplied by the difference of

               (i) the highest  closing price of the Company's  Common Stock for
          any trading day during the Ineffective Period,

               minus

               (ii) the lowest  closing price of the Company's  Common Stock for
          the five (5) trading days including and immediately following the last
          trading day of such Ineffective Period.

          (b) LIQUIDATED DAMAGES.  The parties hereto acknowledge and agree that
the sums payable as  Ineffective  Period  Payments shall give rise to liquidated
damages and not penalties.  The parties further  acknowledge that (i) the amount
of loss or  damages  likely to be  incurred  by the  Holder is  incapable  or is
difficult to precisely  estimate,  (ii) the amounts  specified bear a reasonable
proportion and are not plainly or grossly  disproportionate to the probable loss
likely to be incurred by the Investor,  and (iii) the parties are  sophisticated
business parties and have been  represented by sophisticated  and able legal and
financial counsel and negotiated this Agreement at arm's length.

     5.  PIGGYBACK  REGISTRATION.   If  anytime  prior  to  the  date  that  the
Registration  Statement is declared  effective or during any Ineffective  Period
(as  defined in the  Investment  Agreement)  the  Company  proposes  to register
(including  for  this  purpose  a  registration  effected  by  the  Company  for
shareholders  other  than  the  Holders)  any  of its  Common  Stock  under  the
Securities Act in connection with the public offering of such securities  solely
for cash (other than a registration  relating  solely for the sale of securities
to  participants  in  a  Company  stock  plan  or a  registration  on  Form  S-4
promulgated   under  the  Securities  Act  or  any  successor  or  similar  form
registering stock issuable upon a reclassification,  upon a business combination
involving an exchange of securities or upon an exchange  offer for securities of
the issuer or another  entity),  the Company shall, at such time,  promptly give
each Holder  written  notice of such  registration  (a  "Piggyback  Registration
Statement").  Upon the written  request of each  Holder  given by fax within ten
(10) days after  mailing of such notice by the Company,  the Company shall cause
to be included in such  registration  statement  under the Securities Act all of
the Registrable  Securities that each such Holder has requested to be registered
("Piggyback  Registration")  and all of the  Additional  Warrant Shares that are
then  unregistered,  in each case to the extent such  inclusion does not violate
the  registration  rights of any other  security  holder of the company  granted
prior to the date hereof;  provided,  however, that nothing herein shall prevent
the Company from withdrawing or abandoning such registration  statement prior to
its effectiveness.

     6. LIMITATION ON OBLIGATIONS TO REGISTER UNDER A PIGGYBACK REGISTRATION. In
the case of a Piggyback Registration pursuant to an underwritten public offering
by the Company,  if the managing  underwriter  determines and advises in writing
that the  inclusion  in the  related  Piggyback  Registration  Statement  of all
Registrable  Securities  proposed  to  be  included  would  interfere  with  the
successful marketing of the securities proposed to be registered by the Company,
then the number of such Registrable  Securities to be included in such Piggyback
Registration  Statement,  to the extent any such  Registrable  Securities may be
included in such Piggyback Registration Statement,  shall be allocated among all

                                       6
<PAGE>
Holders who had requested Piggyback  Registration  pursuant to the terms hereof,
in the  proportion  that the number of  Registrable  Securities  which each such
Holder  seeks to register  bears to the total number of  Registrable  Securities
sought to be included by all Holders. If required by the managing underwriter of
such an underwritten public offering,  the Holders shall enter into an agreement
limiting the number of  Registrable  Securities to be included in such Piggyback
Registration  Statement and the terms, if any, regarding the future sale of such
Registrable Securities.

     7. DISPUTE AS TO REGISTRABLE SECURITIES.  In the event the Company believes
that shares sought to be  registered  under Section 2 or Section 5 by Holders do
not  constitute  "Registrable  Securities"  by  virtue  of  Section  2.1 of this
Agreement, and the status of those shares as Registrable Securities is disputed,
the Company shall  provide,  at its expense,  an Opinion of Counsel,  reasonably
acceptable to the Holders of the  Securities at issue (and  satisfactory  to the
Company's transfer agent to permit the sale and transfer), that those securities
may  be  sold   immediately,   without  volume   limitation  or  other  material
restrictions,  without  registration under the Securities Act, by virtue of Rule
144 or similar provisions.

