Document:

CERTIFICATE OF DETERMINATION
                        OF RIGHTS AND PREFERENCES OF THE
                   SERIES A-1 CONVERTIBLE PREFERRED STOCK AND
                     SERIES A-2 CONVERTIBLE PREFERRED STOCK
                                       OF
                                  ZAPWORLD.COM

     The undersigned, JOHN DABELS and OONAGH DUGGAN, hereby certify that:

     1.  They are the duly elected and acting President and Secretary,
respectively of Zapworld.com, a California corporation (the "Company").

     2.  The Company is authorized to issue ten million (10,000,000) shares of
Preferred Stock.

     3.  Under authority given by the Company's Articles of Incorporation, the
Board of Directors has duly adopted the following recitals and resolutions.

     4.  The authorized number of shares of Series A-1 Convertible Preferred
Stock (the "Series A-1 Preferred Stock") is 3,330, none of which is presently
outstanding, and the authorized number of shares of Series A-2 Convertible
Preferred Stock (the "Series A-2 Preferred Stock") is 2,220, none of which is
presently outstanding:

     WHEREAS, the Articles of Incorporation of the Company, as amended,
authorized the Company to issue up to ten million (10,000,000) shares of
Preferred Stock in one or more series, and authorize the Board of Directors of
the Company to fix the number of shares constituting any such series, to
determine the designation thereof, and to determine the rights, preferences,
privileges and restrictions granted to or imposed on such series; and

     WHEREAS, the Company has not issued any shares of Preferred Stock and the
Board of Directors desires to designate a series of Preferred Stock, to fix the
number of shares constituting the series, and to determine the rights,
preferences, privileges and restrictions relating to this series;

     RESOLVED, that the Board of Directors hereby designates three thousand
three hundred thirty (3,330) shares of Preferred Stock as Series A-1 Convertible
Preferred Stock, $1,000 Par Value and two thousand two hundred twenty (2,220)
shares of Preferred Stock as Series A-2 Convertible Preferred Stock, $1,000 Par
Value (collectively the "Preferred Stock"), with the rights, preferences,
privileges and restrictions set forth below.

                             I. CERTAIN DEFINITIONS

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

     A. "Series A-2 Closing Date" means the date of the closing of the purchase
and sale of the Series A-2 Preferred Stock.

     B. "Buy-In Adjustment Amount" means the amount equal to the excess, if any,
of (i) the Converting Holder's total purchase price (including brokerage
commissions, if any) for the Covering Shares (as defined below) over (ii) the
net proceeds (after brokerage commissions, if any) received by the Converting
Holder (as defined below) from the sale of the Sold Shares. By way of
illustration and not in limitation of the foregoing, if the Converting Holder
purchases shares of Common Stock having a total purchase price (including
brokerage commissions) of $11,000 to cover a Buy-In (as defined below) with
respect to shares of Common Stock it sold for net proceeds of $10,000, the
Buy-In Adjustment Amount which the Company will be required to pay to the
Converting Holder will be $1,000

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     C. "Cap Amount" means, if the Cap Regulations (as defined below) limit the
number of shares of Common Stock which the Company may issue to Holders of
Preferred Stock on conversion of Preferred Stock, the maximum number of shares
of Common Stock, determined as of the date of the Series A-1 Closing Date, which
the Company may so issue to the Holders under the Cap Regulations.

     D. "Closing Bid Price" means the closing bid price of the Common Stock (in
U.S. Dollars) on the Principal Trading Market as reported by Bloomberg LP or if
that service is not then reporting the relevant information regarding the Common
Stock, a comparable reporting service of national reputation selected by the
Holders of the Preferred Stock and reasonably acceptable to the Company. If the
Closing Bid Price cannot be calculated for such security on the relevant date on
the foregoing basis, the Closing Bid Price of such security on such date shall
be the fair market value as reasonably determined by an investment banking firm
selected by Holders of a majority of the then outstanding shares of Preferred
Stock and reasonably acceptable to the Company, with the costs of such appraisal
to be borne by the Company. The manner of determining the Closing Bid Price of
the Common Stock set forth in the foregoing definition shall apply with respect
to any other security in respect of which a determination as to closing bid
price must be made hereunder.

     E. "Closing Date" means the Series A-1 Closing Date or the Series A-2
Closing Date, as the case may be.

     F. "Common Stock" means the Company's common stock, no par value per share.

     G. "Conversion Price" means, with respect to any relevant date, the lesser
of (i) the Fixed Conversion Price or (ii) the Variable Conversion Price, which
is in effect as of such date.

     H. "Effective Date" shall mean the date the relevant Registration Statement
for the shares of Common Stock issuable on conversion of the Preferred Stock is
declared effective by the Securities and Exchange Commission.

     I. "Fixed Conversion Price" means (i) with respect to the Series A-1
Preferred Stock, $4.50 per share, and (ii) with respect to the Series A-2
Preferred Stock, 110% of the Closing Bid Price of the Common Stock on the
trading day immediately preceding the Series A-1 Closing Date, each of which
amounts shall be subject to the adjustment as provided herein.

     J. "Holder" means a person or entity holding shares of the Preferred Stock.

     K. "Series A-1 Closing Date" means the date of the closing of the purchase
and sale of the Series A-1 Preferred Stock.

     L. "Junior Securities" means (i) any class or series of capital stock of
the Company authorized prior to the filing of this Certificate of Determination
that, by its terms, ranks junior to the Preferred Stock as to distribution of
assets upon liquidation, dissolution or winding up of the Company, whether
voluntary or involuntary and (ii) all classes or series of capital stock of the
Company authorized after the filing of this Certificate of Determination, unless
consented to as provided herein in each instance, each of which shall rank
junior to the Preferred Stock as to distribution of assets upon liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary.

     M. "Liquidation Preference" means, with respect to a share of Preferred
Stock, an amount equal to the Stated Value thereof, plus the accrued and unpaid
dividends thereon through the date of final distribution.

     N. "Maturity Date" means, with respect to (i) the Series A-1 Preferred
Stock, the date which is thirty-six (36) months after the Series A-1 Closing
Date, and (ii) the Series A-2 Preferred Stock, the date which is thirty-six (36)
months after the Series A-2 Closing Date.

     O. "Meeting Date" means the date which is the earlier of (x) seventy-five
(75) days after the date on which the Company has issued to Holders of Preferred
Stock, after the date of this Certificate of Determination, shares of Common
Stock which, in the aggregate equal or exceed ten percent (10%) of the
outstanding shares of Common Stock on the date hereof or (y) the date on which
the Company holds its next regular or special stockholders meeting.

     P. "Pari Passu Securities" means any class or series of capital stock of
the Company hereafter created specifically ranking, by its terms, on parity with
the Preferred Stock as to distribution of assets upon liquidation,

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dissolution or winding up of the Company, whether voluntary or involuntary.

     Q. "Principal Trading Market" means The Nasdaq/SmallCap Market, or if the
Common Stock is no longer listed on that market, the principal securities
exchange or trading market on which the Common Stock is listed or traded.

     R. "Senior Securities" means each class or series of capital stock of the
Company authorized prior to the original filing of this Certificate of
Determination that, by its terms, is senior to the Preferred Stock as to
distribution of assets upon liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary.

     S. "Stated Value" for the Preferred Stock shall be $1,000.00 per share.

     T. "Variable Conversion Price" means, with respect to a Conversion Date (as
defined below) which occurs (i) after the relevant Closing Date and on or before
the first year anniversary of such Closing Date, the amount equal to eighty-five
percent (85%) of the average of the three (3) lowest Closing Bid Prices over the
twenty-two (22) trading days prior to the Conversion Date, (ii) thereafter and
on or before the second year anniversary of the relevant Closing Date, the
amount equal to eighty percent (80%) of the average of the three (3) lowest
Closing Bid Prices over the twenty-two (22) trading days prior to the Conversion
Date, and (iii) thereafter and on or before the day prior to the Maturity Date,
the amount equal to seventy percent (70%) of the average of the three (3) lowest
Closing Bid Prices over the forty-five (45) days prior to the Conversion Date.

                                  II. DIVIDENDS

     A. Generally. The Holders of the Preferred Stock shall be entitled to
receive a dividend which shall accumulate at a rate of 6% of the stated value
per annum. Except as described below, the dividend shall be payable upon June 30
of each year or on a Conversion Date (each, a "Dividend Payment Date"). The
dividend shall accrue on a daily basis and shall be payable in cash or in Common
Stock at the Company's option. Such dividends shall be payable in preference to
dividends on any Common Stock or stock of any class ranking, as to dividend
rights, junior to the Preferred Stock, and shall be junior as to payment of
dividends to the Senior Securities. Dividends shall be fully cumulative and
shall accrue (whether or not declared and whether or not there shall be funds
legally available for the payment of dividends) daily (based on a 365-day year),
without interest, and shall be payable on the Dividend Payment Date unless such
payment would be in violation of the California Corporations Code.

     B. Dividend on Conversion Date. Upon conversion of shares of the Preferred
Stock, the Holder of those shares shall receive a payment equal to the prorated
amount of the unpaid dividend which accrued through the Conversion Date.

     C. Dividends Paid In Common Stock. If paid in Common Stock, the number of
shares of Common Stock to be received shall be determined by dividing the dollar
amount of the dividend by the Conversion Price on the Dividend Payment Date. If
the dividend is to be paid in Common Stock, said Common Stock shall be delivered
to the Holder, or per Holder's instructions, (i) if being issued in connection
with a conversion, at the same time as the Conversion Certificates pursuant to
Paragraph B(1) of Article III of this Certificate of Determination, and (ii)
with respect to all other instances, within three (3) business days after the
Dividend Payment Date (such third business date, a "Delivery Date"). The
certificates representing the dividends so paid are referred to as "Conversion
Certificates."

     D. Dividends Paid In Cash. If the dividend is to be paid in cash, the
Company shall make such payment on the Dividend Payment Date. If the dividend is
not paid on the Dividend Payment Date, the dividend must be paid in Common Stock
in accordance with the provisions of this Certificate of Determination, unless
the Holder consents otherwise in each specific instance.

                                 III. CONVERSION

     A. Conversion at the Option of the Holder. Subject to the limitations on
conversions contained in Paragraph C of this Article III, each Holder of shares
of Preferred Stock may, at any time and from time to time convert (an "Optional
Conversion") each of its shares of Preferred Stock into a number of fully paid
and non-assessable shares of Common Stock determined in accordance with the
following formula:

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                     Stated Value of Shares to Be Converted
                   -------------------------------------------
                                Conversion Price

     B. Mechanics of Conversion. Conversion shall be effectuated by faxing a
Notice of Conversion in the form attached hereto as Exhibit A ("Notice of
Conversion") to the Company as provided in this Paragraph. The Notice of
Conversion shall be executed by the Holder of one or more shares of Preferred
Stock and shall evidence such Holder's intention to convert all or a portion of
such shares. The date of conversion (the "Conversion Date") shall be deemed to
be the date on which the Holder faxes or otherwise delivers a conversion notice
to the Company so that it is received by the Company on or before such specified
date, provided that, the Holder shall deliver to the Company the certificate or
certificates representing the shares being converted (the "Converted Shares") no
later than five (5) business days thereafter.

     1.  Delivery of Common Stock Upon Conversion. Certificates representing the
Common Stock issuable on conversion of the Preferred Stock (the "Conversion
Certificates") will be delivered to the Converting Holder at the address
specified in the Notice of Conversion (which may be the Converting Holder's
address for notices or a different address), via express courier, by electronic
transfer or otherwise, within three (3) business days (such third business day,
a "Delivery Date") after the later of (i) the date on which the Notice of
Conversion is delivered to the Company as contemplated in this Paragraph or the
Maturity Date, or (ii) the date on which the Converted Shares are delivered to
the Company.

     2.  Taxes. The Company shall pay any and all taxes which may be imposed
upon the Company with respect to the issuance and delivery of the shares of
Common Stock upon the conversion of the Preferred Stock other than transfer
taxes due upon conversion, if such Holder has transferred to another party the
Preferred Stock or the right to receive Common Stock upon the Holder's
conversion thereof or any or income taxes due on the part of the Holder. The
Company shall have the right to withhold any taxes as required by the United
States federal or state tax laws.

     3.  No Fractional Shares. If any conversion of Preferred Stock would result
in the issuance of a fractional share of Common Stock, such fractional share
shall be disregarded and the number of shares of Common Stock issuable upon
conversion of the Preferred Stock shall be rounded up or down to the nearest
whole share, it being understood that .5 of one share shall be rounded up to the
next highest share.

     4.  Conversion Disputes. In the case of any dispute with respect to a
conversion, the Company shall promptly issue such number of shares of Common
Stock as are not disputed in accordance with Paragraph A of Article III above.
If such dispute involves the calculation of the Conversion Price, the Company
shall first discuss such discrepancy with the Converting Holder. If the Company
and the Converting Holder are unable to agree upon the Conversion Price
calculation, the Company shall promptly submit the disputed calculations to
independent auditors, which shall be one of the top six nationally recognized
accounting firms selected by the Holder (unless the Holders and the Company
mutually agree to a different firm). The auditors, at the expense of the party
or parties in error (as determined by the auditors), shall audit the
calculations and notify the Company and the Holder of the results within five
(5) business days following the date it receives the disputed calculations. The
auditor's calculation shall be deemed conclusive, absent manifest error. The
Company shall then issue the appropriate number of shares of Common Stock in
accordance with Paragraph A of Article III above.

