Document:

EXHIBIT 4.19

                           CERTIFICATE OF DESIGNATIONS
                     OF RIGHTS, PREFERENCES, PRIVILEGES AND
                            RESTRICTIONS OF SERIES A
                         CONVERTIBLE PREFERRED STOCK OF
                                ADATOM.COM, INC.

         Adatom.com,  Inc., a corporation  organized  and existing  under and by
virtue  of  the   General   Corporation   Law  of  the  State  of   Delaware(the
"Corporation"),  in accordance  with the provisions of Section  151(g)  thereof,
DOES HEREBY CERTIFY that, by unanimous  written  consent in lieu of a meeting of
the Board of Directors of the Corporation dated June 14, 2000:

         FIRST: The following resolution was duly adopted by the Board of Direc-
tors of the Corporation:

         RESOLVED,  that pursuant to Article  Fourth of the Amended and Restated
Certificate  of  Incorporation  of  the  Corporation,  there  be and  hereby  is
authorized  and created one series of  Preferred  Stock,  hereby  designated  as
Series A  Convertible  Preferred  Stock to consist of one  thousand  one hundred
(1,100)  shares,  with a par value $0.01 per share and a stated  value of $1,000
per share (the  "Stated  Value"),  and that the  designations,  preferences  and
relative,  participating,  optional or other rights of the Series A  Convertible
Preferred Stock (the "Series A Preferred Stock") and qualifications, limitations
or restrictions thereof, shall be as follows:

                                    ARTICLE 1
                                   DEFINITIONS

         SECTION 1.1  DEFINITIONS.  The terms  defined in this Article  whenever
used in this Certificate of Designations have the following respective meanings:

                  "ADDITIONAL  CAPITAL  SHARES"  has the  meaning  set  forth in
Section 5.1(c).

                  "AFFILIATE" has the meaning ascribed to such term in Rule
12b-2 under the Securities Exchange Act of 1934, as amended.

                  "ADDITIONAL AMOUNT" means the result of the following formula:
[(0.06)(N/365)($1,000)],  where N means the number of days from,  but  excluding
the Issue Date through and  including (1) the  Conversion  Date for the Series A
Preferred Stock for which conversion is being elected, or (2) such other date of
determination, as the case may be.

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                  "BUSINESS DAY" means a day other than Saturday,  Sunday or any
day on  which  banks  located  in the  State of  California  are  authorized  or
obligated to close.

                  "CAPITAL  SHARES" means the Common Shares and any other shares
of any  other  class  or  series  of  common  stock,  whether  now or  hereafter
authorized  and however  designated,  which have the right to participate in the
distribution of earnings and assets upon dissolution, liquidation or winding-up)
of the Corporation.

                  "CLOSING  DATE" has the  meaning  set forth in the  Securities
Purchase Agreement.

                  "CLOSING  PRICE" per share of Common  Stock  means the closing
bid price as reported on the  Principal  Market for the Trading Day  immediately
preceding the Closing Date.

                  "COMMON  SHARES"  or  "COMMON  STOCK"  means  shares of common
stock, $0.01 par value, of the Corporation.

                  "COMMON STOCK ISSUED AT  CONVERSION"  when used with reference
to the  securities  issuable upon  conversion  of the Series A Preferred  Stock,
means all Common Shares now or hereafter outstanding and securities of any other
class or series into which the Series A  Preferred  Stock  hereafter  shall have
been  changed or  substituted,  whether  now or  hereafter  created  and however
designated.

                  "CONVERSION AMOUNT" has the meaning set forth in Section 5.1.

                  "CONVERSION DATE" means any day on which all or any portion of
shares of the Series A  Preferred  Stock is  converted  in  accordance  with the
provisions hereof.

                  "CONVERSION NOTICE" has the meaning set forth in Section 5.2.

                  "CONVERSION  PRICE"  means  on any date of  determination  the
applicable  price for the conversion of shares of Series A Preferred  Stock into
Common Shares on such day as set forth in Section 5.1.

                  "CONVERSION  RATIO"  on any date  means  determination  of the
applicable  percentage of the Market Price for  conversion of shares of Series A
Preferred Stock into Common Shares on such day as set forth in Section 5.1.

                  "CORPORATION" means Adatom.com, Inc., a Delaware corporation,
and any successor or resulting corporation by way of

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merger,  consolidation,  sale or  exchange  of all or  substantially  all of the
Corporation's assets, or otherwise.

                  "CURRENT MARKET PRICE" on any date of determination  means the
closing bid price of a Common  Share on such day as  reported  on the  Principal
Market.

                  "EFFECTIVE  DATE"  means the date upon which the  Registration
Statement,  as  defined  in  the  Registration  Rights  Agreement,  is  declared
effective by the SEC.

                  "HOLDER"  means  the  persons   signatory  to  the  Securities
Purchase Agreement (other than the Corporation),  any successor thereto,  or any
Person to whom the  Series A  Preferred  Stock is  subsequently  transferred  in
accordance with the provisions hereof.

                  "ISSUE  DATE" means the date upon which the shares of Series A
Preferred  Stock being sold pursuant to the  Securities  Purchase  Agreement are
issued.

                  "MARKET  DISRUPTION  EVENT"  means any event that results in a
material suspension or limitation of trading of Common Shares on the NASDAQ.

                  "MARKET PRICE" on any given date shall mean the average of the
two lowest  closing bid prices of the Common  Stock on the  Principal  Market as
reported by Bloomberg L.P. for any Valuation Period.

                  "MAXIMUM  CONVERSION  PRICE"  has the  meaning  set  forth  in
Section 5.1.

                  "OUTSTANDING"  when used with  reference  to Common  Shares or
Capital Shares  (collectively,  "Shares"),  means, on any date of determination,
all issued and  outstanding  Shares,  and includes  all such Shares  issuable in
respect of outstanding warrants, options, scrip or any certificates representing
fractional  interests in such Shares;  PROVIDED,  however,  that any such Shares
directly or indirectly owned or held by or for the account of the Corporation or
any Subsidiary of the Corporation shall not be deemed "Outstanding" for purposes
hereof.

                  "PERSON" means an individual, a corporation, a partnership, an
association,   a  limited  liability   company,   an   unincorporated   business
organization,  a trust or other entity or organization,  and any  government  or
political  subdivision  or any agency or instrumentality thereof.

                  "PRINCIPAL  MARKET" shall mean the NASDAQ National Market, the
NASDAQ  SmallCap  Market,  the  American  Stock  Exchange

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or the New York Stock Exchange,  whichever is at the time the principal  trading
exchange or market for the Common Stock.

                  "REGISTRATION    RIGHTS    AGREEMENT"   means   that   certain
Registration  Rights  Agreement  related to the Series A Preferred Stock between
the  Corporation  and the other  persons  signatory to the  Securities  Purchase
Agreement.

                  "SEC" means the United States Securities and Exchange Commis-
sion.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and  regulations  of the SEC  thereunder,  all as in effect at the
time.

                  "SECURITIES  PURCHASE AGREEMENT" means that certain Securities
Purchase  Agreement  related  to  the  Series  A  Preferred  Stock  between  the
Corporation and the other persons signatory thereto.

                  "SERIES A  PREFERRED  STOCK"  means the  Series A  Convertible
Preferred  Stock of the  Corporation or such other  convertible  Preferred Stock
exchanged therefor as provided in Section 2.1.

                  "SUBSIDIARY"  means any  entity of which  securities  or other
ownership  interests  having  ordinary  voting  power to elect a majority of the
board of directors  or other  persons  performing  similar  functions  are owned
directly or indirectly by the Corporation.

                  "TRADING  DAY" means any day on which  purchases  and sales of
securities authorized for quotation on the Principal Market are reported thereon
and on which no Market Disruption Event has occurred.

                  "VALUATION EVENT" has the meaning set forth in Section 5.1.

                  "VALUATION   PERIOD"   means  the  ten   Trading   Day  period
immediately preceding the Conversion Date.

                   All  references to "cash" or "$" herein means currency of the
United States of America.

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                                    ARTICLE 2
                                      RANK

                  The  Series A  Preferred  Stock  shall  rank (i)  prior to the
Common  Stock;  (ii)  prior  to any  class or  series  of  capital  stock of the
Corporation hereafter created other than "Pari Passu Securities"  (collectively,
with the Common Stock, "Junior Securities"); and (iii) pari passu with any class
or series of capital stock of the  Corporation  hereafter  created  specifically
ranking on parity with the Series A Preferred Stock ("Pari Passu Securities").

                                    ARTICLE 3
                                    DIVIDENDS

                  No holder of Series A  Preferred  Stock  shall be  entitled to
receive any dividends.