     8. FURNISH INFORMATION. At the Company's request, each Holder shall furnish
to the Company such information  regarding  Holder,  the Registrable  Securities
held by it, and the intended  method of  disposition  of such  securities to the
extent required to effect the  registration of its Registrable  Securities or to
determine  that  registration  is not  required  pursuant  to Rule  144 or other
applicable  provision  of the  Securities  Act.  The Company  shall  include all
information  provided  by  such  Holder  pursuant  hereto  in  the  Registration
Statement,  substantially  in the  form  supplied,  except  to the  extent  such
information is not permitted by law.

     9. EXPENSES. All expenses,  other than commissions and fees and expenses of
counsel to the selling  Holders,  incurred  in  connection  with  registrations,
filings or qualifications  pursuant hereto,  including (without  limitation) all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company, shall be borne by the Company.

     10.  INDEMNIFICATION.  In the event any Registrable Securities are included
in a Registration Statement under this Agreement:

          (a) To the extent  permitted by law, the Company  will  indemnify  and
hold harmless each Holder, the officers, directors, partners, legal counsel, and
accountants of each Holder,  any  underwriter (as defined in the Securities Act,
or as  deemed  by the  Securities  Exchange  Commission,  or as  indicated  in a
registration  statement)  for such Holder and each person,  if any, who controls
such Holder or  underwriter  within the meaning of Section 15 of the  Securities
Act or the Exchange Act,  against any losses,  claims,  damages,  or liabilities
(joint or several) to which they may become  subject under the  Securities  Act,
the Exchange Act or other federal or state law, insofar as such losses,  claims,
damages,  or  liabilities  (or actions in respect  thereof)  arise out of or are
based  upon  any of the  following  statements  or  omissions:  (i)  any  untrue
statement  or alleged  untrue  statement  of a material  fact  contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, or (ii) 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 the
Company will  reimburse  each such Holder,  officer or director,  underwriter or
controlling person for any legal or other expenses  reasonably  incurred by them

                                       7
<PAGE>
in connection  with  investigating  or defending any such loss,  claim,  damage,
liability, or action; provided,  however, that the indemnity agreement contained
in this  subsection  10(a) shall not apply to amounts paid in  settlement of any
such loss, claim,  damage,  liability,  or action if such settlement is effected
without the  consent of the Company  (which  consent  shall not be  unreasonably
withheld),  nor shall the  Company be liable in any such case for any such loss,
claim,  damage,  liability,  or action to the extent that it arises out of or is
based upon a violation  which  occurs in reliance  upon and in  conformity  with
written  information  furnished  expressly  for  use  in  connection  with  such
registration by any such Holder, officer,  director,  underwriter or controlling
person;  provided however, that the above shall not relieve the Company from any
other liabilities which it might otherwise have.

          (b) Promptly after receipt by an indemnified  party under this Section
10 of notice of the  commencement  of any  action  (including  any  governmental
action),  such  indemnified  party will, if a claim in respect  thereof is to be
made  against  any  indemnifying  party under this  Section  10,  deliver to the
indemnifying  party  a  written  notice  of the  commencement  thereof  and  the
indemnifying  party shall have the right to  participate  in, and, to the extent
the indemnifying  party so desires,  jointly with any other  indemnifying  party
similarly  noticed,  to  assume,  the  defense  thereof  with  counsel  mutually
satisfactory to the parties; provided,  however, that an indemnified party shall
have the right to retain its own counsel,  with the reasonably incurred fees and
expenses  of  one  such  counsel  to be  paid  by  the  indemnifying  party,  if
representation  of  such  indemnified  party  by  the  counsel  retained  by the
indemnifying party would be inappropriate due to actual or potential conflicting
interests between such indemnified party and any other party represented by such
counsel  in such  proceeding.  The  failure  to  deliver  written  notice to the
indemnifying  party within a  reasonable  time of the  commencement  of any such
action,  if materially  prejudicial to its ability to defend such action,  shall
relieve such indemnifying  party of any liability to the indemnified party under
this  Section  10,  but  the  omission  so to  deliver  written  notice  to  the
indemnifying  party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 10.

          (c) To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and  satisfaction  of each of the indemnified  liabilities  which it
would be required to make if such foregoing undertaking was enforceable which is
permissible under applicable law.