     5.  Delay in Delivering Conversion Certificates. The Company understands
that a delay in the delivery of the Conversion Certificates beyond the Delivery
Date could result in economic loss to a Holder. As compensation to a Holder for
such loss, the Company agrees if there is a delay in the delivery of the
Conversion Certificates (as adjusted in accordance with this provision) so that
such Conversion Certificates are not received within two (2) business days after
the Delivery Date, to pay late payments to such Holder for late delivery of
Conversion Certificates in accordance with the following schedule (where "No.
Business Days Late" is defined as the number of business days beyond two (2)
business days after the Delivery Date):

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  No. Business Days Late          Late Payment For Each $10,000 of Liquidation
                                  Preference or Dividend Amount Being Converted
--------------------------        ---------------------------------------------
             1                                                      $100
             2                                                      $200
             3                                                      $300
             4                                                      $400
             5                                                      $500
             6                                                      $600
             7                                                      $700
             8                                                      $800
             9                                                      $900
            10                                                    $1,000
           >10                        $1,000 +$200 for each Business Day
                                              Late beyond 10 days

The Company shall pay any payments incurred under this Paragraph in immediately
available funds upon demand. For purposes of this Paragraph B(5) of Article III,
in connection with a Automatic Conversion (as defined below), the term "Delivery
Date" shall refer to the earlier of (i) the Delivery Date determined in relation
to a Notice of Conversion actually submitted by the Holder to the Company or
(ii) the third business date after written notice from the Holder that the
delivery of shares to the Holder in connection with a Automatic Conversion has
not been accomplished. Nothing herein shall limit the Holder's right to pursue
actual damages for the Company's failure to issue and deliver the Conversion
Certificates to the Holder within a reasonable time. Furthermore, in addition to
any other remedies which may be available to a Holder, in the event that the
Company fails for any reason to effect delivery of such Conversion Certificates
within two (2) business days after the Delivery Date, the Converting Holder will
be entitled to revoke the relevant Notice of Conversion by delivering a notice
to such effect to the Company whereupon the Company and the Converting Holder
shall each be restored to their respective positions immediately prior to
delivery of such Notice of Conversion; provided, however, that any payments
contemplated by this Paragraph B(5) of this Article III which have accrued
through the date of such revocation notice shall remain due and owing to the
Converting Holder notwithstanding such revocation.

     6.  Buy-In. If, by the relevant Delivery Date, the Company fails for any
reason to deliver the Conversion Certificates and after such Delivery Date, the
Holder of the Preferred Stock being converted (a "Converting Holder") purchases,
in an arm's-length open market transaction or otherwise, shares of Common Stock
(the "Covering Shares") in order to make delivery in satisfaction of a sale of
Common Stock by the Converting Holder (the "Sold Shares"), which delivery such
Converting Holder anticipated to make using the shares to be issued upon such
conversion (a "Buy-In"), the Converting Holder shall have the right, to require
the Company to pay to the Converting Holder, in addition to and not in lieu of
the amounts due under Paragraph B(5) of this Article III, the Buy-In Adjustment
Amount. The Company shall pay the Buy-In Adjustment Amount to the Converting
Holder in immediately available funds immediately upon demand by the Converting
Holder.

     7.  DWAC Certificate Delivery. In lieu of delivering physical certificates
representing the Common Stock issuable upon conversion, provided the Company's
transfer agent is participating in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer program, upon request of a Converting Holder and
his/her compliance with the provisions contained in this paragraph, so long as
the certificates therefor do not bear a legend and the Converting Holder thereof
is not obligated to return such certificate for the placement of a legend
thereon, the Company shall use its best efforts to cause its transfer agent to
electronically transmit the Common Stock issuable

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upon conversion to the Converting Holder by crediting the account of Converting
Holder's prime broker with DTC through its Deposit Withdrawal Agent Commission
system.

     8.  Conversion Obligations and Default.

          a. Until such time as a court of competent jurisdiction shall have
     issued a binding injunction prohibiting the Company from issuing shares of
     Common Stock to the Holder on the Holder's conversion of shares of the
     Preferred Stock, the Company will timely honor all such conversions
     effected by the Holder in accordance with the terms of this Certificate of
     Determination, subject only to the limitations as to manner of exercise
     provided herein and to the provisions of Paragraphs E(1) and (2) of this
     Article III. In furtherance of the foregoing, and not in limitation
     thereof, if at any time, a Holder shall elect to convert a share of the
     Preferred Stock, the Company may not refuse to effect such conversion,
     unless a binding injunction from a court of competent jurisdiction, issued
     on notice to the Holder of the hearing with respect to the issuance of such
     injunction, restraining or enjoining conversion of all of the shares of
     Preferred Stock shall have been sought and obtained and the Company shall
     have posted a bond in favor of the Holder in the amount of one hundred
     thirty-five percent (135%) of the Stated Value of the shares of Preferred
     Stock held by the Holder which are subject to such injunction. The bond
     referred to in the immediately preceding sentence shall remain in effect at
     least until thirty (30) days after the completion of the proceedings
     relating to the dispute between the Holder and the Company with respect to
     such conversion or right to effectuate conversions. The proceeds of such
     bond shall be payable to the Holder to offset any amounts owed to the
     Holder as reflected in any judgment obtained by the Holder in its favor in
     connection with such dispute.

          b. If, at any time:

               (I)  the Company challenges, disputes or denies the right of a
          Holder of Preferred Stock to effect a conversion of the Preferred
          Stock into Common Stock or otherwise dishonors or rejects any Notice
          of Conversion delivered in accordance with the terms of this
          Certificate of Determination (subject to the provisions of Paragraph
          B(4) of this Article III with respect to certain disputes relating to
          calculations of the number of shares to be issued and subject to the
          provisions of Paragraph E of this Article V with respect to
          Limitations on Conversions), or

               (II) any third party who is not and has never been an affiliate
          of such Holder commences any lawsuit or proceeding or otherwise
          asserts any claim before any court or public or governmental
          authority, which lawsuit, proceeding or claim seeks to challenge,
          deny, enjoin, limit, modify, delay or dispute the right of such Holder
          to effect the conversion of the Preferred Stock into Common Stock, and
          the Company refuses to honor any such Notice of Conversion,

         then such Holder shall have the right, by written notice to the
         Company, to require the Company to redeem each share of Preferred Stock
         for which a Notice of Conversion has been refused pursuant to clauses
         (I) or (II) of this Paragraphs B(8) for cash, at an amount per share
         equal to the Redemption Amount (as defined below), pursuant to the
         provisions of Article V hereof. Such Redemption Amount shall be payable
         to such Holder in cash within five (5) business days after the such
         Holder gives the Company written notice that it is exercising its
         rights under this paragraph.

     9.  Conversion in Bankruptcy. The Holder of any Preferred Stock Preferred
Stock shall be entitled to exercise its conversion privilege with respect to the
Preferred Stock notwithstanding the commencement of any case

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under 11 U.S.C.ss.101 et seq. (the "Bankruptcy Code"). In the event the Company
is a debtor under the Bankruptcy Code, the Company hereby waives, to the fullest
extent permitted, any rights to relief it may have under 11 U.S.C.ss.362 in
respect of such Holder's conversion privilege. The Company hereby waives, to the
fullest extent permitted, any rights to relief it may have under 11 U.S.C.ss.362
in respect of the conversion of the Preferred Stock. The Company agrees, without
cost or expense to such Holder, to take or to consent to any and all action
necessary to effectuate relief under 11 U.S.C.ss.362.

     C. Automatic Conversion Upon Maturity. Any shares of Preferred Stock not
previously converted or redeemed as of the Maturity Date shall be deemed to be
automatically converted (an "Automatic Conversion") up to an amount contemplated
by Paragraphs E(1) or (2), as may be applicable, of this Article III (or from
time to time thereafter as such additional conversions may be made consistent
with said provisions), without further action of any kind (including, but not
necessarily limited to, the giving of a Notice of Conversion) by the Holder, as
of the Maturity Date at the Conversion Price applicable on the Maturity Date.

     D. Intentionally Omitted.

     E. Limitations on Conversions. The conversion of shares of Preferred Stock
shall be subject to the following limitations (each of which limitations shall
be applied independently):

          1. Cap Regulations. If the Company is limited in the number of shares
     of Common Stock it may issue by virtue of (i) the number of authorized
     shares or (ii) the applicable rules and regulations of its Principal
     Trading Market, including, but not necessarily limited to, Nasdaq Rule
     4310(c)(25)(H)(i) or Rule 4460(i)(1), as may be applicable (collectively,
     the "Cap Regulations") the Company will take all steps reasonably necessary
     to be in a position to issue shares of Common Stock on conversion of the
     Preferred Stock without violating the Cap Regulations. If at any time after
     the date of this Certificate of Determination, the Company has issued
     shares of Common Stock to Holders of Preferred Stock which, in the
     aggregate, equal or exceed ten percent (10%) of the outstanding shares of
     Common Stock on the date of this Certificate of Determination, the Company
     shall immediately notify the Holders of Preferred Stock of such occurrence
     and shall take immediate action (including, if necessary, seeking the
     approval of its shareholders to authorize the listing or issuance of the
     full number of shares of Common Stock which would be issuable upon the
     conversion of the then outstanding shares of Preferred Stock but for the
     Cap Amount) to eliminate any prohibitions under applicable law or the rules
     or regulations of any stock exchange, inter-dealer quotation system or
     other self-regulatory organization with jurisdiction over the Company or
     any of its securities on the Company's ability to list or issue shares of
     Common Stock in excess of the Cap Amount. If on the Meeting Date such
     prohibitions have not been eliminated or if prior to such date there occurs
     a Conversion Date as to which the Company can not honor in full the
     conversion submitted on that date as result of the Cap Regulations, then,
     after all such Preferred Stock which can be converted under the Cap Amount
     have been converted, each Holder of then outstanding shares of Preferred
     Stock (each such share, an "Unconverted Share") shall have the option,
     exercisable in such Holder's sole and absolute discretion, to elect either
     of the following remedies:

               a. If permitted by the Cap Regulations, require the Company to
          issue shares of Common Stock in accordance with such holder's notice
          of conversion at a conversion purchase price equal to the average of
          the closing price per share of Common Stock for any three (3) trading
          days (which need not be consecutive, but subject to certain equitable
          adjustments for certain events occurring during such period) during
          the sixty (60) trading days immediately preceding the date of notice
          of conversion; or

               b. Require the Company to redeem each Unconverted Share for cash,
          at an amount per share equal to the Redemption Amount, pursuant to the
          provisions of Article V hereof, such Redemption Amount shall be paid
          in cash by the Company to the Holder within five (5) business days
          after the date the Holder notifies the Company in writing of the
          Holder's election to pursue this remedy.

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<PAGE>

          A Holder of more than one Unconverted Share may elect one of the above
          remedies with respect to some of such Unconverted Shares and the other
          remedy with respect to other Unconverted Shares. The Redemption Amount
          payable under the provisions of this Paragraph E(1) of this Article
          III shall be payable within ten (10) days after the Redemption Date or
          the Meeting Date, as the case may be. If prior to such date, the Cap
          Regulations no longer apply to limit the Company's issuance of shares
          of Common Stock in connection with the Preferred Stock, the remedies
          contained clauses (a) and (b) of this Paragraph E(1) of this Article
          III shall not be exercisable by a Holder.

     2.  No Ten Percent Holders. Notwithstanding any other provision hereof, in
no event (except (i) as specifically provided in this Certificate of
Determination as an exception to this provision, (ii) while there is outstanding
a tender offer for any or all of the shares of the Company's Common Stock, or
(iii) on at least seventy-five (75) days' advance written notice from the Holder
to the Company of the Holder's election to cancel this Section E(2) of Article
III) shall the Holder be entitled to convert any share of the Holder's Preferred
Stock, or shall the Company have the obligation to convert such share (and the
Company shall not have the right to pay dividends on shares of Preferred Stock
in shares of Common Stock or require an Automatic Conversion), to the extent
that, after such conversion or issuance of stock in payment of dividends, the
sum of (a) the number of shares of Common Stock beneficially owned by the Holder
and its affiliates, and (b) the number of shares of Common Stock issuable upon
the conversion of the shares of Preferred Stock with respect to which the
determination of this proviso is being made, would result in beneficial
ownership by the Holder and its affiliates of more than 9.99% of the outstanding
shares of Common Stock (after taking into account the shares to be issued to the
Holder upon such conversion). For purposes of the proviso to the immediately
preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended. If the Holder
transfers or assigns any shares of the Preferred Stock to a party who or which
would not be considered such an affiliate, such assignment shall be made subject
to the transferee's or assignee's specific agreement to be bound by the
provisions of this Paragraph D(2) of Article III as if such transferee or
assignee were the original Holder hereof. Nothing herein shall preclude the
Holder from disposing of a sufficient number of other shares of Common Stock
beneficially owned by the Holder so as to thereafter permit the continued
conversion of the shares of Preferred Stock.

