Document:

EXHIBIT 4.5

                    EXALINK LTD. 2000 U.S. STOCK OPTION PLAN

1.       NAME

         This Plan, as amended from time to time, shall be known as the EXALINK
         LTD. 2000 U.S. Stock Option Plan (the "USSOP").

2.       PURPOSE OF THE OPTION PLAN

         The USSOP is intended to provide an incentive and to retain, in the
         employ of EXALINK LTD. (the "COMPANY") and its subsidiaries, persons of
         training, experience and ability, to attract new employees, directors
         and consultants whose services are considered valuable, to encourage
         the sense of proprietorship of such persons, and to stimulate the
         active interest of such persons in the development and financial
         success of the Company by providing them with opportunities to purchase
         shares of the Company, pursuant to the USSOP approved by the board of
         directors of the Company (the "BOARD").

         Options granted to the Optionees may or may not contain such terms as
         will qualify such options as Incentive Stock Options ("ISOS") within
         the meaning of Section 422 (b) of the United States Internal Revenue
         Code of 1986, as amended (the "CODE"). Options that do not contain
         terms as will qualify them as ISOs shall be referred to herein as
         Non-Qualified Stock Options ("NQSOS"). All options granted hereunder,
         whether aggregately or separately, shall be hereinafter referred to as
         "OPTIONS".

         The term "SUBSIDIARY" shall mean for the purposes of the USSOP: any
         company (other than the Company) in an unbroken chain of companies
         beginning with the Company if, at the time of granting an option, each
         of the companies other than the last company in the unbroken chain owns
         shares possessing fifty percent (50%) or more of the total combined
         voting power of all classes of shares in one of the other companies in
         such chain.

3.       ADMINISTRATION OF THE USSOP

         The Board and a share option committee appointed and maintained by the
         Board for such purpose (the "COMMITTEE") shall have the power to
         administer the USSOP. Notwithstanding the above, the Board shall
         automatically have a residual authority if no committee shall be
         constituted or if such Committee shall cease to operate for any reason
         whatsoever.

         The Committee shall consist of such number of members (not less than
         two (2)) as may be fixed by the Board. The Committee may select one of
         its members as its chairman ( the "CHAIRMAN") and shall hold its

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         meetings at such times and places as the Chairman shall determine
         subject to the terms of Company's Article of Association. The Committee
         shall keep records of its meetings and shall make such rules and
         regulations for the conduct of its business as it shall deem advisable.

         Any member of such Committee shall be eligible to receive Options under
         the USSOP while serving on the Committee, unless otherwise specified
         herein, and subject to applicable law.

         The Committee shall recommend the Board and the Board shall have full
         power and authority regarding:

         3.1      Designation of participants.

         3.2      The terms and provisions of respective Option agreements
                  (which need not be identical) including, but not limited to,
                  the number of shares in the Company to be covered by each
                  Option, provisions concerning the time or times when and the
                  extent to which the Options may be exercised and the nature
                  and duration of restrictions as to transferability or
                  restrictions constituting substantial risk of forfeiture.

         3.3      Acceleration of the right of an Optionee to exercise, in whole
                  or in part, any previously granted Option.

         The Committee shall have full power and authority to:

         3.4      Designate Options as ISO Options or NQSO Options.

         3.5      Interpret the provisions and supervise the administration of
                  the USSOP;

         3.6      Determine the Fair Market Value (as defined below) of the
                  Shares (as defined below).

         3.7      Determine any other matter which is necessary or desirable
                  for, or incidental to administration of the USSOP.

         Notwithstanding the above, the identity of each of the Optionees and
         the number of Shares covered by each Option must be ratified by the
         Board.

         The Board shall have the authority to grant, in its discretion, to the
         holder of an outstanding Option, in exchange for the surrender and
         cancellation of such Option, a new Option having a purchase price equal
         to, lower than or higher than the Purchase Price provided in the Option
         so surrendered and canceled, and containing such other terms and
         conditions as the Board may prescribe in accordance with the provisions
         of the USSOP.

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         Subject to the Articles of Association of the Company, all decisions
         and selections made by the Board or the Committee pursuant to the
         provisions of the USSOP shall be made by a majority of its members
         except that no member of the Board or the Committee shall vote on any
         proposed action of the Board or the Committee relating to any Option to
         be granted to that member. Subject to the Articles of Association of
         the Company any decision reduced to writing and signed by all of the
         members who are authorized to make such decision shall be fully
         effective as if it had been made by a majority at a meeting duly held.

         The interpretation and construction by the Committee of any provision
         of the USSOP or of any Option Agreement thereunder shall be final and
         conclusive unless otherwise determined by the Board.

         Subject to the Company's article of association, each member of the
         Board or the Committee shall be indemnified and held harmless by the
         Company against any cost or expense (including counsel fees) reasonably
         incurred by him, or any liability (including any sum paid in settlement
         of a claim with the approval of the Company) arising out of any act or
         omission to act in connection with the USSOP, unless arising out of
         such member's own fraud or bad faith, to the extent permitted by
         applicable law. Such indemnification shall be in addition to any rights
         of indemnification the member may have as a director or otherwise under
         the Company's Articles of Association, any agreement, any vote of
         shareholders or disinterested directors, insurance policy or otherwise.

         "FAIR MARKET VALUE" means, as of any date, the value of a Share
         determined as follows:

                  (I)      If the Shares are listed on any established stock
                           exchange or a national market system, including
                           without limitation the Nasdaq National Market system,
                           or The Nasdaq SmallCap Market of the Nasdaq Stock
                           Market , the Fair Market Value shall be the closing
                           sales price for such Shares (or the closing bid, if
                           no sales were reported), as quoted on such exchange
                           or system for the last market trading day prior to
                           time of determination, as reported in the Wall Street
                           Journal, or such other source as the Administrator
                           deems reliable.

                  (ii)     If the Shares are regularly quoted by a recognized
                           securities dealer but selling prices are not
                           reported, the Fair Market Value shall be the mean
                           between the high bid and low asked prices for the
                           Shares on the last market trading day prior to the
                           day of determination, or;

                  (iii)    In the absence of an established market for the
                           Shares, the Fair Market Value thereof shall be
                           determined in good faith by the Board or the
                           Committee.

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4.       DESIGNATION OF PARTICIPANTS

         4.1      The persons eligible to participate in the USSOP as recipients
                  of Options shall include any employees, directors, consultants
                  and service providers of the Company or of any Subsidiary. The
                  grant of an Option hereunder shall neither entitle the
                  Optionee to participate nor disqualify from participating in,
                  any other grant of Options pursuant to the USSOP or any other
                  option or stock plan of the Company or any of its affiliates.

         4.2      Incentive Stock Options may be granted only to employees of
                  the Company, its Parent (if any), and any Subsidiaries.
                  Non-Qualified Stock Options may be granted to employees,
                  Non-Employee Directors, consultants and advisers who, in the
                  opinion of the Board, are in a position to make a significant
                  contribution to the success of the Company, its Parent (if
                  any), and any Subsidiaries.

         4.3      To the extent applicable and anything in the USSOP to the
                  contrary notwithstanding, all grants of Options to directors
                  and office holders - as such term is defined in the Israeli
                  Companies Law -( the "COMPANIES LAW") shall be authorized and
                  implemented in accordance with the provisions of the Companies
                  Law, as in effect from time to time.

5.       SHARES RESERVED UNDER THE OPTION PLAN; RESTRICTIONS THEREON
         5.1      Subject to adjustments as set forth in Section 7 below, the
                  Company has reserved a total of 500,000 authorized but
                  unissued Ordinary Shares par value NIS 0.01 each, of the
                  Company (the "SHARES"), for purpose of the USSOP and for the
                  purpose of the EXALINK LTD 2000 Israeli Stock Option Plan (the
                  "OPTION PLAN")subject to the adjustments as set forth in
                  paragraph 7 below. The Shares are hereby reserved for such
                  purpose out of the authorized share capital of the Company and
                  may only be issued under the terms hereof. Any of such Shares
                  which may remain unissued and which are are not subject to
                  outstanding Options upon the termination of the USSOP shall
                  cease to be reserved for the purpose of the USSOP, but until
                  termination of the USSOP the Company shall at all times
                  reserve sufficient number of Shares to meet the requirements
                  of the USSOP. Should any Option for any reason expire or be
                  canceled prior to its exercise or termination in full, the
                  unissued Shares subject to such Option may again be subjected
                  to an Option under the Option Plan or the USSOP.

         5.2      Each Option granted pursuant to the USSOP, shall be evidenced
                  by a written agreement between the Company and the Optionee
                  (the "OPTION AGREEMENT"), in such form as the Board or the
                  Committee shall from time to time approve. Each Option
                  Agreement shall state a number of the Shares to which the

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                  Option relates and the type of Option granted thereunder
                  (whether a an ISO or an NQSO).

         5.3      To the extent that the aggregate fair market value (determined
                  at the time of the grant) of Shares with respect to which
                  incentive stock options are exercisable for the first time by
                  the Participant during any calendar year under all plans of
                  the Company and its affiliates exceeds $100,000, the options
                  or portions thereof which exceed such limit (according to the
                  order in which they were granted) shall be treated as
                  non-qualified stock options. It should be understood that,
                  because of such limit, there is no assurance the all of the
                  Options will, in fact, be treated as an incentive stock
                  options.

6.       PURCHASE PRICE

         6.1      The purchase price of each Share subject to an Option to be
                  granted or any portion thereof shall be determined by the
                  Board or the Committee in its sole and absolute discretion in
                  accordance with applicable law, subject to any guidelines as
                  may be determined by the Board from time to time (the
                  "PURCHASE PRICE"). The Purchase Price of the Shares covered by
                  each ISO shall be not less than the Fair Market Value of the
                  Company shares on the date the Option is granted; provided,
                  however, that the purchase price of the Shares subject to any
                  ISO may not be less than 110% of the Fair Market Value of the
                  Company's shares on the date the Option is granted with
                  respect to Options granted to an eligible employee who owns
                  more than 10% of the outstanding voting stock of the Company.

6.2 THE PURCHASE PRICE SHALL BE PAYABLE UPON THE EXERCISE OF THE OPTION IN A
FORM SATISFACTORY TO THE BOARD OR THE COMMITTEE BY CASH OR CHECK. THE COMMITTEE
SHALL HAVE THE AUTHORITY TO POSTPONE THE DATE OF PAYMENT ON SUCH TERMS AS IT MAY
DETERMINE.

7.       ADJUSTMENTS

         Upon the occurrence of any of the following described events,
         Optionee's rights to purchase Shares under the USSOP shall be adjusted
         as hereafter provided:

7.1 IN THE EVENT OF A MERGER OF THE COMPANY WITH OR INTO ANOTHER COMPANY (THE
"Successor Company"), OR THE SALE OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OR
SHARES OF THE COMPANY (THE "Transaction") WHILE UNEXERCISED OPTIONS REMAIN

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OUTSTANDING UNDER THE USSOP, THEN EACH UNEXERCISED OPTION SHALL BE ASSUMED, OR
SUBSTITUTED FOR BY AN APPROPRIATE NUMBER OF SHARES, OF EACH CLASS OF SHARES OR
OTHER SECURITIES OF THE SUCCESSOR COMPANY (OR A PARENT OR SUBSIDIARY OF THE
SUCCESSOR COMPANY) WHICH WERE DISTRIBUTED TO THE SHAREHOLDERS OF THE COMPANY IN
RESPECT OF SUCH SHARES. IN THE CASE OF SUCH ASSUMPTION AND/OR SUBSTITUTION OF
SHARES, APPROPRIATE ADJUSTMENTS SHALL BE MADE IN THE PURCHASE PRICE TO REFLECT
SUCH ACTION, AND ALL OTHER TERMS AND CONDITIONS OF THE OPTION AGREEMENTS, SUCH
AS THE VESTING DATES, SHALL REMAIN IN FORCE, ALL AS WILL BE DETERMINED BY THE
COMMITTEE WHOSE DETERMINATION SHALL BE FINAL.

7.2 NOTWITHSTANDING THE ABOVE AND SUBJECT TO ANY APPLICABLE LAW, UNLESS THE
BOARD OR THE COMMITTEE DETERMINES OTHERWISE WITH RESPECT TO CERTAIN OPTION
AGREEMENTS, THERE SHALL BE A CLAUSE IN EACH OPTION AGREEMENT INSTRUCTING THAT IF
IN ANY SUCH TRANSACTION AS DESCRIBED IN SECTION 7.1 ABOVE, THE SUCCESSOR COMPANY
(OR PARENT OR SUBSIDIARY OF THE SUCCESSOR COMPANY) DOES NOT AGREE TO ASSUME OR
SUBSTITUTE FOR THE OPTIONS, ALL UNEXERCISED OPTIONS SHALL BE EXPIRED AS OF THE
DATE OF THE TRANSACTION.

7.3 FOR THE PURPOSES OF SECTION 7.1 ABOVE, THE OPTION SHALL BE CONSIDERED
ASSUMED OR SUBSTITUTED IF, FOLLOWING THE MERGER OR ACQUISITION, THE DOCUMENT
PURSUANT TO WHICH THE TRANSACTION OCCURS PROVIDE THAT THE OPTIONEE HAS THE RIGHT
TO PURCHASE OR RECEIVE, FOR EACH SHARE OF OPTIONED SHARES IMMEDIATELY PRIOR TO
THE TRANSACTION, THE CONSIDERATION (WHETHER SHARES, OPTIONS, CASH, OR OTHER
SECURITIES OR PROPERTY) RECEIVED IN THE TRANSACTION BY HOLDERS OF SHARES FOR
EACH SHARE HELD ON THE EFFECTIVE DATE OF THE TRANSACTION (AND IF SUCH HOLDERS
WERE OFFERED A CHOICE OF CONSIDERATION, THE TYPE OF CONSIDERATION CHOSEN BY THE
HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES) MINUS THE OPTION PRICE PER
SHARE; PROVIDED, HOWEVER, THAT IF SUCH CONSIDERATION RECEIVED IN THE TRANSACTION
IS NOT SOLELY ORDINARY SHARES (OR THEIR EQUIVALENT) OF THE SUCCESSOR COMPANY OR
ITS PARENT OR SUBSIDIARY, THE COMMITTEE MAY, WITH THE CONSENT OF THE SUCCESSOR
COMPANY, PROVIDE FOR THE CONSIDERATION TO BE RECEIVED UPON THE EXERCISE OF THE
OPTION TO BE SOLELY ORDINARY SHARES (OR THEIR EQUIVALENT) OF THE SUCCESSOR
COMPANY OR ITS PARENT OR SUBSIDIARY EQUAL IN FAIR MARKET VALUE TO THE PER SHARE
CONSIDERATION RECEIVED BY HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES IN THE
TRANSACTION; AND PROVIDED FURTHER THAT THE COMMITTEE MAY DETERMINE, IN ITS
DISCRETION, THAT IN LIEU OF SUCH ASSUMPTION OR SUBSTITUTION OF OPTIONS FOR
OPTIONS OF THE SUCCESSOR COMPANY OR ITS PARENT OR SUBSIDIARY, SUCH OPTIONS WILL
BE SUBSTITUTED FOR ANY OTHER TYPE OF ASSET OR PROPERTY INCLUDING CASH WHICH IS
FAIR UNDER THE CIRCUMSTANCES.

7.4 IF THE COMPANY IS LIQUIDATED OR DISSOLVED WHILE UNEXERCISED OPTIONS REMAIN
OUTSTANDING UNDER THE USSOP, THEN THE BOARD IN ITS OWN DISCRETION MAY DETERMINE
THAT ALL SUCH OUTSTANDING OPTIONS MAY BE EXERCISED IN FULL BY THE OPTIONEES AS
OF THE EFFECTIVE DATE OF ANY SUCH LIQUIDATION OR DISSOLUTION OF THE COMPANY
WITHOUT REGARD TO THE VESTING PROVISIONS HEREOF. IF THE BOARD DETERMINES THAT
THE OUTSTANDING OPTIONS MAY BE EXERCISED, ALL SUCH OUTSTANDING OPTIONS MAY BE

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EXERCISED IN FULL BY THE OPTIONEES GIVING NOTICE IN WRITING TO THE COMPANY OF
THEIR INTENTION TO SO EXERCISE TOGETHER WITH PAYMENT OF THE OPTION PRICE

7.5 IF THE OUTSTANDING SHARES OF THE COMPANY SHALL AT ANY TIME BE CHANGED OR
EXCHANGED BY DECLARATION OF A STOCK DIVIDEND (BONUS SHARES), STOCK SPLIT,
COMBINATION OR EXCHANGE OF SHARES, RECAPITALIZATION, OR ANY OTHER LIKE EVENT BY
OR OF THE COMPANY, AND AS OFTEN AS THE SAME SHALL OCCUR, THEN THE NUMBER, CLASS
AND KIND OF SHARES SUBJECT TO THE USSOP OR SUBJECT TO ANY OPTIONS THEREFORE
GRANTED, AND THE PURCHASE PRICES, SHALL BE APPROPRIATELY AND EQUITABLY ADJUSTED
SO AS TO MAINTAIN THE PROPORTIONATE NUMBER OF SHARES WITHOUT CHANGING THE
AGGREGATE PURCHASE PRICE, PROVIDED, HOWEVER, THAT NO ADJUSTMENT SHALL BE MADE BY
REASON OF THE DISTRIBUTION OF SUBSCRIPTION RIGHTS (RIGHTS OFFERING) ON
OUTSTANDING STOCK. UPON HAPPENING OF ANY OF THE FOREGOING, THE CLASS AND
AGGREGATE NUMBER OF SHARES ISSUABLE PURSUANT TO THE USSOP(AS SET FORTH IN
PARAGRAPH 6 HEREOF), IN RESPECT OF WHICH OPTIONS HAVE NOT YET BEEN EXERCISED,
SHALL BE APPROPRIATELY ADJUSTED, ALL AS WILL BE DETERMINED BY THE BOARD WHOSE
DETERMINATION SHALL BE FINAL.

7.6 ANYTHING HEREIN TO THE CONTRARY NOTWITHSTANDING, IF PRIOR TO THE COMPLETION
OF AN INITIAL PUBLIC OFFERING ALL OR SUBSTANTIALLY ALL OF THE SHARES OF THE
COMPANY ARE TO BE SOLD, OR UPON A TRANSACTION REORGANIZATION OR THE LIKE, ALL OR
SUBSTANTIALLY ALL OF THE SHARES OF THE COMPANY ARE TO BE EXCHANGED FOR
SECURITIES OF ANOTHER COMPANY, THEN EACH OPTIONEE SHALL BE OBLIGED TO SELL OR
EXCHANGE, AS THE CASE MAY BE, ANY SHARES SUCH OPTIONEE PURCHASED UNDER THE
USSOP, IN ACCORDANCE WITH THE INSTRUCTIONS ISSUED BY THE BOARD IN CONNECTION
WITH THE TRANSACTION, WHOSE DETERMINATION SHALL BE FINAL.

