Document:

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                                HEALTHOLOGY, INC.
                   SERIES A PREFERRED STOCK PURCHASE AGREEMENT
                                  March 1, 2000

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                                TABLE OF CONTENTS

                                                                         Page
                                                                         ----

1. Purchase and Sale of Stock...............................................1

   1.1     Sale and Issuance of Series A Preferred Stock....................1
   1.2     Closing Date.....................................................1

2. Representations and Warranties of the Company............................2

   2.1     Organization, Good Standing and Qualification....................2
   2.2     Capitalization...................................................2
   2.3     Subsidiaries.....................................................3
   2.4     Authorization....................................................3
   2.5     Valid Issuance of Preferred and Common Stock.....................3
   2.6     Third Party Consents.............................................3
   2.7     Litigation.......................................................4
   2.8     Employees........................................................4
   2.9     Patents and Trademarks...........................................5
   2.10    Compliance with Other Instruments................................5
   2.11    Permits..........................................................6
   2.12    Registration Rights..............................................6
   2.13    Title to Property and Assets.....................................6
   2.14    Brokers or Finders...............................................6
   2.15    Corporate Documents..............................................6
   2.16    Agreements; Action...............................................6
   2.17    Related-Party Transactions.......................................7
   2.18    Tax Returns, Payments and Elections..............................7
   2.19    Minute Books.....................................................7
   2.20    Financial Statements.............................................8
   2.21    Changes..........................................................8
   2.22    Manufacturing and Marketing Rights...............................9
   2.23    Disclosure to Investor...........................................9
   2.24    Year 2000 Compatibility.........................................10
   2.25    Use of Proceeds.................................................10
   2.26    Software........................................................10
   2.27    Customer Warranties.............................................10
   2.28    Disclosure......................................................11

3. Representations and Warranties of the Investor..........................11

   3.1     Experience......................................................11
   3.2     Investment......................................................11
   3.3     Accredited Investor.............................................11
   3.4     Rule 144........................................................11
   3.5     No Public Market................................................12

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                                TABLE OF CONTENTS
                                   (continued)

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   3.6     Access to Data..................................................12
   3.7     Authorization...................................................12

4. Conditions of Investor's Obligations....................................12

   4.1     Representations and Warranties..................................12
   4.2     Performance.....................................................12
   4.3     Compliance Certificate..........................................13
   4.4     By-laws.........................................................13
   4.5     Board of Directors..............................................13
   4.6     Opinion of Company Counsel......................................13
   4.7     Investor's Rights Agreement.....................................13
   4.8     Stockholders' Agreement.........................................13
   4.9     Blue Sky........................................................13
   4.10    Proceedings and Documents.......................................13
   4.11    Lock-Up Agreements..............................................13

5. Conditions of the Company's Obligations.................................14

   5.1     Representations and Warranties..................................14
   5.2     Payment of Purchase Price.......................................14
   5.3     Blue Sky........................................................14
   5.4     Investor's Rights Agreement.....................................14
   5.5     Stockholders' Agreement.........................................14
   5.6     Proceedings and Documents.......................................14
   5.7     Lock-Up Agreement...............................................14

6. Miscellaneous...........................................................14

   6.1     Put.............................................................14
   6.2     Governing Law...................................................15
   6.3     Survival of Warranties; Indemnification.........................15
   6.4     Successors and Assigns..........................................15
   6.5     Entire Agreement; Amendment.....................................15
   6.6     Notices, Etc....................................................16
   6.7     Delays or Omissions.............................................16
   6.8     Finder's Fee....................................................16
   6.9     Attorneys' Fees.................................................16
   6.10    Counterparts....................................................16
   6.11    Severability of this Agreement..................................17
   6.12    Co-Investment Right.............................................17
   6.13    Further Assurances..............................................17

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                                TABLE OF CONTENTS
                                   (continued)

Exhibit A.........Investor Schedule
Exhibit B.........Certificate of Designation
Exhibit C.........Investor's Rights Agreement
Exhibit D.........Stockholders' Agreement
Exhibit E.........Opinion of Company Counsel

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                   SERIES A PREFERRED STOCK PURCHASE AGREEMENT

         THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of the 1st day of March, 2000, by and between HEALTHOLOGY, INC., a
Delaware corporation (the "Company"), with principal offices located at 361
Broadway, New York, NY 10013, and the Investor whose name and address is set
forth on the Investor Schedule attached as Exhibit A hereto (the "Investor").

         THE PARTIES HEREBY AGREE AS FOLLOWS:

         1. Purchase and Sale of Stock.

            1.1 Sale and Issuance of Series A Preferred Stock.

                (a) The Company shall adopt and file with the Secretary of State
of Delaware on or before the Closing Date (as defined below) the Certificate of
Designation in the form attached hereto as Exhibit B (the "Certificate").

                (b) Subject to the terms and conditions of this Agreement, the
Investor agrees to purchase, and the Company agrees to sell and issue to the
Investor, the number of shares of the Company's Series A Preferred Stock (the
"Series A Preferred") set forth opposite the Investor's name on Exhibit A hereto
for the purchase price set forth thereon. The shares of Series A Preferred are
referred to herein as the "Shares."

            1.2 Closing Date.

                (a) The purchase and sale of the Shares shall take place at the
offices of Brown & Wood LLP, One World Trade Center, New York, New York, at
10:00 a.m., on March 1, 2000, or at such other time and place as the Company and
the Investor mutually agree upon orally or in writing (which time and place are
designated as the "Closing Date"). At the Closing Date the Company shall deliver
to the Investor certificates, registered in such names and denominations as
requested, representing 3,211,453 shares to be purchased by the Investor against
payment of the purchase price therefor by check or wire transfer of immediately
available funds.

                (b) Notwithstanding Subsection 1.2(a), if key-man insurance (the
"Insurance") in the amount of $1.0 million ($5.0 million if such request is not
expected to delay the issuance of the $1.0 million policy) on the life of Steven
Haimowitz, M.D. is not issued by the Closing Date, the Shares will be purchased
in two installments: (i) $1,000,000 (1,000,000 Shares to be purchased on the
Closing Date) and (ii) $2,211,453 (2,211,453 Shares to be purchased at a later
date, the "Second Closing Date") in accordance with the following: (i) if the
Company obtains a binder or a policy evidencing the Insurance by 5:00 p.m.
E.S.T. on March 21, 2000, then the Second Closing Date shall be five (5)
business days following the delivery to Investor of such binder or policy and
(ii) if the Company does not obtain a binder or policy evidencing the Insurance
by 5:00 p.m. E.S.T. on March 21, 2000, then Investor shall have until March 28,
2000 to elect to purchase the remaining shares. During such five business day
period, the Company shall provide the Investor all information known to it
regarding the status of the Insurance. At the end of such five business day
period, if a binder or a policy for the Insurance has not been issued, and the
Investor has elected not to purchase the remaining 2,211,453 Shares, the
Investor will lose its right to fund such remaining Shares.

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                (c) Immediately following the Closing Date, the Company shall,
and shall cause Steven Haimowitz, M.D. to, notify in writing EAC Brokerage, Inc.
and North American Life Insurance Company (together, the "Insurance Companies")
that each waives all confidentiality and nondisclosure with respect to, and
authorizes the Insurance Companies to discuss with Investor representatives, the
Insurance, the applications for such Insurance, the results of all examinations
and tests performed in connection therewith and the status of the application
process.

         2. Representations and Warranties of the Company. Except as set forth
in the Schedule of Exceptions delivered separately to the Investor, the Company
(including, for purposes hereof, its predecessor, Healthology, LLC) hereby
represents and warrants as follows:

            2.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own and operate its properties and assets, and to carry on its business as
currently conducted and as proposed to be conducted. The Company is duly
qualified to transact business and is in good standing in each jurisdiction in
which the failure to so qualify would have a material adverse effect on its
business or properties. True and accurate copies of the Company's Certificate of
Incorporation and By-laws, each as amended and in effect at the Closing Date,
have been delivered to the Investor.

            2.2 Capitalization. The authorized capital stock of the Company
consists of 30,000,000 shares of Common Stock, of which 11,150,505 shares are
issued and outstanding immediately prior to the Closing Date and 15,000,000
shares of Preferred Stock, 3,500,000 shares of which are designated as Series A
Preferred, none of which are issued and outstanding. All such issued and
outstanding shares have been duly authorized and validly issued and are fully
paid and nonassessable. The Company has reserved 3,211,453 shares of Series A
Preferred for issuance hereunder. The Company has further reserved 2,600,000
shares of Common Stock for issuance to employees, officers, directors and
doctors pursuant to the Company's Non-Qualified Option Plan, of which 995,310
shares of Common Stock are subject to issuance upon exercise of options that are
currently outstanding; and 500,000 shares of Common Stock are reserved for
issuance upon exercise of outstanding warrants to purchase Common Stock. Except
as set forth in the Schedule of Exceptions, as delivered separately to the
Investor, there are no outstanding rights, options, warrants, convertible
securities, preemptive rights, rights of first refusal or other rights for the
purchase or acquisition from the Company of any securities of the Company. All
outstanding shares have been issued in compliance with state and federal
securities laws. No outstanding options, warrants or other securities
exercisable for or convertible into Common Stock or any other equity securities
of the Company provide for acceleration or vesting, or require anti-dilution
adjustments, by reason of the consummation of the transactions contemplated
hereby, or any change of control, merger, sale of assets or similar transaction.
The Company is not a party or subject to any agreement or understanding and, to
the best of the Company's knowledge, there is no agreement or understanding
between any persons or entities that affects or relates to the voting or giving
of written consent with respect to any security or voting by a director of the
Company.

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            2.3 Subsidiaries. The Company does not presently own or control,
directly or indirectly, any interest in any other corporation, association, or
other business entity. Except as disclosed in Section 2.3 of the Schedule of
Exceptions, the Company is not a party to any written or oral agreement
governing its participation in any joint venture, partnership, or similar
arrangement.

            2.4 Authorization. All corporate action on the part of the Company,
its officers, directors and shareholders necessary for the authorization,
execution and delivery of the Certificate, the Investor's Rights Agreement
between the Company and the Investor and the Stockholders' Agreement by and
among the Company, its stockholders and the Investor, each of even date
herewith, (the "Affiliated Agreements") and this Agreement, the performance of
all obligations of the Company hereunder and thereunder, and the authorization,
issuance (or reservation for issuance), sale and delivery of the Shares being
sold hereunder and the Common Stock issuable upon conversion of the Series A
Preferred has been taken or will be taken prior to the Closing Date, and this
Agreement and the Affiliated Agreements constitute valid and legally binding
obligations of the Company, enforceable in accordance with their respective
terms, subject to: (i) judicial principles limiting the availability of specific
performance, injunctive relief, and other equitable remedies; (ii) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect generally relating to or affecting creditors' rights; and (iii)
limitations on the enforceability of the indemnification provisions of this
Agreement and the Investor's Rights Agreement.

            2.5 Valid Issuance of Preferred and Common Stock. The Shares that
are being purchased by the Investor hereunder, when issued, sold and delivered
in accordance with the terms of this Agreement for the consideration expressed
herein will be duly and validly issued, fully paid, and nonassessable, will have
the rights, preferences, privileges and restrictions described in the
Certificate, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement and the Affiliated Agreements and
under applicable state and federal securities laws. The Common Stock issuable
upon conversion of the Series A Preferred purchased under this Agreement has
been duly and validly reserved for issuance and, upon issuance in accordance
with the terms of the Certificate, will be duly and validly issued, fully paid,
and nonassessable and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement and the Affiliated Agreements and
under applicable state and federal securities laws. The issuance and delivery of
the Shares and the Common Stock issuable upon conversion thereof, as applicable,
are not subject to any preemptive or other similar rights or any liens or
encumbrances, except for preemptive rights that have been waived, which are
listed on Section 2.5 of the Schedule of Exceptions.

                                      -3-
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            2.6 Third Party Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration,
notice to or filing with, any third party or federal, state or local
governmental authority on the part of the Company is required in connection with
the offer, sale or issuance of the Shares (and the Common Stock issuable upon
conversion of the Shares), or the consummation of any other transaction
contemplated hereby, including, without limitation, the merger of the Company's
predecessor, Healthology, L.L.C., into the Company, except for the following:
(i) the filing of the Certificate in the office of the Secretary of State of
Delaware, which shall be filed by the Company on or prior to the Closing Date;
(ii) the filing of such notices as may be required under the Securities Act of
1933, as amended (the "Securities Act"); and (iii) the compliance with other
applicable state securities laws, which compliance will have occurred within the
appropriate time periods therefor. Based in part on the representations of the
Investor set forth in Section 3 below, the offer, sale and issuance of the
Shares in conformity with the terms of this Agreement are exempt from the
registration requirements of Section 5 of the Securities Act and neither the
Company nor any authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such exemptions.

