Document:

SECURITIES PURCHASE AGREEMENT

                  THIS SECURITIES PURCHASE AGREEMENT, dated as of December 4,
2000 set forth below (this "Agreement"), is entered into by and between
3DSHOPPING.COM a California corporation, with headquarters located at 308
Washington Boulevard, Marina del Rey, CA 90292 (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 Series A Convertible
Preferred Stock, having a stated value of $1000 per share, of the Company (the
"Convertible Preferred Stock") which will be convertible into shares of Common
Stock 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 at the Purchase
Price 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 $6,000,000, and having the terms and
conditions set forth in the Statement of Designations of the Series A
Convertible Preferred Stock of the Company attached hereto as Annex I (the
"Certificate of Designations").

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                     (ii) Subject to the terms and conditions of this Agreement
and the other Transaction Agreements, the Buyer will purchase (x) Convertible
Preferred Stock having a stated value of $1,500,000 multiplied by the Buyer's
Allocable Share (the "Initial Preferred Stock") on the Initial Closing Date (as
defined below), (y) Convertible Preferred Stock having a stated value of
$2,500,000 of the Preferred Stock (the "First Additional Preferred Stock") on
the First Additional Closing Date (as defined below) and (Z) the balance of
Convertible Preferred Stock having a stated value of up to $2,000,000 of the
Preferred Stock ("Second Additional Preferred Stock") on the Second Additional
Closing Date (as defined below) determined as follows: if (a) the Capitalization
Rate of the Company falls below $35,000,000 at any time during the period
between the Effective Date and the Second Additional Closing Date then the
stated value of the Second Additional Preferred Stock to be purchased shall
equal $1,000,000; and (b) the Capitalization Rate of the Company is above
$35,000,000 during the period between the Effective Date and the Second
Additional Closing Date then, at the option of the holder, the stated value of
the Second Additional Preferred Stock to be purchased may be increased up to
$2,000,000.

                  (iii) The purchase price 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) "Additional Preferred Stock" means the "First Additional
Preferred Stock" and "Second Additional Preferred Stock".

                  (ii) "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 the purchase
price.

                (iii) "Capitalization Rate" means the product of the closing bid
price of the Common Stock as reported by Bloomberg L.P. ("Closing Bid Price")
and the number of shares of Common Stock outstanding held by non-affiliates.

                (iv) "Certificate of Determination" means the Certificate of
Determination of Rights, Preferences, Privileges and Restrictions of Series A
Convertible Preferred Stock or in the event that the issuance of the First
Additional Preferred Stock or Second Additional Preferred Stock requires the
filing of a new series of Preferred Stock pursuant to the provisions hereof,
Certificate of Determination means the Certificate filed for such respective
series, as the case may be.

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

                (vi) "Converted Shares" means the shares of Common Stock
issuable upon conversion of the Preferred Stock.

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                  (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 herein).

                  (viii) "First Additional Closing Date" means the date of the
approval by the shareholders of the Company of the issuance of Common Stock
issuable upon conversion of the Preferred Stock in excess of 19.99% of the
outstanding shares of Common Stock of the Company..

                  (ix)  "Initial Closing Date" means the date of this Agreement

                  (x)   "Issue Date" means respective closing date of each
tranche of  Series A Preferred Stock.

                  (xi)  "Latest Audited Date" means June 30, 2000.

                  (xii) "Principal Market" means the American Stock Exchange,
New York Stock Exchange, Nasdaq National Market or Nasdaq Small Cap Market.

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

                  (xiv) "Second Additional Closing Date" means the later of (i)
45 days after the effectiveness of the first registration statement filed
pursuant to the Registration Rights Agreement or (ii) 30 days after the Issue
Date of the First Additional Closing Date.

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

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

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

                  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.

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<PAGE>

                  (ii) No later than the relevant Closing Date, but in any event
promptly following payment by the Buyer to the Escrow Agent of the relevant
Purchase Price, the Company shall deliver one or more certificates representing
the Preferred Stock and, if relevant to the transactions to be consummated on
that Closing Date, the Warrants to be issued hereunder, each duly executed on
behalf of the Company and issued in the name of the Buyer (collectively, the
"Certificates") to the Escrow Agent. The Buyer will instruct the Escrow Agent to
pay the Purchase Price to the Company on the relevant Closing Date.

                  (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#
                      For credit to the account of Krieger & Prager LLP,  Esqs.
                      Account No.:  [To be provided to the Buyer by Krieger &
                                     Prager LLP]
                      Re:      3Dshopping.Com

                  e.  Escrow Property.  The Purchase Price 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.

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<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 June 30, 2000 as amended by the Form 10-K(a) dated October 27,
2000, and (2) Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 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.

                  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.

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<PAGE>

                i. If such Buyer is an individual, such Purchaser is a citizen
of the United States and is a resident of the State of New York unless otherwise
indicated on the signature pages to this Agreement. If such Purchaser is an
entity, such Purchaser's principal place of business is in the State of New York
unless otherwise indicated on the signature pages to this Agreement.

                j. Immediately following the Closing, such Buyer will not
beneficially own any voting securities of the Company other than the Securities.

                k. Such Buyer does not have any agreements, arrangements or
understandings with any other Person (other than with other Purchasers who are
affiliates of such Purchaser) with regard to acquiring, holding, voting or
disposing of the securities of the Company.

                l. Buyer acknowledges that the Company is disclosing to Buyer
non-public information ("Information"). Buyer agrees to hold the Information in
confidence and not to release, reproduce, discuss or use the Information without
the Company's express written consent.

                m. Buyer agrees that so long as the Company is in compliance in
all material respects with its obligations to the Buyer under the Transaction
Agreements and so long as the Buyer owns any of the Preferred Stock, neither the
Buyer nor any person on behalf of the Buyer shall engage in any open market
"Short Sales" (as hereinafter defined) of the Common Stock during any period in
the which the conversion price is being computed for purposes of any conversion
of Preferred Stock under the Certificate of Determination, other than upon the
exercise of any rights to cause the Company to issue shares of Common Stock to
the Buyer; provided, however, that unless and until the Company has
affirmatively demonstrated by the use of specific evidence that the Buyer is
engaging in such open market Short Sales, the Buyer shall be assumed to be in
compliance with the provisions of this paragraph and the Company shall remain
obligated to fulfill all of its obligations under the Transaction Agreements;
and provided, further, that the Company shall under no circumstances be entitled
to request or demand that the Buyer affirmatively demonstrate that it has not
engaged in any such Short Sales as a condition to the Company's fulfillment of
its obligations under any of the Transaction Agreements and shall not assert the
Buyer's failure to demonstrate such absence of such Short Sales as a defense to
any breach of the Company's obligations under any of the Transaction Agreements.
As used herein, "Short Sales" has the meaning provided in Rule 3b-3 under the
1934 Act. Nothing in this Article shall prohibit or limit a sale, including a
Short Sale, by the Buyer effected on or after the date on which Buyer gives
appropriate notice to the Company entitling the Buyer to receive a number of
shares of Common Stock equal to or greater than the number of shares so sold.