                    IV. RESERVATION OF SHARES OF COMMON STOCK

     A. Reserved Amount. Upon the initial issuance of the shares of Preferred
Stock, the Company shall reserve out of the authorized but unissued shares of
Common Stock for issuance upon conversion of the Preferred Stock such number of
shares equal to 200% of the number of shares which would be issuable if all of
the authorized shares of Preferred Stock were converted in their entirety on the
Series A-1 Closing Date based on the Conversion Price in effect on that date and
thereafter the number of authorized but unissued shares of Common Stock so
reserved (the "Reserved Amount") shall not be decreased, but may be increased
pursuant to Paragraph B of this Article IV, and shall at all times be sufficient
to provide for the conversion of the Preferred Stock outstanding at the then
current Conversion Price thereof. The Reserved Amount shall be allocated to the
holders of Preferred Stock as provided in Paragraph D of Article IX hereof.

     B. Increases to Reserved Amount. If the Reserved Amount for any ten (10)
consecutive trading days (the last of such ten (10) trading days being the
"Authorization Trigger Date") shall be less than 150% of the number of shares of
Common Stock issuable upon conversion of the then outstanding shares of
Preferred Stock, the Company shall immediately notify the holders of Preferred
Stock of such occurrence and shall take immediate action (including, if
necessary, seeking shareholder approval to authorize the issuance of additional
shares of Common Stock) to increase the Reserved Amount to 200% of the number of
shares of Common Stock then issuable upon conversion of the outstanding
Preferred Stock. In the event the Company fails to so increase the Reserved
Amount within 90 days after an Authorization Trigger Date, each Holder of
Preferred Stock shall thereafter have the option, exercisable in whole or in
part at any time and from time to time by delivery of a Redemption Notice (as
defined below) to the Company, to require the Company to purchase for cash, at
an amount per share equal to the Redemption Amount, a portion of the holder's
Preferred Stock such that, after giving effect to such purchase, the holder's
allocated portion of

                                       8

<PAGE>

the Reserved Amount equals or exceeds 200% of the total number of shares of
Common Stock issuable to such Holder upon conversion of its Preferred Stock. If
the Company fails to redeem any of such shares within five (5) business days
after its receipt of such Redemption Notice, then such Holder shall be entitled
to the remedies provided in Paragraph A(2) of Article V hereof.

     C. Limitations on Redemption Right. Notwithstanding the provisions of
Paragraph B of this Article IV, the holders of Preferred Stock shall have no
right to require the Company to effect a redemption of their outstanding shares
of Preferred Stock as provided in Paragraph B of this Article IV so long as (i)
the Company has not, at any time, decreased the Reserved Amount below that
number of shares of Common Stock computed as set forth in Paragraphs A and B of
this Article IV; (ii) the Company shall have taken immediate action following
the applicable Authorization Trigger Date (including, if necessary, seeking
stockholder approval to authorize the issuance of additional shares of Common
Stock) to increase the Reserved Amount to 200% of the number of shares of Common
Stock then issuable upon conversion of the outstanding Preferred Stock; and
(iii) the Company continues to use its commercially reasonable good faith best
efforts (including the resolicitation of stockholder approval to authorize the
issuance of additional shares of Common Stock) to increase the Reserved Amount
to 200% of the number of shares of Common Stock then issuable upon conversion of
the outstanding Preferred Stock. The Company will be deemed to be using "its
commercially reasonable good faith best efforts" to increase the Reserved Amount
so long as it solicits stockholder approval to authorize the issuance of
additional shares of Common Stock not less than two (2) times during each twelve
month period following the applicable Authorization Trigger Date during which
any shares of Preferred Stock remain outstanding; provided that no such
limitation on the redemption rights set out in Paragraph B of this Article IV,
shall be effective if the Company fails to obtain stockholder approval after two
(2) attempts.

                                  V. REDEMPTION

     A. Redemption by Holder. In the event that any of the following occur
(individually, a "Redemption Event"):

          1.  Cap Regulations. The Company's inability to issue sufficient
     shares of Common Stock upon conversion of Unconverted Shares in accordance
     with Paragraph E(1) of Article III hereof.

          2.  Conversion Default. The Company's inability to deliver Conversion
     Certificates under Paragraph B of Article III hereof.

then, upon the occurrence of any such Redemption Event, each Holder of shares of
Preferred Stock shall thereafter have the option, exercisable in whole or in
part at any time and from time to time by delivery of a notice requesting the
redemption of all or part of such Holder's shares of Preferred Stock (a
"Redemption Notice") to the Company while such Redemption Event continues, to
require the Company to purchase for cash any or all of the then outstanding
shares of Preferred Stock held by such Holder for an amount per share equal to
the Redemption Amount in effect at the time of the redemption hereunder.

     B. Definition of Redemption Amount. The "Redemption Amount" with respect to
a share of Preferred Stock being redeemed (a "Redeemed Share") means an amount
payable in cash, equal to:

                                V
                               ----       x       M
                                CP

          where:

               "V" means the outstanding stated value plus accrued dividends
          through the date of payment of the Redemption Amount for the Redeemed
          Share (the "Redemption Payment Date");

               "CP" means the Conversion Price in effect on the Redemption Date
          (as defined below)

                                       9

<PAGE>

               "Redemption Date" means the date contemplated by a specific
          provision of this Certificate of Determination or, if no such date is
          specified, the date of redemption specified in the notice from the
          Holder electing redemption of a Redeemed Share; and

               "M" means the average of the closing prices for any five (5)
          trading days (which need not be consecutive) selected by the Holder of
          the Unconverted Share being redeemed. during the period beginning on
          the Redemption Date and ending on the Redemption Payment Date.

     C. Redemption Defaults. If the Company fails to pay any Holder the
Redemption Amount with respect to any share of Preferred Stock within
twenty-five (25) business days after its receipt of Redemption Notice, then the
Holder of Preferred Stock delivering such Redemption Notice shall be entitled to
interest on the Redemption Amount at a per annum rate equal to the lower of 15%
and the highest interest rate permitted by applicable law from the date on which
the Company receives the Redemption Notice until the date of payment of the
Redemption Amount hereunder. In the event the Company is not able to redeem all
of the shares of Preferred Stock subject to Redemption Notices delivered prior
to the date upon which such redemption is to be effected, the Company shall
redeem shares of Preferred Stock from each Holder pro rata, based on the total
number of shares of Preferred Stock outstanding at the time of redemption
included by such Holder in all Redemption Notices delivered prior to the date
upon which such redemption is to be effected relative to the total number of
shares of Preferred Stock outstanding at the time of redemption included in all
of the Redemption Notices delivered prior to the date upon which such redemption
is to be effected.

                           VI. LIQUIDATION PREFERENCE

     A. Liquidation Event. If the Company shall commence a voluntary case under
the U.S. Federal bankruptcy laws or any other applicable bankruptcy, insolvency
or similar law, or consent to the entry of an order for relief in an involuntary
case under any law or to the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the Company or
of any substantial part of its property, or make an assignment for the benefit
of its creditors, or admit in writing its inability to pay its debts generally
as they become due, or if a decree or order for relief in respect of the Company
shall be entered by a court having jurisdiction in the premises in an
involuntary case under the U.S. Federal bankruptcy laws or any other applicable
bankruptcy, insolvency or similar law resulting in the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and any such decree or
order shall be unstayed and in effect for a period of 60 consecutive days and,
on account of any such event, the Company shall liquidate, dissolve or wind up,
or if the Company shall otherwise liquidate, dissolve or wind up, including, but
not limited to, the sale or transfer of all or substantially all of the
Company's assets in one transaction or in a series of related transactions (a
"Liquidation Event"), no distribution shall be made to the holders of any shares
of capital stock of the Company (other than Senior Securities and Pari Passu
Securities) upon liquidation, dissolution or winding up unless prior thereto the
holders of shares of Preferred Stock shall have received the Liquidation
Preference with respect to each share. If, upon the occurrence of a Liquidation
Event, the assets and funds available for distribution among the holders of the
Preferred Stock and holders of Pari Passu Securities shall be insufficient to
permit the payment to such holders of the preferential amounts payable thereon,
then the entire assets and funds of the Company legally available for
distribution to the Preferred Stock and the Pari Passu Securities shall be
distributed ratably among such shares in proportion to the ratio that the
Liquidation Preference payable on each such share bears to the aggregate
Liquidation Preference payable on all such shares.

     B. Exclusions. The purchase or redemption by the Company of stock of any
class, in any manner permitted by law, shall not, for the purposes hereof, be
regarded as a liquidation, dissolution or winding up of the Company. Neither the
consolidation or merger of the Company with or into any other entity nor the
sale or transfer by the Company of less than substantially all of its assets
shall, for the purposes hereof, be deemed to be a liquidation, dissolution or
winding up of the Company.

                                       10

<PAGE>

                    VII. ADJUSTMENTS TO THE CONVERSION PRICE

     A. Sale. The Conversion Price shall be subject to adjustment from time to
time as follows: If, for as long as any shares of Preferred Stock remain
outstanding, the Company enters into a merger (other than where the Company is
the surviving entity) or consolidation with another corporation or other entity
or a sale or transfer of all or substantially all of the assets of the Company
to another person (collectively, a "Sale"), the Company will require, in the
agreements reflecting such transaction, that the surviving entity expressly
assume the obligations of the Company hereunder. Notwithstanding the foregoing,
if the Company enters into a Sale and the holders of the Common Stock are
entitled to receive stock, securities or property in respect of or in exchange
for Common Stock, then as a condition of such Sale, the Company and any such
successor, purchaser or transferee will agree that the Preferred Stock may
thereafter be converted on the terms and subject to the conditions set forth
above into the kind and amount of stock, securities or property receivable upon
such merger, consolidation, sale or transfer by a Holder of the number of shares
of Common Stock into which then outstanding shares of Preferred Stock might have
been converted immediately before such merger, consolidation, sale or transfer,
subject to adjustments which shall be as nearly equivalent as may be
practicable. In the event of any such proposed Sale, the Holder hereof shall
have the right to convert by delivering a Notice of Conversion to the Company
within 15 days of receipt of notice of such Sale from the Company.

     B. Spin Off. The Company agrees that for as long as shares of Preferred
Stock remain outstanding, the Company will not, without the consent of the
Holders of a majority of the Preferred Stock, spin off or otherwise divest
itself of a part of its business or operations or dispose all or of a part of
its assets in a transaction (the "Spin Off") in which the Company does not
receive just compensation for such business, operations or assets, but causes
securities of another entity (the "Spin Off Securities") to be issued to
security holders of the Company. If, for any reason, prior to the Conversion
Date or the date of payment of the Redemption Amount hereunder, the Company
consummates a Spin Off, then the Company shall cause (i) to be reserved Spin Off
Securities equal to the number thereof which would have been issued to the
Holder had all of the holder's shares of Preferred Stock outstanding on the
record date (the "Record Date") for determining the amount and number of Spin
Off Securities to be issued to security holders of the Company (the "Outstanding
Preferred Stock") been converted as of the close of business on the trading day
immediately before the Record Date (the "Reserved Spin Off Shares"), and (ii) to
be issued to the Holder on the conversion of all or any of the Outstanding
Preferred Stock, such amount of the Reserved Spin Off Shares equal to (x) the
Reserved Spin Off Shares multiplied by (y) a fraction, of which (a) the
numerator is the principal amount of the Outstanding Preferred Stock then being
converted, and (b) the denominator is the principal amount of the Outstanding
Preferred Stock.

     C. Stock Splits, etc. If, at any time while any shares of Preferred Stock
remain outstanding, the Company effectuates a stock split or reverse stock split
of its Common Stock or issues a dividend on its Common Stock consisting of
shares of Common Stock, the Conversion Price and any other amounts calculated as
contemplated by this Certificate of Determination shall be equitably adjusted to
reflect such action. By way of illustration, and not in limitation, of the
foregoing (i) if the Company effectuates a 2:1 split of its Common Stock,
thereafter, with respect to any conversion for which the Company issues the
shares after the record date of such split, any market price from a date prior
to such split which was used in any of the calculation of the Conversion Price
shall be deemed to be one-half of what it had been calculated to be immediately
prior to such split; (ii) if the Company effectuates a 1:10 reverse split of its
Common Stock, thereafter, with respect to any conversion for which the Company
issues the shares after the record date of such reverse split, any market price
from a date prior to such split which was used in any of the calculation of the
Conversion Price shall be deemed to be ten times what it had been calculated to
be immediately prior to such split; and (iii) if the Company declares a stock
dividend of one share of Common Stock for every 10 shares outstanding,
thereafter, with respect to any conversion for which the Company issues the
shares after the record date of such dividend, any market price from a date
prior to such record date which was used in any of the calculation of the
Conversion Price shall be deemed to be such amount multiplied by a fraction, of
which the numerator is the number of shares (10 in the example) for which a
dividend share will be issued and the denominator is such number

                                       11

<PAGE>

of shares plus the dividend share(s) issuable or issued thereon (11 in the
example).