            2.7 Litigation. There is no action, suit, proceeding or
investigation pending or, to the best of the Company's knowledge, currently
threatened before any court, administrative agency or other governmental body
against the Company, nor is the Company aware that there is any basis for the
foregoing. The foregoing includes, without limitation, actions, suits,
proceedings or investigations pending or threatened (or any basis therefor known
to the Company) involving the prior employment of any of the Company's
employees, their use in connection with the Company's business of any
intellectual property, information or techniques allegedly proprietary to any of
their former employers, or their obligations under any agreements with their
former employers. The Company is not a party or subject to, and none of its
assets is bound by, the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality. There is no action,
suit, proceeding or investigation by the Company currently pending or that the
Company intends to initiate.

            2.8 Employees. (a) No employees of the Company are represented by
any labor union or covered by any collective bargaining agreement. There is no
pending or, to the best of the Company's knowledge, threatened labor dispute or
labor union organizing activity involving the Company and any of its employees.
To the best of the Company's knowledge, none of the Company's employees are
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with the use of his or
her best efforts to promote the interests of the Company or that would conflict
in any manner with the Company's business as proposed to be conducted. To the
best of the Company's knowledge, neither the execution nor delivery of this
Agreement or the Affiliated Agreements, nor the carrying on of the Company's
business by the employees of the Company, nor the conduct of the Company's
business as proposed to be conducted, will conflict with or result in a breach
of the terms, conditions or provisions of, or constitute a default under, any
contract, covenant or instrument under which any of such employees is now
obligated;

                                      -4-
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                (b) Except as stated in Section 2.8(b) of the Schedule of
Exceptions, the Company is not aware that any officer or key employee, or that
any group of key employees, intends to terminate their employment with the
Company, nor does the Company have a present intention to terminate the
employment of any of the foregoing. The employment of each officer and employee
of the Company is terminable at the will of the Company. The Company has
complied in all material respects with all applicable state and federal equal
employment opportunity laws and with all other laws related to employment. To
the best of the Company's knowledge, no employee of the Company, nor any
consultant with whom the Company has contracted, is in violation of any term of
any employment contract, proprietary information agreement or any other
agreement relating to the right of any such individual to be employed by, or to
contract with, the Company because of the nature of the business to be conducted
by the Company or otherwise; and to the best of the Company's knowledge the
continued employment by the Company of its present employees, and the
performance of the Company's contracts with its independent contractors, will
not result in any such violation. The Company has not received any notice
alleging that any such violation has occurred. No employee of the Company has
been granted the right to continued employment by the Company or to any material
compensation following termination of employment with the Company;

                (c) Neither the Company nor any of its subsidiaries have, nor
have they ever had, any Employee Benefit Plan as defined in the Employee
Retirement Income Security Act of 1974, as amended, and no other employee
benefit plan or program.

            2.9 Patents and Trademarks. The Company owns or possesses or has
adequate licenses or other rights to use all patents, trademarks, service marks,
trade names, copyrights, domain names, URLs, trade secrets, information,
proprietary rights and processes necessary for its business as now conducted and
as proposed to be conducted without, to its knowledge, any conflict with or
infringement of the rights of others. A list of all patents, patent
applications, trademarks, trademark applications, URLs and domain names of the
Company (or licenses or rights to so use the patents, trademarks, URLs or domain
names of others) is set forth on Section 2.9 of the Schedule of Exceptions.
There are no outstanding options, licenses, or agreements of any kind relating
to the foregoing, nor is the Company bound by or a party to any options,
licenses or agreements of any kind with respect to the patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information,
proprietary rights and processes of any other person or entity. The Company has
not received any communications alleging that the Company has violated or, by
conducting its business, would violate any of the patents, trademarks, service
marks, trade names, copyrights or trade secrets or other proprietary rights of
any other person or entity nor is the Company aware that there is any basis for
the foregoing. The Company does not and will not need to utilize any inventions
of any of its employees (or people it currently intends to hire) made prior to
their employment by the Company that have not previously been fully and
exclusively assigned to the Company without restrictions.

            2.10 Compliance with Other Instruments. The Company is not in
violation or default of any provision of its Certificate of Incorporation or
By-laws, each as amended and in effect on and as of the Closing Date. The
Company is not in violation or default of any material provision of any
instrument, mortgage, deed of trust, loan, contract, commitment, judgment,
decree, order or obligation to which it is a party or by which it or any of its
properties or assets are bound or in violation in any material respect of any
provision of any federal, state or local statute, rule or governmental
regulation. The execution, delivery and performance of and compliance with this
Agreement and the Affiliated Agreements, and the issuance and sale of the Shares
and the issuance of Common Stock upon the conversion thereof, will not result in
any such violation, be in conflict with or constitute, with or without the
passage of time or giving of notice, a default under any such provision, require
any consent or waiver under any such provision (other than any consents or
waivers that have been obtained), or result in the creation of any mortgage,
pledge, lien, encumbrance or charge upon any of the properties or assets of the
Company pursuant to any such provision. The Company has avoided every condition,
and has not performed any act, the occurrence of which would result in the
Company's loss of any material right granted under any assignment, license,
distribution or other agreement.

                                      -5-
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            2.11 Permits. The Company has all material franchises, permits,
licenses, and any similar authority necessary for the conduct of its business as
now being conducted by it, and the Company believes it can obtain, without undue
burden or expense, any similar authority for the conduct of its business as
planned to be conducted. The Company is not in default under any of such
franchises, permits, licenses, or other similar authority and neither the
execution, delivery nor performance of this Agreement and the Affiliated
Agreements and the consummation of the transactions contemplated hereby and
thereby will result in any suspension, revocation, impairment, forfeiture or
nonrenewal of any permit, license, authorization or approval applicable to the
Company, its business or operations or any of its assets or properties.

            2.12 Registration Rights. Except as provided in the Investor's
Rights Agreement, the Company has not granted or agreed to grant any
registration rights, including piggyback rights, to any person or entity.

            2.13 Title to Property and Assets. The Company has good and
marketable title to all of its properties and assets free and clear of all
mortgages, liens and encumbrances, except liens for current taxes and
assessments not yet due. With respect to the properties and assets it leases,
the Company is in compliance with such leases and holds a valid leasehold
interest free of all liens, claims or encumbrances, and to the best knowledge of
the Company, all other parties to the leases are in compliance with all material
terms of such leases. The Company's properties and assets are in good condition
and repair in all material respects.

            2.14 Brokers or Finders. The Company has not agreed to incur,
directly or indirectly, any liability for brokerage or finders' fees, agents'
commissions or other similar charges in connection with this Agreement or any of
the transactions contemplated hereby.

            2.15 Corporate Documents. Except for amendments necessary to satisfy
representations and warranties or conditions contained herein (the form of which
amendments has been approved by counsel to the Investor), the Certificate of
Incorporation and By-laws of the Company are in the form previously provided to
the Investor or its counsel.

            2.16 Agreements; Action. (a) Except for agreements explicitly
contemplated hereby and by the Affiliated Agreements, there are no agreements,
understandings or proposed transactions between the Company and any of its
officers, directors, affiliates, or any affiliate thereof.

                (b) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or by which it is bound that may (i) involve obligations
(contingent or otherwise) of, or payments to the Company in excess of, $25,000,
(ii) involve the license of any patent, copyright, trade secret or other
proprietary right to or from the Company, (iii) involve provisions restricting
or affecting the development, manufacture or distribution of the Company's
products or services, (iv) involve indemnification by the Company with respect
to infringement of proprietary rights, or (v) otherwise have a material effect
on the Company's business or financial condition.

                                      -6-
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                (c) The Company has not (i) declared or paid any dividends or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities individually in excess of $25,000 or, in the case of
indebtedness and/or liabilities individually less than $25,000, in excess of
$25,000 in the aggregate, (iii) made any loans or advances to any person, other
than ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise
disposed of any of its assets or rights, other than the sale of its inventory in
the ordinary course of business.

                (d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.

            2.17 Related-Party Transactions. No employee, officer, or director
of the Company or member of his or her immediate family is indebted to the
Company, nor, except for the reimbursement of expenses in connection with the
ordinary course of business, is the Company indebted (or committed to make loans
or extend or guarantee credit) to any of them. To the best of the Company's
knowledge, none of such persons has any direct or indirect ownership interest in
any firm or corporation with which the Company is affiliated or with which the
Company has a business relationship, or any firm or corporation that competes
with the Company, except that employees, officers, or directors of the Company
and the members of their immediate families may own stock in publicly traded
companies that may compete with the Company. No member of the immediate family
of any officer or director of the Company is directly or indirectly interested
in any material contract with the Company.

            2.18 Tax Returns, Payments and Elections. The Company has filed all
tax returns and reports as required by law. These returns and reports are true
and correct in all material respects. The Company has paid all taxes and other
assessments due, except those contested by it in good faith that are listed in
the Schedule of Exceptions. To the Company's knowledge, no tax liens or other
claims exist with respect to any assets owned by the Company. The Company has
not elected pursuant to the Code, to be treated as a Subchapter S corporation or
a collapsible corporation pursuant to Section 1362(a) or Section 341(f) of the
Code.

            2.19 Minute Books. The minute books of the Company provided to the
Investor contain a complete summary of all meetings of directors and
shareholders since the time of incorporation and reflect all transactions
referred to in such minutes accurately in all material respects.

                                      -7-
<PAGE>

            2.20 Financial Statements. The Company has delivered to and made
available to the Investor's satisfaction, its audited financial statements
(prepared by Grant Thornton LLP in accordance with generally accepted accounting
principals) at December 31, 1999 (referred to herein as the "Financial
Statements"). The Financial Statements have been prepared in accordance with
generally accepted accounting principals applied on a consistent basis
throughout the periods indicated and with each other. The Financial Statements
fairly present the financial condition and operating results of the Company as
of the dates, and for the periods, indicated therein. Except as set forth in the
Financial Statements, the Company has no material liabilities, contingent or
otherwise, other than (i) liabilities incurred in the ordinary course of
business subsequent to December 31, 1999, and (ii) obligations under contracts
and commitments incurred in the ordinary course of business and not required
under generally accepted accounting principles to be reflected in the Financial
Statements, which, in both cases, individually or in the aggregate, are not
material to the financial condition or operating results of the Company. Except
as disclosed in the Financial Statements, the Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation. The
Company maintains and will continue to maintain a standard system of accounting
established and administered in accordance with generally accepted accounting
principles.

            2.21 Changes. Except as set forth in the Schedule of Exceptions,
since December 31, 1999, there has not been:

                (a) any change in the assets, liabilities, financial condition
or operation results of the Company from that reflected in the Financial
Statements, except changes in the ordinary course of business that have not
been, in the aggregate, materially adverse;

                (b) any damage, destruction or loss, whether or not covered by
insurance, affecting the assets, properties, financial condition, operating
results, prospects or business of the Company (as such business is presently
conducted and as it is proposed to be conducted);

                (c) any waiver by the Company of a valuable right or of a
material debt owed to it;

                (d) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and that is not material to the assets, properties, financial
condition, operating results or business of the Company (as such business is
presently conducted and as it is proposed to be conducted);

                (e) any material change or amendment to a material contract or
arrangement by which the Company or any of its assets or properties is bound or
subject;

                (f) any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder;

                (g) except for licenses and co-branding arrangements entered
into in the ordinary course of business, any sale, assignment or transfer of any
patents, trademarks, copyrights, trade secrets or other intangible assets;

                                      -8-
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                (h) any resignation or termination of employment of any key
officer of the Company; and the Company, to the best of its knowledge, does not
know of the impending resignation or termination of employment of any such
officer;

                (i) receipt of notice that there has been a loss of, or material
order cancellation by, any major customer of the Company;

                (j) any mortgage, pledge, transfer of a security interest in, or
lien, created by the Company, with respect to any of its material properties or
assets, except liens for taxes not yet due or payable;

                (k) any loans or guarantees made by the Company to or for the
benefit of its stockholders, employees, officers or directors, or any members of
their immediate families, other than travel advances and other advances made in
the ordinary course of its business;

                (l) any declaration, setting aside or payment or other
distribution in respect of any of the Company's capital stock, or any direct or
indirect redemption, purchase or other acquisition of any of such stock by the
Company;

                (m) to the best of the Company's knowledge, any other event or
condition of any character that might materially and adversely affect the
assets, properties, financial condition, operating results, business or
prospects of the Company (as such business is presently conducted and as it is
proposed to be conducted);

                (n) any warranties or indemnifications or other contingent
liabilities provided to any party, other than in the ordinary course of
business; or

                (o) any agreement or commitment by the Company to do any of the
things described in this Section 2.21.

            2.22 Manufacturing and Marketing Rights. The Company has not granted
rights to manufacture, produce, assemble, license, market, or sell its products
to any other person and is not bound by any agreement that affects the Company's
exclusive right to develop, manufacture, assemble, distribute, market or sell
its products.