                  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

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<PAGE>

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,
financial condition or results of operation of the Company and its subsidiaries
taken as a whole. The Company has registered its Common Stock and is obligated
to file reports pursuant to Section 12 of the 1934 Act. The Common Stock is
listed and traded on The American Stock Exchange ("Amex"). 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) 10,000,000shares of Common Stock, no par value per
share, of which approximately 5,304,164 shares have been issued as of the date
hereof and (ii) 5,000,000 shares of Preferred Stock, no par value per share, of
which 7,440 have been authorized as Series A Preferred Stock and 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
nonassessable. Assuming the validity of the agreement of Messrs. Gourley and
Gayner not to exercise their options exercisable for 600,000 shares of Common
Stock and the Company's agreement set forth herein in paragraph 4j not to issue
any additional options or shares, the Company has sufficient authorized and
unissued shares of Common Stock as may be necessary to effect the issuance of
the shares underlying the Securities to be issued on the Initial Closing Date
based on the closing bid price of a share of Common Stock on the Principal
Market on the day prior to the Initial Closing Date and the Shares underlying
the Securities to be issued on Initial Closing Date will 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.

                  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 and that rights to indemnity may be
limited by federal and state securities laws and public policy considerations.

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<PAGE>

                  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 subject to the Company obtaining approval of its shareholders to
increase its authorized capital and the sale of the Preferred Stock in excess of
19.99% of the outstanding Common Stock of the Company, 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 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,
excluding the listing agreement for the Common Stock or (iii) to its knowledge,
and assuming compliance with the matters referred to in Section 3(f), 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, except such conflict, breach or
default which would not have a material adverse effect on the business,
operations, financial condition, 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
on the Initial Closing Date as contemplated by this Agreement, except (i) the
filing of the Certificate of Determination in accordance with the law of the
State of California; (ii) the approval of the terms of the transaction
contemplated hereby by Amex and the filing of an additional listing application
with the Amex; (iii) any state or federal Securities or blue sky filings; and
(iv) other filings, notifications and consents that are immaterial to the
consummation of the transactions contemplated hereby.

                  g. SEC Filings. None of the Company's SEC Documents contained,
at the time they were filed (or in the case of an amended report, as of the date
of the amendment), 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 (or with or in
permitted extension periods).

                  h. Absence of Certain Changes. Since the Last Audited Date,
there has been no material adverse change and no material adverse development in
the business, properties, operations, financial condition, or results of
operations of the Company, except as disclosed in the Company's SEC Documents.
Since the Last 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

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<PAGE>

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 material 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 significant 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 to the
Buyer or its representatives that (i) would reasonably be expected to have a
material adverse effect on the business, operations, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole, or
(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 the Certificate of
Determination, 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, financial condition, or results of operations
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
agreement), has occurred and is continuing, which would have a material adverse
effect on the business, operations, financial condition, 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.

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                  m. No Material 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 Last Audited Date, and which individually or in the aggregate, do not
or would not have a material adverse effect on the properties, business,
operations, financial condition, or results of operations of the Company and its
subsidiaries, taken as a whole. To the Company's knowledge event or
circumstances has occurred or exists with respect to the Company or its
properties, business, operations, financial condition, 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. Other than the proposal to increase the
Company's authorized capital and to reincorporate in the State of Delaware,
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 certificate of incorporation or
other charter document or 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
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, and the
Company will honor, in accordance with the terms of the Certificate of
Determination and California law, every Notice of Conversion (as defined in the
Certificate of Designations) relating to the conversion of the Preferred Stock

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<PAGE>

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 H.C.
Wainwright (the "Placement Agent"), payment of which 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.

                  r. Amendments, Modification or Waivers. The Company shall pay
all reasonable fees and expenses incurred by the Buyer in connection with any
amendments, modifications or waivers of this Agreement or the Registration
Rights Agreement or incurred in connection with the enforcement of this
Agreement and the Registration Rights Agreement, including, without limitation,
all reasonable attorneys fees and expenses. The Company shall pay all stamp or
other similar taxes and duties levied in connection with issuance of the Shares
pursuant hereto.

                  s. Material Non-public Information. The Company is not in
possession of, nor has the Company or its agents disclosed or will disclose to
Buyer, any material non-public information that (a) if disclosed, would
reasonably be expected to have a materially adverse effect on the price of the
Common Stock or (b) according to applicable law, rule or regulation, should have
been disclosed publicly by the Company prior to the date hereof but which has
not been so disclosed.

                  4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

                  a. Transfer Restrictions. The Buyer acknowledges that (1) the
Preferred Stock, and Warrants 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 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

                                       11

<PAGE>

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 upon request of Buyer to
provide a copy thereof to the Buyer promptly after such filing.

                  (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 authorization of the Company's issuance of
shares of Common Stock to the holders of the Preferred Stock and Warrants of
shares of Common Stock which shares are in excess of twenty percent (20%) of the
outstanding shares of Common Stock on the date of this Agreement in accordance
with the Listing Rules of the Principal Market as may be applicable. 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. 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

                                       12

<PAGE>

favor of such authorization, the Company shall cause its counsel to issue to the
Buyer an 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 Debentures.

                  (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 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 executive officer of the Company
(each, a "Company Principal") and who, directly or indirectly, holds any shares
of 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
more than one percent (1%) of the outstanding Common Stock of the Company, 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 American Stock Exchange or such
other exchange or Nasdaq or the Smallcap National Market and will comply in all
material respects with the Company's reporting, filing and other obligations
under the by-laws or rules of its Principal Market.

                  f. Use of Proceeds. The Company will 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 as more specifically set forth in
Schedule 4f hereto, and, unless specifically set forth on Schedule 4f, or

                                       13

<PAGE>

consented to in advance in each instance by the Buyer, the Company shall not,
directly or indirectly, use such proceeds for any loan to or investment in any
other corporation (other than majority owned subsidiaries), partnership
enterprise or other person or for the repayment of any outstanding loan by the
Company to any other party.

                  g. Certain Agreements.  (i) 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"), or

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

with any non-employee third party (a "New Investor"), which New Common Stock is
(a) freely tradeable or (b) will be registered under the Securities Act, on or
before two hundred and seventy (270) days after the Effective Date.

         (ii) The provisions of subparagraph (g)(i) will not apply to (w) an
underwritten public offering of shares of Common Stock or Preferred Stock; (x)
the issuance of securities (other than for cash) in connection with an
acquisition, merger, consolidation, sale of assets, disposition or the exchange
of the capital stock for assets, stock or other joint venture interests; or (y)
the Company's issuance of Shares or Convertible Securities in connection with
the proposed acquisitions set forth on Schedule 4f hereto or (z) issuances of
shares on the exercise or conversion of or in connection with, existing warrants
or options.

                  h. Available Shares. After the shareholders of the Company
approve an increase to the authorized shares of Common Stock and the Company
files an amendment to its Articles of Incorporation increasing the number of its
authorized shares the Company will thereafter have at all times authorized and
reserved for issuance, free from preemptive rights, shares of Common Stock
sufficient to yield 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 at the then conversion price 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.

                  i. Warrants. (i) The Company agrees to issue to the Buyer on
each Closing Date transferable warrants with a cashless exercise provision (the
"Warrants") for the purchase of 100,000 shares of Common Stock for every
$1,000,000 of the Preferred Stock purchased on such Closing Date. The Warrants
shall bear an exercise price per share equal to 110% of the Closing Price, (as
defined in the Certificate of Determination) (subject to adjustment as provided
in the Warrant). The Warrants will be exercisable commencing six (6) months
after the Initial Closing Date and will expire on the last day of the calendar
month in which the fifth anniversary of the Initial Closing Date. The Warrants

                                       14

<PAGE>

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.