                                    ARTICLE 4
                             LIQUIDATION PREFERENCE

                           (a)     If the Corporation shall commence a voluntary
case under the Federal  bankruptcy laws or any other applicable Federal or State
bankruptcy,  insolvency  or similar law, or consent to the entry of an order for
relief in an involuntary case under any law or to the appointment of a receiver,
liquidator,   assignee,  custodian,  trustee,  sequestrator  (or  other  similar
official) of the Corporation or of any substantial part of its property, or make
an  assignment  for the  benefit  of its  creditors,  or  admit in  writing  its
inability to pay its debts generally as they become due, or if a decree or order
for  relief in  respect of the  Corporation  shall be entered by a court  having
jurisdiction in the premises in an involuntary case under the Federal bankruptcy
laws or any other applicable Federal or state bankruptcy,  insolvency or similar
law resulting in the appointment of a receiver, liquidator, assignee, custodian,
trustee,  sequestrator (or other similar  official) of the Corporation or of any
substantial  part of its property,  or ordering the winding up or liquidation of
its affairs,  and any such decree or order shall be unstayed and in effect for a
period of thirty (30)  consecutive  days and, on account of any such event,  the
Corporation  shall liquidate,  dissolve or wind up, or if the Corporation  shall
otherwise  liquidate,  dissolve or wind up (each such event being  considered  a
"Liquidation Event"), no distribution shall be made to the holders of any shares
of capital stock of the Corporation upon liquidation,  dissolution or winding up
unless prior thereto, the holders of shares of Series A Preferred Stock, subject
to Article 4, shall have  received  the Liquidation  Preference (as defined in
subparagraph(c)  of this Article 4) with respect to each share. If upon the
occurrence of

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a Liquidation  Event, the assets and funds available for distribution  among the
holders of the Series A  Preferred  Stock and  holders of any class or series of
capital stock ranking on a party as to preference upon liquidation  ("Pari Passu
Securities")  with the Series A Preferred  Stock shall be insufficient to permit
the payment to such holders of the preferential  amounts payable  thereon,  then
the  entire  assets  and  funds  of  the  Corporation   legally   available  for
distribution to the Series A Preferred Stock and the Pari Passu Securities shall
be  distributed  ratably  among such shares in  proportion to the ratio that the
Liquidation  Preference  payable  on each  such  share  bears  to the  aggregate
liquidation preference payable on all such shares.

                  (b) At the  option of each  Holder,  the sale,  conveyance  of
disposition of all or substantially  all of the assets of the  Corporation,  the
effectuation   by  the  Corporation  of  a  transaction  or  series  of  related
transactions  in which more than 50% of the voting power of the  Corporation  is
disposed of, or the consolidation,  merger or other business  combination of the
Corporation with or into any other Person (as defined below) or Persons when the
Corporation is not the survivor shall be deemed to be a liquidation, dissolution
or winding up of the  Corporation  pursuant  to which the  Corporation  shall be
required  to  distribute,  upon  consummation  of and as a  condition  to,  such
transaction an amount equal to the  Liquidation  Preference with respect to each
outstanding  share of Series A Preferred Stock in accordance with and subject to
the terms of this  Article 4;  PROVIDED,  that all holders of Series A Preferred
Stock shall be deemed to elect the option set forth above if at least a majority
in  interest  of such  holders  elect  such  option.  "Person"  shall  mean  any
individual,  corporation,  limited liability company, partnership,  association,
trust or other entity or organization.

                  (c) For purposes  hereof,  the  "Liquidation  Preference" with
respect to a share of the Series A Preferred Stock shall mean an amount equal to
the sum of (i) the Stated Value thereof, plus (ii) the Additional Amount.

                                    ARTICLE 5
                     CONVERSION OF SERIES A PREFERRED STOCK

         SECTION  5.1  CONVERSION;  CONVERSION  PRICE.  Subject  to  the  terms,
conditions  and  restrictions  of this  Section 5, at the option of the  Holder,
commencing on the earlier of the Effective  Date and the ninetieth day after the
Issue Date, the shares of Series A Preferred  Stock may be converted into Common
Shares  (calculated  as to each such  conversion  to the  nearest  1/100th  of a
share),  equal to the sum of the Additional  Amount and the Stated Value of such
share or shares of Series A Preferred Stock (such sum being hereinafter referred
to as the  "Conversion  Amount"),  divided  by the Market Price, after discount-
ing  the Market Price by 15% to determine the  conversion price (the "Conversion
Price");  provided that in no event shall the

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Conversion Price be greater than 115% of the Market Price on the Issue Date (the
"Maximum  Conversion  Price").  The right of each  holder to  convert  shares of
Series  A  Preferred  Stock  into  shares  of  Common  Stock is  subject  to the
limitations  set forth in Sections  5.10 and 5.11 below,  and for the purpose of
complying  with the  limitation  in Section  5.11,  shall be prorated  among the
original  purchasers  of the shares of Series A  Preferred  Stock (the  "Initial
Holders")  and their  transferees,  if any,  based  upon the number of shares of
Series A Preferred Stock purchased by the Initial Purchasers.

         Within two (2) Business Days of the  occurrence  of a Valuation  Event,
the  Corporation  shall send  notice  (the  "Valuation  Event  Notice")  of such
occurrence  to the Holder.  Notwithstanding  anything to the contrary  contained
herein, if a Valuation Event occurs during any Valuation Period, a new Valuation
Period shall begin on the Trading Day  immediately  following the  occurrence of
such Valuation Event and end on the Conversion Date; PROVIDED, further, that the
Holder may, in its  discretion,  postpone such  Conversion Date to a Trading Day
which is no more than three (3) Trading Days after the  occurrence of the latest
Valuation Event by delivering a notification  to the Corporation  within two (2)
Business  Days of the receipt of the Valuation  Event Notice.  In the event that
the Holder  deems the  Valuation  Period to be other than the three (3)  Trading
Days  immediately  prior to the  Conversion  Date, the Holder shall give written
notice of such fact to the Corporation in the related  Conversion  Notice at the
time of conversion.

         For purposes of this  Section  5.1, a  "Valuation  Event" shall mean an
event in which the  Corporation at any time during a Valuation  Period takes any
of the following actions:

         (a)      subdivides or combines its Capital Shares;

         (b)      makes any distribution of its Capital Shares;

         (c) issues any  additional  Capital  Shares  (the  "Additional  Capital
Shares"), otherwise than as provided in the foregoing Sections 5.1(a) and 5.1(b)
above,  at a price per share less, or for other  consideration  lower,  than the
Current Market Price in effect  immediately prior to such issuances,  or without
consideration, except for issuances under employee benefit plans consistent with
those presently in effect and issuances under  presently  outstanding  warrants,
options or convertible securities,  to officers,  directors  or employees of the
Company,  or otherwise under the Company's stock option plans;

         (d) issues any  warrants,  options or other rights to subscribe  for or
purchase  any  Additional  Capital  Shares  and the  price  per  share for which
Additional  Capital  Shares may at any time  thereafter be issuable  pursuant to
such  warrants,  options or other rights  shall be less than the Current  Market
Price in effect immediately prior to such issuance;

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         (e)  issues  any  securities   convertible   into  or  exchangeable  or
exercisable  for  Capital  Shares  and the  consideration  per  share  for which
Additional Capital Shares may at any time thereafter be issuable pursuant to the
terms of such convertible,  exchangeable or exercisable securities shall be less
than the Current Market Price in effect immediately prior to such issuance;

         (f) makes a distribution  of its assets or evidences of indebtedness to
the holders of its  Capital  Shares as a dividend  in  liquidation  or by way of
return of capital or other than as a dividend payable out of earnings or surplus
legally  available  for the payment of  dividends  under  applicable  law or any
distribution to such holders made in respect of the sale of all or substantially
all of the Corporation's assets (other than under the circumstances provided for
in the foregoing Sections 5.1(a) through 5.1(e)); or

         (g) takes any  action  affecting  the  number  of  Outstanding  Capital
Shares,  other than an action described in any of the foregoing  Sections 5.1(a)
through 5.1(f),  inclusive,  which in the opinion of the Corporation's  Board of
Directors,  determined in good faith,  would have a material adverse effect upon
the rights of the Holder at the time of a conversion of the Preferred Stock.