            2.23 Disclosure to Investor. The Company has fully provided the
Investor with all the information that the Investor has requested for deciding
whether to purchase the Series A Preferred and all information that the Company
believes is reasonably necessary to enable the Investor to make such decision.
Any information provided to the Investor in the business plan of the Company,
including any financial projections, are merely descriptions and estimates made
by the Company and are not intended to be commitments of the Company; provided,
however, that the Company represents that such business plan and projections
were prepared in good faith and that the Company reasonably believes there is a
reasonable basis for such business plan and projections.

                                      -9-
<PAGE>

            2.24 Year 2000 Compatibility. To the Company's knowledge, as of the
Closing Date, all Date-Sensitive Systems are Year 2000 Compliant, as such term
is defined below, except as such noncompliance would not materially adversely
effect the Company. "Date Data" means any data of any type that includes date
information or which is otherwise derived from, dependent on or related to date
information. "Date-Sensitive System" means any software that processes any Date
Data that the Company has itself developed for its internal use, or that the
Company sells, leases, licenses, assigns or otherwise provides, or the provision
or operation of which the Company provides the benefit, to its customers. "Year
2000 Compliant" means that each such system accurately processes all Date Data,
including for the twentieth and twenty-first centuries, without loss or any
functionality or performance, including but not limited to calculating,
comparing, sequencing, storing and displaying such Date Data (including all leap
year considerations), when used as a stand-alone system or in combination with
other software or hardware.

            2.25 Use of Proceeds. The proceeds from the sale of the Shares will
be used to fund the following prior to the end of 2000: (i) continued direct and
indirect marketing of the Company; (ii) additional acquisition and development
of enhanced Internet software; (iii) further recruitment of, and initial
operating expenses for, key personnel to expand the products and services
offered and the Company's Web Site; and (iv) capital purchases of computers,
office furniture and equipment, as well as for working capital (including
consulting services for Web Site functionality enhancements) and other general
corporate purposes.

            2.26 Software. The current software applications used by the Company
in the operation of its business (other than "off-the-shelf" software available
to the general public by purchase or download), as set forth and described on
Section 2.26 of the Schedule of Exceptions hereto (the "Software"), have been
designed or developed by the Company's management information or development
staff or by consultants on the Company's behalf, is original and capable of
copyright protection in the United States, and the Company has complete rights
to and ownership of such software, except as indicated on the Schedule of
Exceptions. To the Company's knowledge, no part of any such software is an
imitation or copy of, or infringes upon, the software of any other person or
violates or infringes upon any common law or statutory rights of any other
person, including, without limitation, rights relating to defamation,
contractual rights, copyrights, trade secrets, and rights or privacy or
publicity. To the Company's knowledge, the Software, to the extent it is
licensed from any third party licensor or constitutes "off-the-shelf" software,
is held by the Company legitimately. To the Company's knowledge, all of the
Company's computer hardware has legitimately-licensed software installed
therein. To the Company's knowledge, the Software is free from any software
defect or programming or documentation error which might have a materially
adverse effect on the Company.

            2.27 Customer Warranties. There are no pending, nor to the knowledge
of the Company, threatened, claims under or pursuant to any warranty, whether
express or implied, on products or services sold prior to the Closing Date by
the Company that are not disclosed or referred to in the Financial Statements
and that are not fully reserved against. There is no reason to expect an
increase in warranty claims in the future. The standard terms and conditions of
the Company's warranties have been delivered to counsel for the Investor.

                                      -10-
<PAGE>

            2.28 Disclosure. Neither this Agreement, nor the Schedule of
Exceptions, nor any written materials supplied to Investor by the Company,
contains any untrue statement of a material fact or omits a material fact known
to the Company necessary to make each statement contained herein or therein not
misleading. There is no fact which the Company has not disclosed to the Investor
herein and of which the Company, or any of its officers or directors is aware
and which would reasonably be anticipated to have a material adverse effect on
the Company. The Company has disclosed to the Investor all material information
relating to the business of the Company or the transactions contemplated by this
Agreement which a prudent investor would reasonably require in evaluating an
equity investment in the Company.

         3. Representations and Warranties of the Investor. The Investor hereby
represents and warrants to the Company with the respect to the transactions
contemplated hereby that:

            3.1 Experience. The Investor is experienced in evaluating start-up
companies such as the Company, is able to fend for itself in transactions such
as the one contemplated by this Agreement, has such knowledge and experience in
financial and business matters that Investor is capable of evaluating the merits
and risks of Investor's prospective investment in the Company, and has the
ability to bear the economic risks of the investment.

            3.2 Investment. The Investor is acquiring the Shares (and the Common
Stock issuable upon conversion of the Shares) for investment for such Investor's
own account and not with the view to, or for resale in connection with, any
distribution thereof. Such Investor understands that the Shares (and the Common
Stock issuable upon conversion of the Shares) have not been registered under the
Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment intent as expressed herein. Such Investor
further represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participation to any
third person with respect to any of the Shares (or any Common Stock acquired
upon conversion of the Shares). Such Investor understands and acknowledges that
the offering of the Shares pursuant to this Agreement and any issuance of Common
Stock on conversion of the Shares will not be registered under the Securities
Act on the ground that the sale provided for in this Agreement and the issuance
of securities hereunder is exempt from the registration requirements of the
Securities Act.

            3.3 Accredited Investor. The Investor is an accredited investor as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

            3.4 Rule 144. The Investor acknowledges that the Shares (and the
Common Stock issuable upon conversion of the Shares) must be held indefinitely
unless subsequently registered under the Securities Act or an exemption from
such registration is available. Such Investor is aware of the provisions of Rule
144 promulgated under the Securities Act which permit limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions. Such Investor covenants that, in the absence of an effective
registration statement covering the stock in question, such Investor will sell,
transfer, or otherwise dispose of the Shares (and any Common Stock issued on
conversion of the Series A Preferred) only in a manner consistent with such
Investor's representations and covenants set forth in this Section 3. In
connection therewith, such Investor acknowledges that the Company will make a
notation on its stock books regarding the restrictions on transfers set forth in
this Section 3 and will transfer securities on the books of the Company only to
the extent not inconsistent therewith.

                                      -11-
<PAGE>

            3.5 No Public Market. The Investor understands that no public market
now exists for any of the securities issued by the Company, and that the Company
has made no assurances that a public market will ever exist for any of the
Company's securities.

            3.6 Access to Data. The Investor has received and reviewed
information about the Company and has had an opportunity to discuss the
Company's business, management and financial affairs with its management and to
review the Company's facilities. Except for the representations and warranties
made by the Company in Section 2 hereof, such Investor understands that such
discussions, as well as any written information issued by the Company, were
intended to describe the aspects of the Company's business and prospects which
the Company believes to be material, but were not necessarily a thorough or
exhaustive description.

            3.7 Authorization. This Agreement, when executed and delivered by
such Investor, will constitute a valid and legally binding obligation of the
Investor, enforceable in accordance with its terms, subject to: (i) judicial
principles respecting election of remedies or limiting the availability of
specific performance, injunctive relief, and other equitable remedies; (ii)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect generally relating to or affecting creditors' rights; and
(iii) limitations on the enforceability of the indemnification provisions of
this Agreement and the Investor's Rights Agreement.

         4. Conditions of Investor's Obligations. The obligations of the
Investor under subsection 1.1(b) of this Agreement are subject to the
fulfillment on or before the Closing Date (and any Second Closing Date, if
applicable) of each of the following conditions, the waiver of which shall not
be effective unless the Investor consents in writing thereto:

            4.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true on and as of the
Closing Date (and the Second Closing Date, if applicable) with the same effect
as though such representations and warranties had been made on and as of the
date of such Closing Date (or Second Closing Date, if applicable).

            4.2 Performance. The Company shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing Date
(and the Second Closing Date, if applicable).

            4.3 Compliance Certificate. The President of the Company shall
deliver to the Investor at the Closing Date (and the Second Closing Date, if
applicable) a certificate stating that the conditions specified in Sections 4.1
and 4.2 have been fulfilled.

            4.4 By-laws. The By-laws of the Company shall provide that the Board
of Directors of the Company shall consist of no more than nine (9) persons and
that such provision may not be amended without the consent of the Investor.

                                      -12-
<PAGE>

            4.5 Board of Directors. Effective upon the Closing Date, the
Company's Board of Directors shall include two (2) representatives selected by
the Investor; provided, however, that the Investor shall no longer have the
right to elect two (2) directors if, after the Company's satisfaction of all the
conditions to the Second Closing Date as set forth in this Agreement, the
Investor fails to purchase the remaining 2,211,453 Shares by the Second Closing
Date (if applicable). Notwithstanding the foregoing, in the event that the
Company fails to deliver to Investor a binder or policy evidencing the Insurance
by March 21, 2000 and Investor does not purchase the remaining 2,11,453 Shares,
then Investor shall have the right to elect one (1) director.

            4.6 Opinion of Company Counsel. The Investor shall have received
from Brown & Wood LLP, counsel for the Company, an opinion, dated as of the
Closing Date, in the form attached hereto as Exhibit E.

            4.7 Investor's Rights Agreement. The Company and the Investor shall
have entered into the Investor's Rights Agreement. Such agreement shall contain
provisions acceptable to the Investor regarding the provision of financial
information to the Investor and the agreement by the Company to enter into
employment agreements with and to provide key man insurance on the lives of
certain officers of the Company.

            4.8 Stockholders' Agreement. The Company, at least 66 2/3% of the
Existing Stockholders, as such term is defined in the Stockholders' Agreement,
and the Investor shall have executed the Stockholders' Agreement on or prior to
the Closing Date. However, the Company will use its best efforts to make sure
that each of the Existing Stockholders become parties to such agreement after
the Closing Date.

            4.9 Blue Sky. The Company shall have obtained all necessary permits
and qualifications, if any, or secured an exemption therefrom, required by any
state or country for the offer and sale of the Shares.

            4.10 Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated hereby, and all documents and
instruments incident to these transactions, shall be reasonably satisfactory in
substance to the Investor and its counsel.

            4.11 Lock-Up Agreements. The Company will cause Steven M. Haimowitz,
MD, Matthew R. Caleb, MD, Franco Foti, Janice Lazo, Brown & Wood Ventures,
Gorann, LLC and Spydre LLC to agree to execute lock-up agreements with the
Company pursuant to which such holders will agree, if so requested by the
Company or any underwriters' representative in connection with the first public
offering of the Common Stock of the Company, not to sell or otherwise transfer
any securities of the Company during a period of up to one hundred and eighty
(180) days following the effective date of the registration statement.

         5. Conditions of the Company's Obligations. The obligations of the
Company to the Investor under this Agreement are subject to the fulfillment on
or before the Closing Date (and the Second Closing Date, if applicable) of each
of the following conditions by the Investor:

                                      -13-
<PAGE>

            5.1 Representations and Warranties. The representations and
warranties of the Investor contained in Section 3 shall be true on and as of the
Closing Date (and the Second Closing Date, if applicable) with the same effect
as though such representations and warranties had been made on and as of the
Closing Date (or the Second Closing Date, if applicable).

            5.2 Payment of Purchase Price. The Investor shall have delivered the
purchase price specified in Section 1.2 against delivery of the Shares by the
Company to the Investor. The Investor's delivery of the purchase price shall be
in the form of a check or wire transfer.

            5.3 Blue Sky. The Company shall have obtained all necessary permits
and qualifications, if any, or secured an exemption therefrom, required by any
state or country for the offer and sale of the Shares.

            5.4 Investor's Rights Agreement. The Investor shall have executed
the Investor's Rights Agreement on or prior to the Closing Date.

            5.5 Stockholders' Agreement. The Investor shall have executed the
Stockholders' Agreement on or prior to the date of the Closing Date.

            5.6 Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated hereby, and all documents and
instruments incident to these transactions, shall be reasonably satisfactory in
substance to the Company and its counsel.

            5.7 Lock-Up Agreement. The Investor will agree to execute a lock-up
agreement with the Company pursuant to which it will agree, if so requested by
the Company or any underwriters' representative in connection with the first
public offering of the Common Stock of the Company, not to sell or otherwise
transfer any securities of the Company during a period of up to one hundred and
eighty (180) days following the effective date of the registration statement.

         6. Miscellaneous.

            6.1 Put. (a) If fraud is committed by or on behalf of the Company in
connection with this Agreement or the Affiliated Agreements or if the Company
fails to perform in any material respect its obligations under this Agreement or
the Affiliated Agreements to provide information or to provide pre-emptive,
tag-along or registration rights in accordance with the terms of this Agreement
and the Affiliated Agreements, and such failure remains uncured twenty (20) days
after written notice from Investor, then Investor may put its Shares (or any
Common Stock acquired upon conversion of the Shares) to the Company at a price
equal to the greater of (i) the original purchase price plus any dividends
declared and unpaid or (ii) the fair market value of the Shares (or any Common
Stock acquired upon conversion of the Shares). This right is in addition to any
other remedy at law or in equity available to the Investor.