     D. Certain Defaults. Except to the extent specifically provided in
Paragraph E of this Article VII, the Company has committed to each Holder of
Preferred Stock that, during the period from the date of this Certificate of
Determination until hundred eighty (180) days after the most recent Effective
Date, without the prior written consent of such Holder, the Company will not
enter into

          (x) any subsequent or further offer or sale of Common Stock or
     securities convertible into Common Stock (collectively, "New Common
     Stock"), or

          (y) any subsequent offer or contract for an equity line or similar
     arrangement which contemplates the issuance of New Common Stock

with any third party. In the event the Company breaches the provisions of this
Paragraph D of this Article VII, the Conversion Price shall be amended to be
equal to (i) 90% of (ii) the amount determined in accordance with the provisions
of this Certificate of Determination without regard to this provision.

     E. Right of First Refusal. (i) Subject to the provisions of this Paragraph
E, the Company may during the period commencing on the Effective Date and
continuing through and including the date which is one hundred eighty (180) days
after the Effective Date offer to enter into any transaction (a "New
Transaction") for the sale of New Common Stock to a New Investor, but only if
(x) the average Closing Bid Price for the twenty (20) trading days ending on the
trading immediately before the New Transaction Notice (as defined below) is at
least $5.50 per share (adjusted for capital transactions occurring after the
Series A-1 Closing Date) and (y) the sale price per share of Common Stock or, if
a convertible security or other right to acquire shares, the conversion or
exercise price per share of Common Stock is at least $5.50 per share (adjusted
for capital transactions occurring after the Series A-1 Closing Date). Before
consummating the New Transaction with a New Investor, the Company shall give
written notice (a "New Transaction Notice") to the Holders summarizing all of
the terms of such offer (a "New Transaction Offer"). The Holders shall have the
right (the "Right of First Refusal"), exercisable by written notice given to the
Company by the close of business on the fifth business day after the Holders'
receipt of the New Transaction Offer (the "Right of First Refusal Expiration
Date"), to participate in all or any part of the New Transaction Offer on the
terms so specified.

     (ii)  If, and only if, the Holders do not exercise the Right of First
Refusal in full, the Company may consummate the remaining portion of the New
Transaction with any New Investor on the terms specified in the New Transaction
Offer within thirty (30) days of the Right of First Refusal Expiration Date.

     (iii) If the terms of the New Transaction to be consummated with such other
party differ from the terms specified in the New Transaction Offer so that the
terms are more beneficial in any respect to the New Investor, the Company shall
give the Holders a New Transaction Offer relating to the terms of the New
Transaction, as so changed, and the Holders' Right of First Refusal and the
preceding terms of this Paragraph E shall apply with respect to such changed
terms.

     (iv)  In the event the New Transaction is consummated with such New
Investor at any time prior to the expiration of one hundred eighty (180) days
after the Effective Date on terms providing for a sale price equal to or
computed based on, or a determination of a conversion price (howsoever defined
or computed) based on, a lower percentage of the then current market price
(howsoever defined or computed) than provided in this Certificate of
Determination for determining the Conversion Price, the terms of any unissued or
unconverted share of Preferred Stock shall be modified to reduce the relevant
Conversion Price to be equal to that provided in the New Transaction as so
consummated.

                                       12

<PAGE>

     F. Notice of Adjustments. Upon the occurrence of each adjustment or
readjustment of the Initial Conversion Price pursuant to this Article VII, the
Company, at its expense, shall promptly compute such adjustment or readjustment
and prepare and furnish to each Holder of Preferred Stock a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The Company shall, upon the written
request at any time of any Holder of Preferred Stock, furnish to such Holder a
like certificate setting forth (i) such adjustment or readjustment, (ii) the
Initial Conversion Price at the time in effect and (iii) the number of shares of
Common Stock and the amount, if any, of other securities or property which at
the time would be received upon conversion of a share of Preferred Stock.

                               VIII. VOTING RIGHTS

     A. Generally. The holders of the Preferred Stock have no right to vote in
any matter whatsoever except as otherwise required by the California
Corporations Code.

     B. Class Voting. To the extent that under the California Corporations Code
the vote of the holders of the Preferred Stock, voting separately as a class or
series, as applicable, is required to authorize a given action of the Company,
the affirmative vote or consent of the holders of at least a majority of the
then outstanding shares of the Preferred Stock represented at a duly held
meeting at which a quorum is present or by written consent of the holders of at
least a majority of the then outstanding shares of Preferred Stock (except as
otherwise may be required under the California Corporations Code, a "Required
Interest") shall constitute the approval of such action by the class. To the
extent that under the California Corporations Code Holders of the Preferred
Stock are entitled to vote on a matter with holders of Common Stock, voting
together as one class, each share of Preferred Stock shall be entitled to a
number of votes equal to the number of shares of Common Stock into which it is
then convertible (subject to the limitations contained in Article III Paragraph
E) using the record date for the taking of such vote of shareholders as the date
as of which the Conversion Price is calculated.

                                IX. MISCELLANEOUS

     A. Rank. The Preferred Stock shall rank (i) prior to the Company's Common
Stock; (ii) prior to any Junior Securities; (iii) junior to any Senior
Securities; and (iv) pari passu with any Pari Passu Securities; provided,
however, that no additional Senior or Pari Passu Securities shall be created
without the written consent of a Required Interest.

     B. Cancellation or Redemption of Preferred Stock. If any shares of
Preferred Stock are converted pursuant to Article III, or redeemed pursuant to
Article V. the shares so converted or redeemed shall be canceled, shall return
to the status of authorized, but unissued preferred stock of no series, and
shall not be issuable by the Company as Preferred Stock.

     C. Lost or Stolen Certificates. Upon receipt by the Company of (i) evidence
of the loss, theft, destruction or mutilation of any Preferred Stock
certificate(s) and (ii) (y) in the case of loss, theft or destruction, of
indemnity (without any bond or other security) reasonably satisfactory to the
Company, or (z) in the case of mutilation, upon surrender and cancellation of
the Preferred Stock certificate(s), the Company shall execute and deliver new
Preferred Stock certificate(s) of like tenor and date. However, the Company
shall not be obligated to reissue such lost or stolen Preferred Stock
certificate(s) if the Holder contemporaneously requests the Company to convert
such Preferred Stock.

     D. Allocation of Cap Amount and Reserved Amount. The initial Cap Amount and
Reserved Amount shall be allocated pro rata among the holders of Preferred Stock
based on the number of shares of Preferred Stock issued to each Holder. Each
increase to the Cap Amount and the Reserved Amount shall be allocated pro rata
among the holders of Preferred Stock based on the number of shares of Preferred
Stock held by each Holder at the time of the increase in the Cap Amount or
Reserved Amount. In the event a Holder shall sell or otherwise transfer any of
such holder's shares of Preferred Stock, each transferee shall be allocated a
pro rata portion of such transferor's Cap Amount and Reserved Amount. Any
portion of the Cap Amount or Reserved Amount which remains allocated to any
person or entity which does not hold any Preferred Stock shall be allocated to
the remaining holders of shares of

                                       13

<PAGE>

Preferred Stock, pro rata based on the number of shares of Preferred Stock then
held by such holders.

     E. Payment of Cash; Defaults. Whenever the Company is required to make any
cash payment to a Holder under this Certificate of Determination (upon
redemption or otherwise), such cash payment shall be made to the Holder on the
date specified herein or, if not so specified, within 5 business days after
delivery by such Holder of a notice specifying that the Holder elects to receive
such payment in cash and the method (e.g., by check, wire transfer) in which
such payment should be made. If such payment is not delivered within the
relevant time period, such Holder shall thereafter be entitled to interest on
the unpaid amount at a per annum rate equal to the lower of 15% and the highest
interest rate permitted by applicable law until such amount is paid in full to
the Holder.

     F. Status as Stockholder. Upon submission of a Notice of Conversion by a
Holder of Preferred Stock, (i) the shares covered thereby (other than the
shares, if any, which cannot be issued because their listing or issuance would
exceed such holder's allocated portion of the Reserved Amount or Cap Amount)
shall be deemed converted into shares of Common Stock and (ii) the holder's
rights as a Holder of such converted shares of Preferred Stock shall cease and
terminate, excepting only the right to receive certificates for such shares of
Common Stock and to any remedies provided herein or otherwise available at law
or in equity to such Holder because of a failure by the Company to comply with
the terms of this Certificate of Determination.

     G. Amendments. This Certificate of Determination may only be amended with
the written consent of the holders of eighty-five (85%) percent of the
outstanding Preferred Stock and the vote or action of any other party or class
entitled to vote or act thereon.

                                       14

<PAGE>

     The undersigned declare under penalty of perjury under the laws of the
State of California that the matters set out in the foregoing Certificate are
true of his or her knowledge.

     Executed at San Francisco, California on June 27, 2000.

/s/  John Dabels                                /s/  Oonagh Duggan
-------------------------------                 --------------------------------
John Dabels                                     Oonagh Duggan
President                                       Secretary

                                       15SECURITIES PURCHASE AGREEMENT

     THIS SECURITIES PURCHASE AGREEMENT, dated as of the date of acceptance set
forth below (this "Agreement"), is entered into by and between ZAPWORLD.COM a
California corporation, with headquarters located at 117 Morris Street,
Sebastopol, CA 95472 (the "Company"), and each entity named on a signature page
hereto (each, a "Buyer") (each agreement with a Buyer being deemed a separate
and independent agreement between the Company and such Buyer, except that each
Buyer acknowledges and consents to the rights granted to each other Buyer under
such agreement and the Transaction Agreements, as defined below, referred to
therein).

                              W I T N E S S E T H:

     WHEREAS, the Company and the Buyer are executing and delivering this
Agreement in accordance with and in reliance upon the exemption from securities
registration afforded, inter alia, by Rule 506 under Regulation D ("Regulation
D") as promulgated by the United States Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "1933 Act"), and/or
Section 4(2) of the 1933 Act; and

     WHEREAS, the Buyer wishes to purchase, upon the terms and subject to the
conditions of this Agreement, shares of the Series A-1 and Series A-2
Convertible Preferred Stock, par value $1,000 per share and having a stated
value of $1,000 per share, of the Company (the "Convertible Preferred Stock")
which will be convertible into shares of Common Stock, no par value per share of
the Company (the "Common Stock"), upon the terms and subject to the conditions
of such Convertible Preferred Stock, together with the Warrants (as defined
below) exercisable for the purchase of shares of Common Stock, and subject to
acceptance of this Agreement by the Company;

     NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

     1.  AGREEMENT TO PURCHASE; PURCHASE PRICE.

     a.  Purchase; Certain Definitions.

          (i)   The undersigned hereby agrees to purchase from the Company
     Convertible Preferred Stock having a stated value in the amount set forth
     on the Buyer's signature page of this Agreement (the "Preferred Stock,"
     which term includes the Initial Preferred Stock and the Additional
     Preferred Stock, as defined below), out of a total offering of such
     Convertible Preferred Stock having a stated value of $5,000,000, and having
     the terms and conditions set forth in the Certificate of

                                        1

<PAGE>

     Determination of Rights and Preferences of the Series A-1 Convertible
     Preferred Stock and Series A-2 Convertible Preferred Stock of the Company
     attached hereto as Annex I (the "Certificate of Determination").

          (ii)  Subject to the terms and conditions of this Agreement and the
     other Transaction Agreements, the Buyer will purchase (x) Series A-1
     Convertible Preferred Stock having a stated value of $3,000,000 multiplied
     by the Buyer's Allocable Share (the "Initial Preferred Stock") on the
     Initial Closing Date (as those terms are defined below) and (y) Series A-2
     Convertible Preferred Stock having a stated value of $2,000,000 (the
     "Additional Preferred Stock") on the Additional Closing Date (as defined
     below).

          (iii) The Purchase Price (as defined below) to be paid by the Buyer
     shall be equal to the amount set forth on the Buyer's signature page of
     this Agreement, and shall be payable in United States Dollars.

     b. Certain Definitions. As used herein, each of the following terms has the
meaning set forth below, unless the context otherwise requires:

          (i)   "Securities" means the Preferred Stock, the Warrants and the
     Common Stock issuable upon conversion of the Preferred Stock or the
     exercise of the Warrants.

          (ii)  "Purchase Price" means the purchase price for the Initial
     Preferred Stock or the Additional Preferred Stock, as the case may be.

          (iii) "Initial Closing Date" means the date of the closing of the
     purchase and sale of the Initial Preferred Stock, as provided herein.

          (iv)  "Additional Closing Date" means the date of the closing of the
     purchase and sale of the Additional Preferred Stock, as provided herein.

          (v)   "Closing Date" means the Initial Closing Date or the Additional
     Closing Date, as the case may be.

          (vi)  "Buyer's Allocable Share" means the fraction of which the
     numerator is the stated value of the Buyer's Preferred Stock specified on
     the Buyer's signature page of this Agreement and the denominator is
     $5,000,000.

          (vii) "Effective Date" means the effective date of the Registration
     Statement covering the Registrable Securities (as those terms are defined
     in the Registration Rights Agreement defined below).

                                        2

<PAGE>

          (viii) "Conversion Shares" means the shares of Common Stock issuable
     upon conversion of the Preferred Stock.