         SECTION 5.2 EXERCISE OF  CONVERSION  PRIVILEGE.  (a)  Conversion of the
Series A Preferred Stock may be exercised, in whole or in part, by the Holder by
telecopying  an executed and completed  notice of conversion in the form annexed
hereto as Annex I (the  "Conversion  Notice") to the  Corporation.  Each date on
which a Conversion  Notice is telecopied to and received by the  Corporation  in
accordance with the provisions of this Section 5.2 shall constitute a Conversion
Date.  The  Corporation  shall convert the Preferred  Stock and issue the Common
Stock Issued at Conversion  effective as of the Conversion  Date at the time set
forth in the Conversion  Notice. The Conversion Notice also shall state the name
or names  (with  addresses)  of the persons who are to become the holders of the
Common Stock Issued at Conversion in connection  with such  conversion.  If such
conversion  will  result in the  conversion  of all of such  holder's  shares of
Series A  Preferred  Stock  the Holder shall deliver the shares of Series A
Preferred  Stock to the  Corporation by express courier within 30 days following
the date on which the telecopied  Conversion  Notice has been transmitted to the
Corporation.  Upon  surrender  for  conversion,  the  Preferred  Stock  shall be
accompanied by a proper  assignment  hereof to the Corporation or be endorsed in
blank. As promptly as practicable  after the receipt of the Conversion Notice as
aforesaid,  but in any  event  not more  than  three  Business  Days  after  the
Corporation's receipt of such Conversion Notice, the Corporation shall (i) issue
the Common Stock issued at Conversion in accordance  with the provisions of this
Article 5, and (ii) cause to be mailed for delivery by overnight  courier to the
Holder a certificate or certificate(s) representing the number of

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Common  Shares to which the  Holder is  entitled  by virtue of such  conversion,
together  with cash, as provided in Section 5.3, in respect of any fraction of a
Share issuable upon such conversion.  Holder shall indemnify the Corporation for
any  damages  to third  parties  as a result of a claim by such  third  party to
ownership of the Preferred Stock converted prior to the receipt of the Preferred
Stock by the Corporation.  Such conversion shall be deemed to have been effected
at the time at which the  Conversion  Notice  indicates so long as the Preferred
Stock shall have been surrendered,  if required,  as aforesaid at such time, and
at such time the rights of the Holder of the  Preferred  Stock,  as such,  shall
cease and the Person and Persons in whose name or names the Common  Stock Issued
at  Conversion  shall be  issuable  shall be deemed to have become the holder or
holders of record of the  Common  Shares  represented  thereby.  The  Conversion
Notice  shall  constitute  a contract  between  the Holder and the  Corporation,
whereby the Holder shall be deemed to subscribe  for the number of Common Shares
which it will be entitled to receive  upon such  conversion  and, in payment and
satisfaction  of such  subscription  (and for any cash adjustment to which it is
entitled  pursuant to Section  5.4),  to surrender  the  Preferred  Stock and to
release the Corporation from all liability thereon.

         (b) If, at any time (i) the Corporation challenges,  disputes or denies
the right of the Holder hereof to effect the  conversion of the Preferred  Stock
into Common  Shares or  otherwise  dishonors  or rejects any  Conversion  Notice
delivered  in  accordance  with this Section 5.2 (other than with respect to the
calculation of the number of Common Shares covered by the Conversion  Notice) or
(ii) any third party  commences any lawsuit or  proceeding or otherwise  asserts
any claim before any court or public or  governmental  authority  which seeks to
challenge, deny, enjoin, limit, modify, delay or dispute the right of the Holder
hereof to effect the conversion of the Preferred Stock into Common Shares,  then
the Holder  shall  have the right,  by  written  notice to the  Corporation,  to
require the Corporation to promptly redeem the Series A Preferred Stock for cash
at a  redemption  price  equal to one hundred  and forty  percent  (140%) of the
Conversion  Amount of the shares  sought to be  converted by the holder that are
the subject of such injunction (the "Mandatory  Purchase Amount").  Under any of
the  circumstances set forth above, the Corporation shall be responsible for the
payment of all costs and expenses of the Holder, including reasonable legal fees
and expenses,  as and when incurred in disputing any such action or pursuing its
rights hereunder (in addition to any other rights of the Holder).

         (c) The Holder shall be entitled to exercise its  conversion  privilege
notwithstanding  the  commencement  of any case under 11 U.S.C.  ss. 101 ET SEQ.
(the  "Bankruptcy  Code").In  the event the  Corporation  is a debtor  under the
Bankruptcy  Code, the Corporation  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
holder's  conversion  privilege.  The  Corporation  hereby waives

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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  Series A  Convertible  Preferred
Stock. The Corporation  agrees,  without cost or expense the Holder,  to take or
consent to any and all action necessary to effectuate relief under 11 U.S.C. ss.
362.

         SECTION 5.3  FRACTIONAL  SHARES.  No fractional  Common Shares or scrip
representing  fractional  Common  Shares shall be issued upon  conversion of the
Series  A  Preferred  Stock.  Instead  of any  fractional  Common  Shares  which
otherwise would be issuable upon conversion of the Series A Preferred Stock, the
Corporation shall pay a cash adjustment in respect of such fraction in an amount
equal to the same fraction.

         SECTION 5.4 RECLASSIFICATION,  CONSOLIDATION, MERGER OR MANDATORY SHARE
EXCHANGE; ADJUSTMENTS FOR SPLITS, COMBINATIONS. (a) At any time while the Series
A Preferred  Stock  remains  outstanding  and any shares  thereof  have not been
converted,  in case of any  reclassification  or  change of  Outstanding  Common
Shares  issuable upon  conversion of the Series A Preferred  Stock (other than a
change in par value, or from par value to no par value per share, or from no par
value per share to par value or as a result of a subdivision  or  combination of
outstanding securities issuable upon conversion of the Series A Preferred Stock)
or in case of any  consolidation,  merger or  mandatory  share  exchange  of the
Corporation with or into another  corporation  (other than a merger or mandatory
share exchange with another corporation in which the Corporation is a continuing
corporation and which does not result in any  reclassification or change,  other
than a change in par value, or from par value to no par value per share, or from
no par  value  per  share to par  value,  or as a  result  of a  subdivision  or
combination  of  Outstanding  Common  Shares  upon  conversion  of the  Series A
Preferred Stock), or in the case of any sale or transfer to another  corporation
of the  property  of the  Corporation  as an  entirety  or  substantially  as an
entirety,   the  Corporation,   or  such  successor,   resulting  or  purchasing
corporation,  as the case  may be,  shall,  without  payment  of any  additional
consideration  therefor,  execute a new Series A Preferred  Stock providing that
the Holder  shall have the right to convert  such new Series A  Preferred  Stock
(upon terms and conditions not less favorable to the Holder than those in effect
pursuant to the Series A Preferred Stock) and to receive upon such exercise,  in
lieu of each Common Share  theretofore  issuable upon conversion of the Series A
Preferred Stock, the kind and amount of shares of stock, other securities, money
or  property  receivable  upon  such  reclassification,  change,  consolidation,
merger,  mandatory share exchange,  sale or transfer by the holder of one Common
Share issuable upon  conversion of the Series A Preferred Stock had the Series A
Preferred  Stock  been  converted  immediately  prior to such  reclassification,
change, consolidation, merger, mandatory share exchange or sale or transfer. The
provisions   of  this   Section  5.4  shall   similarly   apply  to   successive
reclassifications,  changes, consolidations,  mergers, mandatory share exchanges
and sales and transfers.

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         (b) The Conversion Price and the number of Common Shares into which the
Series A  Preferred  Stock  shall be  convertible  shall be  adjusted  for stock
splits, combinations,  or other similar events. Additionally, an adjustment will
be made in the case of an exchange of Common Shares,  consolidation or merger of
the Corporation with or into another corporation or sale of all or substantially
all of the assets of the  Corporation  in order to enable the holder of Series A
Preferred  Stock to acquire  the kind and the number of shares of stock or other
securities  or  property  receivable  in such event by a holder of the number of
Common Shares that might  otherwise  have been issued upon the conversion of the
Series A Preferred Stock. No adjustment to the Conversion Price will be made for
dividends (other than stock dividends), if any, paid on the Common Shares.

         SECTION 5.5 ADJUSTMENTS TO CONVERSION  RATIO. For so long as any shares
of the Series A  Preferred  Stock are  outstanding,  if after the Issue Date the
Corporation  issues and sells (A) Common Shares at a purchase  price on the date
of issuance  thereof that is lower than the Conversion Price at such date, other
than with respect to the exercise of options, warrants or convertible securities
outstanding  on the Issue Date or with respect to the Warrants or on  conversion
of the Series A  Preferred  (B)  warrants  or  options  with an  exercise  price
representing  a percentage of the Current Market Price with an exercise price on
the  date of  issuance  of the  warrants  or  options  that is  lower  than  the
Conversion  Price at such date,  except for employee stock option  agreements or
stock incentive agreements of the Corporation, or (C) convertible,  exchangeable
or exercisable  securities with a right to exchange at lower than the Conversion
Price on the Issue Date, as applicable,  of such  convertible,  exchangeable  or
exercisable  securities,  except,  in each case, for stock option  agreements or
stock incentive agreements,  then the Conversion Ratio shall be reduced to equal
the lowest of any such lower rates since the most recently  received  Conversion
Notice, and such Adjusted  Conversion Price shall apply to any future Conversion
Notices  received by the  Corporation.  The Adjusted  Conversion Price as it may
exist from time to time shall not apply  retroactively to any shares of Series A
Preferred  Stock  converted  prior  to  the   implementation  of  such  Adjusted
Conversion Price.

         SECTION  5.6  OPTIONAL   REDEMPTION.   At  any  time  after  the  first
anniversary of the Issue Date,  the  Corporation,  upon notice  delivered to the
Holder as provided in Section 5.7, may redeem the Series A Preferred  Stock (but
only with  respect to such  shares as to which the  Holder  has not  theretofore
furnished a Conversion  Notice in compliance  with Section 5.2), at a price (the
"Optional  Redemption  Price") equal to the greater of (i) the sum of $1,400 and
the  Additional  Amount per share of such Series A Preferred  Stock and (ii) the
Market  Price of the Common  Stock into which such  shares of Series A Preferred
Stock could be converted on the date of such notice.