8.       TERM AND EXERCISE OF OPTIONS

8.1 AN OPTION SHALL BE EXERCISED BY THE OPTIONEE BY GIVING WRITTEN NOTICE TO THE
COMPANY, IN SUCH FORM AND METHOD AS MAY BE DETERMINED BY THE COMPANY, AND
PAYMENT OF OPTION PRICE. SUCH EXERCISE SHALL BE EFFECTIVE UPON RECEIPT OF SUCH
NOTICE AND FULL PAYMENT FOR THE SHARES WITH RESPECT TO WHICH THE OPTION IS BEING
EXERCISED, BY THE COMPANY AT ITS PRINCIPAL OFFICE. THE NOTICE SHALL SPECIFY THE
NUMBER OF SHARES WITH RESPECT TO WHICH THE OPTION IS BEING EXERCISED.

8.2 AN OPTION MAY BE EXERCISED BY THE OPTIONEE IN WHOLE AT ANY TIME OR IN PART
FROM TIME TO TIME, TO THE EXTENT THAT THE OPTION BECOMES VESTED AND EXCERCISABLE
FOLLOWING THE DATES FOR THE NUMBER OF SHARES AS SHALL BE PROVIDED FOR IN EXHIBIT
B TO THE OPTION AGREEMENT., AND UP TO THE NUMBER OF SHARES, AS PROVIDED IN
EXHIBIT B TO THE OPTIONEE'S OPTION AGREEMENT, BUT NO LATER THAN THE EARLIER OF:
(I) IN THE EVENT OF GRANT OF ISO'S, THE EXPIRATION OF EXPIRATION DATE (AS
DEFINED IN OPTIONEE'S OPTION AGREEMENT) OR 10 YEARS AFTER THE DATE OF GRANT,

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(II) IN THE EVENT OF GRANT OF ISO'S TO HOLDERS OF MORE THAN 10% OF THE SHARES,
THE EXPIRATION OF 5 YEARS FROM THE DATE OF GRANT; OR THE EXPIRATION DATE (AS
DEFINED IN THE OPTION AGREEMENT).

8.3 AN OPTION SHALL NOT BE TRANSFERABLE BY AN OPTIONEE OTHER THAN BY WILL OR
LAWS OF DESCENT AND DISTRIBUTION, AND DURING AN OPTIONEE'S LIFETIME MAY BE
EXERCISABLE ONLY BY THAT OPTIONEE.

8.4 THE OPTIONS MAY BE EXERCISED BY THE OPTIONEE IN WHOLE AT ANY TIME OR IN PART
FROM TIME TO TIME, TO THE EXTENT THAT THE OPTIONS BECOME VESTED AND ARE
EXERCISABLE AND PROVIDED THAT, SUBJECT TO THE PROVISIONS OF SECTION 8.6 BELOW,
THE OPTIONEE IS AN EMPLOYEE OF THE COMPANY OR ANY OF ITS SUBSIDIARIES, AT ALL
TIMES DURING THE PERIOD BEGINNING WITH THE GRANTING OF THE OPTION AND ENDING
UPON THE DATE OF EXERCISE.

8.5 SUBJECT TO THE PROVISIONS OF SECTION 8.6 BELOW, IN THE EVENT OF TERMINATION
OF OPTIONEE'S EMPLOYMENT WITH THE COMPANY OR ANY OF ITS SUBSIDIARIES, OR IF
APPLICABLE, THE TERMINATION OF SERVICES GIVEN BY THE OPTIONEE TO THE COMPANY OR
ANY OF ITS SUBSIDIARIES, ALL UNEXERCISED OPTIONS GRANTED TO THE OPTIONEE WILL
IMMEDIATELY EXPIRE. A NOTICE OF TERMINATION OF EMPLOYMENT OR SERVICES SHALL BE
DEEMED TO CONSTITUTE TERMINATION OF EMPLOYMENT OR SERVICES.

8.6 NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTION 8.4 AND 8.5 ABOVE, AN
OPTION MAY BE EXERCISED AFTER THE DATE OF TERMINATION OF OPTIONEE'S SERVICE OR
EMPLOYMENT WITH THE COMPANY OR ANY SUBSIDIARY OF THE COMPANY ONLY WITH RESPECT
TO THE NUMBER OF SHARES SUBJECT TO THE PORTION OF THE OPTION THAT HAS ALREADY
VESTED AND IS UNEXPIRED AT THE TIME OF SUCH TERMINATION ACCORDING TO THE VESTING
AND EXPIRATION PERIODS OF THE OPTIONS SET FORTH IN EXHIBIT B OF SUCH OPTIONEE'S
OPTION AGREEMENT, PROVIDED THAT EITHER:

8.6.1 prior to the date of such termination, the Committee shall authorize an
extension of the exercise period of all or part of the Option beyond the date of
such termination for a period not to exceed the period during which the Option
by its terms would otherwise have been exercisable; or -

8.6.2 such termination is without Cause (as defined below), in which event the
Option may be exercised within a period of 90 days from the date of such
termination; or -

8.6.3 such termination is the result of death or disability of the Optionee, in
which event the Option may be exercised within a period of 12 (twelve) months
from such date of termination.

                           The term "cause" shall mean (i) material misconduct
                           which has an adverse effect on the business and
                           affairs of Company; (ii) Optionee's (a) willful or
                           continued failure to substantially perform his
                           material job duties hereunder, or (b) material
                           misconduct which reasonably could be expected to have
                           an adverse effect on Company, including without
                           limitation disregard of lawful written instructions
                           of Company's Board of Directors consistent with
                           Optionee's position relating to the business of

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                           Company or neglect of duties or failure to act,
                           provided in each such case Company has given at least
                           thirty (30) day's prior written notice describing the
                           alleged breach, failure or misconduct in detail and
                           the Optionee has failed to cure such deficiency
                           within such thirty-day (30-day) period (provided such
                           breach, failure or misconduct is capable of being
                           cured within such period); (iii) gross negligence,
                           gross neglect of duties, including fiduciary duties,
                           or gross insubordination; (iv) conviction or plea of
                           no contest to common law fraud, a felony criminal act
                           or a crime involving moral turpitude; (v) abuse of
                           alcohol or other drugs or controlled substances to
                           the material detriment of Company; (vi) unauthorized
                           appropriation of Company's property.

8.6 SUBJECT TO THE PROVISIONS OF SECTION 9 BELOW, THE HOLDERS OF OPTIONS SHALL
NOT HAVE ANY OF THE RIGHTS OR PRIVILEGES OF SHAREHOLDERS OF THE COMPANY IN
RESPECT OF ANY SHARES PURCHASABLE UPON THE EXERCISE OF ANY PART OF AN OPTION,
NOR SHALL THEY BE DEEMED TO BE A CLASS OF SHAREHOLDERS OR CREDITORS OF THE
COMPANY FOR PURPOSE OF THE OPERATION OF SECTION 350 AND 351 OF THE COMPANIES LAW
OR SUCCESSOR TO SUCH SECTION, UNTIL REGISTRATION OF THE OPTIONEE AS HOLDER OF
SUCH SHARES IN THE COMPANY'S REGISTER OF MEMBERS UPON EXERCISE OF THE OPTION IN
ACCORDANCE WITH THE PROVISIONS OF THE USSOP.

8.7 ANY FORM OF OPTION AGREEMENT AUTHORIZED BY THE USSOP MAY CONTAIN SUCH OTHER
PROVISIONS AS THE COMMITTEE MAY, FROM TIME TO TIME, DEEM ADVISABLE. WITHOUT
LIMITING THE FOREGOING THE COMMITTEE MAY, WITH THE CONSENT OF THE OPTIONEE, FROM
TIME TO TIME, CANCEL ALL OR ANY PORTION OF ANY OPTION THEN SUBJECT TO EXERCISE,
AND THE COMPANY'S OBLIGATION IN RESPECT OF SUCH OPTION MAY BE DISCHARGED BY (I)
PAYMENT TO THE OPTIONEE OF AN AMOUNT IN CASH EQUAL TO THE EXCESS, IF ANY, OF THE
FAIR MARKET VALUE OF THE SHARES AT THE DATE OF SUCH CANCELLATION SUBJECT TO THE
PORTION OF THE OPTION SO CANCELED OVER THE AGGREGATE PURCHASE PRICE OF SUCH
SHARES, (II) THE ISSUANCE OR TRANSFER TO THE OPTIONEE OF SHARES OF THE COMPANY
WITH A FAIR MARKET VALUE AT THE DATE OF SUCH TRANSFER EQUAL TO ANY SUCH EXCESS,
OR (III) A COMBINATION OF CASH AND SHARES WITH A COMBINED VALUE EQUAL TO ANY
SUCH EXCESS, ALL AS DETERMINED BY THE COMMITTEE IN THEIR SOLE DISCRETION.

         8.8      Options shall vest (i.e., Options shall become exercisable )
                  at the dates set forth in Section 3 OF EXHIBIT "B" to the
                  Option Agreement (the "VESTING DATE"). An Option may be
                  granted subject to such other terms and conditions on the time
                  or times when it may be exercised, as the Committee or the
                  Board may deem appropriate to include in the Option Agreement.

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9.       SHARES SUBJECT TO RIGHT OF FIRST REFUSAL

            9.1   NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE ARTICLES OF
                  ASSOCIATION OF THE COMPANY, THE OPTIONEE SHALL NOT HAVE A
                  RIGHT OF FIRST REFUSAL IN RELATION TO ANY SALE OF SHARES IN
                  THE COMPANY.

           9.2    SALE OF SHARES BY THE OPTIONEE SHALL BE SUBJECT TO THE RIGHT
                  OF FIRST REFUSAL OF OTHER SHAREHOLDERS AS SET FORTH IN THE
                  ARTICLES OF ASSOCIATION OF THE COMPANY. IN THE EVENT THAT THE
                  ARTICLES OF ASSOCIATION OF THE COMPANY SHALL NOT CONTAIN ANY
                  PROVISION REGARDING RIGHTS OF FIRST REFUSAL, THEN, UNLESS
                  OTHERWISE PROVIDED BY THE BOARD, UNTIL SUCH TIME AS THE
                  COMPANY SHALL EFFECTUATE AN INITIAL PUBLIC OFFERING, THE SALE
                  OF SHARES ISSUABLE UPON EXERCISE OF AN OPTION, SHALL BE
                  SUBJECT TO A RIGHT OF FIRST REFUSAL ON THE PART OF THE
                  REPURCHASER(S).

                  THE TERM Repurchaser(s) SHALL MEANS (I) THE COMPANY, IF
                  PERMITTED BY APPLICABLE LAWS; ( II) IF THE COMPANY IS NOT
                  PERMITTED BY APPLICABLE LAWS, THEN ANY AFFILIATE OR SUBSIDIARY
                  OF THE COMPANY DESIGNATED BY A UNANIMOUS DECISION IS REACHED
                  BY THE BOARD OF DIRECTORS; OR ( III) IF NO UNANIMOUS DECISION
                  IS REACHED BY THE BOARD OF DIRECTORS , THEN THE COMPANY
                  EXISTING SHAREHOLDERS (SAVE, FOR AVOIDANCE OF DOUBT , FOR
                  OTHER OPTIONEES WHO ALREADY EXERCISED THEIR OPTIONS), PRO RATA
                  IN ACCORDANCE WITH THEIR SHAREHOLDING. THE OPTIONEE SHALL GIVE
                  A NOTICE OF SALE (THE "Notice") TO THE COMPANY IN ORDER TO
                  OFFER THE SHARES TO THE REPURCHASER(S), AND THE COMPANY WILL
                  FORWARD THE NOTICE TO THE EXISTING SHAREHOLDERS.
                  The Notice shall specify the Number of Shares offered for
                  sale, the price per Share, the payment terms the name of each
                  proposed purchaser or other Transferee ( "PROPOSED
                  TRANSFEREE"),. The Repurchaser(s) will be entitled for 30 days
                  from the day of receipt of the Notice ("THE 30 DAYS PERIOD"),
                  to purchase all or part of the offered Shares. If by the end
                  of the 30 Days Period not all of the offered Shares have been
                  purchased by the Repurchaser(s) , the Optionee will be
                  entitled to sell such Shares at any time during the 90 days
                  following the end of the 30 Days Period on terms not more
                  favorable than those set out in the Notice, provided that the
                  proposed Transferee agrees in writing that the provisions of
                  this section shall continue to apply to the Shares in the
                  hands of such proposed Transferee.

10.      PURCHASE FOR INVESTMENT

         The Company's obligation to issue Shares upon exercise of an Option
         granted under the Plan is expressly conditioned upon (a) the Company's
         completion of any registration or other qualifications of such Shares
         under any state and/or federal law, rulings or regulations or (b)
         representations and undertakings by the Optionee (or his legal

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         representative, heir or legatee, in the event of the Optionee's death)
         to assure that the sale of the Shares complies with any registration
         exemption requirements which the Company in its sole discretion shall
         deem necessary or advisable. Such required representations and
         undertakings may include representations and agreements that such
         Optionee (or his legal representative, heir, or legatee): (a) is
         purchasing such Shares for investment and not with any present
         intention of selling or otherwise disposing thereof; and (b) agrees to
         have placed upon the face and reverse of any certificates evidencing
         such Shares a legend setting forth (i) any representations and
         undertakings which such Optionee has given to the Company or a
         reference thereto and (ii) that, prior to effecting any sale or other
         disposition of any such Shares, the Optionee must furnish to the
         Company an opinion of counsel, satisfactory to the Company, that such
         sale or disposition will not violate the applicable laws, rules and
         regulations whether of the state of Israel or of the United States or
         any other State having jurisdiction over the Company and/or the
         Optionee requirements of State and federal laws and regulatory
         agencies.

11.      ASSIGNABILITY AND SALE OF OPTIONS

         Except as provided in section 8.3, no option granted hereunder, whether
         fully paid or not, shall be assignable, transferable or given as
         collateral or any right with respect to them given to any third party
         whatsoever, and during the lifetime of the Optionee each and all of
         such Optionee's rights to purchase Shares hereunder shall be
         exercisable only by the Optionee. Any such action made directly or
         indirectly, for an immediate validation or for a future one, shall be
         void.

12.      TERM OF THE OPTION PLAN

         The USSOP shall become effective on the date that it is adopted by the
         Board of Directors; provided, however, that no Option may be exercised
         until the Option Plan has been approved by the sharehholders of of the
         Company within 12 months before or after the date the USSOP is adopted
         by the Board . If the USSOP is not approved by the shareholders of the
         Company within twelve months after the date the USSOP is adopted by the
         Board, the USSOP and all Options granted thereunder shall be null and
         void. The USSOP shall terminate at the end of 10 years from the day of
         its adoption by the Board, unless earlier terminated pursuant to
         section 13.

13.      AMENDMENT; TERMINATION

THE BOARD MAY, AT ANY TIME AND FROM TIME TO TIME, AMEND, ALTER OR DISCONTINUE
THE USSOP, EXCEPT THAT NO AMENDMENT OR ALTERATION SHALL BE MADE WHICH WOULD

                                       11
<PAGE>

IMPAIR THE RIGHTS OF THE HOLDER OF ANY OPTION PREVIOUSLY GRANTED, WITHOUT HIS
WRITTEN CONSENT. TERMINATION OF THE USSOP SHALL NOT AFFECT THE COMMITTEE'S
AND/OR THE BOARD'S ABILITY TO EXERCISE THE POWERS GRANTED TO IT HEREUNDER AND
UNDER THE TERMS OF AN OPTION AGREEMENT WITH RESPECT TO THE OPTIONS GRANTED UNDER
THE USSOP PRIOR TO THE DATE OF SUCH TERMINATION.

14.      GOVERNMENT REGULATIONS
         The USSOP, the granting and exercise of Options hereunder, and the
         obligation of the Company to sell and deliver Shares issued upon
         exercise of such Options, shall be subject to all applicable laws,
         rules, and regulations of the United States or any other state having
         jurisdiction over the Company and the Optionee, including the
         registration of the Shares under the 1933 Act , and to such approvals
         by any governmental agencies or national securities exchanges as may be
         required.

15.      CONTINUANCE OF EMPLOYMENT OR HIRED SERVICES
         Neither the USSOP nor the Option Agreement with an Optionee shall
         impose any obligation on the Company or a subsidiary thereof, to
         continue employing any Optionee or hiring of the Optionee's services,
         and nothing in the USSOP or in any Option granted pursuant thereto
         shall confer upon any Optionee any right to continue in the employ or
         service of the Company or a subsidiary thereof or restrict the right of
         the Company or a subsidiary thereof to terminate such employment or
         service hiring at any time, with or without notice.

16.      GOVERNING LAW & JURISDICTION

         This USSOP shall be governed by and construed and enforced in
         accordance with the laws of the State of Israel applicable to contracts
         made and to be performed therein, without giving effect to the
         principles of conflict of laws. The competent courts of Tel-Aviv,
         Israel shall have sole jurisdiction in any matters pertaining to the
         USSOP.

17.      TAX CONSEQUENCES
         Any tax consequences arising from the grant or exercise of any Option,
         from the payment for Shares issued upon exercise of an Option or from
         any other event or act hereunder (of the Company and or its
         Subsidiaries or the Optionee), shall be borne solely by the Optionee.
         The Company and/or its subsidiaries shall withhold taxes according to
         the requirements under the applicable laws, rules, and regulations,
         including the withholding of taxes at source. Furthermore, the Optionee
         shall agree to indemnify the Company and/or its subsidisries and hold
         them harmless against and from any and all liability for any such tax
         or interest or penalty thereon, including without limitation,
         liabilities relating to the necessity to withhold, or to have withheld,
         any such tax from any payment made to the Optionee.

                                       12
<PAGE>

18.      NON-EXCLUSIVITY OF THE USSOP

         The adoption of the USSOP by the Board shall not be construed as
         amending, modifying or rescinding any previously approved incentive
         arrangements or as creating any limitations on the power of the Board
         to adopt such other incentive arrangements as it may deem desirable,
         including, without limitation, the granting of stock Options otherwise
         then under the USSOP, and such arrangements may be either applicable
         generally or only in specific cases. For the avoidance of doubt, prior
         grant of options to Optionees of the Company under their employment
         agreements, and not in the framework of any previous option plan, shall
         not be deemed an approved incentive arrangement for the purpose of this
         Section.