         (ii) The Warrants will provide that commencing nine (9) months after
the Effective Date, if the Closing Bid Price of the Common Stock of the Company,
is equal to two hundred seventy five percent (275%) of the exercise price of the
Warrants for a period of twenty (20) consecutive trading days then the Company
shall have the right to redeem all or any of the then outstanding Warrants held
by the Holder, in cash for an amount equal to $0.10 per Warrant, by giving not
less than thirty (30) days written notice of such redemption to the Holders of
such Warrant.

                  j. Limitation on Issuance of Shares. If applicable to the
Company, the Company may be 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 the Principal Market. The Company has agreed
to take all steps necessary regarding shareholder authorization of an increase
in the authorized capital stock of the Company as more fully described in the
Certificate of Determination. In addition, the Company agrees that it will not
issue any additional shares of Common Stock or securities convertible into
Common Stock which would exceed its authorized shares of capital stock.

                  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 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.

                                       15
<PAGE>

                  l. Right of First Refusal. (i) 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 which would otherwise be prohibited under Section
4(g)(i) hereof, but only if the average closing bid price for the Common Stock
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). 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 (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 (l) 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 (l) 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 a sale price equal to or
computed based on, or a determination of a conversion price based on, a lower
percentage of the then current market price (howsoever defined or computed)
provided in the Certificate of Determination for determining the Conversion Rate
(howsoever defined or computed), the terms of any unissued or unconverted
Preferred Stock shall be modified to reduce the relevant Conversion Rate to be
equal to that provided in the New Transaction as so consummated.

                                       16
<PAGE>

                  (vi) The provisions of paragraph (4)(l) will not apply to (w)
an underwritten public offering of shares of Common Stock or Preferred Stock;
(x) the issuance of securities (other than for cash) in connection with an
acquisition, merger, consolidation, sale of assets, disposition or the exchange
of the capital stock for assets, stock or other joint venture interests; or (y)
the Company's issuance of Shares or Convertible Securities in connection with
the proposed acquisitions set forth on Schedule 4f hereto or (z) issuances of
shares on the exercise or conversion of or in connection with, existing options
and warrants.

                  n. Fixed Conversion Price. The parties agree that the "Fixed
Conversion Price" (as such term is used in the Certificate of Determination) for
the First Additional Preferred Stock and Second Additional Preferred Stock shall
mean the Closing Price (as defined in the Certificate of Determination), but in
no event less than $1.50 or greater than $3.00 per share. In the event that the
"Fixed Conversion Price" for any tranche is different than another tranche as
determined in accordance with the foregoing formula or if required by the law of
the state of incorporation of the Company, the Board of Directors of the Company
will establish a new series of preferred stock with the same rights and
preferences as the Series A Preferred Stock except that the Fixed Conversion
Price shall be equal to the amount determined in accordance with this paragraph.

                  o. Certificate of Determination. In the event of any
inconsistency between the terms of this Agreement or the Certificate of
Determination, the provisions of the Certificate of Determination will control.

                  p. Determination of Prices. The parties agree that the
determination of any stock prices hereunder or pursuant to the Certificate of
Determination shall be as reported by Bloomberg LP.

                  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.

                                       17

<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.

                  c. The Company understands that a delay in the issuance of the
Shares of Common Stock beyond the Delivery Date (as defined in the Certificate
of Determination) could result in economic loss to the Buyer. As compensation to
the Buyer for such loss, the Company agrees to pay late payments to the Buyer
for late issuance of Shares upon conversion in accordance with the schedule set
forth in the Certificate of Determination.

                  d. If, by the relevant Delivery Date, the Company fails for
any reason to deliver the Shares to be issued upon conversion of Preferred Stock
and after such Delivery Date, the holder of the Preferred Stock being converted
will have the right to require the Company to pay to the Converting Holder the
"Buy-In Adjustment Amount" as set forth in the Certificate of Determination.

                  e. 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 the Buyer and its compliance with
the provisions contained in this paragraph, so long as the certificates therefor
do not bear a legend and the Buyer 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 upon conversion to the Buyer by crediting the account of Buyer's
Prime Broker with DTC through its Deposit Withdrawal Agent Commission system.

                  f. 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
Conversion Notice delivered in accordance with the terms of this Agreement or
the Certificate of Determination or any exercise of any Warrant in accordance
with its terms ("Warrant Exercise"), 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 Conversion Notice or Warrant Exercise, then such holder shall
have the right, by written notice to the Company, to require the Company to
promptly redeem the Preferred Stock for cash at a redemption price equal to the
Cap Redemption Amount of the unconverted Preferred Stock held by such holder;
provided, however, that the Company shall have a period of sixty (60) days
within which to (i) have the lawsuit or proceeding dismissed and honor the
Conversion Notice and/or the Warrant Exercise, or (ii) raise the capital
required to redeem the Cap Redemption Amount, as the case may be. Under any of
the circumstances set forth above, the Company shall be responsible for the

                                       18

<PAGE>

payment of all costs and expenses of such holder, including, but not necessarily
limited to, reasonable legal fees and expenses, as and when incurred in
connection with such holder's disputing any such action or pursuing such
holder's rights hereunder (in addition to any other rights such holder may have
hereunder or otherwise).

                  g. The holder of any Preferred Stock shall be entitled to
exercise its conversion privilege with respect to the Preferred Stock
notwithstanding the commencement of any case 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.

                  h. 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.

                  a. The closing for the First and Second Additional Preferred
Stock shall be conducted upon the same terms and conditions as set forth in
Section 8.

                  b. 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.

                  c. 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:

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

                                       19
<PAGE>

                  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 American Stock Exchange and trading in securities generally on
the NYSE or The American Stock Exchange shall not have been suspended or
limited, nor shall minimum prices been established for securities traded on The
American Stock Exchange, 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 Designations 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. 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 date (except to the extent it relates to a
particular 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;

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

                                       20
<PAGE>

                  e. 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;

                  f. 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 other than the approval of the
Principal Market;

                  g. 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 The American Stock Exchange and trading in securities generally
on The American Stock Exchange shall not have been suspended or limited, nor
shall minimum prices been established for securities traded on The American
Stock Exchange, 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

                  h. With respect to an Additional Closing Date,

                  (i) The Company shall give the Buyer five trading days notice
of the fulfillment of the conditions necessary to close the purchase and sale of
the Additional Preferred Stock (other than the determination of the
Capitalization Rate which will be determined on the respective Closing Date for
the trading days prior to the closing);

                  (ii) 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);

                  (iii) 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,
except to the extent a representation or warranty relates to a particular date)
and there shall have been no material adverse change to the business, operations
or 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 continued losses of the Company
consistent with prior years is not deemed to be a material adverse change); (iv)
the Company is in compliance its obligations of the material terms of the
Transaction Agreements;

                  (v) 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

                  (vi) 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; and

                                       21
<PAGE>

                  (vii) the Common Stock is listed on one of the following:
Amex, Nasdaq National Market, Nasdaq Smallcap Market or the New York Stock
Exchange and the requisite Shareholder Approval and any other requirements of
the Principal Market as set forth in Section 5(j) of the Certificate of
Determination shall have been received.

                  i. With respect to the First Additional Closing only, the
Capitalization Rate of the Company is equal to or exceeds $25,000,000 for the
five trading days prior to the Issue Date of such shares.

                  j. With respect to the Second Additional Closing only, the
Registration Statement shall have been declared effective and continue to be
effective.