                (b) If the Shares are publicly traded, the value of the Shares
shall be the average closing price of such Shares during the previous five (5)
trading days prior to the breach. If there is no public market for the Shares,
the fair market value of such Shares will be valued by an appraiser of
recognized standing selected by the Investor and the Company or, if they cannot
agree on an appraiser within ten (10) days, each shall select an appraiser of
recognized standing and the two appraisers shall designate a third appraiser of
recognized standing, whose appraisal shall be determinative of such value. The
cost of such appraisal shall be shared equally by the Investor and the Company.
If the time for the closing of the put has expired but for the determination of
the value of the purchase price, then such closing shall be held on or prior to
the fifth (5) business day after such valuation shall have been made pursuant to
this subsection.

                                      -14-
<PAGE>

            6.2 Governing Law. This Agreement shall be governed in all respects
by the laws of the State of New York.

            6.3 Survival of Warranties; Indemnification. The warranties,
representations and covenants of the Company and Investor contained in or made
pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing Date (and any Second Closing Date, if applicable) and
shall in no way be affected by any investigation of the subject matter thereof
made by or on behalf of the Investor or the Company. The parties agree to
indemnify one another (and each officer, director, employee and affiliate of
each party) for, and hold each other harmless from and against: (i) any and all
damages, losses and other liabilities of any kind, including, without
limitation, judgments and costs of settlement, and (ii) any and all
out-of-pocket costs and expenses of any kind, including, without limitation,
reasonable fees and disbursements of counsel for such party (all of which
expenses shall be periodically reimbursed as incurred), in each case, suffered
or incurred in connection with (A) any investigative, administrative or judicial
proceeding or claim or action (collectively, a "claim") brought or threatened
relating to or arising out of the Agreement or the Affiliated Agreements, or the
transactions contemplated hereby and thereby or (B) any inaccuracy in any
representation or warranty of the parties made or incorporated by reference in
the Agreement or the Affiliated Agreements or any breach by the parties of any
covenant or agreement made or incorporated by reference in the Agreement or the
Affiliated Agreements.

            6.4 Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.

            6.5 Entire Agreement; Amendment. This Agreement, the Affiliated
Agreements and the other documents delivered pursuant hereto constitute the full
and entire understanding and agreement among the parties with regard to the
subjects hereof and thereof. Neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated other than by a written instrument
signed by the party affected thereby.

            6.6 Notices, Etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, return receipt requested, or otherwise
delivered by hand or by messenger, addressed (a) if to the Investor, at the
Investor's address set forth on Exhibit A, or at such other address as said
Investor shall have furnished to the Company in writing, with a copy to Stuart
Rosow, Proskauer Rose LLP, 1585 Broadway, New York, NY 10036, or (b) if to any
other holder of any Shares, at such address as such holder shall have furnished
the Company in writing, or, until any such holder so furnishes an address to the
Company, then to and at the address of the last holder of such Shares who has so
furnished an address to the Company, or (c) if to the Company, at its address
set forth on the first page of this Agreement addressed to the attention of the
President, or at such other address as the Company shall have furnished to the
Investor. If notice is provided by mail, notice shall be deemed to be given upon
proper deposit with the United States mail.

                                      -15-
<PAGE>

            6.7 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to the Company or to any holder of any Shares shall
impair any such right, power or remedy of the Company or such holder, nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of the Company or any
holder of any breach or default under this Agreement, or any waiver on the part
of the Company or any holder of any provisions or conditions of this Agreement,
must be in writing and shall be effective only to the extent specifically set
forth in such writing or as provided in this Agreement. All remedies, either
under this Agreement or by law or otherwise afforded to the Company or any
holder, shall be cumulative and not alternative.

            6.8 Finder's Fee. The Company and the Investor shall indemnify and
hold each other harmless from any liability for any commission or compensation
in the nature of a finder's fee (including the costs, expenses and legal fees of
defending against such liability) for which the Company or the Investor, or any
of their respective partners, employees, or representatives, as the case may be,
is responsible.

            6.9 Attorneys' Fees. In the event that any dispute among the parties
to this Agreement should result in litigation, the prevailing party in such
dispute shall be entitled to recover from the losing party all fees, costs and
expenses of enforcing any right of such prevailing party under or with respect
to this Agreement and the transactions contemplated hereby, including without
limitation, such reasonable fees and expenses of attorneys and accountants,
which shall include, without limitation, all fees, costs and expenses of
appeals.

            6.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all parties hereto,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.

            6.11 Severability of this Agreement. In the event that any provision
of this Agreement becomes or is declared by a court of competent jurisdiction to
be illegal, unenforceable or void, this Agreement will continue in full force
and effect without said provision and the parties agree to replace such
provision with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business and other purposes of such provisions;
provided that no such severability will be effective against a party if it
materially and adversely changes the economic benefits of this Agreement to such
party.

                                      -16-
<PAGE>

            6.12 Co-Investment Right. Certain members of the management, board
of directors and employees involved in the transactions contemplated by this
Agreement of SEAL Holdings Corporation, as well as certain members of Benedetto,
Gartland & Company, Inc. involved in the transactions contemplated by this
Agreement, each of whom must be an accredited investor, shall have the right, in
the aggregate, to purchase up to 150,000 shares of the Company's Common Stock at
a price of $1.00 per share, exercisable within thirty (30) days after the
Closing Date. The Company has also determined to sell 50,000 shares of Common
Stock, in a separate transaction, to Patrick Campbell. These sales shall take
place pursuant to supplementary purchase agreements whereby such persons agree
to make similar representations to those made by the Investor and the Company
agrees to make similar representations to them. Such persons shall also become
parties to the Stockholders' Agreement and have the same rights as the Existing
Stockholders therein. Such persons will not have any of the rights granted to
the Investor in the Investor's Rights Agreement. The Investor shall receive no
preemptive rights to purchase its pro rata portion of the foregoing 200,000
shares of Common Stock.

            6.13 Further Assurances. The parties shall cooperate and take such
actions, and execute such other documents as either may reasonably request in
order to carry out the provisions or purposes of this Agreement.

                     (This space intentionally left blank.)

                                      -17-
<PAGE>

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

HEALTHOLOGY, INC.

By: /s/ Steven M. Haimowitz, MD
    -------------------------------------
    Steven M. Haimowitz, MD,
    President and Chief Executive Officer

                [SIGNATURE PAGE TO THE STOCK PURCHASE AGREEMENT]

<PAGE>

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

INVESTOR:

SEAL HOLDINGS CORPORATION

By:   /s/  Robert G. Tancredi, MD
   --------------------------------------
   Robert G. Tancredi, MD
   President and Chief Executive Officer

                [SIGNATURE PAGE TO THE STOCK PURCHASE AGREEMENT]

<PAGE>

                                    EXHIBIT A
                                INVESTOR SCHEDULE

<TABLE>
<CAPTION>
                                    Number of Shares
                                     of Series A                                Aggregate Purchase Price
                                   Preferred Stock         Price per             of Series A Preferred
Name                                  Purchased              Share                 Stock Purchased
----                               -----------------       ---------            ------------------------
<S>                                <C>                    <C>                   <C>
SEAL Holdings Corporation             3,211,453              $1.00                    $3,211,453
5601 North Dixie Highway
Suite 411
Fort Lauderdale, FL  33334
</TABLE>

<PAGE>

                                    EXHIBIT B
                           CERTIFICATE OF DESIGNATION

<PAGE>

                                    EXHIBIT C
                           INVESTOR'S RIGHTS AGREEMENT

<PAGE>

                                    EXHIBIT D
                             STOCKHOLDERS' AGREEMENT

<PAGE>

                                    EXHIBIT E
                           OPINION OF COMPANY COUNSEL<PAGE>

                                WARRANT AGREEMENT

         AGREEMENT, dated as of this    day of         , 2000, by and between
Activeworlds.com, Inc., a Delaware corporation (the "Company"), and         , as
Warrant Agent (the "Warrant Agent").

                              W I T N E S S E T H:
                               - - - - - - - - - -
         WHEREAS, in connection with a public offering of 1,200,000 units (the
"Units"), each Unit consisting of one share of common stock, par value $.001 per
share ("Common Stock"), and a Series B Redeemable Common Stock Purchase Warrant
(collectively, the "Warrants") to purchase one share of Common Stock, pursuant
to an underwriting agreement (the "Underwriting Agreement") dated as of , 2000,
between the Company and the several underwriters named therein of which HD Brous
& Co., Inc. ("Brous") and Solid ISG Capital Markets, LLC ("Solid ISG") are the
representatives (the "Representatives"), the Company may issue Warrants to
purchase up to One Million Two Hundred Thousand (1,200,000) shares of Common
Stock; and
         WHEREAS, in connection with the issuance, pursuant to the Underwriting
Agreement, to the Representatives and their designees of options (the "Unit
Purchase Options" and each a "Unit Purchase Option") to purchase up to one
hundred twenty thousand (120,000) Units, the Company may issue Warrants to
purchase up to one hundred twenty thousand (120,000) shares of Common Stock; and
         WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer, exchange and redemption of the Warrants, as
hereinafter defined, the issuance of certificates representing the Warrants, the
exercise of the Warrants, and the rights of the holders thereof;
         NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of the Warrants and the certificates representing the Warrants and
the respective rights and obligations thereunder of the Company, the holders of
certificates representing the Warrants and the Warrant Agent, the parties hereto
agree as follows:
               1. Definitions.  As used in this Agreement, the following terms
shall have the following meanings, unless the context shall otherwise require:
                  (a) "Corporate Office" shall mean the office of the Warrant
Agent (or its successor) at which at any particular time its principal business
shall be administered, which office is located at the date of this Agreement
at                       .
                  (b) "Effective Date" shall mean the date that the Registration
Statement is declared effective by the Securities and Exchange Commission (the
"Commission").

<PAGE>

                  (c) "Exercise Date" shall mean, as to any Warrant, the date on
which the Warrant Agent shall have received both (a) the Warrant Certificate
representing such Warrant, with the exercise form thereon duly executed by the
Registered Holder thereof or his attorney duly authorized in writing, and (b)
payment in cash, or by official bank or certified check made payable to the
Company, of an amount in lawful money of the United States of America equal to
the Purchase Price; provided, however, that, subject to Paragraph 4 of this
Agreement, if payment shall be made by personal or corporate check, the exercise
of the Warrant shall not be effective until the Warrant Agent shall be satisfied
that the check shall have cleared; provided, further, that if such payment is
made prior to the Warrant Expiration Date or the expiration of a period during
which a reduced Purchase Price is in effect pursuant to Paragraph 9(f) of this
Agreement and the check shall not have cleared until after the Warrant
Expiration Date or such other date, then the Warrant shall be deemed to have
been exercised immediately prior to 5:00 P.M. New York City time on the Warrant
Expiration Date.
                  (d) "Purchase Price" shall mean the purchase price per share
to be paid upon exercise of each Warrant in accordance with the terms hereof,
which price shall be and /100 dollars ($   ) per share for the Warrants, subject
to adjustment from time to time pursuant to the provisions of Paragraph 9 of
this Agreement.
                  (e) "Redemption Price" shall mean the price at which the
Company may, at its option, redeem the Warrants, in accordance with the terms of
this Agreement, which price shall be ten cents ($.10) per Warrant. The
Redemption Price shall not be subject to adjustment pursuant to this Agreement.
                  (f) "Registration Statement" shall mean the Company's
registration statement on Form SB-2, File No. 333-85095, which was declared
effective by the Commission on           , 2000.
                  (g) "Registered Holder" shall mean, as to any Warrant and as
of any particular date, the person in whose name the certificate representing
the Warrant shall be registered on that date on the books maintained by the
Warrant Agent pursuant to Paragraph 6 of this Agreement.
                  (h) "Transfer Agent" shall mean           , as the Company's
transfer agent, or its authorized successor, as such.
                  (i) "Warrant Certificate" shall mean the certificate for the
Warrants in the form attached as Exhibit A to this Agreement.
                  (j) "Warrant Expiration Date" shall mean 5:00 P.M. New York
City time on the first to occur of (i)          , 2005, or (ii) the business day
immediately preceding the Redemption Date, as defined in Paragraph 8(c) of this
Agreement; provided, that if such date shall in the State