          (ix)   "Warrant Shares" means the shares of Common Stock issuable upon
     exercise of the Warrants.

          (x)    "Shares" means the shares of Common Stock representing any or
     all of the Conversion Shares and the Warrant Shares.

          (xi)   "Latest Audited Date" means December 31, 1999.

          (xii)  "Closing Bid Price" means the closing bid price of the Common
     Stock (in U.S. Dollars) on the Principal Trading Market, as reported by
     Bloomberg LP (or if that service is not then reporting the relevant
     information regarding the Common Stock, a comparable reporting service of
     national reputation selected by the Buyer and reasonably acceptable to the
     Company).

          (xiii) "Principal Trading Market" means The Nasdaq/SmallCap Market or,
     if the Common Stock is no longer listed on that market, the principal
     securities exchange or trading market on which the Common Stock is listed
     or traded.

          (xiv)  "Volume Standard" means an average daily trading volume of
     100,000 shares of the Common Stock on the Principal Trading Market for the
     relevant period.

          (xv)   "Certificates" means (x) the stock certificates, duly executed
     by the Company and issued in the name of the Buyer, representing the
     Preferred Stock being issued to the Buyer on the relevant Closing Date and
     (y) the Warrants, each duly executed on behalf of the Company and issued in
     the name of the Buyer, being issued to the Buyer on the relevant Closing
     Date.

     c. Form of Payment; Delivery of Certificates.

          (i)   The Buyer shall pay the Purchase Price for the relevant
     Preferred Stock by delivering immediately available good funds in United
     States Dollars to the escrow agent (the "Escrow Agent") identified in the
     Joint Escrow Instructions attached hereto as Annex II (the "Joint Escrow
     Instructions") on the date prior to the relevant Closing Date.

          (ii)  No later than the relevant Closing Date, but in any event as
     promptly as practicable following payment by the Buyer to the Escrow Agent
     of the relevant Purchase Price, the Company shall deliver the Certificates
     to the Escrow Agent.

                                        3

<PAGE>

          (iii) By signing this Agreement, each of the Buyer and the Company,
     subject to acceptance by the Escrow Agent, agrees to all of the terms and
     conditions of, and becomes a party to, the Joint Escrow Instructions, all
     of the provisions of which are incorporated herein by this reference as if
     set forth in full.

     d. Method of Payment. Payment into escrow of the Purchase Price shall be
made by wire transfer of funds to:

          Bank of New York
          350 Fifth Avenue
          New York, New York 10001

          ABA# 021000018
          For credit to the account of Krieger & Prager LLP, Esqs.
          Account No.:  [To be provided to the Buyer by Krieger & Prager LLP]
          Re:  Zapworld.com

Not later than 5:00 p.m., New York time, on the date which is three (3)
Nasdaq/SmallCap Market trading days after the Company shall have accepted this
Agreement and returned a signed counterpart of this Agreement to the Escrow
Agent by facsimile, the Buyer shall deposit with the Escrow Agent the Purchase
Price for the Initial Preferred Stock in immediately available funds. Time is of
the essence with respect to such payment, and failure by the Buyer to make such
payment, shall allow the Company to cancel this Agreement.

     e. Escrow Property. The Purchase Price, if any, for the Initial Preferred
Stock or the Additional Preferred Stock, as the case may be, which is delivered
to the Escrow Agent as contemplated by Section 1(d) hereof is referred to as the
"Escrow Funds." The Escrow Funds and the Certificates delivered to the Escrow
Agent as contemplated by Section 1(c) hereof are referred to as the "Escrow
Property."

     2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.

     The Buyer represents and warrants to, and covenants and agrees with, the
Company as follows:

     a. Without limiting Buyer's right to sell the Common Stock pursuant to the
Registration Statement, the Buyer is purchasing the Preferred Stock and the
Warrants and will be acquiring the Shares for its own account for investment
only and not with a view towards the public sale or distribution thereof and not
with a view to or for sale in connection with any distribution thereof.

                                        4

<PAGE>

     b. The Buyer is (i) an "accredited investor" as that term is defined in
Rule 501 of the General Rules and Regulations under the 1933 Act by reason of
Rule 501(a)(3), (ii) experienced in making investments of the kind described in
this Agreement and the related documents, (iii) able, by reason of the business
and financial experience of its officers (if an entity) and professional
advisors (who are not affiliated with or compensated in any way by the Company
or any of its affiliates or selling agents), to protect its own interests in
connection with the transactions described in this Agreement, and the related
documents, and (iv) able to afford the entire loss of its investment in the
Securities.

     c. All subsequent offers and sales of the Preferred Stock and the Shares by
the Buyer shall be made pursuant to registration of the Shares under the 1933
Act or pursuant to an exemption from registration.

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

     e. The Buyer and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Preferred Stock and the offer of
the Shares which have been requested by the Buyer, including those set forth on
Annex V hereto. The Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received complete and
satisfactory answers to any such inquiries. Without limiting the generality of
the foregoing, the Buyer has also had the opportunity to obtain and to review
the Company's (1) Annual Report on Form 10-K, as amended, for the fiscal year
ended December 31, 1999, (2) Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 2000; (3) Current Report on Form 8-K filed on April 17,
2000; and (4) Definitive Proxy Statement filed on June 1, 2000 (collectively,
the "Company's SEC Documents").

     f. The Buyer understands that its investment in the Securities involves a
high degree of risk.

     g. The Buyer understands that no United States federal or state agency or
any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities.

                                        5

<PAGE>

     h. This Agreement and the other Transaction Agreements to which the Buyer
is a party have been duly and validly authorized, executed and delivered on
behalf of the Buyer and are valid and binding agreements of the Buyer
enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally.

     3.  COMPANY REPRESENTATIONS, ETC. The Company represents and warrants to
the Buyer as of the date hereof and as of each Closing Date that, except as
otherwise provided in the Company Disclosure Materials attached hereto as Annex
V hereto:

     a. Concerning the Preferred Stock and the Shares. The Preferred Stock has
been duly authorized, and when issued and paid for in accordance with the terms
of this Agreement, will be duly and validly issued, fully paid and
non-assessable and will not subject the holder thereof to personal liability
solely by reason of acquiring the Preferred Stock hereunder. There are no
preemptive rights of any stockholder of the Company, as such, to acquire the
Preferred Stock, the Warrants or the Shares.

     b. Reporting Company Status. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of California
and has the requisite corporate power to own its properties and to carry on its
business as now being conducted. The Company is duly qualified as a foreign
corporation to do business and is in good standing in each jurisdiction where
the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have a material adverse effect on the business, operations
or financial condition or results of operation of the Company and its
subsidiaries taken as a whole. The Company has registered its stock and is
obligated to file reports pursuant to Section 12 of the 1934 Act. The Common
Stock is listed and traded on The Nasdaq/ SmallCap Market. The Company has
received no notice, either oral or written, with respect to the continued
eligibility of the Common Stock for such listing, and the Company has maintained
all requirements for the continuation of such listing.

     c. Authorized Shares. The authorized capital stock of the Company consists
of (i) 20,000,000 shares of Common Stock, no par value per share, of which
approximately 5,500,000 shares have been issued as of the date hereof and
(ii)10,000,000 shares of Indeterminate Preferred Stock, par value $1,000 per
share, of which none have been issued as of the date hereof. All issued and
outstanding shares of Common Stock have been duly authorized and validly issued
and are fully paid and non-assessable. The Company has sufficient authorized and
unissued shares of Common Stock as may be necessary to effect the issuance of
the Shares. The Shares have been duly authorized and, when issued upon
conversion of, or as dividends on, the Preferred Stock or upon exercise of the
Warrants, each in accordance with its respective terms, will be duly and validly
issued, fully paid and non-assessable and will not subject the holder thereof to
personal liability by reason of being such holder.

                                        6

<PAGE>

     d. Securities Purchase Agreement; Registration Rights Agreement and Stock.
This Agreement and the Registration Rights Agreement, the form of which is
attached hereto as Annex IV (the "Registration Rights Agreement"), and the
transactions contemplated thereby, have been duly and validly authorized by the
Company. This Agreement has been duly executed and delivered by the Company and
this Agreement is, and each of the other Transaction Agreements, when executed
and delivered by the Company, will be, a valid and binding agreement of the
Company enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium, and other similar laws affecting the enforcement of creditors'
rights generally.

     e. Non-contravention. The execution and delivery of this Agreement and the
Registration Rights Agreement by the Company, the issuance of the Securities,
and the consummation by the Company of the other transactions contemplated by
this Agreement, the Registration Rights Agreement, and the Preferred Stock do
not and will not conflict with or result in a breach by the Company of any of
the terms or provisions of, or constitute a default under (i) the Articles of
Incorporation or the By-Laws of the Company, each as currently in effect, (ii)
any indenture, mortgage, deed of trust, or other material agreement or
instrument to which the Company is a party or by which it or any of its
properties or assets are bound, including any listing agreement for the Common
Stock except as herein set forth, (iii) to its knowledge, any existing
applicable law, rule, or regulation or any applicable decree, judgment, or order
of any court, United States federal or state regulatory body, administrative
agency, or other governmental body having jurisdiction over the Company or any
of its properties or assets, or (iv) the Company's listing agreement for its
Common Stock, except such conflict, breach or default which would not have a
material adverse effect on the business, operations, condition (financial or
otherwise), or results of operations of the Company and its subsidiaries, taken
as a whole, or on the transactions contemplated herein.

     f. Approvals. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the stockholders of the Company is required to be obtained
by the Company for the issuance and sale of the Securities to the Buyer as
contemplated by this Agreement, except such authorizations, approvals and
consents that have been obtained.

     g. SEC Filings. None of the Company's SEC Documents contained, at the time
they were filed, any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
made therein in light of the circumstances under which they were made, not
misleading. The Company has since April 1, 1999 timely filed all requisite
forms, reports and exhibits thereto with the SEC.

     h. Absence of Certain Changes. Since the Latest Audited Date, there has
been no material adverse change and no material adverse development in the
business, properties,

                                        7

<PAGE>

operations, condition (financial or otherwise), or results of operations of the
Company, except as disclosed in the Company's SEC Documents. Since the Latest
Audited Date, except as provided in the Company's SEC Documents, the Company has
not (i) incurred or become subject to any material liabilities (absolute or
contingent) except liabilities incurred in the ordinary course of business
consistent with past practices; (ii) discharged or satisfied any material lien
or encumbrance or paid any material obligation or liability (absolute or
contingent), other than current liabilities paid in the ordinary course of
business consistent with past practices; (iii) declared or made any payment or
distribution of cash or other property to stockholders with respect to its
capital stock, or purchased or redeemed, or made any agreements to purchase or
redeem, any shares of its capital stock; (iv) sold, assigned or transferred any
other tangible assets, or canceled any debts or claims, except in the ordinary
course of business consistent with past practices; (v) suffered any substantial
losses or waived any rights of material value, whether or not in the ordinary
course of business, or suffered the loss of any material amount of existing
business; (vi) made any changes in employee compensation, except in the ordinary
course of business consistent with past practices; or (vii) experienced any
material problems with labor or management in connection with the terms and
conditions of their employment.

     i. Full Disclosure. There is no fact known to the Company (other than
general economic conditions known to the public generally or as disclosed in the
Company's SEC Documents) that has not been disclosed in writing to the Buyer
that (i) would reasonably be expected to have a material adverse effect on the
business, operations, condition (financial or otherwise), or results of
operations of the Company and its subsidiaries, taken as a whole , (ii) would
reasonably be expected to materially and adversely affect the ability of the
Company to perform its obligations pursuant to this Agreement or any of the
agreements contemplated hereby (collectively, including this Agreement, the
"Transaction Agreements"), or (iii) would reasonably be expected to materially
and adversely affect the value of the rights granted to the Buyer in the
Transaction Agreements.

     j. Absence of Litigation. Except as set forth in the Company's SEC
Documents, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board or body pending or, to the knowledge of the
Company, threatened against or affecting the Company, wherein an unfavorable
decision, ruling or finding would have a material adverse effect on the
properties, business, operations, condition (financial or otherwise), or results
of operation of the Company and its subsidiaries taken as a whole or the
transactions contemplated by any of the Transaction Agreements or which would
adversely affect the validity or enforceability of, or the authority or ability
of the Company to perform its obligations under, any of the Transaction
Agreements.

     k. Absence of Events of Default. Except as set forth in the Company's SEC
Documents, no Event of Default (or its equivalent term), as defined in the
respective agreement to which the Company is a party, and no event which, with
the giving of notice or the passage of time or both, would become an Event of
Default (or its equivalent term) (as so defined in such

                                        8

<PAGE>

agreement), has occurred and is continuing, which would have a material adverse
effect on the business, operations, condition (financial or otherwise), or
results of operations of the Company and its subsidiaries, taken as a whole.

     l. Prior Issues. Except as set forth in the Company's SEC Documents, during
the twelve (12) months preceding the date hereof, the Company has not issued any
convertible securities. As of the date hereof, the outstanding unconverted
principal amount of each convertible security issued by the Company is as set
forth in Annex V hereto.