                  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. Each party waives any right it may have to a trial by
jury in respect of any action, suit or proceeding arising out of or relating to
this Agreement.

                  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.

                                       22

<PAGE>

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

                  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.

                  All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (a) personally served,(b) deposited in the
mail, registered or certified, return receipt requested, postage prepaid, (c)
delivered by reputable courier service which provides evidence of delivery with
charges prepaid, (d) transmitted by hand delivery, or (e) by facsimile,
addressed as set forth below or to such other address as such party shall have
specified most recently by written notice given in accordance herewith. Any
notice or other communication required or permitted to be given hereunder shall
be deemed effective (i) upon hand delivery or delivery at the address or number
designated below (if delivered on a business day during normal business hours
where such notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) (ii) on the second business day following
the date of mailing by express courier service or on the fifth business day
after deposited in the mail, in each case, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first occur or
(iii) if by facsimile, upon confirmation of receipt by the recipient or
confirmation of transmission in another provided in this Section 10. The
addresses for such communications shall be:

                           If to the Company:
                           -----------------

                                    3Dshopping.com
                                    308 Washington Boulevard
                                    Marina del Rey
                                    California 90292
                                    Attention: Howard Cohn
                                    Tel No.:    (310) 301-6733
                                    Fax No.:    (310) 301-6730

                                       23
<PAGE>

                           With a copy (which shall not constitute notice) to:

                                    Graubard Mollen & Miller
                                    600 Third Avenue
                                    New York, NY 10016
                                    Attention: David Alan Miller, Esq.
                                    Tel No.: (212)-818-8800
                                    Fax No.: (212)- 818-8881

                           If to Buyer:  At the address set forth on the
                                         signature page of this Agreement.

                           With a copy (which shall not constitute notice) to:

                                    Krieger & Prager, LLP
                                    39 Broadway, Suite 1440
                                    New York, New York 10006
                                    Attention: Samuel M. Krieger, Esq.
                                    Tel No.: (212) 363-2900
                                    Fax No: (212) 363-2999

                           Either party hereto may from time to time manner
change its address or facsimile number for notices under this Section 10 by
giving at least ten (10) days' prior written notice of such changed address or
facsimile number to the other party hereto. Any notice required or permitted
hereunder shall be given in writing (unless otherwise specified herein).

                  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.

3DSHOPPING.COM

By:_____________________________________

Title:__________________________________

Date:                            ,2000
      __________________________________

                                       25

<PAGE>

         ANNEX I           STATEMENT OF DESIGNATIONS

         ANNEX II          JOINT ESCROW INSTRUCTIONS

         ANNEX III         OPINION OF COUNSEL

         ANNEX IV          REGISTRATION RIGHTS AGREEMENT

         ANNEX V           COMPANY DISCLOSURE MATERIALS

         ANNEX VI          FORM OF WARRANTREGISTRATION RIGHTS AGREEMENT

                  THIS REGISTRATION RIGHTS AGREEMENT, dated as of December 6,
2000 ("Agreement"), is made by and between 3DSHOPPING.COM, a California
corporation, with headquarters located at 308 Washington Boulevard, Marina del
Rey, CA 90292 (the "Company"), and each entity named on a signature page hereto
(each, an "Initial Investor") (each agreement with an Initial Investor being
deemed a separate and independent agreement between the Company and such Initial
Investor, except that each Initial Investor acknowledges and consents to the
rights granted to each other Initial Investor under such agreement).

                              W I T N E S S E T H:

                  WHEREAS, upon the terms and subject to the conditions of the
Securities Purchase Agreement, dated as of December 6, 2000, between the Initial
Investor and the Company (the "Securities Purchase Agreement"; terms not
otherwise defined herein shall have the meanings ascribed to them in the
Securities Purchase Agreement), the Company has agreed to issue and sell to the
Initial Investor shares of Series A Convertible Preferred Stock of the Company
having an aggregate stated value of $6,000,000 (the "Preferred Stock"); and

                  WHEREAS, the Company has agreed to issue the Warrants to the
Initial Investor in connection with the issuance of the Preferred Stock; and

                  WHEREAS, the Preferred Stock (which term, for purposes of this
Agreement, shall include Periodic Amount Shares, as defined below) is
convertible into shares of Common Stock (the "Conversion Shares"; which term,
for purposes of this Agreement, shall include shares of Common Stock of the
Company issuable upon conversion of the Preferred Stock issued in lieu of
accrued dividends as contemplated by the Preferred Stock) upon the terms and
subject to the conditions contained in the Certificate of Determination and the
Warrants may be exercised for the purchase of shares of Common Stock (the
"Warrant Shares") upon the terms and conditions of the Warrants; and

                  WHEREAS, to induce the Initial Investor to execute and deliver
the Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), with respect to the Conversion Shares and the Warrant Shares;

                  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 Company and the
Initial Investor hereby agree as follows:

<PAGE>

                  1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:

                  (a) "Investor" means the Initial Investor and any permitted
transferee or assignee who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 hereof and who holds Preferred Stock,
Warrants or Registrable Securities.

                  (b) "Potential Material Event" means any of the following: (i)
the possession by the Company of material information not ripe for disclosure in
a registration statement, which shall be evidenced by determinations in good
faith by the Board of Directors of the Company that disclosure of such
information in the registration statement would be detrimental to the business
and affairs of the Company; or (ii) any material engagement or activity by the
Company which would, in the good faith determination of the Board of Directors
of the Company, be adversely affected by disclosure in a registration statement
at such time, which determination shall be accompanied by a good faith
determination by the Board of Directors of the Company that the registration
statement would be materially misleading absent the inclusion of such
information.

                  (c) "Register," "Registered," and "Registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("Rule 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").

                  (d) "Registrable Securities" means the Conversion Shares and
the Warrant Shares.

                  (e) "Registration Statement" means a registration statement of
the Company under the Securities Act covering Registrable Securities on Form
S-3, if the Company is then eligible to file using such form, and if not
eligible, on Form SB-2 or other appropriate form.

                  (f) "Required Effective Date" means the relevant Initial
Required Effective Date or Increased Required Effective Date (as those terms are
defined below).

                  2.  Registration.

                  (a) Mandatory Registration.