                                      - 2 -

<PAGE>

of New York be a holiday or a day on which banks are authorized or required to
close, the Warrant Expiration Date shall be the next day which is not such a
date. Upon notice to all warrant holders the Company shall have the right to
extend the Warrant Expiration Date.
                  (k) "Warrant Shares" shall mean the shares of Common Stock
issuable upon exercise of the Warrants.
               2. Warrants and Issuance of Warrants Certificates.
                  (a) Each Warrant initially shall entitle the Registered Holder
of the Warrant Certificate representing such Warrant to purchase, upon the
exercise thereof, in accordance with the terms of this Agreement, subject to
modification and adjustment as provided in Paragraph 9 of this Agreement, such
number of shares of Common Stock as is set forth on the certificate representing
the Warrants.
                  (b) Upon execution of this Agreement, Warrant Certificates
representing the number of Warrants initially issuable pursuant to the
Underwriting Agreement shall be executed by the Company and delivered to the
Warrant Agent. Upon written order of the Company signed by its President or
Chairman or a Vice President and by its Secretary or an Assistant Secretary or
its Treasurer or an Assistant Treasurer, the Warrant Certificates shall be
countersigned, issued and delivered by the Warrant Agent.
                  (c) From time to time, up to the Warrant Expiration Date, the
Transfer Agent shall countersign and deliver stock certificates in required
whole number denominations representing the shares of Common Stock issuable upon
the exercise of Warrants in accordance with this Agreement.
                  (d) From time to time, up to the Warrant Expiration Date, the
Warrant Agent shall countersign and deliver Warrant Certificates in required
whole number denominations to the persons entitled thereto in connection with
any transfer or exchange permitted under this Agreement; provided that no
Warrant Certificates shall be issued except (i) those initially issued hereunder
or otherwise issuable pursuant to the Underwriting Agreement, including those
issuable in exchange for certain outstanding warrants, (ii) those issued on or
after the date of this Agreement, upon the exercise of fewer than all Warrants
represented by any Warrant Certificate, to evidence any unexercised Warrants
held by the exercising Registered Holder, (iii) those issued upon any transfer
or exchange pursuant to Paragraph 6 of this Agreement, (iv) those issued in
replacement of lost, stolen, destroyed or mutilated Warrant Certificates
pursuant to Paragraph 7 of this Agreement, (v) those issued pursuant to the
Representatives' Option, and (vi) at the option of the Company, in such form as
may be approved by the Board of Directors, to reflect any adjustment or change
in the Purchase Price or the number of shares of Common Stock purchasable upon
exercise of the Warrants made pursuant to Paragraph 9 of this Agreement.

                                      - 3 -

<PAGE>

In addition, at the discretion of the Company, the Company may authorize the
issuance of additional Warrants, which shall be subject to the provisions of
this Agreement.
               3. Form and Execution of Warrant Certificates.
                  (a) The Warrant Certificates for the Warrants shall be
substantially in the form annexed as Exhibit A to this Agreement, (the
provisions of which are hereby incorporated herein) and may have such letters,
numbers or other marks of identification or designation and such legends,
summaries or endorsements printed, lithographed or engraved thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Warrants may be listed, or to conform to usage or to the
requirements of Paragraph 2(b) of this Agreement. The Warrant Certificates shall
be dated the date of issuance thereof (whether upon initial issuance, transfer
or exchange in lieu of mutilated, lost, stolen, or destroyed Warrant
Certificates) and issued in registered form. Warrant Certificates shall be
numbered serially with the letter M or other letters acceptable to the Company
and the Warrant Agent.
                  (b) Warrant Certificates shall be executed on behalf of the
Company by its Chairman of the Board, President or any Vice President and by its
Secretary or an Assistant Secretary, by manual signatures or by facsimile
signatures printed thereon, and shall have imprinted thereon a facsimile of the
Company's seal. Warrant Certificates shall be manually countersigned by the
Warrant Agent and shall not be valid for any purpose unless so countersigned. In
case any officer of the Company who shall have signed any of the Warrant
Certificates shall cease to be an officer of the Company or to hold the
particular office referenced in the Warrant Certificate before the date of
issuance of the Warrant Certificates or before countersignature by the Warrant
Agent and issue and delivery thereof, such Warrant Certificates may nevertheless
be countersigned by the Warrant Agent, issued and delivered with the same force
and effect as though the person who signed the Warrant Certificates had not
ceased to be an officer of the Company or to hold such office. After
countersignature by the Warrant Agent, Warrant Certificates shall be delivered
by the Warrant Agent to the Registered Holder without further action by the
Company, except as otherwise provided by Paragraph 4 of this Agreement.
               4. Exercise. Each Warrant may be exercised by the Registered
Holder thereof at any time after the issuance thereof, but not after the Warrant
Expiration Date, upon the terms and subject to the conditions set forth herein
and in the Warrant Certificate. A Warrant shall be deemed to have been exercised
immediately prior to the close of business on the Exercise Date and the person
entitled to receive the securities deliverable upon such exercise shall be
treated for all purposes as the holder of those securities upon the exercise of
the Warrant as of the close

                                      - 4 -

<PAGE>

of business on the Exercise Date. As soon as practicable on or after the
Exercise Date, the Warrant Agent shall deposit the proceeds received from the
exercise of a Warrant and shall notify the Company in writing of the exercise of
the Warrant. Promptly following, and in any event within five (5) days after the
date of such notice from the Warrant Agent, the Warrant Agent, on behalf of the
Company, shall cause to be issued and delivered by the Transfer Agent, to the
person or persons entitled to receive the same, a certificate or certificates
for the securities deliverable upon such exercise, (plus a certificate for any
remaining unexercised Warrants of the Registered Holder) unless prior to the
date of issuance of such certificates the Company shall instruct the Warrant
Agent to refrain from causing such issuance of certificates pending clearance of
checks received in payment of the Purchase Price pursuant to such Warrants.
Notwithstanding the foregoing, in the case of payment made in the form of a
check drawn on an account of the Representatives or such other investment banks
and brokerage houses as the Company shall approve in writing to the Warrant
Agent, by the Representatives or such other investment bank or brokerage house,
certificates shall immediately be issued without prior notice to the Company or
any delay. Upon the exercise of any Warrant and clearance of the funds received,
the Warrant Agent shall promptly remit the payment received for the Warrant (the
"Warrant Proceeds") to the Company or as the Company may direct in writing.
               5. Reservation of Shares; Listing; Payment of Taxes.
                  (a) The Company covenants that it will at all times reserve
and keep available out of its authorized Common Stock, solely for the purpose of
issue upon exercise of Warrants, such number of shares of Common Stock as shall
then be issuable upon the exercise of all outstanding Warrants. The Company
covenants that all Warrant Shares shall, at the time of delivery in accordance
with this Agreement, be duly and validly issued, fully paid, nonassessable and
free from all taxes, liens and charges with respect to the issue thereof (other
than those which the Company shall promptly pay or discharge), and that upon
issuance such shares shall be listed on each national securities exchange or
eligible for inclusion in each automated quotation system, if any, on which the
other shares of outstanding Common Stock of the Company are then listed or
eligible for inclusion.
                  (b) The Company covenants that if any securities to be
reserved for the purpose of exercise of Warrants hereunder require registration
with, or approval of, any governmental authority under any Federal securities
law before such securities may be validly issued or delivered upon such
exercise, then the Company will in good faith and as expeditiously as reasonably
possible, endeavor to secure such registration or approval. The Company will use
reasonable efforts to obtain appropriate approvals or registrations under state
"blue sky" securities laws. With respect to any such securities, however,
Warrants may not be exercised by, or shares

                                      - 5 -

<PAGE>

of Common Stock issued to, any Registered Holder in any state in which such
exercise would be unlawful.
                  (c) The Company shall pay all documentary, stamp or similar
taxes and other governmental charges that may be imposed with respect to the
issuance of Warrants, or the issuance, or delivery of any shares upon exercise
of the Warrants; provided, however, that if the shares of Common Stock are to be
delivered in a name other than the name of the Registered Holder of the Warrant
Certificate representing any Warrant being exercised, then no such delivery
shall be made unless the person requesting the same has paid to the Warrant
Agent the amount of transfer taxes or charges incident thereto, if any.
                  (d) The Warrant Agent is hereby irrevocably authorized to
requisition the Company's Transfer Agent from time to time for certificates
representing shares of Common Stock issuable upon exercise of the Warrants, and
the Company will authorize the Transfer Agent to comply with all such proper
requisitions. The Company will file with the Warrant Agent a statement setting
forth the name and address of the Transfer Agent of the Company for shares of
Common Stock issuable upon exercise of the Warrants.
               6. Exchange and Registration of Transfer.
                  (a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants of the same
class or may be transferred in whole or in part. Warrant Certificates to be
exchanged shall be surrendered to the Warrant Agent at its Corporate Office, and
upon satisfaction of the terms and provisions of this Agreement, the Company
shall execute and the Warrant Agent shall countersign, issue and deliver in
exchange therefor the Warrant Certificate or Certificates which the Registered
Holder making the exchange shall be entitled to receive.
                  (b) The Warrant Agent shall keep at its office books in which,
subject to such reasonable regulations as it may prescribe, it shall register
Warrant Certificates and the transfer thereof in accordance with its regular
practice. Upon due presentment for registration of transfer of any Warrant
Certificate at such office, the Company shall execute and the Warrant Agent
shall issue and deliver to the transferee or transferees a new Warrant
Certificate or Certificates representing an equal aggregate number of Warrants.
                  (c) With respect to all Warrant Certificates presented for
registration or transfer, or for exchange or exercise, the subscription form on
the reverse thereof shall be duly endorsed, or be accompanied by a written
instrument or instruments of transfer and subscription, in form satisfactory to
the Company and the Warrant Agent, duly executed by the Registered Holder or his
attorney-in-fact duly authorized in writing.

                                      - 6 -

<PAGE>

                  (d) A reasonable service charge may be imposed by the Warrant
Agent for any exchange or registration of transfer of Warrant Certificates. In
addition, the Company may require payment by such holder of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any exchanges, registration or transfer of Warrant Certificates.
                  (e) All Warrant Certificates surrendered for exercise or for
exchange in case of mutilated Warrant Certificates shall be promptly canceled by
the Warrant Agent and thereafter retained by the Warrant Agent until termination
of this Agreement or resignation as Warrant Agent, or, with the prior written
consent of the Representatives, disposed of or destroyed, at the direction of
the Company.
                  (f) Prior to due presentment for registration of transfer
thereof, the Company and the Warrant Agent may deem and treat the Registered
Holder of any Warrant Certificate as the absolute owner thereof and of each
Warrant represented thereby (notwithstanding any notations of ownership or
writing thereon made by anyone other than a duly authorized officer of the
Company or the Warrant Agent) for all purposes and shall not be affected by any
notice to the contrary.
                  (g) Notwithstanding any other provisions of this Agreement, no
Warrants issued upon exercise of the Unit Purchase Option and no shares of
Common Stock issuable upon exercise of such Warrants may be sold, transferred,
assigned or hypothecated for a period of one year from the Effective Date except
to the officers of the Representatives or to selling group members or officers
or partners thereof, all of whom shall be bound by such restrictions. Until the
expiration of such one-year period, Warrant Certificates and stock certificates
shall be marked with a legend referring to such restriction.
               7. Loss or Mutilation. Upon receipt by the Company and the
Warrant Agent of evidence satisfactory to them of the ownership of and loss,
theft, destruction or mutilation of any Warrant Certificate and (in case of
loss, theft or destruction) of indemnity satisfactory to them, and (in the case
of mutilation) upon surrender and cancellation thereof, the Company shall
execute and the Warrant Agent shall (in the absence of notice to the Company
and/or Warrant Agent that the Warrant Certificate has been acquired by a bona
fide purchaser) countersign and deliver to the Registered Holder in lieu thereof
a new Warrant Certificate of like tenor representing an equal aggregate number
of Warrants. Applicants for a substitute Warrant Certificate shall comply with
such other reasonable regulations and pay such other reasonable charges as the
Warrant Agent may prescribe.