          (d) The  obligations  of the Company and Holders under this Section 10
shall  survive the resale,  if any, of the Common Stock,  the  completion of any
offering  of  Registrable  Securities  in a  Registration  Statement  under this
Agreement, and otherwise.

     11.  REPORTS UNDER  EXCHANGE  ACT.  With a view to making  available to the
Holders the benefits of Rule 144  promulgated  under the  Securities Act and any
other rule or regulation of the SEC that may at any time permit a Holder to sell
securities of the Company to the public without registration, the Company agrees
to:

          (a) make and keep  public  information  available,  as those terms are
understood and defined in Rule 144; and

          (b) use its best  efforts to file with the SEC in a timely  manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act.

                                       8
<PAGE>
     12. AMENDMENTS TO REGISTRATION  RIGHTS. Any provision of this Agreement may
be amended and the observance  thereof may be waived  (either  generally or in a
particular  instance and either  retroactively or prospectively),  only with the
written  consent of the Company and the written  consent of each Holder affected
thereby.  Any  amendment or waiver  effected in accordance  with this  paragraph
shall be binding  upon each Holder,  each future  Holder,  and the Company.  The
Company will provide the Investor  five (5) business days notice prior to filing
any  amendment to the  Registration  Statement or any amendment or supplement to
the Prospectus and shall give the Investor the opportunity to review and comment
on any such amendment or  supplement.  Failure of the Investor to comment within
five (5) business days shall not preclude the Company from filing such amendment
or supplement after such notice period has expired.

     13. NOTICES.  All notices  required or permitted under this Agreement shall
be made in  writing  signed by the party  making  the same,  shall  specify  the
section  under  this  Agreement  pursuant  to which it is  given,  and  shall be
addressed if to (i) the Company at: Dimensional Visions Incorporated, Attn: John
D.  McPhilimy,  President,  2301 W. Dunlap Ave.,  Ste. 207,  Phoenix,  AZ 85021;
Telephone: (602) 997-1990, Facsimile: (602) 997-5658, (or at such other location
as directed by the Company in writing) and (ii) the Holders at their  respective
last  address as the party as shown on the records of the  Company.  Any notice,
except as otherwise  provided in this Agreement,  shall be made by fax and shall
be deemed given at the time of transmission of the fax.

     14. TERMINATION. This Agreement shall terminate on the date all Registrable
Securities  cease to exist (as that term is defined in Section 2.1 hereof);  but
without  prejudice  to (i) the  parties'  rights and  obligations  arising  from
breaches  of this  Agreement  occurring  prior to such  termination  (ii)  other
indemnification obligations under this Agreement.

     15. ASSIGNMENT. No assignment, transfer or delegation, whether by operation
of law or otherwise,  of any rights or  obligations  under this Agreement by the
Company or any Holder,  respectively,  shall be made  without the prior  written
consent of the majority in interest of the Holders or the Company, respectively;
provided that the rights of a Holder may be transferred  to a subsequent  holder
of the Holder's  Registrable  Securities (provided such transferee shall provide
to the Company, together with or prior to such transferee's request to have such
Registrable  Securities  included in a Registration,  a writing executed by such
transferee agreeing to be bound as a Holder by the terms of this Agreement), and
the Company hereby agrees to file an amended  registration  statement  including
such transferee as a selling  security holder  thereunder;  and provided further
that the Company may transfer its rights and obligations under this Agreement to
a purchaser of all or a substantial  portion of its business if the  obligations
of the  Company  under  this  Agreement  are  assumed  in  connection  with such
transfer,  either by merger or other operation of law (which may include without
limitation a transaction  whereby the Registrable  Securities are converted into
securities of the successor in interest) or by specific  assumption  executed by
the transferee.

     16.  GOVERNING  LAW. This  Agreement  shall be governed by and construed in
accordance  with the laws of the State of Georgia  applicable to agreements made
in and wholly to be performed in that  jurisdiction,  except for matters arising
under the  Securities  Act or the Exchange Act, which matters shall be construed
and  interpreted  in accordance  with such laws.  Any dispute  arising out of or
relating to this Agreement or the breach,  termination or validity  hereof shall
be finally  settled by the  federal or state  courts  located in FULTON  COUNTY,
GEORGIA.