                                       11

<PAGE>

         SECTION 5.7 NOTICE OF REDEMPTION.  (a)Notice of redemption  pursuant to
Section 5.6 shall be provided  by the  Corporation  to the Holder in writing (by
registered mail or overnight  courier at the Holder's last address  appearing in
the Corporation's security registry) not less than ten (10) nor more than thirty
(30) days prior to the dated stipulated by the Corporation for the redemption of
the Series A Preferred Stock (the "Redemption Date"), which notice shall specify
the Redemption Date and refer to Section 5.6 and this Section 5.7.

         (b) Upon receipt of the Redemption  Notice, the recipient thereof shall
have the option,  at its sole election,  to specify what portion of the Series A
Preferred Stock called for redemption in the Redemption Notice shall be redeemed
as provided in Section 5.6 or converted into Common Stock in the manner provided
in  Section  5.1.  If the  holder of the  Series A  Preferred  Stock  called for
redemption elects to convert any of such shares, then such conversion shall take
place on the Conversion Date specified by the holder,  but in no event after the
Redemption Date, in accordance with the terms of Section 5.1.

         SECTION 5.8 SURRENDER OF PREFERRED  STOCK.  Upon any  redemption of the
Series A  Preferred  Stock  pursuant to Sections  5.6 or 5.7,  the Holder  shall
either  deliver the Series A Preferred  Stock by hand to the  Corporation at its
principal  executive  offices or surrender the same to the  Corporation  at such
address by express courier.  Payment of the Optional  Redemption Price specified
in Section 5.6 shall be made by the Corporation to the Holder against receipt of
the Series A Preferred  Stock (as provided in this Section 5.8) by wire transfer
of immediately available funds to such account(s) as the Holder shall specify to
the Corporation.  If payment of such redemption price is not made in full by the
Mandatory Redemption Date or the Redemption Date, as the case may be, the Holder
shall again have the right to convert  the Series A Preferred  Stock as provided
in Article 5 hereof.

         SECTION 5.9  MANDATORY  CONVERSION.  On the fourth  anniversary  of the
Issue Date (the "Mandatory  Conversion Date"), the Corporation shall convert all
Series A  Preferred  Stock  outstanding,  together  with the  Additional  Amount
thereon,  at the Conversion Price or, at the option of the Corporation,  buy out
all such  holders  (including  the  Additional  Amount on the shares of Series A
Preferred  Stock then  outstanding)  in cash, at the then  effective  Conversion
Price.  Notwithstanding the previous sentence, unless the Corporation shall have
obtained the approval of its voting  stockholders to such issuance in accordance
with the rules of the NASDAQ or such other stock market as the Corporation shall
be required to comply  with,  the  Corporation  shall not issue shares of Common
Stock upon conversion of any shares of Series A Preferred Stock if such issuance
of Common Stock,  when added to the number of shares of Common Stock  previously
issued  by the  Corporation  (i)  upon  conversion  of

                                       12

<PAGE>

shares of the Series A Preferred  Stock and (ii) upon  exercise of the  Warrants
issued pursuant to the terms of the Securities Purchase  Agreement,  would equal
or exceed  twenty  percent  (20%) of the  number of shares of the  Corporation's
Common Stock which were issued and outstanding on the Closing Date (the "Maximum
Issuance  Amount").  In the event that a Mandatory  Conversion would require the
Corporation to issue shares of Common Stock equal to or in excess of the Maximum
Issuance Amount, the Corporation shall complete such Mandatory Conversion by (i)
converting  shares  of  Series A  Preferred  Stock  which  would  result  in the
Corporation  issuing  shares  of Common  Stock  equal to one less than an amount
which  would  result in the  Corporation  issuing  shares  equal to the  maximum
Issuance  Amount and (ii)  redeeming the remaining  shares of Series A Preferred
Stock in cash at a price equal to the Optional Redemption Price.

         SECTION 5.10  COMPLIANCE WITH SECTION 13(D).  Notwithstanding  anything
herein to the contrary,  except on the  Mandatory  Conversion  Date,  the Holder
shall not have the right,  and the  Company  shall not have the  obligation,  to
convert all or any portion of the Series A Preferred  Stock if and to the extent
that the issuance to the Holder of shares of Common  Stock upon such  conversion
would result in the Holder being deemed the  "beneficial  owner" of more than 5%
of the then  outstanding  shares of Common  Stock  within the meaning of Section
13(d)  of the  Securities  Exchange  Act of  1934,  as  amended,  and the  rules
promulgated  thereunder.  If any court of competent jurisdiction shall determine
that the  foregoing  limitation  is  ineffective  to prevent a Holder from being
deemed the beneficial  owner of more than 5% of the then  outstanding  shares of
Common Stock,  then the Corporation shall redeem so many of such Holder's shares
(the "Redemption  Shares") of Series A Preferred Stock as are necessary to cause
such  Holder to be deemed the  beneficial  owner of not more than 5% of the then
outstanding  shares  of Common  Stock.  Upon  such  determination  by a court of
competent  jurisdiction,  the Redemption  Shares shall  immediately  and without
further  action be deemed  returned  to the status of  authorized  but  unissued
shares of Series A Preferred  Stock and the Holder  shall have no interest in or
rights under such Redemption  Shares.  Such redemption  shall be for cash at the
Optional Redemption Price.

         SECTION 5.11 STOCKHOLDER  APPROVAL.  Unless the Corporation  shall have
obtained the approval of its voting  stockholders to such issuance in accordance
with the rules of the NASDAQ or such other stock market as the Corporation shall
be required to comply  with,  the  Corporation  shall not issue shares of Common
Stock  upon  conversion  of any  shares of  Series A  Preferred  Stock,  if such
issuance  of Common  Stock,  when added to the number of shares of Common  Stock
previously issued by the Corporation (i) upon conversion of shares of the Series
A Preferred  Stock and (ii) upon exercise of the Warrants issued pursuant to the
terms of the Securities Purchase Agreement, would equal or exceed twenty percent
(20%) of the  number of shares of the  Corporation's  Common  Stock  which  were
issued and outstanding on the Closing Date (the

                                       13

<PAGE>

"Maximum Issuance Amount"). If in the event of the circumstances provided in the
preceding  sentence,  a properly  executed  Conversion Notice is received by the
Corporation  which would require the Corporation to issue shares of Common Stock
equal to or in excess of the Maximum  Issuance  Amount,  the  Corporation  shall
honor such conversion request by (i) converting the number of shares of Series A
Preferred  Stock  stated in the  Conversion  Notice not in excess of the Maximum
Issuance  Amount and (ii)  redeeming  the number of shares of Series A Preferred
Stock  stated in the  Conversion  Notice  equal to or in  excess of the  Maximum
Issuance Amount in cash at the Optional Redemption Price of the shares of Series
A Preferred Stock to be so redeemed.

         SECTION 5.12 NOTICE OF CERTAIN EVENTS. In the case of the occurrence of
any event described in  subparagraphs  (a), (b) or (f) of Section 5.1 or Section
5.4 of this  Certificate  of  Designations,  the  Corporation  shall cause to be
mailed to the Holder of the Series A Preferred  Stock at its last  address as it
appears in the Corporation's  security registry, at least twenty (20) days prior
to the applicable  record,  effective or expiration date  hereinafter  specified
(or,  if such  twenty  (20) days  notice  is not  practicable,  at the  earliest
practicable  date prior to any such record,  effective or  expiration  date),  a
notice  stating (x) the date on which a record is to be taken for the purpose of
such  dividend,  distribution,  issuance  or  granting  of  rights,  options  or
warrants, or if a record is not to be taken, the date as of which the holders of
record  of  Series  A  Preferred   Stock  to  be  entitled  to  such   dividend,
distribution,  issuance  or granting  of rights,  options or warrants  are to be
determined  or (y)  the  date on  which  such  reclassification,  consolidation,
merger,  sale, transfer,  dissolution,  liquidation or winding-up is expected to
become effective, and the date as of which it is expected that holders of record
of Series A  Preferred  Stock will be  entitled  to  exchange  their  shares for
securities,  cash or other  property  deliverable  upon  such  reclassification,
consolidation, merger, sale transfer, dissolution, liquidation or winding-up.

                                    ARTICLE 6
                                  VOTING RIGHTS

         Holders of the Series A Preferred Stock have no voting power, except as
otherwise  provided by the Delaware  General  Corporation Law ("DGCL"),  in this
Article 6, and in Article 7 below.