                  (i) The Company shall prepare and file with the SEC, as soon
as possible after the Initial Closing Date but no later than thirty (30) days
after the Initial Closing Date ("Required Filing Date"), either a Registration
Statement or an amendment to an existing Registration Statement, in either event
registering for resale by the Investor a sufficient number of shares of Common
Stock for the Initial Investors to sell the Registrable Securities issued to the
Investor. Promptly upon receipt of shareholder approval to increase its
authorized capital stock and approving the transactions contemplated by the
Securities Purchase Agreement, the Company will either file an amendment to
existing Registration Statement or a new Registration Statement that would cover
in the aggregate with the first Registration Statement no less than the number

                                       3

<PAGE>

of shares equal to the sum of (A)two hundred percent (200%) of the number of
shares into which the Preferred Stock and all dividends thereon through the
third annual anniversary of their issuance would be convertible at the time of
filing of such Registration Statement (assuming for such purposes that all
shares of Initial Preferred Stock and the maximum number of Additional Preferred
Stock had been issued, had been eligible to be converted, and had been
converted, into Conversion Shares in accordance with their terms, whether or not
such issuance, accrual of dividends, eligibility or conversion had in fact
occurred as of such date or such lesser number as may be required by the SEC)
and (B) the number of shares which would be issued upon exercise of all of the
Warrants issued pursuant to the Securities Purchase Agreement at the time of
filing of the Registration Statement (assuming for such purposes that the
maximum number of Additional Preferred Stock had been issued and all Warrants
had been issued, were eligible to be exercised and had been exercised in
accordance with their terms, whether or not such issuance, eligibility or
exercise had in fact occurred as of such date or such lesser number as may be
required by the SEC). The Registration Statement shall also state that, in
accordance with Rule 416 and 457 under the Securities Act, it also covers such
indeterminate number of additional shares of Common Stock as may become issuable
upon conversion of the Preferred Stock and the exercise of the Warrants to
prevent dilution resulting from stock splits, or stock dividends. The Company
will use its reasonable best efforts to cause such Registration Statement to be
declared effective on a date ("Initial Required Effective Date") which is no
later than the earlier of (Y) five (5) days after oral or written notice by the
SEC that it may be declared effective or (Z) one hundred twenty (120) days after
the Initial Closing Date. Except as set forth on Schedule 2a attached or as may
be consented to by the Initial Investor, the Registration Statement will only
include the Registrable Securities.

                  (ii) If at any time (an "Increased Registered Shares Date"),
the number of shares of Common Stock represented by the Registrable Shares,
issued or to be issued as contemplated by the Transaction Agreements, exceeds
eighty percent (80%) of the aggregate number of shares of Common Stock then
registered, the Company shall either (X) amend the relevant Registration
Statement filed by the Company pursuant to the preceding provisions of this
Section 2, if such Registration Statement has not been declared effective by the
SEC at that time, to register, in the aggregate, at least the number of shares
("Increased Shares Amount") equal to (A) (I) the number of shares theretofore
issued on conversion of the Preferred Stock (including any dividends paid on
conversion by the issuance of Conversion Shares) plus (II) two hundred percent
(200%) of the number of shares into which the unconverted Preferred Stock and
all dividends thereon through the thirty six (36) month anniversary of the
Closing Date would be convertible at the date of such filing (assuming for such
purposes that all such shares of Preferred Stock had been issued, had been
eligible to be converted, and had been converted, into Conversion Shares in
accordance with their terms, whether or not such issuance, accrual of dividends,
eligibility or conversion had in fact occurred as of such date or such lesser
number as may be required by the SEC) and (B) the number of shares which would
be issued upon exercise of all of the Warrants (assuming for such purposes that
all Warrants had been issued, had been eligible to be exercised and had been
exercised in accordance with their terms, whether or not such issuance,
eligibility or exercise had in fact occurred as of such date or such lesser
number as may be required by the SEC), or (Y) if such Registration Statement has
been declared effective by the SEC at that time, file with the SEC an additional
Registration Statement (an "Additional Registration Statement") to register the
number of shares equal to the excess of the Increased Shares Amount over the

                                       3

<PAGE>

aggregate number of shares of Common Stock already registered. The Company will
use its reasonable best efforts to cause such Registration Statement to be
declared effective on a date (each, an "Increased Required Effective Date")
which is no later than (Q) with respect to a Registration Statement under clause
(X) of this subparagraph (ii), the Initial Required Effective Date and (R) with
respect to an Additional Registration Statement, the earlier of (I) five (5)
days after notice by the SEC that it may be declared effective or (I) sixty (60)
days after the Increased Registered Shares Date.

                  (iii) To the extent that any of the Registrable Securities are
not included in any effective Registration Statement prior to an Additional
Closing Date, the Company shall prepare and file either a Registration Statement
or an amendment to an existing Registration Statement, registering such
Registrable Securities. The provisions of this Agreement, including, but not
limited to, the provisions of Section 2(a)(i) hereof, apply separately with
respect to such Registration Statement, except that (i) references to the
Initial Closing Date shall be deemed to refer to the Additional Closing Date,
and (ii) clause (Z) of Section 2(a)(i) shall read "sixty (60) days after the
Additional Closing Date."

                  (iv) The aggregate number of shares registered for the
Investors in each Registration Statement or amendment thereto shall be allocated
among the Investors on a pro rata basis among them according to their relative
Registrable Shares included in such Registration Statement).

                  (v) For purposes of this Agreement, Registrable Securities
will cease to be Registrable Securities when they are eligible to be sold
pursuant to Rule 144(k) under the Act without limitation as to the amount of
securities to be sold or as to the manner of sale.

                  (b)      Payments by the Company.

                  (i) If the Registration Statement covering the Registrable
Securities is not filed in proper form with the SEC by the Required Filing Date,
the Company will make payment to the Initial Investor in such amounts and at
such times as shall be determined pursuant to this Section 2(b).

                  (ii) If the Registration Statement covering the Registrable
Securities is not effective by the relevant Required Effective Date or if the
Investor is restricted from making sales of Registrable Securities covered by
any previously effective Registration Statement at any time (the date such
restriction commences, a "Restricted Sale Date") after the relevant Effective
Date other than during a Permitted Suspension Period (as defined below), then
the Company will make payments to the Initial Investor in such amounts and at
such times as shall be determined pursuant to this Section 2(b).

                  (iii) The amount (the "Periodic Amount") to be paid by the
Company to the Initial Investor shall be determined as of each Computation Date
(as defined below) and such amount shall be equal to the Periodic Amount
Percentage (as defined below) of the Purchase Price for all Preferred Stock for
the period from the date following the relevant Required Filing Date or the
Required Effective Date or Restricted Sale Date, as the case may be, to the
first relevant Computation Date, and thereafter to each subsequent Computation

                                       4

<PAGE>

Date. The "Periodic Amount Percentage" means (A) one percent (1%) of the
Purchase Price of all Preferred Stock for the first 30 days after the relevant
date; (B) two percent (2%) of the Purchase Price of all Preferred Stock to each
Computation Date thereafter. Anything in the preceding provisions of this
paragraph (iii) to the contrary notwithstanding, after the Effective Date the
Purchase Price for such Preferred Stock shall be deemed to refer to the sum of
(X) the principal amount of all Preferred Stock not yet converted and (Y) the
Held Shares Value (as defined below). The "Held Shares Value" means, for shares
acquired by the Investor upon a conversion within the thirty (30) days preceding
the Restricted Sale Date, but not yet sold by the Investor, the principal amount
of the Preferred Stock converted into such Conversion Shares; provided, however,
that if the Investor effected more than one conversion during such thirty (30)
day period and sold less than all of such shares, the sold shares shall be
deemed to be derived first from the conversions in the sequence of such
conversions (that is, for example, until the number of shares from the first of
such conversions have been sold, all shares shall be deemed to be from the first
conversion; thereafter, from the second conversion until all such shares are
sold). By way of illustration and not in limitation of the foregoing, if the
Registration Statement is timely filed but is not declared effective until one
hundred ninety (190) days after the Initial Closing Date, the Periodic Amount
will aggregate five percent (5%) of the Purchase Price of the Preferred Stock
theretofore issued (1% for days 121-150, plus 2% for days 151-180, plus 2% for
days 181-195).