                                      - 7 -

<PAGE>

               8. Redemption.
                  (a) Commencing twelve (12) months from the Effective Date or
earlier with the consent of the Representatives, the Company shall have the
right, on not less than thirty (30) nor more than sixty (60) days notice given
prior to the Redemption Date, as hereinafter defined, at any time to redeem the
then outstanding Warrants at the Redemption Price, provided that the Market
Price of the Common Stock shall equal or exceed the "Target Price" with respect
to the class of Warrants as to which the Company is exercising its right of
redemption. The "Target Price" shall mean one hundred fifty percent (150%) of
the Purchase Price with respect to the applicable class of Warrants. Market
Price for the purpose of this Paragraph 8 shall mean, if the Common Stock is
listed on the Nasdaq Stock Market or the New York or American Stock Exchange,
the average last reported sales price (or, if no sale is reported on any such
trading day, the average of the closing bid and asked prices) on the principal
market for the Common Stock or, if the Common Stock is not so listed or traded,
the average of the last reported bid prices of the Common Stock, during the
twenty (20) day period ending within three (3) days of the date the Warrants are
called for redemption. Notice of redemption shall be mailed by first class mail,
postage prepaid, not later than five (5) business days (or such longer period to
which the Representatives may consent) after the date the Warrants are called
for redemption. All Warrants of any class of Warrants must be redeemed if any
Warrants of such class are redeemed.
                  (b) If the conditions set forth in Paragraph 8(a) of this
Agreement are met, and the Company desires to exercise its right to redeem the
Warrants, it shall request the Representatives or the Warrant Agent to mail the
notice of redemption referred to in said Paragraph 8(a) to each of the
Registered Holders of the Warrants to be redeemed, first class, postage prepaid,
not earlier than the sixtieth (60th) day nor later than the thirtieth (30th) day
before the date fixed for redemption, at their last addresses as shall appear on
the records maintained pursuant to Paragraph 6(b) of this Agreement. Any notice
mailed in the manner provided herein shall be conclusively presumed to have been
duly given whether or not the Registered Holder receives such notice. The
Warrant Agent agrees to mail such notice if requested by the Company or the
Representatives.
                  (c) The notice of redemption shall specify (i) the Redemption
Price, (ii) the date fixed for redemption, (iii) the place where the Warrant
Certificates shall be delivered and the redemption price to be paid, and (iv)
that the right to exercise the Warrants shall terminate at 5:00 p.m. (New York
City time) on the business day immediately preceding the date fixed for
redemption. The date fixed for the redemption of the Warrants shall be the
Redemption Date. No failure to mail such notice nor any defect therein or in the
mailing thereof shall affect the validity of the proceedings for such redemption
except as to a Registered Holder (A) to whom

                                      - 8 -

<PAGE>

notice was not mailed, or (B) whose notice was defective. An affidavit of the
Warrant Agent or of the Secretary or an Assistant Secretary of either of the
Representatives or the Company that notice of redemption has been mailed shall,
in the absence of fraud, be prima facie evidence of the facts stated therein.
                  (d) If either class of Warrant shall have been redeemed, any
right to exercise a Warrant of such class shall terminate at 5:00 p.m. (New York
City time) on the business day immediately preceding the Redemption Date. After
such time, Holders of the Warrants shall have no further rights except to
receive, upon surrender of the Warrant, the Redemption Price without interest,
subject to the provisions of applicable laws relating to the treatment of
abandoned property. In the event that the Warrants or the Warrant Shares shall
not be subject to a current and effective registration statement under the
Securities Act of 1933, as amended, at any time subsequent to the date the
Warrants are called for redemption, the notice of redemption shall not be
effective and shall be deemed for all purposes not to have been given. Nothing
in the preceding sentence shall be construed to prohibit or restrict the Company
from thereafter calling the Warrants for redemption in the manner provided for,
and subject to the provisions of, this Paragraph 8.
                  (e) From and after the Redemption Date with respect to the
Warrants, the Company shall, at the place specified in the notice of redemption,
upon presentation and surrender to the Company by or on behalf of the Registered
Holder thereof of one or more Warrant Certificates evidencing Warrants to be
redeemed, deliver or cause to be delivered to or upon the written order of such
Holder a sum in cash equal to the Redemption Price of each such Warrant. From
and after the Redemption Date and upon the deposit or setting aside by the
Company of a sum sufficient to redeem all the Warrants called for redemption,
such Warrants shall expire and become void and all rights hereunder and under
the Warrant Certificates, except the right to receive payment of the Redemption
Price, shall cease.
                  (f) Notwithstanding any other provision of this Agreement, the
Company shall not call the Warrants for redemption unless there is, at the time
the Warrants are called for redemption, a current and effective registration
statement or a post-effective amendment to the registration statement covering
the issuance of the shares of Common Stock issuable upon exercise of the
Warrants.
                  (g) In the event that the Representatives' Option is exercised
at a time subsequent to the redemption of the Warrants but prior to the Warrant
Expiration Date, as defined in Paragraph 1(j) of this Agreement, then,
notwithstanding any other provisions of this Agreement, the Warrants issued upon
such exercise may be redeemed by the Company at any time after issuance.

                                      - 9 -

<PAGE>

               9. Adjustment of Exercise Price and Number of Securities Issuable
upon Exercise of Warrants.
                  (a) In case the Company shall, at any time or from time to
time after the date of this Agreement, pay a dividend or make a distribution on
its shares of Common Stock in shares of Common Stock, subdivide or reclassify
its outstanding Common Stock into a greater number of shares, or combine or
reclassify its outstanding Common Stock into a smaller number of shares or
otherwise effect a combination of shares or reverse split, the Purchase Price in
effect at the time of the record date for such dividend or distribution or of
the effective date of such subdivision, combination or reclassification shall be
proportionately adjusted so that the holder of any Warrant exercised after such
date shall be entitled to receive the aggregate number and kind of shares which,
if such Warrant had been exercised immediately prior to such time, he would have
owned upon such exercise and been entitled to receive upon such dividend,
subdivision, combination or reclassification. Such adjustment shall be made
successively whenever any event listed in this Paragraph 9(a) shall occur.
                  (b) In case the Company shall, at any time or from time to
time after the date of this Agreement, issue rights or warrants to all holders
of its Common Stock entitling them to subscribe for or purchase shares of Common
Stock (or securities convertible into Common Stock) at a price (or having a
conversion price per share) less than the current market price of the Common
Stock (as defined in Paragraph 9(e) of this Agreement) on the record date
mentioned below, the Purchase Price shall be adjusted so that the same shall
equal the price determined by multiplying the Purchase Price in effect
immediately prior to the date of such issuance by a fraction, of which the
numerator shall be the number of shares of Common Stock outstanding on the
record date mentioned below plus the number of additional shares of Common Stock
which the aggregate offering price of the total number of shares of Common Stock
so offered (or the aggregate conversion price of the convertible securities so
offered) would purchase at such current market price per share of the Common
Stock, and of which the denominator shall be the number of shares of Common
Stock outstanding on such record date plus the number of additional shares of
Common Stock offered for subscription or purchase (or into which the convertible
securities so offered are convertible). Such adjustment shall be made
successively whenever such rights or warrants are issued and shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants; and to the extent that
shares of Common Stock are not delivered (or securities convertible into Common
Stock are not delivered) after the expiration of such rights or warrants, the
Purchase Price shall be readjusted to the Purchase Price which would then be in
effect had the adjustments made upon the issuance of such rights or warrants
been made upon the basis of delivery of only

                                     - 10 -

<PAGE>

the number of shares of Common Stock (or securities convertible into Common
Stock) actually delivered.
                  (c) In case the Company shall, at any time or from time to
time after the date hereof, distribute to all holders of Common Stock evidences
of its indebtedness or assets (excluding cash dividends or distributions paid
out of current earnings and dividends or distributions referred to in Paragraph
9(a) of this Agreement) or subscription rights or warrants (excluding those
referred to in Paragraph 9(b) of this Agreement), then in each such case the
Purchase Price in effect thereafter shall be determined by multiplying the
Purchase Price in effect immediately prior thereto by a fraction, of which the
numerator shall be the total number of shares of Common Stock outstanding
multiplied by the current market price per share of Common Stock (as defined in
Paragraph 9(e) of this Agreement), less the fair market value (as determined by
the Company's Board of Directors) of said assets or evidences of indebtedness so
distributed or of such rights or warrants, and of which the denominator shall be
the total number of shares or Common Stock outstanding multiplied by such
current market price per share of Common Stock. Such adjustment shall be made
whenever any such distribution is made and shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such distribution.
                  (d) Whenever the Purchase Price payable upon exercise of each
Warrant is adjusted pursuant to Paragraphs 9(a), (b) or (c) of this Agreement,
the number of shares of Common Stock purchasable upon exercise of each Warrant
shall simultaneously be adjusted by multiplying the number of shares issuable
upon exercise of each Warrant in effect on the date thereof by the Purchase
Price in effect on the date thereof and dividing the product so obtained by the
Purchase Price, as adjusted.
                  (e) For the purpose of any computation pursuant to Paragraphs
9(b) and (c) of this Agreement, the current market price per share of Common
Stock at any date shall be deemed to be the average of the daily closing prices
for thirty (30) consecutive business days commencing fifteen (15) business days
before such date. The closing price for each day shall be the reported last sale
price regular way or, in case no such reported sale takes place on such day, the
average of the last reported high bid and low asked prices regular way, in
either case on the principal national securities exchange on which the Common
Stock is admitted to trading or listed, if the Common Stock is admitted to
trading or listing on the New York or American Stock Exchange or on The Nasdaq
Stock Market if included in such system or if not listed or admitted to trading
on such exchange or system, the average of the highest bid and lowest asked
prices as reported by Nasdaq, or the National Quotation Bureau, Inc. or another
similar organization if Nasdaq is no

                                     - 11 -

<PAGE>

longer reporting such information, or if not so available, the fair market price
as determined by the Board of Directors of the Company.
                  (f) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least five
cents ($0.05) in such price; provided, however, that any adjustments which by
reason of this Paragraph 9(f) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Paragraph 9 shall be made to the nearest cent or to the nearest
one-tenth of a share, as the case may be. Anything in this Paragraph 9 to the
contrary notwithstanding, the Company may, upon notice to the record holders of
the Warrants, in its sole discretion, reduce the Purchase Price of the Warrants,
and, if such reduction is not otherwise required by this Paragraph 9, such
reduction (i) will not, unless the Board of Directors otherwise determines,
result in any change in the number or class of shares of Common Stock issuable
upon exercise of such Warrants, and (ii) may be of limited duration, in which
event the reduction in Purchase Price shall not apply to any Warrants exercised
after the expiration of the time during which the reduced Purchase Price is in
effect.
                  (g) The Company may retain a firm of independent public
accountants (who may be the regular accountants employed by the Company) of
recognized standing selected by the Board of Directors of the Company to make
any computation required by this Paragraph 9, and a certificate signed by such
firm shall be conclusive evidence of the correctness of such adjustment.
                  (h) In the event that at any time, as a result of an
adjustment made pursuant to Paragraph 9(a) of this Agreement, the holder of any
Warrant thereafter shall become entitled to receive any shares of the Company,
other than Common Stock, thereafter the number of such other shares so
receivable upon exercise of any Warrant shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Paragraphs 9(a) to (f),
inclusive, of this Agreement.
                  (i) The Company may elect, upon any adjustment of the Purchase
Price hereunder, to adjust the number of Warrants outstanding, in lieu of the
adjustment in the number of shares of Common Stock purchasable upon the exercise
of each Warrant as hereinabove provided, so that each Warrant outstanding after
such adjustment shall represent the right to purchase one share of Common Stock.
Each Warrant held of record and each Warrant issuable upon exercise of the
Representatives' Option prior to such adjustment of the number of Warrants shall
become that number of Warrants or an Representatives' Option to purchase that
number of Warrants (calculated to the nearest tenth) determined by multiplying
the number one by a fraction, the numerator of which shall be the Purchase Price
in effect immediately prior to such

                                     - 12 -

<PAGE>

adjustment and the denominator of which shall be the Purchase Price in effect
immediately after such adjustment. Upon each adjustment of the number of
Warrants pursuant to this Paragraph 9, the Company shall, as promptly as
practicable, cause to be distributed to each Registered Holder of Warrant
Certificates on the date of such adjustment Warrant Certificates evidencing,
subject to Paragraph 10 of this Agreement, the number of additional Warrants to
which such Holder shall be entitled as a result of such adjustment or, at the
option of the Company, cause to be distributed to such Holder in substitution
and replacement for the Warrant Certificates held by him prior to the date of
adjustment (and upon surrender thereof, if required by the Company) new Warrant
Certificates evidencing the number of Warrants to which such Holder shall be
entitled after such adjustment. With respect to the Representative's Option, the
Company shall give the registered holders of the Representative's Option notice
as to the number of Warrants issuable in respect of such Representative's Option
reflecting such adjustment. Any Warrants or notice to registered holders of
Representative's Option may be mailed by the Warrant Agent or by first class
mail, postage prepaid.
                  (j) In case of any reclassification, capital reorganization or
other change of outstanding shares of Common Stock, or in case of any
consolidation or merger of the Company with or into another corporation (other
than a consolidation or merger in which the Company is the continuing
corporation and which does not result in any reclassification, capital
reorganization or other change of outstanding shares of Common Stock), or in
case of any sale or conveyance to another corporation of the property of the
Company as, or substantially as, an entirety (other than a sale/leaseback,
mortgage or other financing transaction), the Company shall cause effective
provision to be made so that each holder of a Warrant then outstanding shall
have the right thereafter, by exercising such Warrant, to purchase the kind and
number of shares of stock or other securities or property (including cash)
receivable upon such reclassification, capital reorganization or other change,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock that might have been purchased upon exercise of such Warrant
immediately prior to such reclassification, capital reorganization or other
change, consolidation, merger, sale or conveyance. Any such provisions shall
include provision for adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Paragraph 9. The Company
shall not effect any such consolidation, merger or sale unless, prior to or
simultaneously with the consummation thereof, the successor (if other than the
Company) resulting from such consolidation or merger or the corporation
purchasing assets or other appropriate corporation or entity shall assume, by
written instrument executed and delivered to the Warrant Agent, the obligation
to deliver to the holder of each Warrant such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holders may be
entitled