         Notwithstanding the above, the Corporation shall provide each Holder of
Series  A  Preferred  Stock  with  prior  notification  of  any  meeting  of the
stockholders  (and  copies  of proxy  materials  and other  information  sent to
stockholders).  In the event of any taking by the Corporation of a record of its
stockholders  for the purpose of  determining  stockholders  who are entitled to
receive  payment of any dividend or other  distribution,  any right to

                                       14

<PAGE>

subscribe  for,  purchase  or  otherwise  acquire  (including  by way of merger,
consolidation  or  recapitalization)  any  share  of  any  class  or  any  other
securities  or property,  or to receive any other  right,  or for the purpose of
determining  stockholders  who  are  entitled  to vote in  connection  with  any
proposed  liquidation,  dissolution  or  winding  up  of  the  Corporation,  the
Corporation  shall mail a notice to each Holder, at least thirty (30) days prior
to (or such shorter  period that the  Corporation  first  becomes  aware of) the
consummation of the transaction or event,  whichever is earlier), of the date on
which  any  such  action  is to be  taken  for the  purpose  of  such  dividend,
distribution,  right or other event, and a brief statement  regarding the amount
and character of such dividend, distribution, right or other event to the extent
known at such time.

         To the extent that under the DGCL the vote of the holders of the Series
A Preferred  Stock,  voting  separately as a class or series as  applicable,  is
required to authorize a given action of the Corporation, the affirmative vote or
consent  of the  holders  of at least a  majority  of the shares of the Series A
Preferred Stock  represented at a duly held meeting at which a quorum is present
or by  written  consent of the  holders of a majority  of the shares of Series A
Preferred  Stock  (except as  otherwise  may be  required  under the DGCL) shall
constitute  the  approval of such  action by the class.  Holders of the Series A
Preferred  Stock  shall be  entitled  to notice of all  stockholder  meetings or
written  consents (and copies of proxy materials and other  information  sent to
stockholders) with respect to which they would be entitled to vote, which notice
would be provided pursuant to the Corporation's bylaws and the DGCL.

                                    ARTICLE 7
                              PROTECTIVE PROVISIONS

         So long as shares  of Series A  Preferred  Stock are  outstanding,  the
Corporation  shall not, without first obtaining the approval (by vote or written
consent,  as  provided  by the DGCL) of the  holders of at least 85% of the then
outstanding shares of Series A Preferred Stock:

         (a) alter or change the rights, preferences or privileges of the Series
A Preferred Stock;

         (b) create any new class or series of capital stock having a preference
over the Series A Preferred Stock as to distribution of assets upon liquidation,
dissolution or winding up of the Corporation  ("Senior  Securities") or alter or
change the rights,  preferences or privileges of any Senior  Securities so as to
affect adversely the Series A Preferred Stock;

         (c) increase the authorized number of shares of Series A Preferred
Stock; or

                                       15

<PAGE>

         (d) do any  act or  thing  not  authorized  or  contemplated  by  this
Certificate  of  Designations  which would  result in taxation of the holders of
shares of the Series A Preferred Stock under Section 305 of the Internal Revenue
Code of 1986, as amended (or any  comparable  provision of the Internal  Revenue
Code as hereafter from time to time amended).

         In the event holders of at least 85% of the then outstanding  shares of
Series A Preferred  Stock agree to allow the  Corporation to alter or change the
rights,  preferences  or privileges  of the shares of Series A Preferred  Stock,
pursuant to subsection (a) above, so as to affect the Series A Preferred  Stock,
then the Corporation  will deliver notice of such approved change to the holders
of the Series A Preferred  Stock that did not agree to such alteration or change
(the  "Dissenting  Holders") and  Dissenting  Holders shall have the right for a
period of thirty (30) days to convert  pursuant to the terms of this Certificate
of  Designations as they exist prior to such alteration or change or continue to
hold their shares of Series A Preferred Stock.

                                    ARTICLE 8
                                  MISCELLANEOUS

         SECTION 8.1 LOSS,  THEFT,  DESTRUCTION OF PREFERRED STOCK. Upon receipt
of evidence  satisfactory to the Corporation of the loss, theft,  destruction or
mutilation  of shares of Series A  Preferred  Stock and, in the case of any such
loss,  theft or  destruction,  upon receipt of indemnity or security  reasonably
satisfactory to the Corporation,  or, in the case of any such  mutilation,  upon
surrender and  cancellation  of the Series A Preferred  Stock,  the  Corporation
shall  make,  issue and  deliver,  in lieu of such lost,  stolen,  destroyed  or
mutilated  shares of Series A Preferred  Stock, new shares of Series A Preferred
Stock of like tenor.  The Series A Preferred  Stock shall be held and owned upon
the express condition that the provisions of this Section 8.1 are exclusive with
respect to the  replacement  of mutilated,  destroyed,  lost or stolen shares of
Series A  Preferred  Stock  and shall  preclude  any and all  other  rights  and
remedies notwithstanding any law or statute existing or hereafter enacted to the
contrary  with respect to the  replacement  of negotiable  instruments  or other
securities without the surrender thereof.

         SECTION 8.2 WHO DEEMED  ABSOLUTE  OWNER.  The  Corporation may deem the
Person in whose name the Series A Preferred  Stock shall be registered  upon the
registry books of the Corporation to be, and may treat it as, the absolute owner
of the Series A Preferred  Stock for the purpose of the conversion of the Series
A Preferred Stock and for all other purposes,  and the Corporation  shall not be
affected by any notice to the contrary.  All such  payments and such  conversion
shall be valid and effectual to satisfy and  discharge  the  liability  upon the
Series  A  Preferred  Stock  to the  extent  of the  sum or  sums so paid or the
conversion so made.

                                       16

<PAGE>

         SECTION  8.3  REGISTER.  The  Corporation  shall keep at its  principal
office a register in which the Corporation shall provide for the registration of
the Series A Preferred Stock.  Upon any transfer of the Series A Preferred Stock
in accordance with the provisions  hereof,  the Corporation  shall register such
transfer on the Series A Preferred Stock register.

         The  Corporation  may  deem the  person  in  whose  name  the  Series A
Preferred  Stock shall be registered  upon the registry books of the Corporation
to be, and may treat it as, the absolute  owner of the Series A Preferred  Stock
for the purpose of the  conversion  of the Series A Preferred  Stock and for all
other purposes,  and the Corporation  shall not be affected by any notice to the
contrary.  All such  conversions  shall be valid and  effective  to satisfy  and
discharge the liability  upon the Series A Preferred  Stock to the extent of the
conversion or conversions so made.

         SECTION 8.4 RESERVATION OF STOCK. The  Corporation,  upon the effective
date of this Certificate of Designations,  has a sufficient  number of shares of
Common  Stock  available  to reserve for  issuance  upon the  conversion  of all
outstanding shares of Series A Preferred Stock, including the Additional Amount,
at an  assumed  Conversion  Price of $1.00.  The  Corporation  will at all times
reserve and keep  available out of its authorized  Common Stock,  solely for the
purpose of issuance upon the  conversion  of Series A Preferred  Stock as herein
provided,  such number of shares of Common Stock as shall then be issuable  upon
the  conversion  of all  outstanding  shares of Series A  Preferred  Stock.  The
Corporation  covenants  that all shares of Common Stock which shall be so issued
shall be duly and validly issued, fully paid and non-assessable. The Corporation
will take all such action as may be so taken without violation of any applicable
law or regulation,  or of any  requirement of any national  securities  exchange
upon  which  the  Common  Stock may be  listed  to have a  sufficient  number of
authorized but unissued  shares of Common Stock to issue upon  conversion of the
Series A Preferred Stock. The Corporation will not take any action which results
in any  adjustment  of the  conversion  rights if the total  number of shares of
Common Stock issued and issuable after such action upon conversion of the Series
A Preferred  Stock would  exceed the total number of shares of Common Stock then
authorized by the Corporation's Certificate of Incorporation, as amended.

         SECTION 8.5 WITHHOLDING.  To the extent required by applicable law, the
Corporation  may  withhold  amounts  for or on account  of any taxes  imposed or
levied by or on behalf of any  taxing  authority  in the  United  States  having
jurisdiction  over the Corporation from any payments made pursuant to the Series
A Preferred Stock.

                                       17

<PAGE>

         SECTION 8.6 HEADINGS. The headings of the Articles and Sections of this
Certificate  of  Designations  are  inserted  for  convenience  only  and do not
constitute a part of this Certificate of Designations.

         IN WITNESS  WHEREOF,  the  Corporation  has caused this Certificate of
Designations to be signed by its duly authorized officers on this 15th day of
June, 2000.

                                        ADATOM.COM, INC.