19.      MULTIPLE AGREEMENTS

THE TERMS OF EACH OPTION MAY DIFFER FROM OTHER OPTIONS GRANTED UNDER THE USSOP
AT THE SAME TIME, OR AT ANY OTHER TIME. THE COMMITTEE MAY ALSO GRANT MORE THAN
ONE OPTION TO A GIVEN OPTIONEE DURING THE TERM OF THE OPTION PLAN, EITHER IN
ADDITION TO, OR IN SUBSTITUTION FOR, ONE OR MORE OPTIONS PREVIOUSLY GRANTED TO
THAT OPTIONEE.

                                       13
<PAGE>

                                    EXHIBIT B
                                    ---------

                               TERMS OF THE OPTION
                               -------------------

NAME OF THE OPTIONEE:      ____________________

DATE OF GRANT:             ____________________

DESIGNATION:               ISO / NQSO

OPTION NUMBER:             ____________________

1.       NUMBER OF SHARES SUBJECT TO THE OPTION: ___________________________

2.       PURCHASE PRICE PER SHARE:          ___________________________

3.       VESTING PERIODS:
<TABLE>
         -------------------------------------------- -----------------------------------------
<S>                        <C>                                      <C>
                           NUMBER                                   VESTING DATE
         -------------------------------------------- -----------------------------------------

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

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

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

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

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

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

</TABLE>

4.       EXPIRATION DATE:                   10  YEARS FROM THE DATE OF GRANT

                                       14<PAGE>

================================================================================

                                                                    Exhibit 4.2

                              AMENDED AND RESTATED
                           SECURITYHOLDERS' AGREEMENT

                                  By and Among

                             HARVARD APPARATUS, INC.
                                 (the "Company")

                      PIONEER VENTURES LIMITED PARTNERSHIP,
                    PIONEER VENTURES LIMITED PARTNERSHIP II,
                             PIONEER CAPITAL CORP.,
                       FIRST NEW ENGLAND CAPITAL, L.P. and
                             CITIZENS CAPITAL, INC.
                    (collectively, the "Outside Investors"),
                                       and
                                 Chane Graziano
                                       and
                                   David Green
                   (collectively, the "Management Investors")

                            Dated as of March 2, 1999

================================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
ARTICLE I  DEFINITIONS............................................................................................1
         Section 1.1       Construction of Terms..................................................................1
         Section 1.2       Defined Terms..........................................................................2

ARTICLE II        TERMINATION, AMENDMENT AND RESTATEMENT; WAIVER AND CONSENT......................................5
         Section 2.1       Termination, Amendment and Restatement of Initial Investment Agreement.................5
         Section 2.2       Waiver of Rights; Consent..............................................................5
         Section 2.3       Waiver and Amendment of Warrants.......................................................6

ARTICLE III  REPRESENTATIONS AND WARRANTIES.......................................................................6
         Section 3.1       Representations and Warranties of the Investors........................................6
         Section 3.2       Representations and Warranties of the Company..........................................6

ARTICLE IV   REGISTRATION RIGHTS..................................................................................7
         Section 4.1       "Piggy-Back" Registration Rights.......................................................7
         Section 4.2       Required Registrations of the Outside Investors........................................8
         Section 4.3       Form S-3...............................................................................9
         Section 4.4       Postponement of Registration..........................................................10
         Section 4.5       Registrable Securities................................................................10
         Section 4.6       Further Obligations of the Company....................................................10
         Section 4.7       Indemnification; Contribution.........................................................12
         Section 4.8       Rule 144 and 144A Requirements........................................................14
         Section 4.9       Market Stand-Off......................................................................15
         Section 4.10      Transfer of Registration Rights.......................................................15
         Section 4.11      No other Registration Rights..........................................................15

ARTICLE V  RESTRICTIONS ON TRANSFER; RIGHT OF FIRST REFUSAL AND
                           OBLIGATIONS OF CO-SALE................................................................15
         Section 5.1       Restrictions on Transfer..............................................................15
         Section 5.2       Right of First Refusal................................................................16
         Section 5.3       Co-Sale Option........................................................................18
         Section 5.4       Take-Along............................................................................19
         Section 5.5       Assignment of Rights..................................................................20
         Section 5.6       Prohibited Transfers..................................................................20

ARTICLE VI  RIGHTS TO PURCHASE...................................................................................21
         Section 6.1       Right to Purchase.....................................................................21
         Section 6.2       Procedure.............................................................................21
         Section 6.3       Definitions...........................................................................21
         Section 6.4       Assignment of Rights..................................................................22

                                      (i)
<PAGE>

                                                                                                               Page
                                                                                                               ----

ARTICLE VII  ELECTION OF DIRECTORS OF THE COMPANY................................................................22
         Section 7.1       Voting of Shares for Election of Directors of the Company.............................22
         Section 7.2       Vacancies.............................................................................23
         Section 7.3       Meetings; Expenses....................................................................23
         Section 7.4       No Waiver.............................................................................24
         Section 7.5       Board Control Override................................................................24
         Section 7.6       Compensation Committee................................................................24

ARTICLE VIII  OTHER COVENANTS OF THE COMPANY.....................................................................24
         Section 8.1       Restricted Activities.................................................................24
         Section 8.2       Key Man Life Insurance................................................................26
         Section 8.3       Accounts and Records..................................................................26
         Section 8.4       Insurance.............................................................................26
         Section 8.5       Accounts and Reports..................................................................27
         Section 8.6       Information and Inspection............................................................28
         Section 8.7       Small Business Investment Act.........................................................28

ARTICLE IX  MISCELLANEOUS PROVISIONS.............................................................................29
         Section 9.1       Survival of Representations, Warranties and Covenants.................................29
         Section 9.2       Indemnification.......................................................................29
         Section 9.3       Legend on Securities..................................................................31
         Section 9.4       Amendment and Waiver..................................................................31
         Section 9.5       Notices...............................................................................32
         Section 9.6       Headings..............................................................................33
         Section 9.7       Counterparts..........................................................................33
         Section 9.8       Remedies; Severability................................................................33
         Section 9.9       Entire Agreement......................................................................33
         Section 9.10      Adjustments...........................................................................33
         Section 9.11      Law Governing.........................................................................34
         Section 9.12      Termination of Agreement..............................................................34
         Section 9.13      Cooperation...........................................................................34
         Section 9.14      Expenses..............................................................................34

ARTICLE X EVENTS OF DEFAULT......................................................................................35

ARTICLE XI  FAIR MARKET VALUE....................................................................................37

ARTICLE XII  ARBITRATION.........................................................................................37

ARTICLE XIII  TERMS OF THE SUBORDINATED DEBENTURES...............................................................38

</TABLE>

                                    EXHIBITS
         Exhibit A - Form of Joinder Agreement

                                      (ii)
<PAGE>

                              AMENDED AND RESTATED
                           SECURITYHOLDERS' AGREEMENT

         This Amended and Restated Securityholders' Agreement is made as of
March 2, 1999, by and among Harvard Apparatus, Inc., a Massachusetts corporation
(the "Company"), Chane Graziano ("Graziano") and David Green ("Green")
(collectively, the "Management Investors," except such term shall not include
Graziano in his capacity as an Outside Investor) and Pioneer Ventures Limited
Partnership, Pioneer Ventures Limited Partnership II, Pioneer Capital Corp.,
First New England Capital, L.P., Citizens Capital, Inc. and Graziano, but only
to the extent of and with respect to the securities purchased by Graziano on
March 15, 1996 pursuant to the Initial Investment Agreement (as defined below)
and not in his capacity as a Management Investor (collectively, the "Outside
Investors" and, together with the Management Investors, the "Investors" and each
individually, an "Investor").

                              W I T N E S S E T H:

         WHEREAS, reference is made to the Investment and Stockholders'
Agreement dated as of March 15, 1996 by and among the Company and certain of the
Investors (the "Initial Investment Agreement"), pursuant to which certain of the
Investors purchased shares of Common Stock, the Warrants, shares of Series A
Preferred Stock and other securities of the Company, and the parties thereto set
forth the terms of such investment and certain other matters.

         WHEREAS, concurrently herewith, the Company is selling, and certain of
the Outside Investors are purchasing, shares of Series B Preferred Stock of the
Company pursuant to the terms of that certain Securities Purchase Agreement of
even date herewith (the "Securities Purchase Agreement").

         WHEREAS, in connection with such sale and purchase of the Series B
Preferred Stock, the parties to the Initial Investment Agreement wish to amend
and restate their agreement with respect to the Company, the Series A Preferred
Stock, the Warrants and the Subordinated Debentures and provide for the issuance
of the Series B Preferred Stock so as to set forth their agreement with respect
to all of their shares of capital stock of the Company.

         NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:

ARTICLE I  DEFINITIONS

         SECTION 1.1 CONSTRUCTION OF TERMS. As used herein, the masculine,
feminine or neuter gender, and the singular or plural number, shall be deemed to
be or to include the other genders or number, as the case may be, whenever the
context so indicates or requires.

<PAGE>

         SECTION 1.2 DEFINED TERMS. Capitalized terms used but not defined
herein have the meanings ascribed thereto in the Securities Purchase Agreement.
The following capitalized terms, as used in this Agreement, shall have the
meanings set forth below.

         An "Affiliate" of any Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by or is
under common control with the first mentioned Person. A Person shall be deemed
to control another Person if such first Person possesses directly or indirectly
the power to direct, or cause the direction of, the management and policies of
the second Person, whether through the ownership of voting securities, by
contract or otherwise.

         "Articles of Organization" means the Amended and Restated Articles of
Organization of the Company in substantially the form attached as EXHIBIT A to
the Securities Purchase Agreement.

         "Bank Documents" shall mean the Amended and Restated Loan and Security
Agreement by and among the Company, as borrower, and Brown Brothers Harriman &
Co. as agent; and the lending institutions from time to time parties thereto and
the other documentation in connection with a loan to the Company in the
aggregate amount of $5,850,000, as the same may be amended from time to time.

         "Buyer" has the meaning set forth in Section 5.4.

         "Commission" means the Securities and Exchange Commission.

         "Common Stock" means the Common Stock, par value $0.01 per share, of
the Company issued in accordance with and subject to the terms of the Articles
of Organization, and any other common equity securities now or hereafter issued
by the Company (but not including the Preferred Stock), together with any other
shares of stock issued or issuable with respect thereto (whether by way of a
stock dividend, stock split or in exchange for or upon conversion of such shares
or otherwise in connection with a combination of shares, recapitalization,
merger, consolidation or other corporate reorganization).

         "Company" means Harvard Apparatus, Inc., a Massachusetts corporation,
and its successors and assigns, whether by way of merger, consolidation or
otherwise.

         "Compliance Certificate" has the meaning set forth in Section 8.5(a).

         "Controlling Person" has the meaning set forth in Section 4.7.

         "Co-Sale Option" has the meaning set forth in Section 5.3.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations promulgated thereunder.

                                       2
<PAGE>

         "Graziano" has the meaning set forth in the preamble to this Agreement.

         "Green" has the meaning set forth in the preamble to this Agreement.

         "Holder" has the meaning set forth in Section 4.1.

         "Initial Investment Agreement" has the meaning set forth in the
preamble to this Agreement.

         "Investors" has the meaning set forth in the preamble to this
Agreement.

         "Management Investors" has the meaning set forth in the preamble to
this Agreement except such term shall not include Graziano in his capacity as an
Outside Investor.

         "Management Investor Shares" means the shares of Common Stock owned by
the Management Investors from time to time, together with (i) those securities
purchased by Graziano pursuant to Sections 2.1, 2.2, 2.5. 2.6, 2.7 and 2.8 of
the Initial Investment Agreement and (ii) any other shares of Common Stock or
other securities of the Company from time to time held by the Management
Investors.

         "New Stock" has the meaning set forth in Section 6.3.

         "New Stock Offer" has the meaning set forth in Section 6.2.

         "Offeror" has the meaning set forth in Section 5.2.

         "Offer Notice" has the meaning set forth in Section 5.2.

         "Outside Investor" has the meaning set forth in the preamble to this
Agreement, except such term shall include Graziano only to the extent of and
with respect to the securities purchased by him pursuant to the Initial
Investment Agreement and not in his capacity as a Management Investor.

         "Outside Investor Shares" means the shares of Preferred Stock and the
shares of Common Stock to be received by the Outside Investors upon exercise of
the Warrants or conversion of the Series B Preferred Stock, together with any
other shares of Common Stock, Preferred Stock and other securities of the
Company held by the Outside Investors from time to time.

         "Percentage Ownership" has the meaning set forth in Section 6.3.

         "Permitted Transfer" has the meaning set forth in Section 5.1.

                                       3
<PAGE>

         "Permitted Transferee" means, with respect to the Outside Investors,
any Transferee thereof, and, with respect to either Management Investor, has the
meaning set forth in Section 5.1.

         "Person" means an individual, a corporation, an association, a
partnership, a limited liability company, an estate, a trust, and any other
entity or organization, governmental or otherwise.

         "Preferred Stock" means, collectively, the Series A Preferred Stock and
the Series B Preferred Stock.

         "Pro Rata Share" has the meaning set forth in Section 5.2.

         "Registrable Securities" shall have the meaning set forth in Section
4.5.

         "Required Outside Investors" means a majority-in-interest of the
Outside Investors, based upon holdings of Common Stock and assuming the exercise
of all outstanding Warrants and conversion of all outstanding shares of Series B
Preferred Stock (but excluding any securities purchased or acquired by Graziano
other than pursuant to the Initial Investment Agreement).

         "Right of First Refusal" has the meaning set forth in Section 5.2.

         "Sale" has the meaning set forth in Section 5.4.

         "Securities Act" means the Securities Act of 1933, as amended from time
to time, and the rules and regulations promulgated thereunder.

         "Securities Purchase Agreement" means the Securities Purchase Agreement
of even date herewith by and among the Company and certain of the Investors.

         "Selling Holder" has the meaning set forth in Section 4.7.

         "Series A Preferred Stock" means the Series A Redeemable Preferred
Stock of the Company, par value $0.01 per share, purchased by certain of the
Investors pursuant to the Initial Investment Agreement, with the terms set
forth in the Articles of Organization, together with any other shares issued
or issuable with respect thereto (whether by way of a stock dividend, stock
split or in exchange for or in replacement or upon conversion of such shares
or otherwise in connection with a combination of shares, recapitalization,
merger, consolidation or other corporate reorganization).

         "Series B Preferred Stock" means the Series B Convertible Preferred
Stock of the Company, par value $0.01 per share, purchased by certain of the
Investors pursuant to the Securities Purchase Agreement, with the terms set
forth in the Articles of Organization, together with any other shares issued or
issuable with respect thereto (whether by way of a

                                       4
<PAGE>

stock dividend, stock split or in exchange for or in replacement or upon
conversion of such shares or otherwise in connection with a combination of
shares, recapitalization, merger, consolidation or other corporate
reorganization).

         "Stock" means collectively, Preferred Stock and Common Stock, Common
Stock issued or to be issued upon conversion of convertible securities or
exercise of warrants or options, regardless of whether or not the convertible
securities are converted or the warrants or options are exercised, and other
equity securities of the Company.

         "Subordinated Debentures" means the Subordinated Debentures purchased
by certain of the Investors pursuant to Section 2.7 of the Initial Investment
Agreement.

         "Transaction Offer" has the meaning set forth in Section 5.2.

         "Transfer" means any direct or indirect offer, transfer, donation,
sale, assignment, pledge, hypothecation, grant of a security interest in,
conveyance of a beneficial ownership or other right in, or other disposal or
attempted disposal of all or any portion of a security or of any rights.
"Transferred" means the accomplishment of a Transfer, and "Transferee" means the
recipient of a Transfer.

         "Transferring Investor" has the meaning set forth in Section 5.2.

         "Warrants" means the warrants to purchase shares of Common Stock
purchased by certain of the Outside Investors and Graziano pursuant to the
Initial Investment Agreement.

ARTICLE II TERMINATION, AMENDMENT AND RESTATEMENT; WAIVER AND CONSENT

         SECTION 2.1 TERMINATION, AMENDMENT AND RESTATEMENT OF INITIAL
INVESTMENT AGREEMENT. In accordance with Section 12.5 of the Initial Investment
Agreement, by execution of this Agreement, the parties hereto hereby amend and
restate the Initial Investment Agreement in its entirety and replace such
Agreement with this Agreement, intending to be bound in accordance with the
terms hereof. The provisions of this Agreement shall replace and be in
substitution for the Initial Investment Agreement. To the extent that any other
agreement or document that was executed or delivered in connection with the
Initial Investment Agreement referred to or incorporated by reference the
Initial Investment Agreement, such agreements and documents shall be deemed to
be modified to the extent necessary to refer to or incorporate by reference the
provisions set forth in this Agreement.

         SECTION 2.2 WAIVER OF RIGHTS; CONSENT. In connection with the purchase
and sale of the Series B Preferred Stock on the date hereof pursuant to the
Securities Purchase Agreement, the purchase of certain assets of Pharmacia
Biotech (Biochrom) Limited pursuant to the Asset Purchase Agreement and the
borrowings incurred in connection therewith under the Bank Documents, each of
the Investors hereby grants its consent to and waives any and all rights

                                       5
<PAGE>

that such Investor may have on the date hereof under the Initial Investment
Agreement, as amended and restated by this Agreement, as a result of such
transactions. Without limitation of the foregoing, each Outside Investor who is
a party to the Initial Investment Agreement hereby waives any right to purchase
additional securities pursuant to Article VIII thereof as a result of the sale
by the Company of the Series B Preferred Stock pursuant to the Securities
Purchase Agreement, and each Investor hereby grants its consent under Article X
of the Initial Investment Agreement and Article VIII of this Agreement to the
execution, delivery and performance by the Company of this Agreement, the
Securities Purchase Agreement, the Asset Purchase Agreement, the Bank Documents
and each other agreement, document or instrument contemplated hereby and
thereby.

         SECTION 2.3 WAIVER AND AMENDMENT OF WARRANTS. The parties hereto, in
their capacity as holders of all of the issued and outstanding Warrants, hereby
amend the terms of the Warrants as follows: (i) the defined term "Repurchase
Price" as used in Section 2(a) of the Warrants, is amended to refer to the
"Series A Redemption Price" as defined in the Articles of Organization and (ii)
the parties hereby agree that it shall not be a breach of, or an event of
default under, the Warrants or any promissory note issued pursuant to Section 3
thereof if the Company does not repurchase, redeem or otherwise make any payment
in respect of the Warrants or such notes in accordance with the terms thereof as
a result of (i) any prohibition thereof set forth herein or in the Articles of
Organization or (ii) any failure to grant consent thereto by the holders of the
Series A Preferred Stock and/or the Series B Preferred Stock.