     m. No Undisclosed Liabilities or Events. The Company has no liabilities or
obligations other than those disclosed in the Company's SEC Documents or those
incurred in the ordinary course of the Company's business since the Latest
Audited Date, and which individually or in the aggregate, do not or would not
have a material adverse effect on the properties, business, operations,
condition (financial or otherwise), or results of operations of the Company and
its subsidiaries, taken as a whole. No event or circumstances has occurred or
exists with respect to the Company or its properties, business, operations,
condition (financial or otherwise), or results of operations, which, under
applicable law, rule or regulation, requires public disclosure or announcement
prior to the date hereof by the Company but which has not been so publicly
announced or disclosed. There are no proposals currently under consideration or
currently anticipated to be under consideration by the Board of Directors or the
executive officers of the Company (other than the transactions contemplated by
the Transaction Agreements) which proposal would (x) change the Articles of
Incorporation or any other charter document or the By-Laws of the Company, each
as currently in effect, with or without shareholder approval, which change would
reduce or otherwise adversely affect the rights and powers of the shareholders
of the Common Stock or (y) materially or substantially change the business,
assets or capital of the Company, including its interests in subsidiaries.

     n. No Default. Except as provided in the Company's SEC Documents, the
Company is not in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any material
indenture, mortgage, deed of trust or other material instrument or agreement to
which it is a party or by which it or its property is bound.

     o. No Integrated Offering. Neither the Company nor any of its affiliates
nor any person acting on its or their behalf has, directly or indirectly, at any
time since November 1, 1999, made any offer or sales of any security or
solicited any offers to buy any security under circumstances that would
eliminate the availability of the exemption from registration under Rule 506 of
Regulation D in connection with the offer and sale of the Securities as
contemplated hereby.

     p. Dilution. The number of Shares issuable upon conversion of the Preferred
Stock and the exercise of the Warrants may increase substantially in certain
circumstances, including, but not necessarily limited to, the circumstance
wherein the trading price of the Common Stock declines prior to the conversion
of the Preferred Stock. The Company's executive officers and

                                        9

<PAGE>

directors have studied and fully understand the nature of the Securities being
sold hereby and recognize that they have a potential dilutive effect. The board
of directors of the Company has concluded, in its good faith business judgment,
that such issuance is in the best interests of the Company. The Company
specifically acknowledges that its obligation to issue the Shares upon
conversion of the Preferred Stock and upon exercise of the Warrants is binding
upon the Company and enforceable regardless of the dilution such issuance may
have on the ownership interests of other shareholders of the Company, the
Company will honor every Notice of Conversion (as defined in the Certificate of
Determination) relating to the conversion of the Preferred Stock and every
Notice of Exercise Form (as contemplated by the Warrants) relating to the
exercise of the Warrants unless the Company is subject to an injunction (which
injunction was not sought by the Company) prohibiting the Company from doing so.

     q. Brokers, Finders. Except for payment of fees to Harry Kraatz, an
independent finder (the "Finder") , and fees payable to Union Atlantic LC or
Union Atlantic Capital, LC (the "Placement Agent"), the payment of which fees is
the sole responsibility of the Company, the Company has taken no action which
would give rise to any claim by any person for brokerage commission, finder's
fees or similar payments by Buyer relating to this Agreement or the transactions
contemplated hereby. Buyer shall have no obligation with respect to such fees or
with respect to any claims made by or on behalf of other persons for fees of a
type contemplated in this Section 3(q) that may be due in connection with the
transactions contemplated hereby. The Company shall indemnify and hold harmless
each of Buyer, its employees, officers, directors, agents, and partners, and
their respective affiliates, from and against all claims, losses, damages, costs
(including the costs of preparation and attorney's fees) and expenses suffered
in respect of any such claimed or existing fees, as and when incurred.

                                       10

<PAGE>

     4.  CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

     a. Transfer Restrictions. The Buyer acknowledges that (1) the Preferred
Stock have not been and are not being registered under the provisions of the
1933 Act and, except as provided in the Registration Rights Agreement, the
Shares have not been and are not being registered under the 1933 Act, and may
not be transferred unless (A) subsequently registered thereunder or (B) the
Buyer shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration; (2) any sale of the Securities made in
reliance on Rule 144 promulgated under the 1933 Act ("Rule 144") may be made
only in accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such Securities under circumstances in which the
seller, or the person through whom the sale is made, may be deemed to be an
underwriter, as that term is used in the 1933 Act, may require compliance with
some other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; and (3) neither the Company nor any other person is under any
obligation to register the Securities (other than pursuant to the Registration
Rights Agreement) under the 1933 Act or to comply with the terms and conditions
of any exemption thereunder.

     b. Restrictive Legend. The Buyer acknowledges and agrees that the Preferred
Stock and the Warrants, and, until such time as the Common Stock has been
registered under the 1933 Act as contemplated by the Registration Rights
Agreement and sold in accordance with an effective Registration Statement,
certificates and other instruments representing any of the Securities shall bear
a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of any such Securities):

          THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN REGISTERED
          UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
          SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED
          FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
          FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
          ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT
          REQUIRED.

     c. Registration Rights Agreement. The parties hereto agree to enter into
the Registration Rights Agreement on or before the Initial Closing Date.

     d. Filings.

          (i)   The Company undertakes and agrees to make all necessary filings
     in connection with the sale of the Securities to the Buyer under any
     United States laws and regulations applicable to the Company, or by any
     domestic securities exchange or trading market, and to provide a copy
     thereof to the Buyer promptly after such filing.

                                       11

<PAGE>

          (ii)  Subject to the conditions of the immediately following sentence,
     the Company undertakes and agrees to take all steps necessary to have a
     meeting and vote of the stockholders of the Company no later than the
     Meeting Date (as defined below) regarding either or both (A) the
     authorization of the Company's issuance to the holders of the Preferred
     Stock of shares of Common Stock in excess of twenty percent (20%) of the
     outstanding shares of Common Stock on the date of this Agreement in
     accordance with NASDAQ Rule 4310(c)(25)(H)(i) or Rule 4460(i)(1), as may be
     applicable and/or (B) the increase of the authorized shares of Common Stock
     of the Company, if and as may be necessary, to enable the Company to meet
     its obligations regarding the reservation of shares and the conversion of
     the Preferred Stock as contemplated by the Certificate of Determination and
     the other Transaction Agreements. The term "Meeting Date" means the date
     which is the earlier of (x) seventy-five (75) days after the date on which
     the Company has issued, after the date of this Agreement, shares of Common
     Stock which, in the aggregate equal or exceed ten percent (10%) of the
     outstanding shares of Common Stock on the date hereof or (y) the date on
     which the Company holds its next regular or special stockholders meeting or
     (v) the date on which the Company holds its next regular or special
     stockholders meeting after the meeting originally scheduled to be held on
     or about June 24, 2000. The Company will recommend to the stockholders that
     such authorization be granted and will seek proxies from stockholders not
     attending the meeting naming a director or officer of the Company as such
     stockholder's proxy and directing the proxy to vote, or giving the proxy
     the authority to vote, in favor of such authorization. Upon determination
     that the stockholders have voted in favor of such authorization, the
     Company shall cause its counsel to issue to the Buyer an unqualified
     opinion (the "Authorization Opinion") that such authorization has been duly
     adopted by all necessary corporate action of the Company and that the
     Company will be able to issue, without restriction as to the number of such
     shares, all shares of Common Stock as may be issuable upon conversion of
     the Preferred Stock and without any limits imposed by the Cap Regulations
     (as defined in the Certificate of Determination) adopted on or before and
     in effect on the date of the Authorization Opinion. The Authorization
     Opinion shall state that the Buyer may rely thereon in connection with the
     transactions contemplated by this Agreement and the other Transaction
     Agreements regarding its holdings of the Preferred Stock. If, for any
     reason, (x) the Authorization Opinion is not issued within five (5)
     business days after such meeting, (y) the meeting is not held by the
     Meeting Date or (z) the requisite stockholder approval is not obtained at
     the meeting, then in lieu of issuing any shares in violation of NASDAQ Rule
     4310(c)(25)(H) or Rule 4460(i)(1), as may be applicable, or any of the
     other Cap Regulations, the Company shall redeem the outstanding Preferred
     Stock as set forth in Section VI of the Certificate of Determination within
     ten (10) days after the Meeting Date.

          (iii) In furtherance of the provisions of the immediately preceding
     subparagraph (ii) hereof, the Company (a) commits to using its best efforts
     to obtain any stockholder authorization contemplated by said subparagraph
     (ii), and (b) represents to the Buyer that the Company has obtained the
     binding irrevocable commitment or proxy (each, a "Principal Voter Proxy")
     of each Principal Voter (as defined below) that such Principal Voter will
     vote in favor of any stockholder authorization contemplated by said
     subparagraph (ii). A "Principal Voter" is a person who meets any one or
     more of the following criteria: (A) a person who is a director or principal
     officer of the Company (each, a "Company Principal") and who, directly or
     indirectly, holds any shares of

                                       12

<PAGE>

     Common Stock of the Company; (B) a spouse of a Company Principal who
     resides in the household of the Company Principal (a "Principal's Spouse")
     and who, directly or indirectly, holds any shares of Common Stock of the
     Company, (C) a parent, sibling or child of a Company Principal who resides
     in the household of a Company Principal or of a Principal's Spouse (each, a
     "Principal's Relative") and who, directly or indirectly, holds any shares
     of Common Stock or (D) any other person or entity, including, without
     limitation, for profit or non-profit corporations, partnerships and trusts,
     whose voting rights regarding Common Stock of the Company is subject to the
     direction, control or other influence of any Company Principal, Principal's
     Spouse or Principal's Relative. The Company will deliver such Principal
     Voter Proxies to the Buyer or the Buyer's designee on the Initial Closing
     Date.

     e. Reporting Status. So long as the Buyer beneficially owns any of the
Securities, the Company shall file all reports required to be filed with the SEC
pursuant to Section 13 or 15(d) of the 1934 Act, and the Company shall not
terminate its status as an issuer required to file reports under the 1934 Act
even if the 1934 Act or the rules and regulations thereunder would permit such
termination. The Company will take all reasonable action under its control to
obtain and to continue the listing and trading of its Common Stock (including,
without limitation, all Registrable Securities) on The Nasdaq/Small Cap market
and will comply in all material respects with the Company's reporting, filing
and other obligations under the by-laws or rules of the National Association of
Securities Dealers, Inc. ("NASD") or The Nasdaq/Small Cap Market.

     f. Use of Proceeds. The Company may use the proceeds from the sale of the
Preferred Stock (excluding amounts paid by the Company for legal fees, finder's
fees and escrow fees in connection with the sale of the Preferred Stock) for
internal working capital purposes and other corporate business activities.

     g. Certain Agreements. Except to the extent specifically provided in
Section 4(j) hereof, but in each such event subject to compliance with all of
the other provisions of this Agreement, the Company covenants and agrees that it
will not, without the prior written consent of the Buyer, enter into

          (x) any subsequent or further offer or sale of Common Stock or
     securities convertible into Common Stock (collectively, "New Common Stock")
     except as contemplated by Section 4(j) hereof,, or

          (y) any subsequent offer or contract for an equity line or similar
     arrangement which contemplates the issuance of New Common Stock

with any third party (a "New Investor") on any date which is earlier than one
hundred eighty (180) days after the Effective Date.

                                       13

<PAGE>

     h. Available Shares. The Company shall have at all times authorized and
reserved for issuance, free from preemptive rights, shares of Common Stock
sufficient to yield (the "Reserved Standard") at least the aggregate of (i) two
hundred percent (200%) of the number of shares of Common Stock issuable at
conversion as may be required to satisfy the conversion rights of the Buyer
pursuant to the terms and conditions of the Certificate of Determination or to
represent payment of dividends on the Preferred Stock and (ii) the number of
shares issuable upon exercise as may be required to satisfy the exercise rights
of the Buyer pursuant to the terms and conditions of the Warrants. If, at any
time, the number of shares so authorized and reserved for issuance to all Buyers
is less than the number of shares contemplated by Paragraph B of Article VI of
the Certificate of Determination, the Company shall promptly take all steps
necessary or appropriate, which may include the calling of a special or regular
shareholders' meeting, to authorize an increase in the number of authorized
shares at least sufficient to enable the Company to comply with the Reserved
Standard.

     i. Warrants. The Company agrees to issue to the Buyer on each Closing Date
transferable warrants (the "Warrants") for the purchase of a number of shares of
Common Stock equal to (x) the stated value of the Preferred Stock issued to the
Buyer on such Closing Date, divided by (y) the Fixed Conversion Price ( as
defined in the Certificate of Determination). The Warrants shall bear an
exercise price per share equal to 110% of (i) for the Warrants issued on the
Initial Closing Date, the average Closing Bid Price for the five (5) trading
days ending on the trading day immediately before (x) June 23, 2000 or (y) the
Initial Closing Date, whichever is lower, and (ii) for the Warrants issued on
the Additional Closing Date, the average Closing Bid Price for the five (5)
trading days ending on the trading day immediately before the Additional Closing
Date (subject in each instance to adjustment as provided in the Warrant). The
Warrants will expire on the last day of the calendar month in which the fifth
anniversary of the relevant Closing Date occurs. The Warrants shall be in the
form annexed hereto as Annex VI, together with (x) registration rights as
provided in the Registration Rights Agreement and (y) piggy-back registration
rights after the effectiveness of the Registration Statement expires, as
contemplated by the Registration Rights Agreement.

     j. Right of First Refusal. (i) Subject to the provisions of this paragraph
(j), the Company may during the period commencing on the Effective Date and
continuing through and including the date which is one hundred eighty (180) days
after the Effective Date offer to enter into any transaction (a "New
Transaction") for the sale of New Common Stock to a New Investor, but only if
(x) the average Closing Bid Price for the twenty (20) trading days ending on the
trading immediately before the New Transaction Notice (as defined below) is at
least $5.50 per share (adjusted for capital transactions occurring after the
Initial Closing Date) and (y) the sale price per share of Common Stock or, if a
convertible security or other right to acquire shares, the conversion or
exercise price per share of Common Stock is at least $5.50 per share (adjusted
for capital transactions occurring after the Initial Closing Date). Before
consummating the New Transaction with a New Investor, the Company shall give
written notice (a "New Transaction Notice") to the Buyer summarizing all of the
terms of such offer (a "New Transaction Offer"). The Buyer shall have the right
(the "Right of First Refusal"), exercisable by written notice given to the
Company by the close of business on the fifth business day after the Buyer's
receipt of the New Transaction Offer

                                       14

<PAGE>

(the "Right of First Refusal Expiration Date"), to participate in all or any
part of the New Transaction Offer on the terms so specified.