                                     - 13 -

<PAGE>

to purchase and the other obligations under this Agreement. The foregoing
provisions shall similarly apply to successive reclassifications, capital
reorganizations and other changes of outstanding shares of Common Stock and to
successive consolidations, mergers, sales or conveyances. In the event that, as
a result of any merger, consolidation or similar transaction, all of the holders
of Common Stock receive and are entitled to receive no consideration other than
cash in respect of their shares of Common Stock, then, at the effective time of
the transaction, the rights to purchase Common Stock pursuant to the Warrants
shall terminate, and the holders of the Warrants shall, notwithstanding any
other provisions of this Agreement or the Warrants, receive in respect of each
Warrant to purchase one (1) share of Common Stock, upon presentation of the
Warrant Certificate, the amount by which the consideration per share of Common
Stock payable to the holders of Common Stock at such effective time exceeds the
Purchase Price in effect on such effective date, without giving effect to the
transaction. In the event that, subsequent to the effective time, additional
cash or other consideration is payable to the holders of Common Stock of record
as of the effective time, the same consideration shall be payable to the holders
of the Warrants to the extent that the total cash then received by the holders
of Common Stock exceeds the Purchase Price in effect at such effective date,
without giving effect to the transaction, with the same effect as if the
Warrants had been exercised on and as of such effective time. In the event of
any merger, consolidation, sale or lease of substantially all of the Company's
assets or reorganization whereby the Company is not the surviving corporation,
in lieu of the foregoing provisions of this Paragraph 9(j), the Company may
provide in the agreement relating to the transaction that each Warrant shall
become, be converted into or be exchanged for, such securities of the surviving
or acquiring corporation or other entity as has a value equal to the value of
the Warrants (which shall not exceed the amount by which the consideration to be
received per share of Common Stock (valued on such date as the Company's Board
of Directors shall determine) exceeds the exercise price of the Warrant), the
value of the Warrants and securities being issued in exchange therefor to be
determined by the Company's Board of Directors, such determination to be final,
binding and conclusive on the Company and the holders of the Warrants. In the
event that, in such a transaction, the value of the consideration to be received
per share of Common Stock is not greater than the exercise price of the
Warrants, the Warrants shall terminate and no consideration will be paid with
respect thereof.
                  (k) Irrespective of any adjustments or changes in the Purchase
Price or the number of shares of Common Stock purchasable upon exercise of the
Warrants, the Warrant Certificates theretofore and thereafter issued shall,
unless the Company shall exercise its option to issue new Warrant Certificates
pursuant to Paragraphs 2(e) and 9(i) of this Agreement, continue to express the
Purchase Price per share, the number of shares purchasable thereunder

                                     - 14 -

<PAGE>

and the Redemption Price therefor as to the Purchase Price per share, and the
number of shares purchasable and the Redemption Price therefore were expressed
in the Warrant Certificates when the same were originally issued.
                  (l) After any adjustment of the Purchase Price pursuant to
this Paragraph 9, the Company will promptly prepare a certificate signed by the
Chairman, President, Vice President or Treasurer, of the Company setting forth:
(i) the Purchase Price as so adjusted, (ii) the number of shares of Common Stock
purchasable upon exercise of each Warrant after such adjustment, and, if the
Company shall have elected to adjust the number of Warrants, the number of
Warrants to which the registered holder of each Warrant shall then be entitled,
and (iii) a brief statement of the facts accounting for such adjustment. The
Company will promptly file such certificate with the Warrant Agent and cause a
brief summary thereof to be sent by first class mail to each Representative and
to each registered holder of Warrants at his last address as it shall appear on
the registry books of the Warrant Agent. No failure to mail such notice nor any
defect therein or in the mailing thereof shall affect the validity thereof. The
affidavit of an officer of the Warrant Agent or the Secretary or an Assistant
Secretary of the Company that such notice has been mailed shall, in the absence
of fraud, constitute prima facie evidence of the facts stated therein.
                  (m) As used in this Paragraph 9, the term "Common Stock" shall
mean and include the Company's Common Stock authorized on the Effective Date and
shall also include any capital stock of any class of the Company thereafter
authorized which shall not be limited to a fixed sum or percentage in respect of
the rights of the holders thereof to participate in dividends and in the
distribution of assets upon the voluntary liquidation, dissolution or winding up
of the Company; provided, however, that the shares issuable upon exercise of the
Warrants shall include only shares of such class designated in the Company's
Certificate of Incorporation as Common Stock on the Effective Date or, in the
case of any reclassification, change, consolidation, merger, sale or conveyance
of the character referred to in Paragraph 9(j) of this Agreement, the stock,
securities or property provided for in such section or, in the case of any
reclassification or change in the outstanding shares of Common Stock issuable
upon exercise of the Warrants as a result of a subdivision or combination or
consisting of a change in par value, or from par value to no par value, or from
no par value to par value, such shares of Common Stock as so reclassified or
changed.
                  (n) Any determination as to whether an adjustment in the
Purchase Price in effect hereunder is required pursuant to this Paragraph 9, or
as to the amount of any such adjustment, if required, shall be binding upon the
holders of the warrants and the Company if made in good faith by the Board of
Directors of the Company.

                                     - 15 -

<PAGE>

                  (o) In lieu of an adjustment pursuant to Paragraph 9(b) of
this Agreement, if the Company shall grant to the holders of Common Stock, as
such, rights or warrants to subscribe for or to purchase Common Stock or
securities convertible into or exchangeable for or carrying a right or warrant
to purchase Common Stock, the Company may concurrently therewith grant to each
Registered Holder as of the record date for such transaction of the Warrants
then outstanding, the rights or warrants to which each Registered Holder would
have been entitled if, on the record date used to determine the stockholders
entitled to the rights or warrants being granted by the Company, the Registered
Holder were the holder of record of the number of whole shares of Common Stock
then issuable upon exercise of his Warrants. If the Company exercises such right
no adjustment which otherwise might be called for pursuant to said Paragraph
9(b) shall be made.
               10. Fractional Warrants and Fractional Shares. If the number of
shares of Common Stock purchasable upon the exercise of each Warrant is adjusted
pursuant to Paragraph 9 of this Agreement, the Company nevertheless shall not be
required to issue fractions of shares, upon exercise of the Warrants or
otherwise, or to distribute certificates that evidence fractional shares. With
respect to any fraction of a share called for upon any exercise hereof, the
Company, at its option, shall either issue a whole share in lieu of such
fractional share or pay to the Holder an amount in cash equal to such fraction
multiplied by the current market value of such fractional share, determined as
follows:
                  (a) If the Common Stock is listed on the New York or American
Stock Exchange or admitted to unlisted trading privileges on such exchange or
listed for trading on the Nasdaq Stock Market, the current value shall be the
reported last sale price of the Common Stock on such exchange or system on the
last business day prior to the date of exercise of this Warrant, or if no such
sale is made on such day, the average closing bid and asked prices for such day
on such exchange or system; or
                  (b) If the Common Stock is not listed or admitted to unlisted
trading privileges, the current value shall be the last reported bid price
reported by the National Quotation Bureau, Inc. on the last business day prior
to the date of the exercise of this Warrant; or
                  (c) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid prices are not so reported, the current
value shall be an amount determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company.
               11. Warrant Holders Not Deemed Stockholders. No holder of
Warrants shall, as such, be entitled to vote or to receive dividends or be
deemed the holder of Common Stock that may at any time be issuable upon exercise
of such Warrants for any purpose whatsoever, nor shall anything contained in
this Agreement be construed to confer upon the holder of Warrants, as

                                     - 16 -

<PAGE>

such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issue or reclassification of stock, change of par
value or change of stock to no par value, consolidation, merger or conveyance or
otherwise), or to receive notice of meetings, or to receive dividends or
subscription rights, until such Holder shall have exercised such Warrants and
been issued shares of Common Stock in accordance with the provisions hereof
               12. Rights of Action. All rights of action with respect to this
Agreement are vested in the respective Registered Holders of the Warrants, and
any Registered Holder of a Warrant, without consent of the Warrant Agent or of
the holder of any other Warrant, may, in his own behalf and for his own benefit,
enforce against the Company his right to exercise his Warrants for the purchase
of shares of Common Stock in the manner provide in the Warrant Certificate and
this Agreement.
               13. Agreement of Warrant Holders. Every holder of a Warrant, by
his acceptance of the Warrants, consents and agrees with the Company, the
Warrant Agent and every other holder of a Warrant that:
                  (a) The warrants are transferable only on the registry books
of the Warrant Agent by the Registered Holder thereof in person or by his
attorney duly authorized in writing and only if the Warrant Certificates
representing such Warrants are surrendered at the office of the Warrant Agent,
duly endorsed or accompanied by a proper instrument of transfer satisfactory to
the Warrant Agent and the Company in their sole discretion, together with
payment of any applicable transfer taxes; and
                  (b) The Company and the Warrant Agent may deem and treat the
person in whose name the Warrant Certificate is registered as the holder and as
the absolute, true and lawful owner of the Warrants represented thereby for all
purposes, and neither the Company nor the Warrant Agent shall be affected by any
notice or knowledge to the contrary, except as otherwise expressly provided in
Paragraph 6 of this Agreement.
               14. Cancellation of Warrant Certificates. If the Company shall
purchase or acquire any Warrant or Warrants, the Warrant Certificate or Warrant
Certificates evidencing the same shall thereupon be delivered to the Warrant
Agent and canceled by it and retired.
               15. Concerning the Warrant Agent.
                   (a) The Warrant Agent acts hereunder as agent and in a
ministerial capacity for the Company, and its duties shall be determined solely
by the provisions of this Agreement. The Warrant Agent shall not, by issuing and
delivering Warrant Certificates or by any other act hereunder be deemed to make
any representations as to the validity, value or authorization of the

                                     - 17 -

<PAGE>

Warrant Certificates or the Warrants represented thereby or of any securities or
other property delivered upon exercise of any Warrant or whether any stock
issued upon exercise of any Warrant is fully paid and nonassessable.
                  (b) The Warrant Agent shall not at any time be under any duty
or responsibility to any holder of Warrant Certificates to make or cause to be
made any adjustment of the Purchase Price or the Redemption Price provided in
this Agreement, or to determine whether any fact exists which may require any
such adjustments, or with respect to the nature or extent of any such
adjustment, when made, or with respect to the method employed in making the
same. It shall not (i) be liable for any recital or statement of facts contained
herein or for any action taken, suffered or omitted by it in reliance on any
Warrant Certificate or other document or instrument believed by it in good faith
to be genuine and to have been signed or presented by the proper party or
parties, (ii) be responsible for any failure on the part of the Company to
comply with any of its covenants and obligations contained in this Agreement or
in any Warrant Certificate, or (iii) be liable for any act or omission in
connection with this Agreement except for its own negligence or wilful
misconduct.
                  (c) The Warrant Agent may at any time consult with counsel
satisfactory to it (who may be counsel for the Company) and shall incur no
liability or responsibility for any action taken, suffered or omitted by it in
good faith in accordance with the opinion or advice of such counsel.
                  (d) Any notice, statement, instrument, request, direction,
order or demand of the Company shall be sufficiently evidenced by an instrument
signed by the Chairman of the Board, President, any Vice President, its
Secretary, or Assistant Secretary, unless other evidence in respect thereof is
specifically prescribed in this Agreement. The Warrant Agent shall not be liable
for any action taken, suffered or omitted by it in accordance with such notice,
statement, instruction, request, direction, order or demand believed by it to be
genuine.
                  (e) The Company agrees to pay the Warrant Agent reasonable
compensation for its services hereunder and to reimburse it for its reasonable
expenses hereunder; it further agrees to indemnify the Warrant Agent and hold it
harmless against any and all costs and counsel fees, for anything done or
omitted by the Warrant Agent in the execution of its duties and powers hereunder
except losses, expenses and liabilities arising as a result of the Warrant
Agent's negligence or wilful misconduct.
                  (f) The Warrant Agent may resign its duties and be discharged
from all further duties and liabilities hereunder (except liabilities arising as
a result of the Warrant Agent's own negligence or wilful misconduct), after
giving thirty (30) days' prior written notice to the Company. At least fifteen
(15) days prior to the date such resignation is to become effective, the Warrant