ARTICLE III REPRESENTATIONS AND WARRANTIES

         SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. Each of
the Investors, individually as to itself, severally and not jointly, hereby
represents, warrants and covenants to the Company as follows: (a) such Investor
has full authority, power and capacity, under its charter, by-laws, governing
partnership agreement or comparable constituent organizational documents (if
such Investor is a legal entity) to enter into this Agreement; (b) this
Agreement constitutes the valid and binding obligation of such Investor; and (c)
the execution, delivery and performance by such Investor of this Agreement: (i)
does not and will not violate any laws, rules or regulations of the United
States or any state or other jurisdiction applicable to such Investor, or
require such Investor to obtain any approval, consent or waiver of, or to make
any filing with, any Person that has not been obtained or made; and (ii) does
not and will not result in a breach of, constitute a default under, accelerate
any obligation under or give rise to a right of termination of any indenture or
loan or credit agreement or any other agreement, contract, instrument, mortgage,
lien, lease, permit, authorization, order, writ, judgment, injunction, decree,
determination or arbitration award to which such Investor is a party or by which
the property of such Investor is bound or affected, or result in the creation or
imposition of any mortgage, pledge, lien, security interest or other charge or
encumbrance on any of the assets or properties of such Investor.

         SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company hereby represents, warrants and covenants to the Investors as follows:
(a) the Company has full

                                       6
<PAGE>

corporate authority, power and capacity under its Articles of Organization and
Bylaws to enter into this Agreement; (b) this Agreement constitutes the valid
and binding obligation of the Company enforceable against it in accordance with
its terms; and (c) the execution, delivery and performance by the Company of
this Agreement: (i) does not and will not violate any laws, rules or regulations
of the United States or any state or other jurisdiction applicable to the
Company, or require the Company to obtain any approval, consent or waiver of, or
to make any filing with, any Person that has not been obtained or made; and (ii)
does not and will not result in a breach of, constitute a default under,
accelerate any obligation under or give rise to a right of termination of any
indenture or loan or credit agreement or any other agreement, contract,
instrument, mortgage, lien, lease, permit, authorization, order, writ, judgment,
injunction, decree, determination or arbitration award to which the Company is a
party or by which the property of the Company is bound or affected, or result in
the creation or imposition of any mortgage, pledge, lien, security interest or
other charge or encumbrance on any of the assets or properties of the Company.

ARTICLE IV  REGISTRATION RIGHTS

         SECTION 4.1 "PIGGY-BACK" REGISTRATION RIGHTS. If at any time or times
after the Closing Date, the Company shall determine or be required to register
any shares of its Common Stock for sale under the Securities Act (whether in
connection with a public offering of securities by the Company (a "primary
offering"), a public offering of securities by stockholders of the Company (a
"secondary offering"), or both, but not in connection with a registration
effected solely to implement an employee benefit plan or a transaction to which
Rule 145 or any other similar rule of the Commission under the Securities Act is
applicable), the Company will promptly give written notice thereof to the
Investors and any other Person to whom the Company has granted "piggy-back"
registration rights with respect to the Common Stock (including Common Stock
issued or issuable upon exercise of any Warrants or conversion of any shares of
Series B Preferred Stock) (referred to for purposes of this Article IV
collectively as the "Holders" and individually as a "Holder," subject to Section
4.10 below). If within 30 days after the delivery of such notice by the Company,
one or more Holders of Registrable Securities (as hereinafter defined) requests
in a writing delivered to the Company the inclusion of some or all of the
Registrable Securities (but not any other securities) held by them in such
registration, the Company will use its best efforts to effect the registration
under the Securities Act of all such Registrable Securities. In the case of the
registration of shares of Common Stock by the Company in connection with an
underwritten public offering, (i) the Company shall not be required to include
any Registrable Securities in such underwriting unless the Holders thereof
accept the terms of the underwriting as agreed upon between the Company and the
underwriter or underwriters selected by it (provided the same is not
inconsistent with the terms of this Agreement), and (ii) if the underwriter(s)
determines that marketing factors require a limitation on the number of
Registrable Securities to be offered, the Company shall not be required to
register Registrable Securities of the Holders in excess of the amount, if any,
of shares of the capital stock which the principal underwriter of such
underwritten offering shall reasonably and in good faith agree to include in
such offering in excess of any amount to be registered for the Company. In the
event of any

                                       7
<PAGE>

such limitation, the first shares to be included in such registration shall be
any shares to be registered for the benefit of the Company, and thereafter the
priority of the remaining securities to be included in such registration shall
be as follows: (1) for so long as there are any shares of Series B Preferred
Stock outstanding, any Registrable Securities to be registered for the holders
thereof upon conversion of such Series B Preferred Stock shall be included on a
pro rata basis based on their relative ownership of Series B Preferred Stock;
(2) until the Subordinated Debentures and Series A Preferred Stock held by the
Outside Investors (or their transferees) have been paid in full or redeemed, as
applicable, any Registrable Securities to be registered for the benefit of the
Outside Investors (or their transferees) (other than as provided in clause (1)
above) shall be included on a pro rata basis based on their relative ownership
of such Registrable Securities (excluding for this purpose (i) any shares of
Series B Preferred Stock or Common Stock issued upon conversion thereof and (ii)
any securities purchased or acquired by Graziano other than pursuant to the
Initial Investment Agreement); and (3) thereafter any Registrable Securities
which any other Holders have requested to be registered shall be included, based
upon their respective holdings of Registrable Securities. After such time as the
Subordinated Debentures and Series A Preferred Stock held by the Outside
Investors (or their transferees) have been paid in full or redeemed, as
applicable, Registrable Securities which any Holders under clauses (2) and (3)
above have requested to be registered shall be included on a pro rata basis
(subject to any shares with priority pursuant clause (1) above), based upon
their respective holdings of Registrable Securities. All expenses relating to
the registration and offering of Registrable Securities pursuant to this Section
4.1 (including the reasonable fees and expenses of not more than one independent
counsel for the Holders) shall be borne by the Company, except that the Holders
shall bear underwriting and selling commissions attributable to their
Registrable Securities being registered and any transfer taxes on shares being
sold by such Holders.

         SECTION 4.2 REQUIRED REGISTRATIONS OF THE OUTSIDE INVESTORS. If on any
two (2) occasions, Outside Investors holding 30% or more of the then outstanding
Registrable Securities held by all Outside Investors shall notify the Company in
writing that they intend to offer or cause to be offered for public sale all or
any portion of their Registrable Securities, the Company shall notify all of the
Holders of Registrable Securities who are entitled to notice of a proposed
registration under or as contemplated by Section 4.1 above, if any, of its
receipt of such notification. Upon the written request of any such Holder
delivered to the Company within 30 days after delivery by the Company of such
notification, the Company will, at its election, either (i) elect to make a
primary offering or (ii) use its best efforts to cause such of the Registrable
Securities as may be requested by any Holders (including the Holder or Holders
giving the initial notice of intent to register) to be registered under the
Securities Act in accordance with the terms of this Section 4.2; PROVIDED,
HOWEVER, that if such registration is underwritten and the underwriter
determines that a limitation on the number of shares to be underwritten is
required, the first shares to be excluded from such registration shall be any
shares to be registered for the benefit of the Company, thereafter any shares to
be registered for the benefit of any Holders other than the Outside Investors
based upon their respective holdings of Registrable Securities and thereafter
any shares to be registered for the benefit of the Outside Investors; PROVIDED,
HOWEVER, that in the event less than 70% of the Registrable Securities desired
to be registered by the Outside Investors initiating the registration pursuant

                                       8
<PAGE>

to the first sentence of this Section 4.2 are registered in such registration,
such registration may be terminated by a majority-in-interest of such Outside
Investors (based upon holdings of Common Stock on an as-converted basis), in
which event such registration shall not count as one of the two (2) demand
registrations pursuant to such sentence, notwithstanding that the Company may
determine to proceed with such registration. If so requested by the Outside
Investors requesting registration under this Section 4.2, the Company shall take
such steps as are required to register the relevant Holders' Registrable
Securities for sale on a delayed or continuous basis under Rule 415, and to keep
such registration effective for 180 days (or 120 days in the case of a
registration on Form S-3, if applicable) or until all of such Holders'
Registrable Securities registered thereunder are sold, whichever is shorter. All
expenses of such registrations and offerings (other than underwriting and
selling commissions attributable to the Registrable Securities) and the
reasonable fees and expenses of not more than one independent counsel for the
Holders in connection with any registration pursuant to this Section 4.2 shall
be borne by the Company. Any registration effected pursuant to this Section 4.2
and so designated by the Outside Investors shall be subject to this Section 4.2,
regardless of the form in which such registration is effected. Notwithstanding
anything contained herein to the contrary, at any time after a notice by the
Outside Investors has been sent pursuant to the first sentence of this Section
4.2 (the "Election Notice"), the Required Outside Investors may send a notice
rescinding such Election Notice and thereafter no Holder shall have any right to
have any Registrable Securities offered or registered in connection with such
Election Notice.

         SECTION 4.3 FORM S-3. If the Company becomes eligible to use Form S-3
under the Securities Act or a comparable successor form, the Company shall use
its best efforts to continue to qualify at all times for registration of its
capital stock on Form S-3 or such successor form. In addition to their rights
under Section 4.2 hereof, the Outside Investors shall have the right to request
and have effected registrations of Registrable Securities on Form S-3 or such
successor form for a public offering of shares of Registrable Securities having
an aggregate proposed offering price of not less than $2,000,000 (such requests
shall be in writing and shall state the number of shares of Registrable
Securities to be disposed of and the intended method of disposition of such
shares by the Outside Investors). The Company shall give notice to all of the
Holders of Registrable Securities of the receipt of a request for registration
pursuant to this Section 4.3 and upon the written request of any such Holder
delivered to the Company within 20 days after receipt from the Company, the
Company shall use its best efforts to cause such of the Registrable Securities
as may be required by any Holder to be registered under the Securities Act on
Form S-3 (or any successor form). If so requested by the Holders initiating the
demand under this Section 4.3, the Company shall take such steps as are required
to register the requesting Holders' Registrable Securities for sale on a delayed
or continuous basis under Rule 415 and to keep such registration effective for
120 days or until all of such Holders' Registrable Securities registered
thereunder are sold, whichever is shorter. All expenses incurred in connection
with a registration requested pursuant to this Section 4.3 (other than
underwriting and selling commissions attributable to the Registrable Securities)
and the reasonable fees and expenses of not more than one independent counsel
for the Holders shall be borne by the Company.

                                       9

<PAGE>

         SECTION 4.4 POSTPONEMENT OF REGISTRATION.

                           (a) The Company may postpone the filing of any
         registration statement required under Section 4.2 or 4.3 for a
         reasonable period of time, not to exceed 60 days during any
         twelve-month period, if the Company has been advised by legal counsel
         that such filing would require a special audit or the disclosure of a
         material impending transaction or other matter and the Company
         determines reasonably and in good faith that such disclosure would have
         a material adverse effect on the Company. The Company shall not be
         required to cause a registration statement requested pursuant to
         Section 4.2 or 4.3 to become effective prior to 90 days following the
         effective date of a registration statement initiated by the Company if
         the request for registration has been received by the Company
         subsequent to the delivery of written notice by the Company, made in
         good faith, to the Holders of Registrable Securities to the effect that
         the Company is commencing to prepare a Company-initiated registration
         statement (other than a registration effected solely to implement an
         employee benefit plan or a transaction to which Rule 145 or any other
         similar rule of the Commission under the Securities Act is applicable);
         PROVIDED, HOWEVER, that the Company shall use its best efforts to cause
         such Company-initiated registration statement to become effective
         promptly.

                           (b) In the event that the Company notifies the
         Holders of Registrable Securities of any postponement of registration
         pursuant to the foregoing subparagraph (a), such Holders shall keep all
         information regarding such postponement confidential.

         SECTION 4.5 REGISTRABLE SECURITIES. For the purposes of this Article
IV, the term "Registrable Securities" and any and all references to Registrable
Securities held by any Person shall mean any shares of Common Stock purchased by
or issued to an Investor prior to, at or after the Closing, and shall also mean
shares of Common Stock issuable pursuant to the conversion of Series B Preferred
Stock, the exercise of Warrants and, to the extent then vested, options,
notwithstanding that any such shares of Series B Preferred Stock have not been
converted or such Warrants or options have not been exercised; PROVIDED,
HOWEVER, that any Common Stock that is sold in a registered sale pursuant to an
effective registration statement under the Securities Act or pursuant to Rule
144 thereunder, or that may be sold without restriction pursuant to Rule 144(k)
under the Securities Act (as confirmed by an unqualified opinion of counsel to
the Company), shall not be deemed Registrable Securities.

         SECTION 4.6 FURTHER OBLIGATIONS OF THE COMPANY. Whenever under the
preceding Sections of this Article IV the Company is required hereunder to
register any Registrable Securities, it agrees that it shall also do the
following:

                           (a) Pay all expenses of such registrations and
         offerings (exclusive of underwriting discounts and commissions) and the
         reasonable fees and expenses of not more than one independent counsel
         for the Holders satisfactory to a majority-in-interest of the Holders
         (based upon holdings of Common Stock on an as-converted basis);

                                       10
<PAGE>

                           (b) Use its best efforts (with due regard to the
         management of the ongoing business of the Company) diligently to
         prepare and file with the Commission a registration statement and such
         amendments and supplements to said registration statement and the
         prospectus used in connection therewith as may be necessary to keep
         said registration statement effective and to comply with the provisions
         of the Securities Act with respect to the sale of securities covered by
         said registration statement for the lesser of (i) 180 days (or 120 days
         in the case of registration or Form S-3) or (ii) the period necessary
         to complete the proposed public offering;

                           (c) Furnish to each selling Holder such number of
         copies of each preliminary and final prospectus and such other
         documents as such Holder may reasonably request to facilitate the
         public offering of its or his Registrable Securities;

                           (d) Enter into any reasonable underwriting agreement
         required by the proposed underwriter for the selling Holders, if any,
         in such form and containing such terms as are customary and not
         inconsistent with the terms of this Agreement; PROVIDED, HOWEVER, that
         no Holder shall be required to make any representations or warranties
         other than with respect to its title to the Registrable Securities and
         any written information provided by the Holders to the Company, and if
         the underwriter requires that representations or warranties be made,
         the Company shall make all such representations and warranties relating
         to the Company;

                           (e) Use its best efforts to register or qualify the
         securities covered by said registration statement under the securities
         or "blue-sky" laws of such jurisdictions as any selling Holders may
         reasonably request; PROVIDED that the Company shall not be required to
         register or qualify securities in any jurisdictions which require it to
         qualify to do business or subject itself to general service of process
         therein;

                           (f) Immediately notify each selling Holder, at any
         time when a prospectus relating to such Holder's Registrable Securities
         is required to be delivered under the Securities Act, of the happening
         of any event as a result of which such prospectus contains an untrue
         statement of a material fact or omits any material fact necessary to
         make the statements therein not misleading, and, at the request of any
         such selling Holder, prepare a supplement or amendment to such
         prospectus so that, as thereafter delivered to the purchasers of such
         Registrable Securities, such prospectus will not contain any untrue
         statement of a material fact or omit to state any material fact
         necessary to make the statements therein not misleading;

                           (g) Cause all such Registrable Securities to be
         listed on each securities exchange or quoted in each quotation system
         on which similar securities issued by the Company are then listed or
         quoted (or, in the case of the Company's initial public offering, such
         exchange or quotation system as the Company may determine);

                                       11
<PAGE>

                           (h) Otherwise use its best efforts to comply with all
         applicable rules and regulations of the Commission and make generally
         available to its security holders, in each case as soon as practicable,
         but not later than 45 days after the close of the period covered
         thereby (90 days in case the period covered corresponds to a fiscal
         year of the Company), an earnings statement of the Company which will
         satisfy the provisions of Section 9(a) of the Securities Act;

                           (i) Obtain and furnish to each selling Holder,
         immediately prior to the effectiveness of the registration statement
         (and, in the case of an underwritten offering, at the time of delivery
         of any Registrable Securities sold pursuant thereto), a cold comfort
         letter from the Company's independent public accountants in the same
         form and covering the same matters as is typically delivered to
         underwriters and, in the event that an underwriter or underwriters have
         been retained in connection with such registration, such cold comfort
         letter to be provided to the selling Holders shall be the same cold
         comfort letter delivered to such underwriter or underwriters; and

                           (j) Otherwise cooperate with the underwriter or
         underwriters, the Commission and other regulatory agencies and take all
         actions and execute and deliver or cause to be executed and delivered
         all documents necessary to effect the registration of any Registrable
         Securities under this Article IV.

         SECTION 4.7 INDEMNIFICATION; CONTRIBUTION.