              (iv) Each Periodic Amount will be payable by the Company, except
as provided in the other provisions of this subparagraph (iv), in cash or other
immediately available funds to the Investor (1) on the day after the Required
Filing Date or the Required Effective Date, as the case may be, and (2) on the
earlier of (A) each thirtieth day thereafter, (B) the third business day after
the date the Registration Statement is filed or is declared effective, or (C)
the third business day after the Registration Statement has its restrictions
removed after the Effective Date, as the case may be, in each case without
requiring demand therefor by the Investor. Notwithstanding the provisions of the
first sentence of this subparagraph (iv), at the option of the Investor,
exercisable in its sole and absolute discretion by written notice to the Company
at any time before the Periodic Amount is paid, all or a portion of the Periodic
Amount shall be paid by the issuance of additional shares of Series A Preferred
Stock to the Investor ("Periodic Amount Shares") having a stated value equal to
the Periodic Amount being paid thereby.

              (v) The parties acknowledge that the damages which may be incurred
by the Investor if the Registration Statement is not filed by the Required
Filing Date or the Registration Statement has not been declared effective by a
Required Effective Date, including if the right to sell Registrable Securities
under a previously effective Registration Statement is suspended, may be
difficult to ascertain. The parties agree that the Periodic Amounts represent a
reasonable estimate on the part of the parties, as of the date of this
Agreement, of the amount of such damages.

              (vi) Notwithstanding the foregoing, the amounts payable by the
Company pursuant to this provision shall not be payable (i) to the extent any
delay in the effectiveness of the Registration Statement occurs because of an
act of, or a failure to act or to act timely by the Initial Investor or its
counsel, (ii) in the event all of the Registrable Securities may be sold
pursuant to Rule 144 or another available exemption under the Act without volume

                                       5

<PAGE>

or other restrictions or limits or (iii) with respect to a Permitted Suspension
Period or (iv) acts of God, fire, earthquakes, war, civil unrest, accident,
power fluctuations or outages, or other events beyond the control of the
Company.

                 (vii) "Computation Date" means (A) the date which is the
earlier of (1) thirty (30) days after the Required Filing Date, any relevant
Required Effective Date or a Restricted Sale Date, as the case may be, or (2)
the date after the Required Filing Date, such Required Effective Date or
Restricted Sale Date on which the Registration Statement is filed (with respect
to payments due as contemplated by Section 2(b)(i) hereof) or is declared
effective or has its restrictions removed (with respect to payments due as
contemplated by Section 2(b)(ii) hereof), as the case may be, and (B) each date
which is the earlier of (1) thirty (30) days after the previous Computation Date
or (2) the date after the previous Computation Date on which the Registration
Statement is filed (with respect to payments due as contemplated by Section
2(b)(i) hereof) or is declared effective or has its restrictions removed (with
respect to payments due as contemplated by Section 2(b)(ii) hereof), as the case
may be.

                  3. Obligations of the Company. In connection with the
registration  of the  Registrable Securities, the Company shall do each of the
following:

                  (a) Prepare promptly, and file with the SEC by the Required
Filing Date a Registration Statement with respect to not less than the number of
Registrable Securities provided in Section 2(a) above, and thereafter use its
reasonable best efforts to cause such Registration Statement relating to
Registrable Securities to become effective by the Required Effective Date and
keep the Registration Statement effective at all times during the period (the
"Registration Period") continuing until the earliest of (i) the date that is
three (3) years after the last day of the calendar month following the month in
which the relevant Effective Date occurs, (ii) the date when the Investors may
sell all Registrable Securities under Rule 144 without volume or other
restrictions or limits or (iii) the date the Investors no longer own any of the
Registrable Securities, which Registration Statement (including any amendments
or supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading;

                  (b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times during the
Registration Period, and, during the Registration Period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement;

                  (c) Permit a single firm of counsel designated by the Initial
Investors to review the Registration Statement and all amendments and
supplements thereto a reasonable period of time (but not less than three (3)
business days) prior to their filing with the SEC, and not file any document in
a form to which such counsel reasonably objects;

                                       6
<PAGE>

                  (d) Notify each Investor and such Investor's legal counsel
identified to the Company and which has requested by written notice to the
Company that it receive such notification (which, until further notice, shall be
deemed to be Krieger & Prager LLP, Attn: Samuel Krieger, Esq., which firm has
requested to receive such notification; each, an "Investor's Counsel"), and any
managing underwriters immediately (and, in the case of (i)(A) below, not less
than three (3) business days prior to such filing) and (if requested by any such
person) confirm such notice in writing no later than one (1) business day
following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement is proposed to be filed;
(B) whenever the SEC notifies the Company whether there will be a "review" of
such Registration Statement; (C) whenever the Company receives (or a
representative of the Company receives on its behalf) any oral or written
comments from the SEC in respect of a Registration Statement (copies or, in the
case of oral comments, summaries of such comments shall be promptly furnished by
the Company to the Investors); and (D) with respect to the Registration
Statement or any post-effective amendment, when the same has become effective;
(ii) of any request by the SEC or any other Federal or state governmental
authority for amendments or supplements to the Registration Statement or
Prospectus or for additional information; (iii) of the issuance by the SEC of
any stop order suspending the effectiveness of the Registration Statement
covering any or all of the Registrable Securities or the initiation of any
proceedings for that purpose; (iv) if at any time any of the representations or
warranties of the Company contained in any agreement (including any underwriting
agreement) contemplated hereby ceases to be true and correct in all material
respects; (v) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose; and (vi) of the occurrence of
any event that to the best knowledge of the Company makes any statement made in
the Registration Statement or Prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. In addition, the Company shall furnish the Investor's
Counsel with copies of all intended written responses to the comments
contemplated in clause (C) of this Section 3(d) not later than one (1) business
day in advance of the filing of such responses with the SEC so that the
Investors shall have the opportunity to comment thereon;

                  (e) Furnish to each Investor and such Investor's Counsel (i)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one (1) copy of the Registration Statement,
each preliminary prospectus and prospectus, and each amendment or supplement
thereto, and (ii) such number of copies of a prospectus, and all amendments and
supplements thereto and such other documents, as such Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Investor;

                  (f) As promptly as practicable after becoming aware thereof,
notify each Investor of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or

                                       7

<PAGE>

omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and use its best efforts promptly to prepare a supplement
or amendment to the Registration Statement or other appropriate filing with the
SEC to correct such untrue statement or omission, and deliver a number of copies
of such supplement or amendment to each Investor as such Investor may reasonably
request;

                  (g) As promptly as practicable after becoming aware thereof,
notify each Investor who holds Registrable Securities being sold (or, in the
event of an underwritten offering, the managing underwriters) of the issuance by
the SEC of a Notice of Effectiveness or any notice of effectiveness or any stop
order or other suspension of the effectiveness of the Registration Statement at
the earliest possible time;