                                       9
<PAGE>
     17. EXECUTION IN COUNTERPARTS PERMITTED.  This Agreement may be executed in
any number of  counterparts,  each of which  shall be  enforceable  against  the
parties actually  executing such  counterparts,  and all of which together shall
constitute one (1) instrument.

     18.  SPECIFIC  PERFORMANCE.  The Holder  shall be entitled to the remedy of
specific performance in the event of the Company's breach of this Agreement, the
parties agreeing that a remedy at law would be inadequate.

     19. INDEMNITY.  Each party shall indemnify each other party against any and
all claims, damages (including reasonable attorney's fees), and expenses arising
out of the first party's breach of any of the terms of this Agreement.

     20.  ENTIRE  AGREEMENT;   WRITTEN  AMENDMENTS  REQUIRED.   This  Agreement,
including the Exhibits  attached hereto,  the Investment  Agreement,  the Common
Stock certificates, and the other documents delivered pursuant hereto constitute
the full and entire  understanding and agreement between the parties with regard
to the subjects hereof and thereof, and no party shall be liable or bound to any
other party in any manner by any warranties, representations or covenants except
as  specifically  set forth  herein or  therein.  Except as  expressly  provided
herein,

                           [INTENTIONALLY LEFT BLANK]

                                       10
<PAGE>
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written  instrument  signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought.

     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of this
2nd day of MARCH, 2001.

                                        DIMENSIONAL VISIONS INCORPORATED

                                        By: /s/ John D. Mcphilimy
                                            ------------------------------------
                                            John D. McPhilimy, President

                                        Address: 2301 W. Dunlap Ave.
                                                 Suite 207
                                                 Phoenix, AZ 85021
                                                 Telephone: (602) 997-1990
                                                 Facsimile: (602) 997-5658

                                        INVESTOR:
                                        SWARTZ PRIVATE EQUITY, LLC.

                                        By: /s/ Eric S. Swartz
                                            ------------------------------------
                                            Eric S. Swartz, Manager

                                            Address: 300 Colonial Center Parkway
                                                     Suite 300
                                                     Roswell, GA  30076
                                                     Telephone: (770) 640-8130
                                                     Facsimile: (770) 640-7150

                                       11
<PAGE>
               AMENDED AND RESTATED WARRANT ANTIDILUTION AGREEMENT

     THIS AMENDED AND RESTATED WARRANT ANTIDILUTION  AGREEMENT (the "Agreement")
is  entered  into  as of  March  2,  2001,  by  and  among  DIMENSIONAL  VISIONS
INCORPORATED,  a corporation  duly  organized and existing under the laws of the
State of Delaware (the  "Company") and Swartz Private Equity,  LLC  (hereinafter
referred to as  "Swartz"),  and amends and  restates  the  Warrant  Antidilution
Agreement between the parties dated on or about December 22, 2000.

                                    RECITALS:

     WHEREAS, pursuant to the Company's offering ("Equity Line") of up to Twenty
Million  Dollars  ($20,000,000),  excluding  any funds paid upon exercise of the
Warrants,  of Common Stock of the Company  pursuant to that certain  Amended and
Restated Investment  Agreement (the "Investment  Agreement") between the Company
and Swartz  dated on or about March 2, 2001,  the Company has agreed to sell and
Swartz has agreed to purchase,  from time to time as provided in the  Investment
Agreement, shares of the Company's Common Stock for a maximum aggregate offering
amount of Twenty Million Dollars ($20,000,000); and

     WHEREAS, pursuant to the terms of the Investment Agreement, the Company has
agreed, among other things, to issue to Swartz Commitment  Warrants,  as defined
in the  Investment  Agreement,  to purchase a number of shares of Common  Stock,
exercisable for seven (7) years from their respective dates of issuance.

                                     TERMS:

     NOW, THEREFORE,  in consideration of the mutual promises,  representations,
warranties,  covenants and  conditions set forth in Agreement and for other good
and  valuable  consideration,  the  receipt and  sufficiency  of which is hereby
acknowledged, the parties hereto agree as follows:

1. ISSUANCE OF COMMITMENT WARRANTS. As compensation for entering into the Equity
Line,  Swartz  received  a  warrant  convertible  into  1,309,000  shares of the
Company's  Common  Stock,  in  the  form  attached  hereto  as  EXHIBIT  A  (the
"Commitment Warrants").