                           (a) Incident to any registration statement referred
         to in this Article IV and subject to applicable law, the Company will
         indemnify and hold harmless each underwriter, each Holder who offers or
         sells any such Registrable Securities in connection with such
         registration statement (including its partners (including partners of
         partners and stockholders of any such partners), and directors,
         officers, employees and agents of any of them (a "Selling Holder"), and
         each person who controls any of them within the meaning of Section 15
         of the Securities Act or Section 20 of the Exchange Act (a "Controlling
         Person") (each, an "Indemnified Party"), from and against any and all
         losses, claims, damages, expenses and liabilities, joint or several
         (including any investigation, legal and other expenses incurred in
         connection with, and any amount paid in settlement of, any action, suit
         or proceeding or any claim asserted), to which they, or any of them,
         may become subject under the Securities Act, the Exchange Act or other
         federal or state statutory law or regulation, at common law or
         otherwise, insofar as such losses, claims, damages, expenses or
         liabilities arise out of or are based on (i) any untrue statement or
         alleged untrue statement of a material fact contained in such
         registration statement (including any related preliminary or definitive
         prospectus, or any amendment or supplement to such registration
         statement or prospectus), (ii) any omission or alleged omission to
         state in such document a material fact required to be stated in it or
         necessary to make the statements in it not misleading, or (iii) any
         violation by the Company of the Securities Act, any state securities or
         "blue sky" laws or any rule or regulation thereunder in connection with
         such registration; PROVIDED, HOWEVER, that the Company will not be
         liable to any Indemnified Party to the extent that

                                       12
<PAGE>

         such loss, claim, damage, expense or liability arises from and is based
         on an untrue statement or omission or alleged untrue statement or
         omission made in reliance on and in conformity with information
         furnished in writing to the Company by such Indemnified Party expressly
         for use in such registration statement (in such Person's capacity as a
         shareholder of the Company and not in its capacity as an officer or
         director of the Company and which such information relates to such
         Person's capacity as a shareholder). With respect to (but only with
         respect to) such untrue statement or omission or alleged untrue
         statement or omission in the information furnished in writing to the
         Company by such Selling Holder expressly for use in such registration
         statement (in such Person's capacity as a shareholder of the Company
         and not in its capacity as an officer or director of the Company and
         which such information relates to such Person's capacity as a
         shareholder), such Selling Holder will indemnify and hold harmless each
         underwriter, the Company (including its directors, officers, employees
         and agents), each other Investor (including its partners (including
         partners of partners and stockholders of such partners) and directors,
         officers, employees and agents of any of them) so registered, and each
         Controlling Person thereof, from and against any and all losses,
         claims, damages, expenses and liabilities, joint or several, to which
         they, or any of them, may become subject under the Securities Act, the
         Exchange Act or other federal or state statutory law or regulation, at
         common law or otherwise to the same extent provided in the immediately
         preceding sentence. In no event, however, shall the aggregate liability
         of a Selling Holder for indemnification and/or contribution under this
         Section 4.7 in its capacity as such (and not in its capacity as an
         officer or director of the Company) exceed the lesser of (i) that
         proportion of the total of such losses, claims, damages or liabilities
         indemnified against equal to the proportion of the total securities
         sold under such registration statement which is being sold by such
         Selling Holder or (ii) the net cash proceeds received by such Selling
         Holder from its sale of Registrable Securities under such registration
         statement.

                           (b) If the indemnification provided for in Section
         4.7(a) above for any reason is held by a court of competent
         jurisdiction to be unavailable to an indemnified party in respect of
         any losses, claims, damages, expenses or liabilities referred to
         therein, then each indemnifying party under this Section 4.7, in lieu
         of indemnifying such indemnified party thereunder, shall contribute to
         the amount paid or payable by such indemnified party as a result of
         such losses, claims, damages, expenses or liabilities (i) in such
         proportion as is appropriate to reflect the relative benefits received
         by the Company, the Selling Holders and the underwriters from the
         offering of the Registrable Securities or (ii) if the allocation
         provided by clause (i) above is not permitted by applicable law, in
         such proportion as is appropriate to reflect not only the relative
         benefits referred to in clause (i) above but also the relative fault of
         the Company, the Selling Holders and the underwriters in connection
         with the statements or omissions which resulted in such losses, claims,
         damages, expenses or liabilities, as well as any other relevant
         equitable considerations. The relative benefits received by the
         Company, the Selling Holders and the underwriters shall be deemed to be
         in the same respective proportions that the net proceeds from the
         offering (before deducting expenses) received by the Company and the
         Selling Holders and the underwriting

                                       13
<PAGE>

         discount received by the underwriters, in each case as set forth in the
         table on the cover page of the applicable prospectus, bear to the
         aggregate public offering price of the Registrable Securities. The
         relative fault of the Company, the Selling Holders and the underwriters
         shall be determined by reference to, among other things, whether the
         untrue or alleged untrue statement of a material fact or the omission
         or alleged omission to state a material fact relates to information
         supplied by the Company, the Selling Holders or the underwriters and
         the parties' relative intent, knowledge, access to information and
         opportunity to correct or prevent such statement or omission.

                  The Company, the Selling Holders, and the underwriters agree
         that it would not be just and equitable if contribution pursuant to
         this Section 4.7(b) were determined by pro rata or per capita
         allocation or by any other method of allocation which does not take
         account of the equitable considerations referred to in the immediately
         preceding paragraph. In no event, however, shall a Selling Holder be
         required to make any indemnification payment under Section 4.7(a)
         and/or contribute any amount under this Section 4.7(b) in excess, in
         the aggregate, of the lesser of (i) that proportion of the total of
         such losses, claims, damages or liabilities indemnified against equal
         to the proportion of the total Registrable Securities sold under such
         registration statement which are being sold by such Selling Holder or
         (ii) the net cash proceeds received by such Selling Holder from its
         sale of Registrable Securities under such registration statement. No
         person found guilty of fraudulent misrepresentation (within the meaning
         of Section 11(f) of the Securities Act) shall be entitled to
         contribution from any person who was not found guilty of such
         fraudulent misrepresentation.

                           (c) The amount paid by an indemnifying party or
         payable to an indemnified party as a result of the losses, claims,
         damages and liabilities referred to in this Section 4.7 shall be deemed
         to include, subject to the limitations set forth above, any legal or
         other expenses reasonably incurred by such indemnified party in
         connection with investigating or defending any such action or claim,
         payable as the same are incurred. The indemnification and contribution
         provided for in this Section 4.7 will remain in full force and effect
         regardless of any investigation made by or on behalf of the indemnified
         parties or any officer, director, employee, agent or controlling person
         of the indemnified parties.

         SECTION 4.8 RULE 144 AND 144A REQUIREMENTS. If the Company becomes
subject to the reporting requirements of either Section 13 or 15(d) of the
Exchange Act, the Company will use its best efforts thereafter to file with the
Commission such information as is specified under either of said Sections for so
long as there are Holders of Registrable Securities; and in such event, the
Company shall use its best efforts to take all action as may be required as a
condition to the availability of Rule 144 or Rule 144A under the Securities Act
(or any successor or similar exemptive rules hereafter in effect). The Company
shall furnish to any Holder of Registrable Securities upon request a written
statement executed by the Company as to the steps it has taken to comply with
the current public information requirement of Rule 144 or Rule 144A or such
successor rules.

                                       14
<PAGE>

         SECTION 4.9 MARKET STAND-OFF. Each Holder agrees, if requested by the
Company and an underwriter of Common Stock of the Company (provided that all
Holders have been so requested), not to publicly sell or otherwise publicly
transfer or dispose of any Common Stock held by it for such period, not to
exceed 180 days following the effective date of any registration statement
(other than a registration effected solely to implement an employee benefit plan
or a transaction to which Rule 145 or any other similar rule of the Commission
under the Securities Act is applicable) of the Company filed under the
Securities Act as the Company or such underwriter shall specify reasonably and
in good faith (a "Lock-up Agreement"), and each Holder shall require any
transferee of Common Stock by a private sale or transfer, as a condition to such
private sale or transfer, to enter into a Lock-up Agreement.

         SECTION 4.10 TRANSFER OF REGISTRATION RIGHTS. The registration rights
and related obligations under this Article IV of each Outside Investor with
respect to its Registrable Securities may be assigned to any transferee of
Registrable Securities held by it, and upon such Transfer, the relevant
Transferee shall be deemed to be included within the definition of an "Outside
Investor" and a "Holder" solely for purposes of this Article IV. Each Outside
Investor shall notify the Company at the time of such Transfer. The registration
rights and related obligations under this Article IV of each Management Investor
may not be assigned or transferred (except to their Permitted Transferees),
until such time as the Subordinated Debentures and Series A Preferred Stock held
by the Outside Investors (or their transferees) have been paid in full,
redeemed, or converted in to Common Stock, as applicable, and if permitted to be
so transferred, only in compliance with and subject to all other terms and
conditions of this Agreement.

         SECTION 4.11 NO OTHER REGISTRATION RIGHTS. Other than the rights
provided in this Article IV to the Investors and their Permitted Transferees,
without the prior written consent of holders of at least a majority of the
outstanding shares of Series B Preferred Stock, the Company shall not grant to
any other Person(s) any right to register, or require the Company to register,
capital stock of the Company under the Securities Act.

ARTICLE V  RESTRICTIONS ON TRANSFER; RIGHT OF FIRST REFUSAL AND
           OBLIGATIONS OF CO-SALE

         SECTION 5.1 RESTRICTIONS ON TRANSFER. Neither Management Investor shall
Transfer any Stock, except (subject to Section 5.1(b) below) for Permitted
Transfers as defined in Section 5.1(a).

                           (a) For purposes of this Article V, a "Permitted
         Transfer" by a Management Investor means:

                                    (i) Transfers by any Management Investor
                  pursuant to Sections 5.2, 5.3 or 5.4, in each case made in
                  accordance with the procedures set forth therein;

                                       15
<PAGE>

                                    (ii) Transfers by any Management Investor
                  pursuant to a public offering of the Company's Common Stock
                  registered under the Securities Act, subject to the
                  limitations and procedures set forth in Article IV hereof or,
                  following a public offering, sold pursuant to Rule 144
                  promulgated under the Securities Act;

                                    (iii) Transfers by any Management Investor
                  to his spouse or children or to a trust of which he is the
                  settlor and a trustee for the benefit of his spouse or
                  children; PROVIDED, HOWEVER, that any such trust does not
                  require or permit distribution of such Stock during the term
                  of this Agreement;

                                    (iv) Transfers by any Management Investor
                  upon the death of such Management Investor to his heirs,
                  executors or administrators or to a trust under his will or
                  Transfers between such Management Investor and his guardian or
                  conservator;

                                    (v) Transfers by any Management Investor to
                  satisfy such Management Investor's obligations under Section
                  5.3 of the Initial Investment Agreement.

Any Transferee of a Permitted Transfer by a Management Investor described in the
preceding clauses (iii) and (iv) shall be referred to herein as a "Permitted
Transferee" thereof.

                           (b) Notwithstanding the foregoing, no Transfer of
         Stock or rights pursuant to Sections 5.1(a)(iii) or (iv) shall be
         deemed to be a Permitted Transfer unless the Transferee shall have
         entered into a Joinder Agreement, in substantially the form attached
         hereto as EXHIBIT A, for the benefit of the other Investors, as a
         condition to such Transfer, pursuant to which such Transferee shall
         agree to be bound by all of the provisions of this Agreement, to the
         same extent as was the transferor hereunder; and PROVIDED, FURTHER,
         that any such Transferee shall take all such Stock and rights subject
         to all the provisions of this Agreement as if such Stock or rights were
         still held by the Investor who made the Transfer, whether or not they
         so agree with the Company, the Investor who makes the Transfer or with
         the other Investors.

         SECTION 5.2 RIGHT OF FIRST REFUSAL. In the event that either of the
Management Investors, including any Permitted Transferee thereof, receives a
bona fide offer to purchase all or any portion of the shares of Stock held by
such Management Investor (a "Transaction Offer") from a party other than a
Permitted Transferee (the "Offeror") and such Management Investor desires to
accept such Transaction Offer, such Management Investor (a "Transferring
Investor") may, subject to the provisions of Section 5.3 hereof, Transfer such
shares pursuant to and in accordance with the following provisions of this
Section 5.2:

                           (a) Such Transferring Investor shall notify the
         Company, with a copy to the Outside Investors (enclosing a description,
         in reasonable detail, including, without limitation, the consideration
         to be received and the name and address of the

                                       16
<PAGE>

         Offeror, of the Transaction Offer), of his wish to accept the
         Transaction Offer and otherwise comply with the provisions of this
         Section 5.2 and, if applicable, Section 5.3 (such notice, the "Offer
         Notice").

                           (b) The Company shall have the right, exercisable
         upon written notice to the Transferring Investor within thirty (30)
         days after it receives the Offer Notice, to purchase all or any portion
         of the shares of Stock proposed to be sold, at the price set forth in
         the Offer Notice and upon the other terms and conditions set forth
         below (the "Company Right of First Refusal"). In the event that the
         price set forth in the Offer Notice is stated in consideration other
         than cash or cash equivalents, the fair market value of such
         consideration shall be determined substantially as provided in Article
         XI hereof, and the Company may exercise its Right of First Refusal by
         payment of such fair market value in cash or cash equivalents.

                           (c) In the event the Company does not elect to
         purchase all of the shares of Stock in accordance with the terms of
         Section 5.2(b) above, each of the Outside Investors shall have the
         right, exercisable upon written notice to the Transferring Investor
         within thirty (30) days after the Outside Investors have received
         notice from the Transferring Investor (i) that the Company has not
         elected to exercise the Company Right of First Refusal with respect to
         all or a portion of shares of Stock proposed to be sold and (ii)
         offering to sell all or such portion, as the case may be, not so
         elected to be purchased by the Company pursuant to 5.2(b) of the shares
         of Stock proposed to be sold, to purchase at the price set forth in the
         Offer Notice and upon the other terms and conditions set forth below to
         purchase its Pro Rata Share (as defined below) (the "Outside Investors'
         Right of First Refusal," and collectively with the Company Right of
         First Refusal, the "Right of First Refusal"). In the event that the
         price set forth in the Offer Notice is stated in consideration other
         than cash or cash equivalents, any of the Outside Investors may request
         that the fair market value of such consideration be determined as
         provided in Article XI hereof, and any of the Outside Investors may
         exercise its Outside Investors' Right of First Refusal by payment of
         such fair market value in cash or cash equivalents. An Outside
         Investor's Pro Rata Share shall equal the product obtained by
         multiplying (i) the total number of shares of Stock subject to the
         Offer Notice and not to be purchased by the Company pursuant to Section
         5.2(b) by (ii) a fraction, the numerator of which is the total number
         of shares of Stock owned by such Outside Investor on the date of the
         Offer Notice, and the denominator of which is the total number of
         shares of Stock then held by all Outside Investors on the date of the
         Offer Notice (in each case, calculated on a fully diluted basis). To
         the extent one or more Outside Investors elects not to purchase, or
         fails to exercise its right to purchase, the full amount of such shares
         of Stock which it is entitled to purchase pursuant to this Section 5.2,
         the other Outside Investors' rights to purchase shares of Stock shall
         be increased proportionately and such other Outside Investors shall
         have an additional five (5) days from the date upon which they are
         notified of such election or failure to exercise in which to increase
         the number of shares of Stock to be purchased by them hereunder. For
         purposes of this Section 5.2, any Warrants held by an Outside Investor
         which are exercisable for shares of Common Stock shall be treated as so

                                       17
<PAGE>

         exercised, and any shares Series B Preferred Stock held by an Outside
         Investor which are convertible into shares of Common Stock shall be
         treated as so converted.

                           (d) The closing for any purchase of shares of Stock
         by the Company or the Outside Investors shall take place at the place
         and on a date specified in the applicable notice of exercise within
         sixty (60) days of such notice of exercise.

                           (e) In the event that the Company or the Outside
         Investors do not elect to exercise the Right of First Refusal with
         respect to all or part of the shares of Stock proposed to be sold, the
         Transferring Investor may sell the remaining shares of such Stock
         proposed to be sold to the Offeror on the terms and conditions set
         forth in the Offer Notice, subject to the provisions of Section 5.3. If
         the Transaction Offer is not consummated within the later of (i) thirty
         (30) days after the expiration of the Outside Investors' Right of First
         Refusal and the Co-Sale Option set forth in Section 5.3 below, if
         applicable, and (ii) ten (10) days after the satisfaction of all
         governmental approval or filing requirements, the Transaction Offer
         shall be deemed to lapse, and any Transfers of shares of Stock pursuant
         to such Transaction Offer shall be deemed to be in violation of the
         provisions of this Agreement unless the Company and the Outside
         Investors are once again afforded the Right of First Refusal provided
         for herein with respect to such Transaction Offer.

         SECTION 5.3 CO-SALE OPTION. In the event that the Right of First
Refusal is not exercised with respect to all or part of the shares of Stock
proposed to be sold by any Transferring Investor, such Transferring Investor may
Transfer such shares only pursuant to and in accordance with the following
provisions of this Section 5.3:

                           (a) Each of the Outside Investors shall have the
         right to participate in the Transaction Offer on the terms and
         conditions herein stated, which right shall be exercisable upon written
         notice to the Transferring Investor within thirty (30) days after the
         Outside Investors receive notice from the Transferring Investor that
         the Company has not elected to exercise the Company Right of First
         Refusal with respect to all of the shares of Stock proposed to be sold
         (the "Co-Sale Option").

                           (b) Each of the Outside Investors shall have the
         right to sell a portion of its Stock pursuant to the Transaction Offer
         which is equal to or less than the product obtained by multiplying (i)
         the total number of shares of Stock subject to the Transaction Offer by
         (ii) a fraction, the NUMERATOR of which is the total number of shares
         of Stock owned by such Outside Investor on the date of the Offer
         Notice, and the DENOMINATOR of which is the total number of shares of
         Stock then held by all Outside Investors and the Transferring Investor
         on the date of the Offer Notice (in each case, calculated on a fully
         diluted basis). To the extent one or more Outside Investors elects not
         to sell, or fails to exercise its right to sell, the full amount of
         such shares of Stock which it is entitled to sell pursuant to this
         Section 5.3, the other Outside Investors' rights to sell shares of
         Stock shall be increased proportionately and such other Outside
         Investors shall have an additional five (5) days from the date upon
         which they are

                                       18
<PAGE>

         notified of such election or failure to exercise in which to increase
         the number of shares of Stock to be sold by them hereunder. For
         purposes of this Section 5.3, any Warrants held by an Outside Investor
         which are exercisable for shares of Common Stock shall be treated as so
         exercised, and any shares Series B Preferred Stock held by an Outside
         Investor which are convertible into shares of Common Stock shall be
         treated as so converted. In addition, any Outside Investor that holds
         Warrants or shares of Series B Preferred Stock shall be permitted to
         sell to the relevant purchaser shares of Common Stock acquired upon
         exercise or conversion thereof or, at its election, (i) an option to
         acquire such Common Stock when it receives the same upon such exercise
         or conversion of the Warrants or Series B Preferred Stock, as the case
         may be, or (ii) the Warrants (net of the exercise price thereof) or the
         shares of Series B Preferred Stock (on an as-converted basis), in each
         case, with the same effect as if Common Stock were being conveyed.

                           (c) Within ten (10) days after the date by which the
         Outside Investors were first required to notify the Transferring
         Investor of their intent to participate, the Transferring Investor
         shall notify each participating Outside Investor of the number of
         shares of Stock held by such Investor that will be included in the sale
         and the date on which the Transaction Offer will be consummated, which
         shall be no later than the later of (i) thirty (30) days after the date
         by which the Investors were required to notify the Management Investor
         of their intent to participate and (ii) ten (10) days after the
         satisfaction of any governmental approval or filing requirements, if
         any.