          (ii)  If, and only if, the Buyer does not exercise the Right of First
     Refusal in full, the Company may consummate the remaining portion of the
     New Transaction with any New Investor on the terms specified in the New
     Transaction Offer within thirty (30) days of the Right of First Refusal
     Expiration Date.

          (iii) If the terms of the New Transaction to be consummated with such
     other party differ from the terms specified in the New Transaction Offer so
     that the terms are more beneficial in any respect to the New Investor, the
     Company shall give the Buyer a New Transaction Offer relating to the terms
     of the New Transaction, as so changed, and the Buyer's Right of First
     Refusal and the preceding terms of this paragraph (j) shall apply with
     respect to such changed terms.

          (iv)  If there is more than one Buyer signatory to this Agreement, the
     preceding provisions of this paragraph (j) shall apply pro rata among them
     (based on their relative Buyer's Allocable Shares), except that, to the
     extent any such Buyer does not exercise its Right of First Refusal in full
     (a "Declining Buyer"), the remaining Buyer or Buyers who or which have
     exercised their own Right of First Refusal in full, shall have the right
     (pro rata among them based on their relative Buyer's Allocable Shares, if
     more than one) to exercise all or a portion of such Declining Buyer's
     unexercised Right of Refusal.

          (v)   In the event the New Transaction is consummated with such New
     Investor at any time prior to the expiration of one hundred eighty (180)
     days after the Effective Date on terms providing for

                (x) either a sale price equal to or computed based on, or a
          determination of a conversion price (howsoever defined or computed)
          based on, a lower percentage of the then current market price
          (howsoever defined or computed) than provided in the Certificate of
          Determination for determining the Conversion Price, the terms of any
          unissued or unconverted share of Preferred Stock shall be modified to
          reduce the relevant Conversion Price to be equal to that provided in
          the New Transaction as so consummated; and/or

                (y) the issuance of warrants at an exercise price lower than
          that provided in the Warrants, the terms of any unissued or
          unexercised Warrants shall be modified to reduce the relevant Warrant
          exercise price to be equal to that provided in the New Transaction as
          so consummated.

     k. Reimbursement. If (i) the Buyer, other than by reason of its gross
negligence or willful misconduct, becomes involved in any capacity in any
action, proceeding or investigation brought by any shareholder of the Company,
in connection with or as a result of the consummation of the transactions
contemplated by the Transaction Documents, or if the Buyer is impleaded in any
such action, proceeding or investigation by any person, or (ii) the Buyer, other
than by reason of its gross negligence or willful misconduct or by reason of its
trading of the Common Stock in a manner that is illegal under the federal or
state securities laws, becomes involved in any capacity in any action,
proceeding or investigation brought by the SEC against or involving the Company
or in connection with or as a result of the consummation of the transactions

                                       15

<PAGE>

contemplated by the Transaction Documents, or if the Buyer is impleaded in any
such action, proceeding or investigation by any person, then in any such case,
the Company will reimburse the Buyer for its reasonable legal and other expenses
(including the cost of any investigation and preparation) incurred in connection
therewith, as such expenses are incurred. In addition, other than with respect
to any matter in which Buyer is a named party, the Company will pay to the Buyer
reasonable out-of-pocket costs with respect to assisting in preparation for
hearings, trials or pretrial matters, or otherwise with respect to inquiries,
hearing, trials, and other proceedings relating to the subject matter of this
Agreement. The reimbursement obligations of the Company under this Section 4(k)
shall be in addition to any liability which the Company may otherwise have,
shall extend upon the same terms and conditions to any affiliates of the Buyer
that are actually named in such action, proceeding or investigation, and
partners, directors, agents, employees and controlling persons (if any), as the
case may be, of the Buyer and any such affiliate, and shall be binding upon and
inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, the Buyer and any such affiliate and any such
person.

     5. TRANSFER AGENT INSTRUCTIONS.

     a. The Company warrants that, with respect to the Securities, other than
the stop transfer instructions to give effect to Section 4(a) hereof, it will
give its transfer agent no instructions inconsistent with instructions to issue
Common Stock from time to time upon conversion of the Preferred Stock in such
amounts as specified from time to time by the Company to the transfer agent,
bearing the restrictive legend specified in Section 4(b) of this Agreement prior
to registration of the Shares under the 1933 Act, registered in the name of the
Buyer or its nominee and in such denominations to be specified by the Buyer in
connection with each conversion of the Preferred Stock. Except as so provided,
the Shares shall otherwise be freely transferable on the books and records of
the Company as and to the extent provided in this Agreement, the Registration
Rights Agreement, and applicable law. Nothing in this Section shall affect in
any way the Buyer's obligations and agreement to comply with all applicable
securities laws upon resale of the Securities. If the Buyer provides the Company
with an opinion of counsel reasonably satisfactory to the Company that
registration of a resale by the Buyer of any of the Securities in accordance
with clause (1)(B) of Section 4(a) of this Agreement is not required under the
1933 Act, the Company shall (except as provided in clause (2) of Section 4(a) of
this Agreement) permit the transfer of the Securities and, in the case of the
Converted Shares or the Warrant Shares, as the case may be, promptly instruct
the Company's transfer agent to issue one or more certificates for Common Stock
without legend in such name and in such denominations as specified by the Buyer.
The Company agrees that if a sale by a holder of Securities complies with the
provisions of Rule 144, it will instruct the Company's transfer agent to
transfer shares to each purchaser in such a transaction and, if necessary,
arrange for an opinion of counsel to be delivered to the transfer agent with
respect to such transfer.

                                       16

<PAGE>

     b. Subject to the provisions of this Agreement, the Company will permit the
Buyer to exercise its right to convert the Preferred Stock in the manner
contemplated by the Certificate of Determination. The Company acknowledges that
the submission (by facsimile transmission or delivery by mail, messenger or
courier) of a Notice of Conversion substantially in the form annexed hereto as
Annex VII shall constitute adequate notice of the exercise of the conversion
right by the holder of the Preferred Stock.

     c The Company will authorize its transfer agent to give information
relating to the Company directly to the Buyer or the Buyer's representatives
upon the request of the Buyer or any such representative , to the extent such
information relates to (i) the status of shares of Common Stock issued or
claimed to be issued to the Buyer in connection with a Notice of Conversion, or
(ii) the number of outstanding shares of Common Stock of all stockholders as of
a current or other specified date. The Company will provide the Buyer with a
copy of the authorization so given to the transfer agent.

     6. CLOSING DATES.

     a. The Initial Closing Date shall occur on the date which is the first NYSE
trading day after each of the conditions contemplated by Sections 7 and 8 hereof
shall have either been satisfied or been waived by the party in whose favor such
conditions run.

     b.   (i)   The Additional Closing Date shall be the date which is seven (7)
business days after the date of the Company Additional Closing Date Notice or
the Buyer Additional Closing Date Notice (as those terms are defined below;
each, an "Additional Closing Date Notice") .

          (ii)  On a date which is no earlier than the fifteenth business day
     after the Effective Date and ending on the thirtieth business day after the
     Effective Date, the Company may give notice (the "Company Additional
     Closing Date Notice") by fax transmission or hand delivery to the Buyer,
     with a copy to the Escrow Agent, specifying its demand that the Buyer
     purchase the Additional Preferred Stock, as contemplated by Section
     1(a)(ii)(y) hereof. The closing of the purchase and sale of the Additional
     Preferred Stock shall be subject to the provisions of this Section 6(b) and
     the other terms of this Agreement.

          (iii) It shall be a condition to the Company's right to issue a
     Company Closing Date Notice that, as of the Additional Closing Notice Date:

                (A) The Registration Statement shall have been declared
          effective and shall continue to be effective;

                (B) Each of the Transaction Agreements shall continue to be in
          full force and effect and be applicable, to the extent relevant, to
          the

                                       17

<PAGE>

          Additional Preferred Stock and the Warrants to be issued on the
          Additional Closing Date (and the Company's issuance of the Company
          Additional Closing Date Notice shall constitute the Company's making
          each such representation and warranty as of such date);

               (C) The Closing Bid Price on the trading day immediately prior to
          the date of the Company Additional Closing Date Notice was not less
          than $2.00 per share (adjusted to reflect any capital adjustments made
          by the Company after the Initial Closing Date);

               (D) (a)(i) If the average Closing Bid Price for the Common Stock
          for the thirty (30) trading days ending on the trading day immediately
          before the date the Company Additional Date Notice was given, was not
          less than $2.50 per share (adjusted to reflect any capital adjustments
          made by the Company after the Initial Closing Date), and (ii) the
          average daily trading volume for the thirty (30) trading days ending
          the trading day immediately prior to the date of the Company
          Additional Closing Date Notice was not less than the Volume Standard;
          provided, however, that if the average daily trading volume during
          that period is less than the Volume Standard, but at least
          seventy-five percent (75%) of the Volume Standard, the amount of the
          Additional Preferred Stock to be purchased by the Buyer shall be
          two-thirds of the amount contemplated by Section 1(a)(ii)(y);

                   (b)(i) If the average Closing Bid Price for the Common Stock
                   for the thirty (30) trading days ending on the trading day
                   immediately before the date the Company Additional Date
                   Notice was given, was not less than $4.00 per share
                   (adjusted to reflect any capital adjustments made by the
                   Company after the Initial Closing Date), and (ii) the
                   average daily trading volume for the thirty (30) trading
                   days ending the trading day immediately prior to the date of
                   the Company Additional Closing Date Notice was not less than
                   seventy-five percent (75%) of the Volume Standard; provided,
                   however, that if the average daily trading volume during
                   that period is less than such amount but at least fifty
                   percent (50%) of the Volume Standard, the amount of the
                   Additional Preferred Stock to be purchased by the Buyer
                   shall be two- thirds of the amount contemplated by Section
                   1(a)(ii)(y);

               (E) the Authorization Opinion shall have been issued to the
          Buyer; and

                                       18

<PAGE>

               (F) The representations and warranties of the Company contained
          in Section 3 hereof shall be true and correct in all material respects
          and there shall have been no material adverse effect on the business,
          operations or financial condition or results of operations of the
          Company and its subsidiaries taken as a whole, from the Initial
          Closing Date through and including the date the Company gives the
          Company Additional Closing Date Notice to the Buyer (and the Company's
          issuance of the Additional Closing Date Notice shall constitute the
          Company's making each such representation and warranty as of such
          date).

     (iv)  The Buyer by written notice to the Company can waive all or any part
of the conditions referred to in Section 6(b)(iii) with respect to all or any
specified portion of the Additional Preferred Stock; and

     (v) If the Company has not given the Company Additional Closing Date
Notice, then, during the period commencing on the thirty-first business day
after the Effective Date and ending on the forty-fifth business day after the
Effective Date, the Buyer shall have the right to give notice (the "Buyer
Additional Closing Date Notice") by fax transmission or hand delivery to the
Company, with a copy to the Escrow Agent, specifying its demand that the Company
issue all or part of the Additional Preferred Stock, as contemplated by Section
1(a)(ii)(y) hereof.

     (vi)  The closing for the Additional Preferred Stock shall be conducted
upon the same terms and conditions as those applicable to the Initial Preferred
Stock.

     c. Each closing of the purchase and issuance of Preferred Stock shall occur
on the relevant Closing Date at the offices of the Escrow Agent and shall take
place no later than 3:00 P.M., New York time, on such day or such other time as
is mutually agreed upon by the Company and the Buyer.

     d. Notwithstanding anything to the contrary contained herein, the Escrow
Agent will be authorized to release the Escrow Funds to the Company and to
others and to release the other Escrow Property on the relevant Closing Date
upon satisfaction of the conditions set forth in Sections 7 and 8 hereof and as
provided in the Joint Escrow Instructions.