                  (h) Notwithstanding the foregoing, if at any time or from time
to time after the date of effectiveness of the Registration Statement, the
Company notifies the Investors in writing of the existence of a Potential
Material Event, the Investors shall not offer or sell any Registrable
Securities, or engage in any other transaction involving or relating to the
Registrable Securities, from the time of the giving of notice with respect to a
Potential Material Event until such Investor receives written notice from the
Company that such Potential Material Event either has been disclosed to the
public or no longer constitutes a Potential Material Event; provided, however,
that the Company may not so suspend the right to such holders of Registrable
Securities during the periods the Registration Statement is required to be in
effect other than during a Permitted Suspension Period (and the applicable
provisions of Section 2(b) shall apply with respect to any such suspension other
than during a Permitted Suspension Period) . The term "Permitted Suspension
Period" means up to two such suspension periods during any consecutive 12-month
period, each of which suspension period shall not either (i) be for more than
ten (10) days or (ii) begin less than ten (10) days after the last day of the
preceding suspension (whether or not such last day was during or after a
Permitted Suspension Period); provided further that the Company shall, if lawful
to do so, provide the Investor with at least two (2) business days' notice of
the existence (but not the substance of) a Potential Material Event;

                  (i) Use its reasonable efforts to secure and maintain the
designation of all the Registrable Securities covered by the Registration
Statement on the American Stock Exchange within the meaning of Rule 11Aa2-1 of
the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the quotation of the Registrable Securities on The American Stock
Exchange; and, without limiting the generality of the foregoing, to arrange for
at least two market makers to register with the National Association of
Securities Dealers, Inc. as such with respect to such Registrable Securities;

                  (j) Provide a transfer agent and registrar, which may be a
single entity, for the Registrable Securities not later than the effective date
of the Registration Statement;

                  (k) Cooperate with the Investors who hold Registrable
Securities being offered to facilitate the timely preparation and delivery of
certificates for the Registrable Securities to be offered pursuant to the
Registration Statement and enable such certificates for the Registrable

                                       8

<PAGE>

Securities to be in such denominations or amounts as the case may be, as the
Investors may reasonably request, and, within five (5) business days after a
Registration Statement which includes Registrable Securities is ordered
effective by the SEC, the Company shall deliver, and shall cause legal counsel
selected by the Company to deliver, to the transfer agent for the Registrable
Securities (with copies to the Investors whose Registrable Securities are
included in such Registration Statement) an appropriate instruction and opinion
of such counsel; and

                  (l) Take all other reasonable actions necessary to expedite
and facilitate disposition by the Investor of the Registrable Securities
pursuant to the Registration Statement.

                  4. Obligations of the Investors.  In connection with the
registration of the Registrable Securities, the Investors shall have the
following obligations:

                  (a) It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request. At
least ten (10) days prior to the first anticipated filing date of the
Registration Statement, the Company shall notify each Investor of the
information the Company requires from each such Investor (the "Requested
Information") if such Investor has any Registrable Securities included in the
Registration Statement. If at least two (2) business days prior to the filing
date the Company has not received the Requested Information from an Investor (a
"Non-Responsive Investor"), then the Company may file the Registration Statement
without including Registrable Securities of such Non-Responsive Investor;

                  (b) Each Investor, by such Investor's acceptance of the
Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Registration Statement hereunder, unless such Investor has notified the Company
in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement; and

                  (c) Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section 3(f)
or 3(g), above, such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(f) or 3(g) and, if
so directed by the Company, such Investor shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in such Investor's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.

                  5. Expenses of Registration. All reasonable expenses (other
than underwriting discounts and commissions of the Investor) incurred in
connection with registrations, filings or qualifications pursuant to Section 3,
but including, without limitation, all registration, listing, and qualifications

                                       9

<PAGE>

fees, printers and accounting fees, the fees and disbursements of counsel for
the Company shall be borne by the Company. In addition, a fee for a single
counsel for the Investors (as a group and not individually) equal to $4,500 for
the review of each Registration Statement and $2,000 for each post-effective
amendment to a Registration Statement, shall be borne by the Company.

                  6. Indemnification. In the event any Registrable Securities
are included in a Registration Statement under this Agreement:

                  (a) To the extent permitted by law, the Company will indemnify
and hold harmless each Investor who holds such Registrable Securities, the
directors, if any, of such Investor, the officers, if any, of such Investor,
each person, if any, who controls any Investor within the meaning of the
Securities Act or the Exchange Act (each, an "Indemnified Person" or
"Indemnified Party"), against any losses, claims, damages, liabilities or
expenses (joint or several) incurred (collectively, "Claims") to which any of
them may become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations in the Registration Statement, or
any post-effective amendment thereof, or any prospectus included therein: (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any post-effective amendment thereof or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii)
any untrue statement or alleged untrue statement of a material fact contained in
the final prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission or alleged
omission to state therein any material fact necessary to make the statements
made therein, in light of the circumstances under which the statements therein
were made, not misleading or (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any state securities law or any
rule or regulation under the Securities Act, the Exchange Act or any state
securities law (the matters in the foregoing clauses (i) through (iii) being,
collectively, "Violations"). Subject to clause (b) of this Section 6, the
Company shall reimburse the Investors, promptly as such expenses are incurred
and are due and payable, for any legal fees or other reasonable expenses
incurred by them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a) shall not (I) apply to a Claim arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by or on behalf of any
Indemnified Person expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto,
after such prospectus was made available by the Company pursuant to Section 3(c)
hereof; (II) be available to the extent such Claim is based on a failure of the
Investor to deliver or cause to be delivered the prospectus made available by
the Company or the amendment or supplement thereto made available by the
Company; (III) be available to the extent such Claim is based on the delivery of
a prospectus by the Investor after receiving notice from the Company under
Section 3(f), (g) or (h) hereof (other than a notice regarding the effectiveness
of the Registration Statement or any amendment or supplement thereto), or (IV)
apply to amounts paid in settlement of any Claim if such settlement is effected

                                       10

<PAGE>

without the prior written consent of the Company, which consent shall not be
unreasonably withheld or delayed. Each Investor will indemnify the Company and
its officers, directors and agents (each, an "Indemnified Person" or
"Indemnified Party") against any claims arising out of or based upon a Violation
which occurs in reliance upon and in conformity with information furnished in
writing to the Company, by or on behalf of such Investor, expressly for use in
connection with the preparation of the Registration Statement or the amendment
or supplement thereto, subject to such limitations and conditions as are
applicable to the Indemnification provided by the Company to this Section 6.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Investors pursuant to Section
9.

                  (b) Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of any
action (including any governmental action), such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be. In case any such action is brought against any Indemnified Person
or Indemnified Party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof, subject to the provisions herein stated
and after notice from the indemnifying party to such Indemnified Person or
Indemnified Party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such Indemnified Person or Indemnified
Party under this Section 6 for any legal or other reasonable out-of-pocket
expenses subsequently incurred by such Indemnified Person or Indemnified Party
in connection with the defense thereof other than reasonable costs of
investigation, unless the indemnifying party shall not pursue the action to its
final conclusion. The Indemnified Person or Indemnified Party shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and reasonable out-of-pocket expenses of such
counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the Indemnified Person or Indemnified Party provided such
counsel is of the opinion that all defenses available to the Indemnified Party
can be maintained without prejudicing the rights of the indemnifying party. The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Person or Indemnified Party under this
Section 6, except to the extent that the indemnifying party is prejudiced in its
ability to defend such action. The indemnification required by this Section 6
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as such expense, loss, damage or liability is
incurred and is due and payable.