                           (d) Each of the participating Outside Investors may
         effect its participation in any Transaction Offer hereunder by delivery
         to the Offeror, or to the Transferring Investor for delivery to the
         Offeror, of one or more instruments or certificates, properly endorsed
         for transfer, representing the shares of Stock it elects to sell
         therein, together with executed copies of any purchase agreement or
         related documents that (i) accompanied the original Offer Notice and
         (ii) are also executed by the Transferring Investors. At the time of
         consummation of the Transaction Offer, the Offeror shall remit directly
         to each Outside Investor that portion of the sale proceeds to which
         such Outside Investor is entitled by reason of its participation
         therein.

                           (e) In the event that the Transaction Offer is not
         consummated within the period required by subsection (c) hereof or the
         Offeror fails to remit timely to each Outside Investor its portion of
         the sale proceeds, the Transaction Offer shall be deemed to lapse, and
         any Transfers of shares of Stock pursuant to such Transaction Offer
         shall be deemed to be in violation of the provisions of this Agreement
         unless the Transferring Investor once again complies with the
         provisions of Section 5.2 and this Section 5.3 hereof with respect to
         such Transaction Offer.

         SECTION 5.4 TAKE-ALONG.

                           (a) In the event that the Required Outside Investors
         determine to sell or otherwise dispose of all or substantially all of
         the assets of the Company or all of the

                                       19
<PAGE>

         capital stock of the Company owned by such Outside Investors to any
         non-Affiliate(s) of the Company or of the Outside Investors, or to
         cause the Company to merge with or into or consolidate with any
         non-Affiliate(s) of the Company or of the Outside Investors in a
         transaction in which the Outside Investors and their Affiliates
         following such transaction own less than 51% in the aggregate of the
         securities of the Company they owned prior to such transaction (in each
         case, the "Buyer") in a bona fide negotiated transaction (a "Sale") and
         in which such Sale the actual or implied sale price per share of Common
         Stock is not less than $13.00, each of the Management Investors,
         including any of their respective Permitted Transferees, shall be
         obligated to and shall upon the written request of the Outside
         Investors: (i) sell, transfer and deliver, or cause to be sold,
         transferred and delivered, to the Buyer, his or its shares of Stock on
         the same terms applicable to the Outside Investors (with appropriate
         adjustments to reflect the conversion of convertible securities and the
         exercise of exercisable securities); and (ii) execute and deliver such
         instruments of conveyance and transfer and take such other action,
         including voting such shares of Stock in favor of any Sale proposed by
         the Outside Investors and executing any purchase agreements, merger
         agreements, indemnity agreements, escrow agreements or related
         documents, as the Outside Investors or the Buyer may reasonably require
         in order to carry out the terms and provisions of this Section 5.4.

                           (b) Not less than thirty (30) days prior to the date
         proposed for the closing of any Sale, the Outside Investors shall give
         written notice to each Management Investor, setting forth in reasonable
         detail the name or names of the Buyer, the terms and conditions of the
         Sale, including the purchase price, and the proposed closing date. In
         furtherance of the provisions of this Section 5.4, each Management
         Investor hereby (i) irrevocably appoints the Outside Investors as his
         attorney-in-fact (with full power of substitution) to execute all
         agreements, instruments and certificates and take all actions necessary
         or desirable to effectuate any Sale hereunder; and (ii) grants to the
         Outside Investors a proxy (which shall be deemed to be coupled with an
         interest and irrevocable) to vote the shares of Stock held by such
         Management Investor and exercise any consent rights applicable thereto
         in favor of any Sale hereunder; PROVIDED, HOWEVER, that the Outside
         Investors shall not exercise such powers-of-attorney or proxies with
         respect to either of the Management Investors unless such Management
         Investor is in breach of his obligations under this Section 5.4.

         SECTION 5.5 ASSIGNMENT OF RIGHTS. Each Outside Investor may assign his
or its rights under this Article V in connection with the sale by such Outside
Investor of any Stock or Warrants.

         SECTION 5.6 PROHIBITED TRANSFERS. If any Transfer is made or attempted
contrary to the provisions of this Agreement, such purported Transfer shall be
void AB INITIO; the Company and the other Investors shall have, in addition to
any other legal or equitable remedies which they may have, the right to enforce
the provisions of this Agreement by actions for specific performance (to the
extent permitted by law); and the Company shall have the right to refuse to
recognize any Transferee as one of its Investors for any purpose. Without
limitation to the

                                       20
<PAGE>

foregoing, each of the Management Investors further agrees that the provisions
of Section 9.7 shall apply in the event of any violation or threatened violation
of this Agreement.

ARTICLE VI  RIGHTS TO PURCHASE

         SECTION 6.1 RIGHT TO PURCHASE. The Company hereby grants to the
Outside Investors (for purposes of this Article VI including any assignees under
Section 6.4), the right, from and after the date hereof, to purchase such
quantity of any class or classes of New Stock (as hereinafter defined) that the
Company may, from time to time, propose to sell and issue to any Person as shall
be necessary to ensure that, after giving effect to such purchase, the Outside
Investor's Percentage Ownership (as hereinafter defined) is at least equal to
its Percentage Ownership immediately prior to such sale and issuance of New
Stock.

         SECTION 6.2 PROCEDURE. The Company shall give each Outside Investor
written notice of such proposed sale of New Stock, describing the amount, type
and class of New Stock and the price and the other terms upon which the Company
proposes to issue the same (the "New Stock Offer"). Each of the Outside
Investors shall have thirty (30) days from the date of delivery of any such
written notice to agree to exercise its purchase right hereunder for the price
and upon the terms specified in the New Stock Offer by giving written notice to
the Company and stating therein the maximum quantity of each class of New Stock
that it is willing to purchase. In the event any Outside Investor fails to
exercise the right granted herein within said thirty-day period, the right to
exercise its purchase right shall expire with respect to such issuance of New
Stock. The closing of the purchase of New Stock by the Outside Investors shall
take place within fifteen (15) business days after the expiration of said
thirty-day period. The Company shall have fifteen (15) days from the closing of
the purchase of New Stock by the Outside Investors to sell the unsold portion of
the New Stock to other purchasers, but only upon terms and conditions that are
in all respects no more favorable to such purchasers or less favorable to the
Company than those set forth in the New Stock Offer.

         SECTION 6.3 DEFINITIONS. For purposes of this Agreement, "New Stock"
means any equity securities of the Company (whether common stock, preferred or
otherwise), or any warrants, options, convertible securities or rights to
purchase any equity securities of the Company, in each case issued after the
Closing Date; PROVIDED, HOWEVER, that "New Stock" does not include: (i)
securities issued upon exercise of the Warrants or conversion of the Series B
Preferred Stock, (ii) securities issued as a result of any stock split, stock
dividend, reclassification or reorganization of the Company's Stock,
distributable on a pro rata basis to all holders of such Stock (excluding
options and warrants) and (iii) up to 206,620 shares of Common Stock, or options
to purchase such shares, granted to employees, consultants and advisers,
officers or directors of the Company pursuant to the Company's stock plan (and
the Common Stock acquired upon the exercise of any such options); PROVIDED
FURTHER, that the Company covenants and agrees that of such 206,620 shares of
Common Stock (or options to purchase such shares), 104,362 of which remain
available for grant, 57,862 shares shall be allocated to the general pool of
awards to be granted to current and future employees of the Company other than
Green and Graziano, and 46,500 shares will be allocated to awards for

                                       21
<PAGE>

Green and Graziano (23,250 shares each), with such restricted stock or options
granted to Green and Graziano to have vesting provisions consistent with all
other awards granted to employees of the Company, but such restricted stock or
options granted to Green and Graziano shall only be vested and/or exercisable
upon the closing of an underwritten public offering of the Company's Common
Stock at a price per share to the public of not less than $41.23 per share
(appropriately adjusted for stock dividends, stock splits, and other
recapitalization transactions) and gross proceeds to the Company of at least
$15.0 million.

         An Outside Investor's "Percentage Ownership" shall mean as of the date
of determination, such Outside Investor's percentage ownership of the Common
Stock of the Company determined on a fully diluted basis assuming exercise of
all then outstanding Warrants and stock options described in Section 6.3(i) and
the conversion of all then outstanding shares of Series B Preferred Stock
purchased pursuant to the Securities Purchase Agreement; PROVIDED, HOWEVER, that
any securities purchased by Graziano other than pursuant to the Initial
Investment Agreement and any stock options issued to Graziano shall not be
counted in the numerator in determining Graziano's percentage ownership of the
Company.

         SECTION 6.4      ASSIGNMENT OF RIGHTS.  Each Outside Investor may
assign its rights under this Article VI to any Person.

ARTICLE VII  ELECTION OF DIRECTORS OF THE COMPANY

         SECTION 7.1      VOTING OF SHARES FOR ELECTION OF DIRECTORS OF THE
COMPANY. Except as provided in Section 7.5 hereof, with respect to each election
or removal of members of the Board of Directors of the Company (including,
without limitation, any replacement members), whether at an annual or special
meeting of stockholders or by written consent of stockholders, each of the
Investors and their Permitted Transferees agrees to vote its Stock (and any
shares of Stock over which it exercises voting control) and to take such other
action as may be necessary to fix the number of Directors of the Company at five
(5) or seven (7), as indicated below, and to cause and maintain the nomination
and election to the Board of Directors of the Company and to keep in office as
such:

                                    (i) two (2) persons designated from time to
                  time by the Required Outside Investors, which shall initially
                  be C.W. Dick, and Richard C. Klaffky, and during such time as
                  there shall be four (4) directors designated pursuant to
                  clauses (ii) and (iii) below, three (3) persons designated
                  from time to time by the Outside Investors (any such director
                  designated under this clause (i), an "Outside Director" and
                  collectively, the "Outside Directors");

                                    (ii) three (3) persons designated from time
                  to time by Graziano and Green (the "Other Directors"), who
                  shall initially be Paul Grindle, Chane Graziano and David
                  Green; provided, however, in the event: (a) Graziano (I)
                  ceases to be employed by the Company for any reason or (II)
                  ceases, together with his Permitted Transferees, to own fifty
                  percent (50%)

                                       22
<PAGE>

                  or more of the shares of Common Stock held of record by him as
                  of the Closing, the number of Other Directors shall (unless
                  otherwise consented to by the Outside Investors) be reduced by
                  one (1) and Graziano shall have no further rights under this
                  clause (ii), and/or (b) in the event Green (I) ceases to be
                  employed by the Company for any reason or (II) ceases,
                  together with his Permitted Transferees, to own fifty percent
                  (50%) or more of the shares of Common Stock held of record by
                  him as of the Closing, the number of Other Directors shall
                  (unless otherwise consented to by the Outside Investors) be
                  reduced by one (1) and Green shall have no further rights
                  under this clause (ii); and

                                    (iii) up to one (1) person mutually
                  agreeable to the Required Outside Investors and a majority of
                  the Other Directors (the "Independent Director").

If, pursuant to clauses (i), (ii) and (iii) above, no representative of Citizens
Capital, Inc. is elected as a member of the Board of Directors, for as long as
Citizens Capital, Inc. owns any shares of Series B Preferred Stock or shares of
Common Stock issued upon conversion thereof, a representative of Citizens
Capital, Inc. shall be entitled to receive: (i) notice of all meetings of the
Board of Directors and all committees thereof and (ii) all information provided
to Directors by the Company at the same time and in the same manner as all
members of the Board of Directors receive such notice and/or information, and
such representative of Citizens Capital, Inc., or his or her designee, shall be
entitled to attend in person, or at his or her option, by telephone, and have
observation rights (but not vote at) all meetings of the Board of Directors and
all committees thereof (excluding the Compensation Committee).

         SECTION 7.2 VACANCIES. Except as provided in Section 7.5 hereof, each
of the Investors and its Permitted Transferees, if any, agrees to vote its Stock
(and any shares of stock over which it exercises voting control), to the extent
required by Section 7.1, in such manner as shall be necessary or appropriate so
as to ensure that any vacancy occurring for any reason in the Board of Directors
of the Company shall be filled so as to constitute the Board in accordance with
Section 7.1 above.

         SECTION 7.3 MEETINGS; EXPENSES. The Board of Directors shall hold not
less than six (6) meetings per year, or such fewer numbers as shall be agreed to
by a majority of the Outside Investor Directors. All Directors and the
representative of Citizens Capital Inc. referred to in Section 7.1 above shall,
subject to reasonable substantiation and documentation, be entitled to
reimbursement of out-of-pocket expenses incurred in attending each meeting of
the Board of Directors or any committee thereof or otherwise incurred in
performing his duties as a director of the Company (including, without
limitation, reasonable travel, lodging, meals and communication expenses). In
addition, each Director not affiliated with any Investor shall be entitled to
reasonable compensation when if and as from time to time (if at all) determined
by the Board (including without limitation, stock options under the Company's
stock option plan).

                                       23
<PAGE>

         SECTION 7.4 NO WAIVER. Any failure by any of the Investors to fully
exercise its rights to designate Directors under this Article VII at any time
shall not be construed to waive or limit its rights to designate such
Director(s) hereunder at any time thereafter.

         SECTION 7.5 BOARD CONTROL OVERRIDE. Notwithstanding anything
contained herein to the contrary, in the event an Event of Default (as defined
in the Articles of Organization, which such definition is incorporated by
reference herein with the same force and effect as if stated herein in full)
shall occur, each of the Investors and their Permitted Transferees agrees to
vote its Stock (and any shares of Stock over which it exercises voting control)
and to take such other action as may be necessary so that the Required Outside
Investors (other than Graziano) shall be entitled to elect the smallest number
of directors which shall constitute a majority of the authorized number of
directors of the Company at such time.

         SECTION 7.6 COMPENSATION COMMITTEE. The Company shall maintain a
Compensation Committee (the "Compensation Committee") which shall have authority
over all compensation matters. The Compensation Committee shall initially have
two (2) members consisting of Graziano and C.W. Dick (so long as each such
person is a member of the Board of Directors) and shall have three (3) members,
which third member shall be the Independent Director, at such time as such
Director is so designated.

ARTICLE VIII  OTHER COVENANTS OF THE COMPANY.

         SECTION 8.1 RESTRICTED ACTIVITIES. Without the written approval of a
majority-in-interest of the Outside Investors (other than Graziano) (based upon
holdings of Common Stock and assuming the exercise of all outstanding Warrants
and conversion of all outstanding shares of Series B Preferred Stock), the
Company agrees and covenants that neither the Company nor its subsidiaries
shall, together or alone:

                           (a) borrow, guarantee or otherwise incur any
         indebtedness or commit itself to pay in excess of $250,000 in any
         transaction or series of similar transactions (other than under the
         Bank Documents in connection with the Asset Purchase Agreement);

                           (b) lease, purchase, sell or otherwise acquire or
         dispose of any property or services having a value in excess of
         $250,000 in any transaction or series of similar transactions;

                           (c) assign, mortgage, pledge, hypothecate, grant a
         security interest in, or otherwise encumber or permit any lien on any
         assets having a value of more than $100,000 (other than under the Bank
         Documents in connection with the Asset Purchase Agreement);

                           (d) disclose any proprietary information to any
         Person other than as shall be necessary to the conduct of the ordinary
         business of the Company unless the

                                       24
<PAGE>

         Company has the written agreement of the party to whom the disclosure
         is made to retain the confidentiality of the Company's proprietary
         information and not to disclose it to others;

                           (e) enter into any employment, consulting or similar
         agreement which the Company or its subsidiaries shall be unable to
         cancel, without penalty or other cost, upon notice of one month or
         less, or any collective bargaining agreement;

                           (f) make any loan or extend any credit to, guaranty
         any indebtedness of, pledge or hypothecate any asset to secure the
         indebtedness of, or forgive or otherwise change the terms of any
         indebtedness of any director, officer or holder of securities of the
         Company or its subsidiaries;

                           (g) make any loan, extend any credit or guaranty any
         indebtedness, or forgive or otherwise change the terms of any
         indebtedness, in excess of $250,000, or pledge or hypothecate any asset
         worth more than $250,000 to secure any indebtedness (other than under
         the Bank Documents in connection with the Asset Purchase Agreement);

                           (h) make an investment in, or purchase or otherwise
         acquire the securities or assets of any other corporation, partnership
         or other entity or enter into any partnership, joint venture or other
         similar agreement; PROVIDED, HOWEVER, that investments in short-term
         U.S. government securities, bank certificates of deposit or other
         similar investments shall not be deemed a breach of this covenant;

                           (i) merge or consolidate the Company with, or sell,
         assign, lease or otherwise dispose of or voluntarily part with the
         control of (whether in one transaction or in a series of transactions)
         all, or substantially all, of its assets or capital stock (whether now
         owned or hereinafter acquired) or sell, assign or otherwise dispose of
         (whether in one transaction or in a series of transactions) any asset
         or group of assets which is material to the business or operations of
         the Company and its subsidiaries, taken as a whole, or permit any
         subsidiary to do any of the foregoing, except for sales or other
         dispositions of assets in the ordinary course of business and except
         that (1) any subsidiary may merge into or consolidate with or transfer
         assets to any other subsidiary and (2) any subsidiary may merge into or
         transfer assets to the Company;

                           (j) amend the Company's Articles of Organization or
         By-laws;

                           (k) repurchase or otherwise make any distributions
         with respect to any outstanding Stock (other than with respect to
         redemption, repurchase or payments in respect of shares of Series A
         Preferred Stock, Series B Preferred Stock, Warrants or options granted
         under the Company's 1996 Stock Option and Grant Plan in accordance with
         the terms hereof, thereof and the Articles of Organization);

                                       25
<PAGE>

                           (l) issue to any Person any capital stock of the
         Company, unless in connection with such issuance, such Person enters
         into an agreement reasonably satisfactory to the Outside Investors
         agreeing to be bound by all of the voting restrictions contained
         herein, including, without limitation, Article VII hereof;

                           (m) issue to any Person any capital stock of any of
         the Company's subsidiaries from time to time existing;

                           (n) without the approval of the Compensation
         Committee, increase salaries or benefits of any officer of the Company
         or any of its subsidiaries;

                           (o) terminate the employment of either Graziano
         or Green;

                           (p) amend the Bank Documents in any way that is not
         permitted under the terms of that certain Amended and Restated
         Subordination Agreement dated as of the date hereof by and among the
         Company, the Investors and Brown Brothers Harriman & Co., as agent;

                           (q) issue shares of Common Stock (or options or
         convertible securities exchangeable for or convertible into shares of
         Common Stock) for a price that is less than fair market value.