                                        By: /s/ RICHARD S. BARTON
                                            ------------------------
                                            Name:  Richard S. Barton
                                            Title: President & CEO

                                        By: /s/ MICHAEL M. WHEELER
                                            -------------------------
                                            Name:  Michael M. Wheeler
                                            Title: Secretary

                                       18

<PAGE>

                                                                         ANNEX I

                           [FORM OF CONVERSION NOTICE]

TO:
         ----------------------------
         ----------------------------
         ----------------------------

         The undersigned owner of this Series A Convertible Preferred Stock (the
"Series A Preferred  Stock")  issued by  Adatom.com,  Inc.  (the  "Corporation")
hereby irrevocably  exercises its option to convert _______ shares of the Series
A  Preferred  Stock into  shares of the  common  stock,  $.01 par value,  of the
Corporation ("Common Stock"), in accordance with the terms of the Certificate of
Designations.  The undersigned  hereby  instructs the Corporation to convert the
number of shares of the Series A Preferred  Stock specified above into Shares of
Common Stock Issued at Conversion in accordance with the provisions of Article 5
of the  Certificate of  Designations.  The  undersigned  directs that the Common
Stock issuable and certificates therefor deliverable upon conversion, the Series
A Preferred Stock  recertificated,  if any, not being surrendered for conversion
hereby,  together  with any check in payment for  fractional  Common  Stock,  be
issued in the name of and delivered to the  undersigned  unless a different name
has been indicated below. All capitalized terms used and not defined herein have
the respective meanings assigned to them in the Certificate of Designations.

Dated:
        -------------

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

         Fill in for registration of Series A Preferred Stock:

Please print name and address (including zip code number):

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

                                       19Exhibit 4.20

                          SECURITIES PURCHASE AGREEMENT

         SECURITIES  PURCHASE  AGREEMENT  dated  as of June  22,  2000,  between
Adatom.com,  Inc.,  a Delaware  corporation  with  principal  executive  offices
located at 920  Hillview  Court,  Suite  160,  Milpitas,  California  95035 (the
"Company"), and the persons signatory hereto (the "Buyers").

                              W I T N E S S E T H:

         WHEREAS,  Buyers desires to purchase from the Company,  and the Company
desires  to issue and sell to the  Buyers,  upon the terms  and  subject  to the
conditions of this Agreement, (i) 1,100 shares of Series A Convertible Preferred
Stock, $0.01 par value (the "Preferred Stock"),  having the rights,  preferences
and  privileges  set  forth  in  the  Certificate  of  Designations  of  Rights,
Preferences,  Privileges and  Restrictions  of Series A Preferred Stock attached
hereto as ANNEX I (the "Certificate of Designations"), (ii) warrants to purchase
an aggregate of 275,000 shares (the  "Warrants")  of the Company's  common stock
$0.01 par value (the  "Common  Stock"),  137,500  Warrants in the form  attached
hereto as Annex II-A  ("Class A  Warrants")  and  137,500  Warrants  in the form
attached hereto as Annex II-B ("Class B Warrants").

         WHEREAS,  upon the terms and subject to the conditions set forth in the
Certificate of  Designations,  the Preferred Stock is convertible into shares of
Common Stock;

         WHEREAS, the Warrants,  upon the terms and subject to the conditions in
the  Warrants,  will for a period of five (5) years be  exercisable  to purchase
275,000 shares of Common Stock;

         NOW  THEREFORE,  in  consideration  of  the  premises  and  the  mutual
covenants  contained herein, the parties hereto,  intending to be legally bound,
hereby agree as follows:

         I.  PURCHASE AND SALE OF PREFERRED STOCK AND WARRANTS

         A.  TRANSACTION. Each Buyer hereby agrees to purchase from the Company,
and the Company hereby agrees to issue and sell to each Buyer,  in a transaction
exempt  from  the  registration  and  prospectus  delivery  requirements  of the
Securities Act of 1933, as amended (the "Securities  Act"), the number of shares
of Preferred Stock and Warrants set forth on the signature page hereof.

         B.  PURCHASE  PRICE;  FORM  OF  PAYMENT.  The  purchase  price  for the
Preferred  Stock and Warrants to be purchased by Buyer  hereunder shall be equal
to one thousand  dollars  ($1,000) times the number of shares of Preferred Stock
purchased (the "Purchase Price"). Each Buyer shall pay the Purchase Price on the
date hereof by wire transfer of immediately  available funds to the escrow agent
(the "Escrow  Agent")  identified in those certain Escrow  Instructions  of even
date  herewith,  a copy of which is  attached  hereto as ANNEX III (the  "Escrow
Instructions").

         Simultaneously  against  receipt  by the Escrow  Agent of the  Purchase
Price,  the  Company  shall  deliver  one or more duly  authorized,  issued  and
executed

<PAGE>

certificates (I/N/O Buyer or, if the Company otherwise has been notified,  I/N/O
Buyer's  nominee)  evidencing  the  Securities,  to  the  Escrow  Agent  or  its
designated depository. By executing and delivering this Agreement, Buyer and the
Company  each hereby  agrees to observe the terms and  conditions  of the Escrow
Instructions,  all of which are incorporated herein by reference as if fully set
forth herein.

         C.  METHOD OF PAYMENT. Payment into escrow of the Purchase Price shall
be made by wire transfer of immediately available funds to:

         Sterling National Bank & Trust Company
         500 Seventh Avenue, 10th Floor
         New York, New York 10018
         ABA# 026007773
         Snow Becker Krauss IOLA Escrow Account
         Account# 13-133423-01

Simultaneously  with the  execution of this  Agreement,  the Buyer shall deposit
with the Escrow Agent the Purchase  Price and the Company shall deposit with the
Escrow Agent the Securities.

         II. BUYER'S REPRESENTATIONS, WARRANTIES; ACCESS TO INFORMATION; INDE-
PENDENT INVESTIGATION.

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

         A.  Buyer is purchasing the Preferred Stock,  the Warrants,  the Common
Stock  issuable upon  exercise of the Warrants  (the  "Warrant  Shares") and the
shares  of  Common  Stock  issuable  upon  conversion  of the  Preferred  Stock,
including  payment of the Additional  Amounts,  as defined in the Certificate of
Designations  (the  "Conversion  Shares" and,  collectively  with the  Preferred
Stock,  the  Warrants  and the Warrant  Shares,  the  "Securities")  for its own
account,  for  investment  purposes  only  and  not  with a view  towards  or in
connection  with the public sale or  distribution  thereof in  violation  of the
Securities Act.

         B.  Buyer is (i) an "accredited investor"  within  the meaning  of Rule
501 of  Regulation  D under  the  Securities  Act,  (ii)  experienced  in making
investments of the kind contemplated by this Agreement, (iii) capable, by reason
of its business and financial experience,  of evaluating the relative merits and
risks of an  investment in the  Securities,  and (iv) able to afford the loss of
its investment in the Securities.

         C.  Buyer understands that the Securities are being offered and sold by
the Company in reliance on an exemption from the  registration  requirements  of
the Securities Act and equivalent state securities and "blue sky" laws, and that
the  Company is relying  upon the  accuracy  of, and  Buyer's  compliance  with,
Buyer's representations, warranties and covenants set forth in this Agreement to
determine the  availability  of such  exemption and the  eligibility of Buyer to
purchase the Securities;

         D.  Buyer has been furnished  with or provided  access to all materials
relating to the  business,  financial  position and results of operations of the
                                       2

<PAGE>

Company,  and all  other  materials  requested  by Buyer to enable it to make an
informed investment decision with respect to the Securities.

         E.  Buyer acknowledges that it has been furnished with,or had access to
through the EDGAR system of the Securities and Exchange  Commission (the "SEC"),
copies of the  Company's  Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1999 and all other  reports and documents  heretofore  filed by the
Company with the SEC pursuant to the Securities Act and the Securities  Exchange
Act  of  1934,  as  amended  (the  "Exchange  Act"),  since  December  31,  1999
(collectively the "SEC Filings").

         F.  Buyer acknowledges  that in making its  decision  to  purchase  the
Securities it has been given an  opportunity  to ask questions of and to receive
answers  from  the  Company's  executive  officers,   directors  and  management
personnel  concerning the terms and  conditions of the private  placement of the
Securities by the Company.

         G.  Buyer understands  that the  Securities  have not been  approved or
disapproved by the SEC or any state securities commission and that the foregoing
authorities  have not reviewed any documents or instruments  in connection  with
the offer and sale to it of the  Securities and have not confirmed or determined
the adequacy or accuracy of any such documents or instruments.

         H.  This Agreement has been duly and validly  authorized,  executed and
delivered  by Buyer and is a valid and binding  agreement  of Buyer  enforceable
against it in  accordance  with its terms,  subject  to  applicable  bankruptcy,
insolvency, fraudulent conveyance,  reorganization,  moratorium and similar laws
affecting creditors' rights and remedies generally.

         I.  Neither Buyer nor its  affiliates,  nor any person acting on its or
their behalf,  has the intention of entering,  or will enter into,  prior to the
closing, or has entered within the past 30 days, any put option,  short position
or other  similar  instrument  or position  with respect to the Common Stock and
neither Buyer nor any of its  affiliates,  nor any person acting on its or their
behalf,  will use at any time shares of Common Stock  acquired  pursuant to this
Agreement to settle any put option,  short position or other similar  instrument
or  position  that may have been  entered  into prior to the  execution  of this
Agreement.