                                     - 18 -

<PAGE>

Agent shall cause a copy of such notice of resignation to be mailed to the
Registered Holder of each Warrant Certificate at the Company's expense. Upon
such resignation, or any inability of the Warrant Agent to act as such under
this Agreement, the Company shall appoint a new warrant agent in writing. If the
Company shall fail to make such appointment within a period of fifteen (15) days
after it has been notified in writing of such resignation by the resigning
Warrant Agent, then the Registered Holder of any Warrant Certificate may apply
to any court of competent jurisdiction for the appointment of a new warrant
agent. Any new warrant agent, whether appointed by the Company or by such a
court, shall be a bank or trust company having a capital and surplus, as shown
by its last published report to its stockholders, of not less than $10,000,000
or a stock transfer company. After acceptance in writing of such appointment by
the new warrant agent is received by the Company, such new warrant agent shall
be vested with the same powers, rights, duties and responsibilities as if it had
been originally named herein as the Warrant Agent, without any further
assurance, conveyance, act or deed; but if for any reason, it shall be necessary
or expedient to execute and deliver any further assurance, conveyance, act or
deed, the same shall be done at the expense of the Company and shall be legally
and validly executed and delivered by the resigning Warrant Agent. Not later
than the effective date of any such appointment the Company shall file notice
thereof with the resigning Warrant Agent and shall forthwith cause a copy of
such notice to be mailed to the Registered Holder of each Warrant Certificate.
                  (g) Any corporation into which the Warrant Agent or any new
warrant agent may be converted or merged or any corporation resulting from any
consolidation to which the Warrant Agent or any new warrant agent shall be a
party or any corporation succeeding to the trust business of the Warrant Agent
shall be a successor warrant agent under this Agreement without any further act,
provided that such corporation is eligible for appointment as successor to the
Warrant Agent under the provisions of the preceding paragraph. Any such
successor warrant agent shall promptly cause notice of its succession as warrant
agent to be mailed to the Company and to the Registered Holder of each Warrant
Certificate.
                  (h) The Warrant Agent, its subsidiaries and affiliates, and
any of its or their officers or directors, may buy and hold or sell Warrants or
other securities of the Company and otherwise deal with the Company in the same
manner and to the same extent and with like effects as though it were not
Warrant Agent. Nothing herein shall preclude the Warrant Agent from acting in
any other capacity for the Company or for any other legal entity.
               16. Modification of Agreement. The Warrant Agent and the Company
may, by supplemental agreement, make any changes or corrections in this
Agreement (i) that they shall deem appropriate to cure any ambiguity or to
correct any defective or inconsistent provision or manifest mistake or error
herein contained; or (ii) that they may deem necessary or desirable and

                                     - 19 -

<PAGE>

which shall not adversely affect the interests of the holders of Warrant
Certificates; provided, however, that this Agreement shall not otherwise be
modified, supplemented or altered in any respect except with the consent in
writing of the Registered Holders of Warrant Certificates representing not less
than fifty percent (50%) of the Warrants then outstanding; and provided,
further, that no change in the number or nature of the securities purchasable
upon the exercise of any Warrant, or the Purchase Price therefor, or the
acceleration of the Warrant Expiration Date, shall be made without the consent
in writing of the Registered Holder of the Warrant Certificate representing such
Warrant, other than such changes as are specifically prescribed by this
Agreement as originally executed or are made in compliance with applicable law;
and provided, further, that Paragraphs 4(b) and 4(c) may not be modified or
amended without the consent of the Representatives.
               17. Notices. All notices provided for in this Agreement shall be
in writing signed by the party giving such notice, and, unless otherwise
expressly provided in this Agreement, delivered personally or sent by overnight
courier or messenger against receipt thereof or sent by registered or certified
mail (air mail if overseas), return receipt requested, or by facsimile
transmission or similar means of communication. Notices sent by facsimile
transmission or similar means of communication shall be confirmed by
acknowledged receipt or by registered or certified mail, return receipt
requested. Notices shall be deemed to have been received on the date of personal
delivery or telecopy or, if sent by certified or registered mail, return receipt
requested, shall be deemed to be delivered on the third business day after the
date of mailing. Notices shall be sent to the Registered Holders at their
respective addresses on the Warrant Agent's warrant register, to the Company at
95 Parker Street, Newburyport, MA 01950, telecopier (978) 499-0221, Attention:
Richard F. Noll, President and Chief Executive Officer, and to the Warrant Agent
at its Corporate Office, telecopier (  )          . Either party may, by like
notice, change the address, person or telecopier number to which notice should
be given.
               18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements entered and to be performed wholly within such State, without regard
to principles of conflicts of laws. The parties hereby (a) irrevocably consent
and agree that any legal or equitable action or proceeding arising under or in
connection with this Agreement shall be brought exclusively in any Federal or
state court situated in New York County, New York, (b) irrevocably submit to and
accept, with respect to their respective properties and assets, generally and
unconditionally, the in personam jurisdiction of the aforesaid courts, and (c)
agree that any process in any action commenced in such court under this
Agreement may be served upon such party personally, by certified or registered
mail, return receipt requested, or by overnight courier service which obtains
evidence of delivery, with the

                                     - 20 -

<PAGE>

same full force and effect as if personally served upon such party in New York
City, in addition to any other method of service permitted by law.
               19. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company and, the Warrant Agent and their respective
successors and assigns, and the holders from time to time of Warrant
Certificates. Nothing in this Agreement is intended or shall be construed to
confer upon any other person any right, remedy or claim, in equity or at law, or
to impose upon any other person any duty, liability or obligation.
               20. Termination. This Agreement shall terminate at the close of
business on the Expiration Date of all the Warrants or such earlier date upon
which all Warrants have been exercised, except that the Warrant Agent shall
account to the Company for cash held by it, and the provisions of Paragraph 15
of this Agreement shall survive any such termination.
               21. Counterparts. This Agreement may be executed in several
counterparts, which taken together shall constitute a single document.
               IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first above written.

                                   ACTIVEWORLDS.COM, INC.

                                   By:_______________________________________
                                         Richard F. Noll, President and CEO

                                   __________________________________________

                                   By:_______________________________
                                                 , Authorized Officer

                                     - 21 -

<PAGE>
                                                                       EXHIBIT A

                      [FORM OF FACE OF WARRANT CERTIFICATE]

No. A-                                                     Warrant to Purchase
                                                               -----------
                                                          Shares of Common Stock

           Void after             , 2005 (or earlier upon redemption).

                              ACTIVEWORLDS.COM, INC

                SERIES B REDEEMABLE COMMON STOCK PURCHASE WARRANT

         This certifies that FOR VALUE RECEIVED                            or
registered assigns (the "Registered Holder") is the owner of the number of
Series B Redeemable Common Stock Purchase Warrants ("Warrants") specified above.
Each Warrant initially entitles the Registered Holder to purchase, subject to
the terms and conditions set forth in this Certificate and the Warrant Agreement
(as hereinafter defined), one (1) fully paid and nonassessable share of Common
Stock, par value $.001 per share ("Common Stock"), of Activeworlds.com, Inc., a
Delaware corporation (the "Company"), at any time during the period commencing
with the issuance of this Warrant and ending on the Expiration Date, as
hereinafter defined, by delivery of this Warrant, with the Subscription Form on
the reverse hereof duly executed, at the corporate office of
                          , as Warrant Agent, or its successor (the "Warrant
Agent"), accompanied by payment of $               , subject to adjustment as
provided in the Warrant Agreement (the "Purchase Price") in lawful money of the
United States of America in cash or by official bank or certified check made
payable to the order of the Company.

         This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement (the "Warrant Agreement"), dated as of
      , 2000, by and between the Company and the Warrant Agent.

         In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price or the number of shares of Common Stock subject to
purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.

         Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional shares of Common Stock will be issued. In
the case of the exercise of less than all the Warrants represented hereby, the
Company shall cancel this Warrant Certificate upon the surrender hereof and
shall execute and deliver a new Warrant Certificates or Warrant Certificates of
like tenor, which the Warrant Agent shall countersign, for the balance of such
Warrants.

         The term "Expiration Date" shall mean 5:00 P.M. (New York City time)
on            , 2005 or earlier upon redemption as hereinafter provided. If such
date shall in the State of New York be a holiday or a day on which the banks are
authorized or required to close, then the Expiration Date shall mean 5:00 P.M.
(New York City time) the next following day which in the State of New York is
not a holiday or a day on which banks are authorized or required to close. Under
certain circumstances as provided in the Warrant Agreement, the period during
which the Warrant may be exercised may be extended.

         The Company shall not be obligated to deliver any securities pursuant
to the exercise of this Warrant unless a registration statement under the
Securities Act of 1933, as amended, with respect to such securities is
effective. The Company has covenanted and agreed that it will file a
registration statement and will use its commercially reasonably efforts to cause
the same to become effective and to keep such registration statement current
while any of the Warrants are outstanding. This Warrant shall not be exercisable
by a Registered Holder in any state where such exercise would be unlawful.

         This Warrant Certificate is exchangeable, upon the surrender hereof by
the Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant Certificates to represent
such number of Warrants as shall

                                       A-1

<PAGE>

be designated by such Registered Holder at the time of such surrender. Upon
payment by the Registered Holder of any tax or other governmental charge imposed
in connection therewith, for registration of transfer of this Warrant
Certificate at such office, a new Warrant Certificate or Warrant Certificates
representing an equal aggregate number of Warrants will be issued to the
transferee in exchange therefor, subject to the limitations provided in the
Warrant Agreement.

         Prior to the exercise of any Warrant represented hereby, the Registered
Holder shall not be entitled to any rights of a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.

         Commencing    , 2000, or earlier as provided in the Warrant Agreement,
this Warrant may be redeemed at the option of the Company, at a redemption price
of $.10 per Warrant at any time, provided the average market price for the
Common Stock issuable upon exercise of such Warrant shall equal or exceed 150%
of the Purchase Price for the twenty day period ending within three days of the
date the Warrants are called for redemption. Notice of redemption shall be given
not earlier than the thirtieth (30th) nor later than the sixtieth (60th) day
before the date fixed for redemption, all as provided in the Warrant Agreement.
On and after 5:00 P.M. (New York City time) on the business day immediately
preceding the date fixed for redemption, the Registered Holder shall have no
rights with respect to this Warrant except to receive the $.10 per Warrant upon
surrender of this Certificate. This Warrant may only be called for redemption
if, on the date the Warrant is called for redemption, the issuance of the shares
of Common Stock upon exercise of this Warrant is subject to a current and
effective registration statement.

         Prior to due presentment for registration of transfer hereof, the
Company and the Warrant Agent may deem and treat the Registered Holder as the
absolute owner hereof and of each Warrant represented hereby (notwithstanding
any notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary.

         This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements
executed and to be performed wholly within such State, without regard to
principles of conflicts of laws.

         This Warrant Certificate is not valid unless countersigned by the
Warrant Agent.

         IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, manually or in facsimile by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.

                                                  ACTIVEWORLDS.COM, INC.

Dated:_____________                               By:_________________________

                                                  By:_________________________

Countersigned:

____________________________                      [Seal]
  as Warrant Agent

By:_______________________________
       Authorized Officer

                                      A-2

<PAGE>
                             ACTIVEWORLDS.COM, INC.

                                SUBSCRIPTION FORM

      To Be Executed by the Registered Holder in Order to Exercise Warrants

         THE UNDERSIGNED REGISTERED HOLDER hereby irrevocably elects to
exercise______________ Warrants represented by this Warrant Certificate to
purchase the securities issuable upon the exercise of such Warrants, and
requests that certificates for such securities shall be issued in the name of

_______________________________________________________________________________

_______________________________________________________________________________

_______________________________________________________________________________

_______________________________________________________________________________
                     (please print or type name and address)

Please insert Social Security
or other identifying number

______________________________

and be delivered to

_______________________________________________________________________________

_______________________________________________________________________________

_______________________________________________________________________________

_______________________________________________________________________________
                     (please print or type name and address)

and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.

Date:__________________________     X__________________________________________

                                    ___________________________________________

                                    ___________________________________________

                                    ___________________________________________
                                    Address

                                    ___________________________________________
                                    Taxpayer Identification Number

                                    ___________________________________________
                                    Signature Medallion Guaranteed

                                      A-3

<PAGE>

                                   ASSIGNMENT

       To Be Executed by the Registered Holder in Order to Assign Warrants

         FOR VALUE RECEIVED, ___________________________________________________
hereby sells, assigns and transfers onto

Please insert social security
or other identifying number

_____________________________

_______________________________________________________________________________

_______________________________________________________________________________

_______________________________________________________________________________

_______________________________________________________________________________
                     (please print or type name and address)

______________________________ of the Warrants represented by this Warrant
Certificate, and hereby irrevocably constitutes and appoints _________________

_______________________________________________________________________Attorney
to transfer this Warrant Certificate on the books of the Company, with full
power of substitution in the premises.

Date:________________________________    X_____________________________________
                                            Signature Medallion Guaranteed

                                         ______________________________________

THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER. AND MUST BE
GUARANTEED BY AN ELIGIBLE INSTITUTION (AS DEFINED IN RULE 17Ad-15 UNDER THE
SECURITIES AND EXCHANGE ACT OF 1934) WHICH MAY INCLUDE A COMMERCIAL BANK OR
TRUST COMPANY, SAVINGS ASSOCIATION, CREDIT UNION OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE

                                      A-4

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