         SECTION 8.2 KEY MAN LIFE INSURANCE. The Company shall maintain key
man life insurance payable to the Company (i.e. with the Company named as the
beneficiary) on the lives of each of Graziano and Green in the amount of
$1,000,000 each so long as each such person remains an employee of the Company.
The Company will not cause or permit any assignment of the proceeds of the life
insurance policies specified above, and will not borrow against any of such
policies. Such policies shall not be cancelable by the Company except upon sixty
(60) days prior written notice to, and upon the consent of the Required Outside
Investors.

         SECTION 8.3 ACCOUNTS AND RECORDS. The Company shall keep true books
of accounts and records in which full, true and correct entries will be made of
all dealings or transactions in relation to its business and affairs in
accordance (to the extent applicable) with generally accepted accounting
principles applied on a consistent basis. These books and records shall be
available for inspection by any of the Outside Investors during regular business
upon reasonable advance notice to the Company.

         SECTION 8.4 INSURANCE. The Company and each of its subsidiaries will
keep its insurable properties insured with fire, broad form extended coverage
insurance policies by financially sound and reputable insurers satisfactory to
the Required Outside Investors for amounts not less than the full replacement
value of such properties. The Company and each of its subsidiaries will maintain
in full force and effect public liability insurance, business interruption
insurance, and a so-called "umbrella" policy in such amounts as is customary in

                                       26
<PAGE>

its industry or as reasonably required by the Outside Investors against claims
for bodily injury, death or physical property damages occurring upon, in, about,
or in connection with the use of any properties occupied or controlled by it,
through the operation of any motor vehicles by its agents or employees, or
arising in any other manner out of its business. Each such insurance policy
shall contain a provision requiring at least 30 days' written notice to the
Outside Investors prior to the cancellation or modification of such policy. The
Outside Investors shall have the additional right, exercisable by other written
election of the Required Outside Investors at any point in time, in their
reasonable judgment, to require additional insurance coverage.

         SECTION 8.5 ACCOUNTS AND REPORTS. The Company will furnish, or cause
to be furnished, to the Outside Investors (or any transferee of Outside Investor
Shares) the following reports:

         (a) ANNUAL REPORTS. As soon as available and in any event within ninety
(90) days after the end of each fiscal year, (i) audited consolidated and
consolidating financial statements of the Company and its subsidiaries together
with all notes thereto, prepared in reasonable detail and in accordance with
generally accepted accounting principles consistently applied, such statements
to be duly certified by certified, independent public accountants selected by
the Company and reasonably acceptable to the Required Outside Investors and (ii)
an officer's certificate demonstrating compliance with all of the covenants
contained in this Agreement ("Compliance Certificate"). The financial statements
referred to in clause (i) above shall be accompanied by a statement of such
certified, independent public accountants that the examination made in
certifying such statements did not disclose the existence of any condition or
event which constitutes an Event of Default under the Articles of Organization
or which, after the giving of notice or the lapse of time or both, would
constitute such an Event of Default, or a statement specifying the nature and
period of existence of any such condition or event disclosed by such
examination.

         (b) MONTHLY AND QUARTERLY REPORTS. As soon as available, and in any
event within twenty (20) days after the end of each monthly and quarterly
accounting period, as the case may be, in each fiscal year, (i) unaudited
consolidated and consolidating financial statements of the Company and its
subsidiaries (including balance sheet, income statement and source and
application of funds (compared to budget on a monthly, quarterly and year to
date basis)), prepared in accordance with generally accepted accounting
principles consistently applied and certified by the chief financial officer,
chief accounting officer or treasurer of the Company, which statements shall
also contain a balance sheet as of the end of such accounting period and a
statement of profit and loss for the period from the beginning of such fiscal
year to the end of such accounting period, and (ii) a Compliance Certificate.

         (c) AUDITOR'S LETTERS. Promptly after receipt by the Company or any of
its subsidiaries, copies of any written communications concerning the
management, finances, internal controls or operation of the Company and its
subsidiaries by the independent certified public accountants who audit the
Company's and its subsidiaries' annual financial statements.

                                       27
<PAGE>

         (d) ACCOUNTING PRINCIPLES. Reports furnished to the Outside Investors
under this Agreement shall be prepared in accordance with generally accepted
accounting principles used in the United States except that unaudited statements
need not contain notes thereto and may be subject to normal year-end
adjustments. Compliance with the covenants set forth in this Agreement will be
determined on the basis of accounting principles used in the preparation of the
financial statements. In the event that any subsequent reports shall have been
prepared in accordance with accounting principles different than those used in
the financial statements, the Company shall inform the Outside Investors of such
changes in accounting principles and shall provide to the Outside Investors,
with such subsequent reports, such supplemental reconciling financial
information as may be required to ascertain performance by the Company and its
subsidiaries with the covenants contained in this Agreement.

         (e) BUDGET AND PROJECTIONS. At least thirty (30) days prior to the end
of each fiscal year of the Company, a budget (the "Budget") and projections for
the next fiscal year indicating each of the Company's and its subsidiaries'
expected operating results (on a consolidated and consolidating basis), and
proposed expenditures, including without limitation, and subject to the approval
of the Compensation Committee, management compensation. The Budget and
projections shall be made on a month-by-month basis. The Budget shall be subject
to the approval of the holders of two-thirds of the shares of Preferred Stock.

         SECTION 8.6 INFORMATION AND INSPECTION. The Company will furnish to
the Outside Investors upon request full information pertinent to any covenant,
provision or condition hereof or to any matter in connection with its business
and that of its subsidiaries and, at all reasonable times and as often as the
Outside Investors shall reasonably request, permit any authorized representative
designated by the Outside Investors to visit and inspect any of its and its
subsidiaries' properties, including its books (and to make extracts therefrom),
and to discuss their affairs, finances and accounts with their officers. The
Company will, in addition, promptly furnish to the Outside Investors such
financial information as the Outside Investors shall reasonably request. The
Investors agree to treat all material non-public information provided to them by
the Company as confidential and use all commercially reasonable efforts to
protect the confidentiality of such information at least to the same extent as
such Investors protect their own confidential information.

         SECTION 8.7 SMALL BUSINESS INVESTMENT ACT. Promptly after request
made by any holder of Stock or Subordinated Debentures that is a small business
investment company licensed under the Small Business Investment Act of 1958, as
amended, the Company shall furnish to such holder or permit such holder access
to such information as such holder may request to enable such holder to comply
with its record keeping, reporting and other obligations under such Act or under
any rule or regulation of the Small Business Administration thereunder.

         SECTION 8.8 RELATED PARTY TRANSACTIONS. The Company covenants that
it shall not, and will not permit any of its subsidiaries to enter into any
transaction (including without limitation the purchase, sale, rental or exchange
of any property or services, or any loans, advances or guarantees) with any
stockholder, director, officer, agent, partner, employee or

                                       28
<PAGE>

Affiliate of the Company or any of its stockholders, other than upon fair and
reasonable terms no less favorable to the Company and its subsidiaries than
would be obtained in a comparable arms-length transaction with any other Person
not so affiliated with the Company.

ARTICLE IX  MISCELLANEOUS PROVISIONS

         SECTION 9.1      SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
Each of the parties hereto agrees that the representations, warranties,
covenants and agreements made by each of them in this Agreement, the Securities
Purchase Agreement and in other agreements entered into in connection herewith
or therewith, or in any certificate, instrument or other document delivered
pursuant to this Agreement or in other agreements entered into in connection
herewith or therewith are material, shall be deemed to have been relied upon by
the other parties and shall remain operative and in full force and effect after
the date hereof regardless of any investigation. This Agreement shall not be
construed so as to confer any right or benefit upon any Person other than the
parties hereto and their respective successors and permitted assigns to the
extent contemplated herein.

         SECTION 9.2      INDEMNIFICATION.

                           (a) The Company agrees to defend, indemnify and hold
         each of the Outside Investors (except with respect to any matter with
         respect to which indemnification is not available to such Outside
         Investor as provided in Section 4.7(a)) and its or his Affiliates and
         its or his direct and indirect partners, directors, officers, employees
         and agents and each person who controls any of them within the meaning
         of Section 15 of the Securities Act or Section 20 of the Exchange Act
         (parties receiving the benefit of the indemnification agreement herein
         shall be referred to collectively as "Indemnified Parties" and
         individually as an "Indemnified Party") harmless from and against any
         and all losses, claims, damages, obligations, liens, assessments,
         judgments, fines, liabilities, and other costs and expenses (including
         without limitation interest, penalties and any investigation, legal and
         other expenses incurred in connection with, and any amount paid in
         settlement of, any action, suit or proceeding or any claim asserted, as
         the same are incurred) of any kind or nature whatsoever which may be
         sustained or suffered by any such Indemnified Party, without regard to
         any investigation by any of the Indemnified Parties, based upon,
         arising out of, by reason of or otherwise in respect of or in
         connection with (a) any inaccuracy in or breach of any representation
         or warranty made by the Company in this Agreement or the Initial
         Investment Agreement or in any agreement or instrument or other
         document delivered pursuant to this Agreement or the Initial Investment
         Agreement (including the Securities Purchase Agreement), (b) any breach
         of any covenant or agreement made by the Company in this Agreement or
         the Initial Investment Agreement or in any agreement or instrument
         delivered pursuant to this Agreement or the Initial Investment
         Agreement and (c) any action taken or omitted to be taken or alleged to
         have been taken or omitted to have been taken by any Indemnified Party
         as shareholder, director, agent, representative or controlling person
         of the Company, including, without limitation, any

                                       29
<PAGE>

         and all losses, claims, damages, expenses and liabilities, joint or
         several (including any investigation, legal and other expenses incurred
         in connection with, and any amount paid in settlement of, any action,
         suit or proceeding or any claim asserted, as the same may be incurred)
         arising or alleged to arise under the Securities Act, the Exchange Act
         or other federal or state statutory law or regulation, at common law or
         otherwise; PROVIDED, HOWEVER, that the Company will not be liable to
         the extent that such loss, claim, damage, expense or liability arises
         from and is based on (i) an untrue statement or omission or alleged
         untrue statement or omission in a registration statement or prospectus
         which is made in reliance on and in conformity with written information
         furnished to the Company in an instrument duly executed by or on behalf
         of such Indemnified Party specifically stating that it is for use in
         the preparation thereof or (ii) a knowing and willful violation of the
         federal securities laws by a Indemnified Party, as finally determined
         by a court of competent jurisdiction.

                           (b) If the indemnification provided for in Section
         9.2(a) above for any reason is held by a court of competent
         jurisdiction to be unavailable to a Indemnified Party in respect of any
         losses, claims, damages, expenses or liabilities referred to therein,
         then the Company, in lieu of indemnifying such Indemnified Party
         thereunder, shall contribute to the amount paid or payable by such
         Indemnified Party as a result of such losses, claims, damages, expenses
         or liabilities (i) in such proportion as is appropriate to reflect the
         relative benefits received by the Company and the Investors, or (ii) if
         the allocation provided by clause (i) above is not permitted by
         applicable law, in such proportion as is appropriate to reflect not
         only the relative benefits referred to in clause (i) above but also the
         relative fault of the Company and the Investors in connection with the
         action or inaction which resulted in such losses, claims, damages,
         expenses or liabilities, as well as any other relevant equitable
         considerations. In connection with any registration of the Company's
         securities, the relative benefits received by the Company and the
         Outside Investors shall be deemed to be in the same respective
         proportions that the net proceeds from the offering (before deducting
         expenses) received by the Company and the Outside Investors, in each
         case as set forth in the table on the cover page of the applicable
         prospectus, bear to the aggregate public offering price of the
         securities so offered. The relative fault of the Company and the
         Investors shall be determined by reference to, among other things,
         whether the untrue or alleged untrue statement of a material fact or
         the omission or alleged omission to state a material fact relates to
         information supplied by the Company or the Investors and the parties'
         relative intent, knowledge, access to information and opportunity to
         correct or prevent such statement or omission.

                  The Company and the Outside Investors agree that it would not
         be just and equitable if contribution pursuant to this Section 9.2(b)
         were determined by pro rata or per capita allocation or by any other
         method of allocation which does not take account of the equitable
         considerations referred to in the immediately preceding paragraph. In
         connection with the registration of the Company's securities, in no
         event shall an Investor be required to contribute any amount under this
         Section 9.2 in excess of the lesser of (i) that proportion of the total
         of such losses, claims, damages or liabilities

                                       30
<PAGE>

         indemnified against equal to the proportion of the total securities
         sold under such registration statement which is being sold by such
         Outside Investor or (ii) the proceeds received by such Outside Investor
         from its sale of securities under such registration statement. No
         person found guilty of fraudulent misrepresentation (within the meaning
         of Section 11(f) of the Securities Act) shall be entitled to
         contribution from any person who was not found guilty of such
         fraudulent misrepresentation.

                           (c) The indemnification and contribution provided for
         in this Section 9.2 will remain in full force and effect regardless of
         any investigation made by or on behalf of the Indemnified Parties or
         any officer, director, employee, agent or controlling person of the
         Indemnified Parties.

                           (d) The provisions of this Section 9.2 are in
         addition to and shall supplement (and not derogate) those set forth in
         Section 4.7 which shall apply in the case of the registration and sale
         of Registrable Securities held by any of the Investors registered
         pursuant to Article IV hereof.

         SECTION 9.3 LEGEND ON SECURITIES. The Company and the Investors
acknowledge and agree that the following legend shall be typed on each
certificate evidencing any of the securities issued pursuant to the Securities
Purchase Agreement held at any time by any of the Investors or their Permitted
Transferees:

         THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE PROVISIONS OF A
CERTAIN AMENDED AND RESTATED SECURITYHOLDERS' AGREEMENT, DATED AS OF MARCH 2,
1999, INCLUDING CERTAIN RESTRICTIONS ON TRANSFER SET FORTH THEREIN. A COMPLETE
AND CORRECT COPY OF SUCH AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL
OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST AND WITHOUT
CHARGE.

         SECTION 9.4 AMENDMENT AND WAIVER. Any party may waive any provision
hereof intended for its benefit in writing. No failure or delay on the part of
any party hereto in exercising any right, power or remedy hereunder shall
operate as a waiver thereof. Except as otherwise expressly provided herein, the
remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to any party hereto at law or in equity or
otherwise. This Agreement may not be amended without the prior written consent
of (A) the Company, (B) the Required Outside Investors and (C) the Management
Investors, except in the case where the Management Investors are not materially
and adversely affected in a manner different than other Investors, in which such
case, one Management Investor. Except as otherwise expressly provided herein,
neither of the Management Investors may assign any of his or its rights under
this Agreement without the prior written consent of the Company and the Outside
Investors. Notwithstanding the foregoing, (i) any action to be taken, amendment,
waiver or consent by, in connection with, or with respect to the Series A
Preferred Stock, the Series B Preferred Stock, the Subordinated Debentures or
the Warrants, respectively, shall require the holders of a majority-in-interest
of the Series A Preferred Stock, a

                                       31
<PAGE>

majority-in-interest of the Series B Preferred Stock, a majority-in-interest in
aggregate principal amount of the Subordinated Debentures or the holders of a
majority-in-interest of the Warrants, respectively, (ii) no waiver or amendment
may adversely affect one Investor in a manner different from any other Investor
without the written consent of such first mentioned Investor, (iii) no amendment
of this Section 9.4 shall be binding upon any Investor without the prior written
consent of such Investor, (iv) no amendment of Section 9.2 or 9.14 shall be
binding upon any Investor without the prior written consent of such Investor,
(v) no provision herein which by its terms requires the act or consent of more
than a majority-in-interest of any class or group of Investors may be amended
without the prior written consent of such greater number of such class or group
of Investors as is so specified and (vi) no amendment or waiver of any of the
provisions herein relating to the board visitation rights of Citizens Capital,
Inc. shall be effective without the prior written consent of Citizens Capital,
Inc.

         SECTION 9.5 NOTICES. All notices and other communications provided for
herein shall be in writing and shall be deemed to have been duly given,
delivered and received (a) if delivered personally or (b) if sent by telex or
facsimile, registered or certified mail (return receipt requested) postage
prepaid, or by courier guaranteeing next day delivery, in each case to the party
to whom it is directed at the following addresses (or at such other address for
any party as shall be specified by notice given in accordance with the
provisions hereof, provided that notices of a change of address shall be
effective only upon receipt thereof). Notices delivered personally shall be
effective on the day so delivered, notices sent by registered or certified mail
shall be effective three days after mailing, notices sent by telex shall be
effective when answered back, notices sent by facsimile shall be effective when
receipt is acknowledged, and notices sent by courier guaranteeing next day
delivery shall be effective on the earlier of the second business day after
timely delivery to the courier or the day of actual delivery by the courier:

If to the Company:                 Harvard Apparatus, Inc.
                                   84 October Hill Road
                                   Holliston, MA  01746-1371
                                   Attention:  President
                                   Phone: (508) 893-8999
                                   Fax: (508) 429-5732

with a copy to:                    Goodwin, Procter & Hoar LLP
                                   Exchange Place
                                   Boston,  MA 02109
                                   Attention:  H. David Henken, P.C.
                                   Phone: (617) 570-1672
                                   Fax: (617) 523-1231

If to the Outside Investors:       To the address set forth on the signature
                                   pages hereto

with a copy to:                    Choate, Hall & Stewart
                                   Exchange Place

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<PAGE>

                                   Boston, MA 02109
                                   Attention: W. Brewster Lee, P.C.
                                   Phone: (617) 248-5051
                                   Fax: (617) 248-4000

If to the Management Investors:    at the office of the Company set forth above.

         SECTION 9.6 HEADINGS. The Article and Section headings used or
contained in this Agreement are for convenience of the reference only and shall
not affect the construction of this Agreement.

         SECTION 9.7 COUNTERPARTS. This Agreement may be executed in one or
more counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
together shall be deemed to constitute one and the same agreement.

         SECTION 9.8 REMEDIES; SEVERABILITY. It is specifically understood and
agreed that any breach of the provisions of this Agreement by any Person subject
hereto will result in irreparable injury to the other parties hereto, that the
remedy at law alone will be an inadequate remedy for such breach, and that, in
addition to any other legal or equitable remedies which they may have, such
other parties may enforce their respective rights by actions for specific
performance (to the extent permitted by law) and the Company may refuse to
recognize any unauthorized transferee as one of its stockholders for any
purpose, including, without limitation, for purposes of dividend and voting
rights, until the relevant party or parties have complied with all applicable
provisions of this Agreement.

         In the event that any one or more of the provisions contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.