         III.COMPANY'S REPRESENTATIONS

         The Company  represents  and warrants to Buyer that except as disclosed
on Schedule III hereto:

         A.  CAPITALIZATION.  1. The  authorized  capital  stock of the  Company
consists of 50,000,000  shares of Common Stock, of which  16,146,499  shares are
outstanding  on the date hereof and  5,000,000  shares of preferred  stock,  par
value $0.01, none of which are outstanding on the date hereof. All of the issued
and  outstanding  shares of Common Stock have been duly  authorized  and validly
issued and are fully paid and non-assessable. As of the date hereof, the Company
has  outstanding  stock  options and  warrants to purchase  6,368,952  shares of
Common Stock as set forth on Schedule III.A.  The Conversion  Shares and Warrant
Shares have been duly and validly  authorized  and  reserved for issuance by the
Company,  and when issued by the Company upon conversion of the Preferred Shares

                                       3

<PAGE>

(including  payment of the Additional  Amount),  or on exercise of the Warrants,
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.
There are no preemptive, subscription, "call" or other similar rights to acquire
the Common Stock (including the Conversion  Shares and Warrant Shares) that have
been issued or granted to any person.

         2.  The Company  does not  have  any  subsidiaries  and does not own or
control,  directly  or  indirectly,  any  interest  in  any  other  corporation,
partnership,  limited liability company,  unincorporated  business organization,
association, trust or other business entity.

         B.  ORGANIZATION; REPORTING COMPANY STATUS.

         1.  The Company is a corporation duly organized,validly existing and in
good standing under the laws of its  jurisdiction  of  organization  and is duly
qualified as a foreign  corporation in all jurisdictions in which the failure to
so qualify would have a material  adverse  effect on the  business,  properties,
prospects,  condition  (financial  or otherwise) or results of operations of the
Company or on the consummation of any of the  transactions  contemplated by this
Agreement (a "Material Adverse Effect").

         2.  The Company has  registered the Common Stock pursuant to Section 12
of the  Exchange  Act  and has  timely  filed  with  the  SEC  all  reports  and
information  required to be filed by it pursuant  to all  reporting  obligations
under  Section  13(a) or  15(d),  as  applicable,  of the  Exchange  Act for the
12-month  period  immediately  preceding  the date  hereof.  The Common Stock is
listed and traded on the NASDAQ SmallCap  Market  ("NASDAQ") and the Company has
not received any notice  regarding,  and to its knowledge there is no threat, of
the  termination or  discontinuance  of the  eligibility of the Common Stock for
such listing.

         C.  AUTHORIZED  SHARES. The Company has duly and validly authorized and
reserved  for  issuance  shares of Common  Stock  sufficient  in number  for the
conversion of the Preferred  Stock (assuming for purposes of this Section III.C.
a Conversion  Price (as defined in the Certificate of Designations) of $1.00 and
the exercise of the  Warrants.  The Company  understands  and  acknowledges  the
potentially  dilutive  effect  to  the  Common  Stock  of  the  issuance  of the
Conversion  Shares upon conversion of the Preferred Stock and the Warrant Shares
upon  exercise  of the  Warrants.  The  Company  further  acknowledges  that its
obligation to issue Conversion Shares upon conversion of the Preferred Stock and
Warrant  Shares upon exercise of the Warrants in accordance  with this Agreement
is  absolute  and  unconditional  regardless  of the  dilutive  effect that such
issuance  may  have on the  ownership  interests  of other  stockholders  of the
Company, 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 the
conversion of the Preferred Stock and the exercise of the Warrants.  The Company
agrees,  without cost or expense to the Buyer, to take or consent to any and all
action necessary to effectuate relief under 11 U.S.C. ss. 362.

         D.  AUTHORITY;  VALIDITY  AND  ENFORCEABILITY.   The  Company  has  the
requisite  corporate  power and  authority  to enter  into this  Agreement,  the
Certificate of  Designations,  the  Registration  Rights  Agreement of even date

                                       4

<PAGE>

herewith  between the Company  and Buyer,  a copy of which is annexed  hereto as
Annex IV (the  "Registration  Rights Agreement") and the Warrants and to perform
all of its obligations  hereunder and thereunder  (including the issuance,  sale
and  delivery  to  Buyer  of  the  Securities).  The  execution,   delivery  and
performance by the Company of this Agreement,  the Certificate of  Designations,
the Warrants and the Registration Rights Agreement,  and the consummation by the
Company of the transactions contemplated hereby and thereby (the issuance of the
Preferred  Stock,  the Warrants and the issuance and reservation for issuance of
the  Conversion  Shares and Warrant  Shares),  has been duly  authorized  by all
necessary  corporate action on the part of the Company and no further consent or
authorization  of the  Company  or its Board of  Directors  or  stockholders  is
required,  except to the extent  stockholder  approval is required  under NASDAQ
rules. Each of this Agreement, the Certificate of Designations, the Warrants and
the  Registration  Rights Agreement has been duly validly executed and delivered
by the Company and each instrument constitutes a valid and binding obligation of
the Company  enforceable  against it in  accordance  with its terms,  subject to
applicable  bankruptcy,   insolvency,  fraudulent  conveyance,   reorganization,
moratorium and similar laws affecting creditors,  rights and remedies generally.
The Securities have been duly and validly authorized for issuance by the Company
and,  when  executed and  delivered  by the  Company,  will be valid and binding
obligations  of the  Company  enforceable  against it in  accordance  with their
terms,  subject to applicable  bankruptcy,  insolvency,  fraudulent  conveyance,
reorganization,  moratorium  and similar laws  affecting  creditors'  rights and
remedies generally.

         E.  NON-CONTRAVENTION.  The execution  and delivery  by the  Company of
this  Agreement,   the  Certificate  of  Designations,   the  Warrants  and  the
Registration  Rights  Agreement,  the  issuance  of  the  Securities,   and  the
consummation by the Company of the other  transactions  contemplated  hereby and
thereby,  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  (or an event
which, with notice, lapse of time or both, would constitute a default) under (i)
the Amended and Restated Certificate of Incorporation or by-laws of the Company,
(ii) except for such conflict, breach or default which would not have a Material
Adverse  Effect,  any  indenture,  mortgage,  deed of trust  or  other  material
agreement  or  instrument  to which  the  Company  is a party or by which  their
respective  properties or assets are bound, or (iii) any law, rule,  regulation,
decree,  judgment  or order of any  court or public  or  governmental  authority
having  jurisdiction  over the  Company or any of the  Company's  properties  or
assets,  nor is the Company  otherwise  in  violation  of,  conflict  with or in
default under any of the foregoing,  except for such conflict, breach or default
which would not have a Material Adverse Affect.

         F.  APPROVALS.  No authorization,  approval or  consent of any court or
public or  governmental  authority is required to be obtained by the Company for
the  issuance  and  sale of the  Preferred  Stock  and  the  Warrants  (and  the
Conversion  Shares  and  Warrant  Shares)  to  Buyer  as  contemplated  by  this
Agreement,  except such  authorizations,  approvals  and consents that have been
obtained by the Company prior to the date hereof.

         G.  SEC FILINGS.None of the SEC Filings contained at the time they were
filed any untrue  statement of a material  fact or omitted to state any material
fact  required to be stated  therein or  necessary to make the  statements  made
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.  The  Company  has not  provided  to  Buyer  any  information  that,

                                       5

<PAGE>

according to applicable  law,  rule or  regulation,  should have been  disclosed
publicly  prior to the date  hereof  by the  Company,  but which has not been so
disclosed.

         H.  ABSENCE OF CERTAIN CHANGES.  Except as disclosed in the SEC Filings
or the Financial  Statements  (as defined in Section III.L.  hereto),  since the
Balance  Sheet Date (as defined in Section  III.L.),  there has not occurred any
change, event or development in the business, financial condition,  prospects or
results of  operations  of the Company,  and there has not existed any condition
having or reasonably likely to have, a Material Adverse Effect.

         I.  FULL DISCLOSURE.  There is no fact known to the Company (other than
general economic or industry  conditions known to the public generally) that has
not been fully  disclosed in writing to the Buyer that (i)  reasonably  would be
expected to have a Material  Adverse Effect or (ii) reasonably would be expected
to  materially  and  adversely  affect the ability of the Company to perform its
obligations  pursuant to this Agreement,  the Certificate of  Designations,  the
Warrants or the Registration Rights Agreement.

         J.  ABSENCE OF LITIGATION. There is no action, suit, claim, proceeding,
inquiry or investigation pending or, to the Company's knowledge,  threatened, by
or before any court or public or  governmental  authority  which,  if determined
adversely to the Company, would have a Material Adverse Effect.

         K.  ABSENCE OF EVENTS OF DEFAULT.  No "Event of Default" (as defined in
any agreement or instrument to which the Company is a party) and no event which,
with notice,  lapse of time or both, would constitute an Event of Default (as so
defined),  has occurred and is continuing,  which could have a Material  Adverse
Effect.