                  7. Contribution. To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which it
would otherwise be liable under Section 6 to the fullest extent permitted by
law; provided, however, that (a) no contribution shall be made under

                                       11

<PAGE>

circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 6; (b) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any seller
of Registrable Securities who was not guilty of such fraudulent
misrepresentation; and (c) except where the seller has committed fraud (other
than a fraud by reason of the information included or omitted from the
Registration Statement as to which the Company has not given notice as
contemplated under Section 3 hereof) or intentional misconduct, contribution by
any seller of Registrable Securities shall be limited in amount to the net
amount of proceeds received by such seller from the sale of such Registrable
Securities.

                  8. Reports under Securities Act and Exchange Act. With a view
to making available to Investor the benefits of Rule 144 promulgated under the
Securities Act or any other similar rule or regulation of the SEC that may at
any time permit Investor to sell securities of the Company to the public without
Registration ("Rule 144"), the Company agrees to:

                  (a) make and keep public information available, as those terms
are understood and defined in Rule 144;

                  (b) file with the SEC in a timely manner all reports and other
documents  required of the Company under the Securities Act and the Exchange
Act; and

                  (c) furnish to Investor, at Investor's request, so long as
Investor owns Registrable Securities, promptly upon request, (i) a written
statement by the Company that it has complied with the reporting requirements of
the Securities Act and the Exchange Act, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so filed
by the Company and (iii) such other information as may be reasonably requested
to permit Investor to sell such securities pursuant to Rule 144 without
Registration.

                  (d) The Company will, at the request of any Holder of
Registrable Securities, upon receipt from such Holder of a certificate
certifying (i) that such Holder has held such Registrable Securities for a
period of not less than one (1) year, (ii) that such Holder has not been an
affiliate (as defined in Rule 144) of the company for more than the ninety (90)
preceding days, and (iii) as to such other matters as may be appropriate in
accordance with such Rule, remove from the stock certificate representing such
Registrable Securities that portion of any restrictive legend which relates to
the registration provisions of the Securities Act, provided, however, counsel to
Investor may provide such instructions and opinion to the transfer agent
regarding the removal of the restrictive legend.

                  9. Assignment of the Registration Rights. The rights to have
the Company register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investors to any transferee of the Registrable
Securities (or all or any portion of any unconverted Preferred Stock or
unexercised Warrant) only if: (a) the Investor agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment, (b) the
Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (i) the name and address of such transferee or

                                       12

<PAGE>

assignee and (ii) the securities with respect to which such registration rights
are being transferred or assigned, (c) immediately following such transfer or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act and applicable state securities
laws, (d) at or before the time the Company received the written notice
contemplated by clause (b) of this sentence the transferee or assignee agrees in
writing with the Company to be bound by all of the provisions contained herein,
and (e) such transfer of Registrable Securities is completed and disclosed to
the Company prior to the initial Effective Date or involves the transfer of
Registrable Securities resulting from the conversion of Preferred Stock having a
stated value of at least $200,000. In the event of any delay in filing or
effectiveness of the Registration Statement as a result of such assignment, the
Company shall not be liable for any damages arising from such delay, or the
payments set forth in Section 2(b) hereof arising from such delay.

                  10. Amendment of Registration Rights. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investors who
hold a majority interest of the Registrable Securities (as calculated by the
stated value of the Preferred Stock without any reference to the Warrant
Shares). Any amendment or waiver effected in accordance with this Section 10
shall be binding upon each Investor and the Company.

                  11. Miscellaneous.

                  (a) A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.

                  (b) Notices required or permitted to be given hereunder shall
be given in the manner contemplated by the Securities Purchase Agreement, (i) if
to the Company or to the Initial Investor, to their respective address
contemplated by the Securities Purchase Agreement, and (ii) if to any other
Investor, at such address as such Investor shall have provided in writing to the
Company, or at such other address as each such party furnishes by notice given
in accordance with this Section 11(b).

                  (c) 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.

                  (d) 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

                                       13

<PAGE>

the maximum extent permitted by law, any objection, including any objection
based on forum non coveniens, to the bringing of any such proceeding in such
jurisdictions. To the extent determined by such court, either party hereto shall
reimburse the other party for any reasonable legal fees and disbursements
incurred by such party in enforcement of or protection of any of its rights
under this Agreement.

                   (e) 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.

                   (f) Subject to the requirements of Section 9 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.

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

                   (h) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning thereof.

                   (i) This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto by telephone line facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.

                   (j) The Company acknowledges that any failure by the Company
to perform its obligations under Section 3(a) hereof, or any delay in such
performance could result in loss to the Investors, and the Company agrees that,
in addition to any other liability the Company may have by reason of such
failure or delay, the Company shall be liable for all direct damages caused by
any such failure or delay, unless the same is the result of force majeure.
Neither party shall be liable for consequential damages.

                   (k)  This Agreement constitutes the entire agreement among
the parties hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof. This Agreement may be amended only by an instrument in writing signed by
the party to be charged with enforcement thereof.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       14

<PAGE>

                 IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.

                                 COMPANY:
                                 3DSHOPPING.COM

                                 By: ______________________________________

                                 Name:
                                 Title:

                                 INITIAL INVESTOR:

                                 __________________________________________
                                 [Print Name of Initial Investor]

                                 By: ______________________________________

                                 Name:
                                 Title:

                                       15
<PAGE>

<TABLE>
                                      Number of Shares
                                         Underlying
                   Name               Warrants or Options Description of Option or Warrant
-----------------------------------   ------------------- --------------------------------------------------------
<S>                                      <C>             <C>
                                                          Each  warrant  is  exercisable  for one  year  from the
Rick and Louise Emery                      70,108         effective date of the Company's  registration statement
                                                          at an exercise price of $1.50 per share.
                                                          Each  warrant  is  exercisable  for one  year  from the
Silhouette Investments, Ltd.               57,608         effective date of the Company's  registration statement
                                                          at an exercise price of $1.50 per share.

                                                          Includes  90,000  shares of common stock  issuable upon
The Del Mar Consulting Group, Inc.         90,000         exercise of options,  which become exercisable when 80%
                                                          of the Company's  outstanding  publicly traded warrants
                                                          are exercised.  One option to purchase 45,000 shares of
                                                          common  stock is  exercisable  at an exercise  price of
                                                          $11.00 per share and the  remaining  option to purchase
                                                          45,000  shares of common stock at an exercise  price of
                                                          $15.00  per  share.  The  options  will  expire  on the
                                                          earlier   of  April   2004  or  two  years   after  the
                                                          termination of the consulting agreement

                                                          Includes  immediately  exercisable  options to purchase
Shareholders Solutions, Inc.               175,000        an  aggregate  of 100,000  shares of common stock at an
                                                          exercise  price of $10.00  per  share  and  immediately
                                                          exercisable   options  to  purchase  75,000  shares  of
                                                          common  stock  at  an  exercise  price  of  $10.00  per
                                                          share.  All of these  options  will  expire in  October
                                                          2002.

ChannelSpace Entertainment, Inc.           833,333        Acquisition of assets pursuant to agreement.
</TABLE>

                                       16

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