2. ISSUANCE OF ADDITIONAL WARRANTS. On each six month anniversary of the date of
execution  by the Company and the  Investor of the initial  Commitment  Warrants
(each, a "Six Month Anniversary  Date"), the Company shall issue to the Investor
additional warrants (the "Additional Warrants"),  to purchase a number of shares
of Common  Stock,  if  necessary,  such that the sum of the number of Commitment
Warrants and the number of Additional Warrants issued to Investor shall equal at
least "Y%" of the number of fully diluted  shares of Common Stock of the Company
on such Six Month  Anniversary Date (not including any shares issued or issuable
to Swartz),  where "Y" shall equal 7% for the first Six Month  Anniversary Date,
and shall be reduced by 0.5% for each Six Month  Anniversary  Date  beginning on
and following the second Six Month  Anniversary  Date. The  Additional  Warrants
shall be in the form of EXHIBIT A hereto, and shall initially be exerciseable at
the same price as the Commitment  Warrants (as most recently reset),  shall have
the same reset  provisions as the Commitment  Warrants (which resets shall occur

                                       1
<PAGE>
on each  six  month  anniversary  of the  date  of  issuance  of the  applicable
Additional  Warrant throughout the term of the applicable  Additional  Warrant),
shall have piggyback registration rights and shall have a 7-year term.

3.  OPINION OF  COUNSEL.  Concurrently  with the  issuance  and  delivery of the
Commitment Opinion (as defined in the Investment  Agreement) to the Investor, or
on the date that is six (6) months after the date of this  Agreement,  whichever
is sooner,  the  Company  shall  deliver to the  Investor  an Opinion of Counsel
(signed by the  Company's  independent  counsel)  covering  the  issuance of the
Commitment Warrants and the Additional Warrants,  and the issuance and resale of
the Common Stock  issuable  upon  exercise of the  Warrants  and the  Additional
Warrants.

4. CHANGE IN CORPORATE ENTITY. The Company shall not, at any time after the date
hereof, enter into any merger,  consolidation or corporate reorganization of the
Company with or into, or transfer all or substantially  all of the assets of the
Company to, another entity unless the resulting successor or acquiring entity in
such transaction,  if not the Company (the "Surviving  Entity"),  (i) has Common
Stock listed for trading on Nasdaq or on another  national stock exchange and is
a Reporting Issuer, (ii) assumes by written instrument the Company's obligations
with respect to this Warrant Antidilution Agreement and the Additional Warrants,
including but not limited to the  obligations to deliver to the Investor  shares
of Common Stock and/or  securities that Investor is entitled to receive pursuant
to this  Investment  Agreement and upon exercise of the Additional  Warrants and
agrees by written  instrument to reissue,  in the name of the Surviving  Entity,
any Additional  Warrants  (each in the same terms,  including but not limited to
the same reset  provisions,  as the  Commitment  Warrants  originally  issued or
required to be issued by the Company) that are outstanding  immediately prior to
such transaction,  making appropriate  proportional adjustments to the number of
shares  represented by such Warrants and the exercise prices of such Warrants to
accurately reflect the exchange represented by the transaction.

5.  GOVERNING  LAW.  This  Agreement  shall  be  governed  by and  construed  in
accordance  with the laws of the State of Georgia  applicable to agreements made
in and wholly to be performed in that  jurisdiction,  except for matters arising
under the Act or the  Securities  Exchange Act of 1934,  which  matters shall be
construed and interpreted in accordance with such laws.

     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of this
2nd day of March, 2001.

DIMENSIONAL VISIONS                     SUBSCRIBER:
INCORPORATED                            SWARTZ PRIVATE EQUITY, LLC.

By: /s/ John D. Mcphilimy               By: /s/ Eric S. Swartz
    ------------------------------          ------------------------------------
    John D. McPhilimy, President            Eric S. Swartz, Manager

2301 W. Dunlap Ave.                     300 Colonial Center Parkway
Suite 207                               Suite 300
Phoenix, AZ  85021                      Roswell, GA  30076
Telephone: (602) 997-1990               Telephone: (770) 640-8130
Facsimile:  (602) 997-5658              Facsimile:  (770) 640-7150

                                       2

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