     7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

     The Buyer understands that the Company's obligation to sell the relevant
Preferred Stock to the Buyer pursuant to this Agreement on the relevant Closing
Date is conditioned upon:

                                       18

<PAGE>

                                                                DRAFT -2 6/21/00

     a. The Buyer's execution and delivery of this Agreement and the other
Transaction Agreements contemplated to be signed by the Buyer;

     b. Delivery by the Buyer to the Escrow Agent of good funds as payment in
full of an amount equal to the Purchase Price for the relevant Preferred Stock
in accordance with this Agreement;

     c. The accuracy on such Closing Date of the representations and warranties
of the Buyer contained in this Agreement, each as if made on such date, and the
performance by the Buyer on or before such date of all covenants and agreements
of the Buyer required to be performed on or before such date;

     d. Except to the extent contemplated by specific provisions of the
Transaction Agreements, there shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby to an extent
materially greater than contemplated herein, or requiring any consent or
approval which shall not have been obtained; and

     e. From and after the date hereof to and including such Closing Date, the
trading of the Common Stock shall not have been suspended by the SEC or the NASD
and trading in securities generally on the NYSE or The Nasdaq/SmallCap Market
shall not have been suspended or limited, nor shall minimum prices been
established for securities traded on The Nasdaq/SmallCap Market, nor shall there
be any outbreak or escalation of hostilities involving the United States or any
material adverse change in any financial market that in either case in the
reasonable judgment of the Company makes it impracticable or inadvisable to sell
the Preferred Stock.

     8. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.

     The Company understands that the Buyer's obligation to purchase the
Preferred Stock on the relevant Closing Date is conditioned upon:

     a. The adoption of the Certificate of Determination by all necessary
corporate action of the Company and the filing of all filings necessary to
effectuate the Certificate of Determination as a part of the charter documents
of the Company;

     b. The execution and delivery of this Agreement and the Registration Rights
Agreement by the Company;

     c. Delivery by the Company to the Escrow Agent of the relevant Certificates
in accordance with this Agreement;

     d. The accuracy in all material respects on such Closing Date of the
representations and warranties of the Company contained in this Agreement, each
as if made on such

                                       20

<PAGE>

date, and the performance by the Company on or before such date of all covenants
and agreements of the Company required to be performed on or before such date;

     e. On such Closing Date, the Registration Rights Agreement shall be in full
force and effect and the Company shall not be in default thereunder;

     f. On such Closing Date, the Buyer shall have received an opinion of
counsel for the Company, dated such Closing Date, in form, scope and substance
reasonably satisfactory to the Buyer, substantially to the effect set forth in
Annex III attached hereto;

     g. Except to the extent contemplated by specific provisions of the
Transaction Agreements, there shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby to an extent
materially greater than contemplated herein, or requiring any consent or
approval which shall not have been obtained;

     h. From and after the date hereof to and including such Closing Date, the
trading of the Common Stock shall not have been suspended by the SEC or the NASD
and trading in securities generally on the The Nasdaq/SmallCap Market shall not
have been suspended or limited, nor shall minimum prices been established for
securities traded on The Nasdaq/SmallCap Market, nor shall there be any outbreak
or escalation of hostilities involving the United States or any material adverse
change in any financial market that in either case in the reasonable judgment of
the Buyer makes it impracticable or inadvisable to purchase the Preferred Stock;
and

     i. With respect to the Additional Closing Date,

          (i)   a Company Additional Closing Date Notice shall have been duly
     given in accordance with the provisions of Section 6(b);

          (ii)  all the other conditions of Section 6(b) shall have been
     satisfied;

          (iii) the Registration Statement shall have been declared effective
     and continue to be effective;

          (iv)  each of the Transaction Agreements shall continue to be in full
     force and effect and be applicable, to the extent relevant, to the
     Additional Preferred Stock and Warrants (and the Company's issuance of the
     Additional Preferred Stock shall constitute the Company's making a
     representation and warranty to such effect as of such date);

          (v)   the representations and warranties of the Company contained in
     Section 3 hereof shall be true and correct in all material respects (and
     the Company's issuance of the Additional Preferred Stock shall constitute
     the Company's making each such representation and warranty as of such date)
     and there shall have been no material adverse change to the business,
     operations or

                                       21

<PAGE>

     financial condition or results of operation of the Company and its
     subsidiaries taken as a whole from the Initial Closing Date through and
     including the Additional Closing Date (and the Company's issuance of the
     Additional Preferred Stock shall constitute the Company's making such
     representation and warranty as of such date);

     (vi)  the Company shall have timely issued all shares issuable upon
conversion of the Preferred Stock or upon exercise of the Warrants prior to the
date of such Additional Closing Date; and

     (vii) the Company shall have available and shall reserve for issuance to
Buyer at least two hundred (200%) of the number of Shares which would be issued
on (x) conversion of all unconverted Initial Preferred Stock and all Additional
Preferred Stock and (y) exercise of all unexercised Warrants.

     9. GOVERNING LAW: MISCELLANEOUS.

     a. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of New York for contracts to be wholly performed in such
state and without giving effect to the principles thereof regarding the conflict
of laws. Each of the parties consents to the jurisdiction of the federal courts
whose districts encompass any part of the City of New York or the state courts
of the State of New York sitting in the City of New York in connection with any
dispute arising under this Agreement and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on forum non
conveniens, to the bringing of any such proceeding in such jurisdictions. To the
extent determined by such court, the Company shall reimburse the Buyer for any
reasonable legal fees and disbursements incurred by the Buyer in enforcement of
or protection of any of its rights under any of the Transaction Agreements.

     b. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

     c. This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto.

     d. All pronouns and any variations thereof refer to the masculine, feminine
or neuter, singular or plural, as the context may require.

     e. A facsimile transmission of this signed Agreement shall be legal and
binding on all parties hereto.

                                       22

<PAGE>

     f. This Agreement may be signed in one or more counterparts, each of which
shall be deemed an original.

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

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

     i. This Agreement may be amended only by an instrument in writing signed by
the party to be charged with enforcement thereof.

     j. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.

     10. NOTICES. Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be deemed effectively
given on the earliest of

          (a) the date delivered, if delivered by personal delivery as against
     written receipt therefor or by confirmed facsimile transmission,

          (b) the seventh business day after deposit, postage prepaid, in the
     United States Postal Service by registered or certified mail, or

          (c) the third business day after mailing by domestic or international
     express courier, with delivery costs and fees prepaid,

in each case, addressed to each of the other parties thereunto entitled at the
following addresses (or at such other addresses as such party may designate by
ten (10) days' advance written notice similarly given to each of the other
parties hereto):

          COMPANY:         Zapworld.com
                           117 Morris Street
                           Sebastopol, CA 95472
                           Attn: Gary Starr
                           Telephone No.: (707) 824-4150
                           Telecopier No.: (707) 824-4159

                           with a copy to:

                                       23

<PAGE>

                           Evers & Hendrickson LLP
                           155 Montgomery Street
                           12th Floor
                           San Francisco, California 94104
                           Attn: William D.  Evers, Esq.
                           Telephone No.: (415) 772-8102
                           Telecopier No.: (415) 772-8101

          BUYER:           At the address set forth on the signature
                           page of this Agreement.

                           with a copy to:

                           Krieger & Prager LLP
                           39 Broadway
                           Suite 1440
                           New York, NY 10006
                           Attn: Samuel Krieger, Esq.
                           Telephone No.: (212) 363-2900
                           Telecopier No.  (212) 363-2999

          ESCROW AGENT:    Krieger & Prager LLP
                           39 Broadway
                           Suite 1440
                           New York, NY 10006
                           Attn: Samuel Krieger, Esq.
                           New York, New York 10016
                           Telephone No.: (212) 363-2900
                           Telecopier No.  (212) 363-2999

     11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's and the
Buyer's representations and warranties herein shall survive the execution and
delivery of this Agreement and the delivery of the Certificates and the Warrants
and the payment of the Purchase Price and shall inure to the benefit of the
Buyer and the Company and their respective successors and assigns.

                   [BALANCE OF PAGE INTENTIONALLY LEFT BLANK.]

                                       24

<PAGE>

     IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer by
one of its officers thereunto duly authorized as of the date set forth below.

STATED VALUE OF PREFERRED STOCK:                    $
                                                     ---------------------------

PURCHASE PRICE OF PREFERRED STOCK:                  $
                                                     ---------------------------

                             SIGNATURES FOR ENTITIES

     IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this day , 2000.

--------------------------------            ------------------------------------
Address                                     Printed Name of Subscriber

--------------------------------            By:
                                                --------------------------------
Telecopier No.                                  (Signature of Authorized Person)
               -----------------

                                            ------------------------------------
--------------------------------            Printed Name and Title
Jurisdiction of Incorporation
or Organization

As of the date set forth below, the undersigned hereby accepts this Agreement
and represents that the foregoing statements are true and correct and that it
has caused this Securities Purchase Agreement to be duly executed on its behalf.

ZAPWORLD.COM

By:
        -------------------------------------
                 Gary Starr
Title:     Chief Executive Officer
        -------------------------------------

Date:                                      ,2000
        ----------------------------------

                                       25

<PAGE>

          ANNEX I          CERTIFICATE OF DETERMINATION

          ANNEX II         JOINT ESCROW INSTRUCTIONS

          ANNEX III        OPINION OF COUNSEL

          ANNEX IV         REGISTRATION RIGHTS AGREEMENT

          ANNEX V          COMPANY DISCLOSURE MATERIALS

          ANNEX VI         FORM OF WARRANT

          ANNEX VII        NOTICE OF CONVERSION FORM

                                       26

<PAGE>

                          COMPANY DISCLOSURE MATERIALS
                          ----------------------------

                                      NONE

<PAGE>

                                  ZAPWORLD.COM

                              Notice of Conversion

                    (To be Executed by the Registered Holder
                in order to Convert the Series A Preferred Stock)

TO:    APWORLD.COM                                 VIA TELECOPIER TO:
       17 Morris Street                            (    )
       ebastopol, CA 95472 Attn:

FROM:                                                                 ("Holder")
     -----------------------------------------------------------------

DATE:                                                    (the "Conversion Date")
     ----------------------------------------------------

RE:  Conversion of                     shares (the "Converted Shares") of the
                   -------------------

                  [ ]    Series A-1 Convertible Preferred Stock
                  [ ]    Series A-2 Convertible Preferred Stock

(the "Preferred Stock") of ZAPWORLD.COM (the "Company") into ______ shares (the
"Conversion Shares") of Common Stock (defined below)

CONVERSION DATE:
                 ---------------------------------------------------

     The captioned Holder hereby gives notice to the Company, pursuant to the
Certificate of Determination of Convertible Preferred Stock of ZAPWORLD.COM (the
"Certificate of Determination"), that the Holder elects to convert the Converted
Shares into fully paid and non- assessable shares of Common Stock, no par value
(the "Common Stock"), of the Company as of the Conversion Date specified above.
Said conversion shall be based on the following Conversion Price (the lower of
the two alternatives is checked):

<PAGE>

          [ ]   $               , representing the Fixed Conversion Price (as
                 ---------------
                defined in the Certificate of Determination)

          [ ]   $               , representing the Variable Conversion Price
                 ---------------
                (as defined in the Certificate of Determination)

     A schedule of the Closing Bid Prices of the Common Stock for the [ ]
twenty-two [ ] forty-five trading days prior to the relevant Conversion Date,
as reported on the Principal Trading Market by the Reporting Service (as those
terms are defined in the Certificate of Determination), is attached for your
reference in determining the Variable Conversion Price, if that box is checked
above.

     Based on this Conversion Price, the number of Conversion Shares indicated
above should be issued in the following name(s):

               Name and Record Address           Conversion Shares

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

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

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

     As contemplated by the Certificate of Determination and the Securities
Purchase Agreement, dated June ____, 2000 (the "Securities Purchase Agreement"),
to which the Company and the Holder are parties, this Notice of Conversion is
being sent by facsimile to the telecopier number and officer indicated above,
with a copy to the Company's counsel.

     The Holder has previously surrendered or will surrender (or cause to be
surrendered) the certificate(s) for the Converted Shares, duly endorsed, to the
Company at the address indicated above by express courier within 5 business days
after delivery or facsimile transmission of this Notice of Conversion.

     The certificates representing the Conversion Shares (together with
certificate(s) representing the shares of Preferred Stock not converted hereby)
should be transmitted by the Company to the Holder via express courier or by
electronic transfer within the time contemplated by the Certificate of
Determination after receipt of this Notice of Conversion (by facsimile
transmission or otherwise) and the certificate(s) representing the Converted
Shares to:

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

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

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

<PAGE>

     As contemplated by Article III of the Certificate of Determination, the
Company should also pay all unpaid dividends on the Converted Shares by check
payable to the Holder (unless such dividends are being paid in Common Stock as
contemplated by said section, in which event such shares should be issued in the
name of the Holder) delivered in the same manner as, and together with, the
Conversion Shares.

                                        ----------------------------------------
                                            (Print name of Holder)

                                        By:
                                            ------------------------------------
                                            (Signature of Authorized Person)

                                        ----------------------------------------
                                            (Printed Name and Title)

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