         SECTION 9.9 ENTIRE AGREEMENT. This Agreement is intended by the
parties as a final expression of their agreement and intended to be complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter (including without limitation, the Initial Investment Agreement).

         SECTION 9.10 ADJUSTMENTS. All references to share prices and amounts
herein shall be equitably adjusted to reflect stock splits, stock dividends,
recapitalizations and similar changes affecting the capital stock of the
Company.

                                       33
<PAGE>

         SECTION 9.11 LAW GOVERNING. This Agreement shall be construed and
enforced in accordance with and governed by the laws of The Commonwealth of
Massachusetts (without giving effect to principles of conflicts of law). Each
party also waives trial by jury in any action relating to this Agreement and
consents to the jurisdiction of any Massachusetts court (federal or state).

         SECTION 9.12  TERMINATION OF AGREEMENT.

                  (a) With respect to all Investors, this Agreement shall,
except as provided in the following sentence, automatically terminate and be of
no further force or effect upon the closing of a public offering of the
Company's capital stock resulting in gross proceeds to the Company of at least
$10,000,000 and a per share price of Common Stock of $24.29 (appropriately
adjusted for stock dividends, stock splits, and other recapitalization
transactions), provided that the Subordinated Debentures and all amounts owing
in connection therewith have been or will be concurrently with the closing of
any such public offering paid in full. Notwithstanding the preceding sentence,
the agreements contained in Article IV, Section 9.2, Section 9.14 (with respect
only to expenses incurred prior to or in connection with such public offering)
and Sections 9.4, 9.5, 9.8, 9.9, 9.10, 9.11 and 9.13 hereof shall survive such
termination.

                  (b) With respect to each holder of shares of Series B
Preferred Stock in its capacity as such, except as provided in the following
sentence, this Agreement shall automatically terminate and be of no further
force or effect upon the earlier of (i) the events described in subparagraph
9.12(a) above, and (ii) that time when such holder no longer owns at least 30%
of the shares of Series B Preferred Stock purchased by it pursuant to the
Securities Purchase Agreement. Notwithstanding the preceding sentence, the
agreements contained in Article IV, Section 9.2 and Section 9.14 (with respect
only to expenses incurred prior to or in connection any public offering
described in subparagraph 9.12(a) above) and Sections 9.4, 9.5, 9.8, 9.9, 9.10,
9.11 and 9.13 hereof shall survive such termination.

         SECTION 9.13 COOPERATION. Each of the Company, the Outside Investors
and the Management Investors shall cooperate with all reasonable requests of the
others not inconsistent with the terms of this Agreement to consummate more
effectively the transactions contemplated hereby.

         SECTION 9.14 EXPENSES. The Company agrees to pay and hold the Outside
Investors harmless against liability for payment of all costs and expenses
incurred in connection with their investment in the Company, including the
reasonable fees and disbursements of legal counsel and other professionals. The
Company shall not pay or reimburse the Management Investors for any costs or
expenses (including, without limitation, reasonable legal fees or fees of other
professionals) incurred by them in connection with their investment in the
Company.

                                       34
<PAGE>

ARTICLE X EVENTS OF DEFAULT.

         In each case of the happening of any of the following events (each of
which is herein sometimes referred to as an "Event of Default"):

                           (a) if any representation or warranty made herein or
         by the Company in any agreement executed in connection with, or in any
         report, certificate, financial statement or other instrument furnished
         in connection with or pursuant to, this Agreement, the Initial
         Investment Agreement or the Securities Purchase Agreement shall prove
         to have been false or misleading when made in any material respect;

                           (b) if a default occurs in the payment of any
         premium, installment of the principal of, interest or dividends on, or
         other obligation with respect to, the Preferred Stock or the
         Subordinated Debentures, whether at the due date thereof or upon
         acceleration thereof, and, in the case of any such default such default
         continues for fifteen (15) or more days after the due date thereof;

                           (c) if a default occurs in the due observance or
         performance of any material covenant, condition or agreement on the
         part of the Company to be observed or performed pursuant to the
         provisions of this Agreement, the Subordinated Debentures or any other
         agreement entered into in connection herewith or contemplated by this
         Agreement and, if such default is susceptible to cure, such default
         continues for ten (10) days after the occurrence thereof or (ii) if a
         default occurs in the due observance or performance of any covenant,
         condition or agreement on the part of the Company to be observed or
         performed pursuant to the provisions of this Agreement, the
         Subordinated Debentures or any other agreement entered into in
         connection herewith or contemplated by this Agreement other than any
         such default described in clause (b) or clause (c)(i) hereof and, if
         such default is susceptible to cure, such default continues for thirty
         (30) days after the occurrence thereof ;

                           (d) if a default occurs with respect to any other
         indebtedness of the Company for borrowed money which permits the holder
         thereof to accelerate such indebtedness prior to the stated maturity
         thereof;

                           (e) if the Company shall (i) discontinue its
         business, (ii) apply for or consent to the appointment of a receiver,
         trustee, custodian or liquidator of it or any of its property, (iii)
         admit in writing its inability to pay its debts as they mature, (iv)
         make a general assignment for the benefit of creditors, or (v) file a
         voluntary petition in bankruptcy, or a petition or an answer seeking
         reorganization or an arrangement with creditors, or to take advantage
         of any bankruptcy, reorganization, insolvency, readjustment of debt,
         dissolution or liquidation laws or statutes, or an answer admitting the
         material allegations of a petition filed against it in any proceeding
         under any such law, or if corporate action shall be taken for the
         purpose of effecting any of the foregoing;

                                       35
<PAGE>

                           (f) there shall be filed against the Company an
         involuntary petition not stayed or vacated within thirty (30) days
         seeking reorganization of the Company or the appointment of a receiver,
         trustee, custodian or liquidator of the Company or a substantial part
         of its assets, or an involuntary petition under any bankruptcy,
         reorganization or insolvency law of any jurisdiction, whether now or
         hereafter in effect (any of the foregoing petitions being hereinafter
         referred to as an "Involuntary Petition");

                           (g) if final judgment(s) for the payment of money in
         excess of an aggregate of $100,000 shall be rendered against the
         Company and the same shall remain undischarged for a period of thirty
         (30) consecutive days, during which time execution shall not be
         effectively stayed; or

                           (h) if there occurs any attachment of any deposits or
         other property of the Company in an amount exceeding $100,000, which
         shall not be discharged within thirty (30) days of the date of such
         attachment;

then, upon each and every such Event of Default and at any time thereafter
during the continuance of such Event of Default, at the election of the
respective Outside Investor, the Subordinated Debentures and any and all
indebtedness of the Company to such Outside Investor shall immediately become
due and payable, both as to principal and interest, without presentment, demand,
or protest, all of which are hereby expressly waived, anything contained herein
or in the Subordinated Debentures or other evidence of such indebtedness to the
contrary notwithstanding (except in the case of an Event of Default under
paragraphs (e) or (f) of this Article X, in which event such indebtedness shall
automatically become due and payable). In the event of an acceleration of the
Company's indebtedness hereunder as a result of the filing of an Involuntary
Petition as specified in paragraph (f) of this Article X, such acceleration
shall be rescinded, and the Company's rights hereunder reinstated, if, within
forty-five (45) days following the filing of such Involuntary Petition, such
Involuntary Petition shall have been dismissed, and there shall exist no other
Event of Default under this Agreement.

         In case any one or more Events of Default shall occur and be continuing
and acceleration of the Subordinated Debentures or any other indebtedness of the
Company to the Outside Investors shall have occurred, the Outside Investors may
proceed to protect and enforce their rights by an action at law, suit in equity
or other appropriate proceeding, whether for the specific performance of any
agreement contained in this Agreement or the Subordinated Debentures, or for an
injunction against a violation of any of the terms hereof or thereof or in and
of the exercise of any power granted hereby or thereby or by law. No right
conferred upon the Outside Investors hereby or by the Subordinated Debentures
shall be exclusive of any other right referred to herein or therein or now or
hereafter available at law, in equity, by statute or otherwise.

                                       36
<PAGE>

ARTICLE XI  FAIR MARKET VALUE

         For purposes of this Agreement, "Fair Market Value" with respect to any
security shall mean the fair market value of such security, on a fully-diluted
basis, as of the date of the event giving rise to the necessity of making such
determination, as determined in good faith by the Board of Directors of the
Company and without discount for any lack of control. In making its
determination of Fair Market Value, the Board of Directors shall take into
consideration such factors as it deems appropriate. The Investor for whom such
Fair Market Value determination is being made shall have thirty (30) days
following the date on which the Board of Directors of the Company gives written
notice to such Investor of such Fair Market Value determination to accept such
Fair Market Value determination. Such Investor will be deemed to have accepted
such Fair Market Value determination if he fails to so notify the Company within
the 30-day period. During such 30-day period, the Company shall supply to the
Investor with such information as the Investor shall reasonably request (subject
to executing an appropriate confidentiality agreement) in order that the
Investor can assess the Fair Market Value determination. In the event that such
Investor notifies the Company in writing within such 30-day period that such
Investor disagrees with the determination of Fair Market Value made by the Board
of Directors, the Fair Market Value shall be determined by an accounting or
other firm reasonably satisfactory to the Company and such Investor (the
"Independent Firm"). The Independent Firm shall be instructed to determine Fair
Market Value on a fully-diluted basis, as of the date of the event giving rise
to the necessity of making such determination and without discount for any lack
of control. The expense of such determination of Fair Market Value shall be
borne by the objecting Investor; PROVIDED, HOWEVER, that if the Independent
Firm's determination of Fair Market Value is one hundred twenty-five percent
(125%) or more than the determination of the Company's Board of Directors as
presented to the Investor, the expense of the determination of Fair Market Value
by the Independent Firm shall be borne by the Company.

ARTICLE XII  ARBITRATION

         The parties agree that any controversy or dispute arising under this
Agreement, including without limitation, for indemnification, shall be referred
to the J.A.M.S./Endispute, to be settled by arbitration in Boston, Massachusetts
in accordance with the arbitration rules of such entity. The fees and expenses
of the arbitrator shall, as between the relevant parties, be borne by them in
such proportions as shall be determined by the arbitrator, or if there is no
such determination, then such fees and expenses shall be borne equally by the
relevant parties. The determination of the arbitrator as to any controversy or
dispute shall be conclusive and binding upon the parties hereto and judgment may
be entered thereon in any court having jurisdiction thereof, including, without
limitation, any Superior Court in The Commonwealth of Massachusetts.

                                       37
<PAGE>

ARTICLE XIII  TERMS OF THE SUBORDINATED DEBENTURES

         The terms of the Subordinated Debentures shall be as follows:

                           (a) MATURITY DATE. The Subordinated Debentures shall
         mature and shall be due and payable, together with all accrued but
         unpaid interest on the first to occur of: (i) March 15, 2003; (ii) the
         consummation of the first registered offering of the Company's capital
         stock (the "First Offering") under the Securities Act; (iii) the sale,
         lease or other disposition of all or substantially all of the Company's
         assets (whether in one transaction or a series of related transactions)
         or the merger or consolidation of the Company with another entity where
         the beneficial owners of the Company's outstanding capital stock
         immediately prior to such transaction hold less than fifty-one per cent
         (51%) of the voting power of the outstanding capital stock of the
         combined entity immediately after such transaction; (iv) any sale of a
         material or substantial asset or group of assets of the Company or of
         any subsidiary of the Company other than in the ordinary course of
         business (including, without limitation, any sale of the capital stock
         of any subsidiary of the Company), whether in one transaction or in a
         series of transactions, in which the aggregate consideration paid to
         the Company by the purchaser or purchasers of such asset or group of
         assets exceeds $2,000,000; or (v) the liquidation, dissolution or
         winding up of the Company (the first to occur of the foregoing, the
         "Maturity Date").

                           (b) INTEREST. The Subordinated Debentures shall bear
         interest, contingent upon and limited to the extent of earnings
         ("Debenture Interest"), computed on the basis of twelve 30-day months
         and the actual number of days elapsed, on the unpaid principal amount
         thereof from the date of issuance until the Maturity Date at the per
         annum rate of thirteen percent (13%). Interest on the Subordinated
         Debentures shall be payable quarterly in arrears on each March 31, June
         30, September 30, and December 31 commencing on March 31, 1996.

                           (c) INTEREST AFTER DEFAULT. In the event that any
         Event of Default occurs hereunder, the interest rate on the
         Subordinated Debentures shall increase to fifteen percent (15%) per
         annum ("Debenture Default Interest") (computed as provided above)
         during the period from the occurrence of such Event of Default through
         the earlier of the cure or waiver of such Event of Default or the
         payment in full of all outstanding principal and accrued but unpaid
         interest due thereon; provided, however, notwithstanding the foregoing,
         in no event shall the interest actually paid on a Subordinated
         Debenture exceed, so long as the holder of such Subordinated Debenture
         (a "Debentureholder") is a Small Business Investment Company, the
         maximum amount of interest permitted to be paid by the U.S. SBA
         Regulations as in effect on the date hereof, or such greater amount as
         may be permitted by such regulations as amended from time to time.

                                       38
<PAGE>

                           (d) PRINCIPAL. The Company will pay the principal of,
         and all accrued but unpaid interest on, the Subordinated Debentures
         without set-off, deduction or counterclaim in accordance with the
         following amortization schedule:

<TABLE>
<CAPTION>
              Calendar                                  Percent of Original Principal
              Quarter                                             Amount of
               Ended                                     Debentures Due and Payable
              -------                                   ----------------------------
<S>                                                     <C>
The issue date - March 31, 1997                                            0.0%
June 30, 1997 - March 31, 1998                                             2.5%
June 30, 1998 - December 31, 1998                                         3.75%
March 31, 1999                                                             0.0%
June 30, 1999  - December 31, 1999                                         2.0%
March 31, 2000 - December 31, 2000                                         2.5%
March 31, 2001 - December 31, 2002                                         5.0%
March 31, 2003                                                           22.75%
</TABLE>

         Payments due under this Section 2.7(d) shall be made not later than
         five (5) business days after the relevant calendar quarter end.

                           (e) PAYMENTS ON THE DEBENTURES. All payments of
         principal and interest on the Subordinated Debentures shall be made by
         the Company in lawful money of the United States of America in
         immediately available funds not later than 12:00 p.m., Boston time, on
         the date such payment is due, or, if such date is not a business day,
         then on the next succeeding business day, at the address of the
         Debentureholder set forth on the signature pages hereto or, at such
         Debentureholder's election, by crediting the Debentureholder's account
         at a bank designated by the Debentureholder in writing to the Company.

                           (f) PREPAYMENT. The outstanding principal amount of
         the Subordinated Debentures may be prepaid, in whole or in part,
         without penalty or premium, but with all accrued but unpaid interest
         thereon, at any time upon not less than ten (10) days' prior written
         notice to the Debentureholders, and shall be paid, in whole, with all
         accrued but unpaid interest thereon, upon the Maturity Date.

                           (g) FINANCIAL COVENANT. The Company at all times
         shall maintain a ratio of Debt to Equity of not more than 2.5 to 1. For
         these purposes, "Debt" shall mean all outstanding indebtedness for
         borrowed money (excluding the Subordinated Debentures) and "Equity"
         shall mean the sum of (A) the Company's consolidated tangible net worth
         as determined in accordance with generally accepted accounting
         principles and (B) the principal amount of the Subordinated Debentures.

                           (h) TRANSFERABILITY. The Subordinated Debentures
         shall be freely transferable.

                                       39
<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

COMPANY
                                   HARVARD APPARATUS, INC.

                                   By: /S/ David Green
                                      -----------------------------------------
                                        Name: David Green
                                        Title: President

OUTSIDE INVESTORS
                                   PIONEER VENTURES LIMITED PARTNERSHIP

ADDRESS:                                By:   Pioneer SBIC Corp.,
c/o Pioneer Capital Corp.               Its:  General Partner
60 State Street
Boston, MA  02109
Attn:  C.W. Dick                        By:   /S/ C.W. Dick
fax:  (617) 742-7315                          ---------------------------------
                                              C. W. Dick
                                              Vice President

                                   PIONEER VENTURES LIMITED PARTNERSHIP II

                                        By:   Pioneer Ventures Management LP
                                        Its:  General Partner

ADDRESS:                                By:   Pioneer Management SBIC Corp.
c/o Pioneer Capital Corp.               Its:  General Partner
60 State Street
Boston, MA  02109
Attn:  C.W. Dick                        By:   /S/ C.W. Dick
fax:  (617) 742-7315                          ---------------------------------
                                              C. W. Dick
                                              Vice President

ADDRESS:                                PIONEER CAPITAL CORP.
60 State Street
Boston, MA  02109
Attn:  C.W. Dick                        By:   /S/ C.W. Dick
fax:  (617) 742-7315                          ---------------------------------
                                              C. W. Dick

<PAGE>

                                   FIRST NEW ENGLAND CAPITAL, L.P.
ADDRESS:
100 Pearl Street                        By:   FINEC CORP.
Hartford, CT  06103                     Its:  General Partner
Attn: Richard Klaffky
fax:  (860) 293-3338
                                        By:   /S/ Richard C. Klaffky
                                              ---------------------------------
                                              Richard C. Klaffky
                                              President

                                   CITIZENS CAPITAL, INC.
ADDRESS:
28 State Street, 15th Floor
Boston, MA  02109
Attn:  Daniel P. Corcoran, Jr.          By:   /S/ Daniel P. Corcoran, Jr.
fax: (617) 725-5630                           ---------------------------------
                                              Daniel P. Corcoran, Jr.
                                              Title:

                                              /S/ Chane Graziano
                                              ---------------------------------
                                              Chane Graziano, in his capacity as
                                              an Outside Investor

MANAGEMENT INVESTORS

                                              /S/ Chane Graziano
                                              ---------------------------------
                                              Chane Graziano, in his capacity as
                                              a Management Investor

                                              /S/ David Green
                                              ---------------------------------
                                              David Green

<PAGE>

                                    EXHIBIT A

                            FORM OF JOINDER AGREEMENT

         The undersigned hereby agrees, effective as of the date hereof, to
become a party to that certain Securityholders' Agreement (the "Agreement")
dated as of March 2, 1999 by and among Harvard Apparatus, Inc. (the "Company")
and the other parties named therein and for all purposes of the Agreement, the
undersigned shall be included within the term "Management Investor" (as defined
in the Agreement). As of the date hereof the undersigned makes each of the
representations and warranties set forth in Section 3.1 of the Agreement. The
address and facsimile number to which notices may be sent to the undersigned is
as follows:
_______________________________________________________________________________
Facsimile No.____________________.

                                                  _____________________________
                                                  [Name]

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