         L.  FINANCIAL STATEMENTS;  NO UNDISCLOSED LIABILITIES.  The Company has
delivered or made  available  to Buyer true and  complete  copies of its audited
balance  sheet as at December  31, 1999 and the related  audited  statements  of
operations  and cash flows for the fiscal year ended December 31, 1999 including
the related notes and schedules thereto as well as the same unaudited  financial
statements  as  of  and  for  the  three  month  period  ended  March  31,  2000
(collectively,  the "Financial Statements"), and all management letters, if any,
from the  Company's  independent  auditors  relating  to the dates  and  periods
covered by the Financial  Statements.  Each of the Financial Statements has been
prepared in accordance with United States General Accepted Accounting Principles
("GAAP") (subject,  in the case of the interim Financial  Statements,  to normal
year end  adjustments  and the absence of footnotes) and in conformity  with the
practices  consistently  applied  by the  Company  without  modification  of the
accounting  principles used in the preparation  thereof, and fairly presents the
financial  position,  results of operations  and cash flows of the Company as at
the dates and for the  periods  indicated.  For  purposes  hereof,  the  audited
balance sheet of the Company as at December 31, 1999 is hereinafter  referred to
as the "Balance  Sheet" and December 31, 1999 is hereinafter  referred to as the
"Balance  Sheet  Date".  The  Company  has  no   indebtedness,   obligations  or
liabilities of any kind (whether accrued, absolute, contingent or otherwise, and
whether due or to become due) that would have been  required to be reflected in,
reserved  against or otherwise  described  in the Balance  Sheet or in the notes
thereto in accordance  with GAAP,  which was not fully  reflected  in,  reserved
against or otherwise  described in the Balance Sheet or the notes thereto or was

                                       6

<PAGE>

not incurred in the ordinary  course of business  consistent  with the Company's
past practices since the Balance Sheet Date.

         M.  COMPLIANCE WITH LAWS; PERMITS.The Company is in compliance with all
laws, rules,  regulations,  codes, ordinances and statutes (collectively "Laws")
applicable  to  it  or  to  the  conduct  of  its  business,   except  for  such
non-compliance  which  would not have a Material  Adverse  Effect.  The  Company
possesses all permits,  approvals,  authorizations,  licenses,  certificates and
consents  from all public and  governmental  authorities  which are necessary to
conduct  its  business,  except for those the  absence of which would not have a
Material Adverse Effect.

         N.  RELATED  PARTY  TRANSACTIONS.  Neither  the  Company nor any of its
officers, directors or "Affiliates" (as such term is defined in Rule 12b-2 under
the  Exchange  Act)  has  borrowed  any  moneys  from  or  has  outstanding  any
indebtedness  or other similar  obligations to the Company.  Neither the Company
nor any of its officers, directors or Affiliates (i) owns any direct or indirect
interest  constituting  more  than  a one  percent  equity  (or  similar  profit
participation)  interest  in, or controls or is a  director,  officer,  partner,
member or employee of, or  consultant  to or lender to or borrower  from, or has
the right to  participate in the profits of, any person or entity which is (x) a
competitor,  supplier,  customer,  landlord,  tenant,  creditor or debtor of the
Company,  (y) engaged in a business  related to the business of the Company , or
(z) a participant in any transaction to which the Company is a party (other than
in the  ordinary  course of the  Company's  business)  or (ii) is a party to any
contract, agreement, commitment or other arrangement with the Company.

         O.  INSURANCE.  The Company  maintains  property and casualty,  general
liability  and  workers'  compensation,  insurance  with  financially  sound and
reputable insurers that is adequate in light of the Company's  historical claims
experience.  The Company has not received  notice from,  and has no knowledge of
any threat by, any insurer (that has issued any insurance policy to the Company)
that such insurer  intends to deny coverage under or cancel,  discontinue or not
renew any insurance policy presently in force.

         P.  SECURITIES LAW MATTERS.Based, in part, upon the representations and
warranties  of Buyer set forth in Section  II hereof,  the offer and sale by the
Company of the  Securities is exempt from (i) the  registration  and  prospectus
delivery requirements of the Securities Act and the rules and regulations of the
SEC thereunder and (ii) the registration and/or qualification  provisions of all
applicable  state  securities  and "blue sky" laws.  Other than  pursuant  to an
effective  registration  statement under the Securities Act, the Company has not
issued, offered or sold Preferred Stock or any shares of Common Stock (including
for this purpose any  securities of the same or a similar class as the Preferred
Stock or Common Stock,  or any securities  convertible  into or  exchangeable or
exercisable  for Preferred  Stock or Common Stock or any such other  securities)
within the six-month period next preceding the date hereof, except as previously
disclosed in writing to Buyer,  and the Company shall not directly or indirectly
take, and shall not permit any of its directors, officers or Affiliates directly
or indirectly to take, any action (including,  without limitation,  any offering
or sale to any person or entity of Preferred  Stock or shares of Common  Stock),
so as to make unavailable the exemption from Securities Act  registration  being
relied  upon by the  Company  for the offer  and sale to Buyer of the  Preferred
Stock (and the Conversion Shares) as contemplated by this Agreement.  No form of

                                       7

<PAGE>

general  solicitation  or advertising has been used or authorized by the Company
or any of its officers,  directors or Affiliates in connection with the offer or
sale of the Preferred Stock (and the Conversion  Shares) as contemplated by this
Agreement or any other agreement to which the Company is a party.

         Q.  ENVIRONMENTAL  MATTERS.  1.  The  operations  of the Company are in
material  compliance  with all  applicable  Environmental  Laws and all  permits
issued pursuant to Environmental Laws or otherwise;

         2.  to its knowledge, the Company has obtained or applied for all mate-
rial permits  required  under all  applicable  Environmental  Laws  necessary to
operate their respective businesses;

         3.  to its knowledge, the Company is not the subject of any outstanding
written  order of and the  Company  is not a party to any  agreement  with,  any
governmental  authority  or  person  respecting  (i)  Environmental  Laws,  (ii)
Remedial  Action  or (iii)  any  Release  or  threatened  Release  of  Hazardous
Materials;

         4.  the Company has not received, since the October 14, 1999, any writ-
ten communication  alleging that it may be in violation of any Environmental Law
or any  permit  issued  pursuant  to any  Environmental  Law,  or may  have  any
liability under any Environmental Law;

         5.  to its  knowledge, the Company does not have any current contingent
liability in  connection  with any Release of any Hazardous  Materials  into the
indoor or outdoor environment (whether on-site or off-site);

         6.  to the Company's  knowledge,  there  are  no  investigations of the
business,  operations,  or currently  or  previously  owned,  operated or leased
property of the Company pending or threatened which could lead to the imposition
of any liability pursuant to any Environmental Law;

         7.  to its knowledge, there is not located at any of the properties of
the Company any (A) underground storage tanks, (B) asbestos-containing  material
or (C) equipment containing polychlorinated biphenyls; and,

         8.  the  Company  has  provided to Buyer  all  environmentally  related
audits, studies, reports, analyses, and results of investigations that have been
performed with respect to the currently or previously owned,  leased or operated
properties of the Company.

         For purposes of this Section III.Q.:

         "ENVIRONMENTAL LAW" means any federal, state or local statute, regula-
tion, ordinance,  or rule of common law as now or hereafter in effect in any way
relating  to the  protection  of human  health  and  safety  or the  environment
including,   without  limitation,  the  Comprehensive   Environmental  Response,
Compensation  and  Liability  Act (42  U.S.C.ss.9601  ET  SEQ.),  the  Hazardous
Materials  Transportation  Act (49 U.S.C.  App.ss.1801  ET SEG.),  the  Resource
Conservation  and Recovery Act (42  U.S.C.ss.6901  ET SEQ.), the Clean Water Act
(33  U.S.C.ss.1251 ET SEG.),  the Clean Air Act (42  U.S.C.ss.7401 ET SEG.), the
Toxic   Substances   Control  Act  (15   U.S.C.ss.2601  ET  SEG.),  the  Federal
Insecticide,  Fungicide,  and Rodenticide Act (7 U.S.C.ss.136 ET SEQ.),  and the

                                       8

<PAGE>

Occupational   Safety  and  Health  Act  (29  U.S.C.ss.651  ET  SEG.),  and  the
regulations promulgated pursuant thereto.

         "HAZARDOUS  MATERIAL"  means any substance,  material or waste which is
regulated  by the  United  States or any state or local  governmental  authority
including, without limitation, petroleum and its by-products,  asbestos, and any
material  or  substance  which is defined  as a  "hazardous  waste,"  "hazardous
substance,"  "hazardous  material,"  "restricted  hazardous waste,"  "industrial
waste,"  "solid  waste,"  "contaminant,"  "pollutant,"  "toxic  waste"  or toxic
substance" under any provision of any Environmental Law;

         "RELEASE"  means any release,  spill,  filtration,  emission,  leaking,
pumping, injection,  deposit, disposal,  discharge,  dispersal, or leaching into
the indoor or outdoor environment,  or into or out of any property, in each case
in violation of any Environmental law.

         "REMEDIAL  ACTION" means all actions to (x) clean up, remove,  treat or
in any other way address any Hazardous Material;  (y) prevent the Release of any
Hazardous Material in violation of any Environmental law so it does not endanger
or  threaten  to  endanger  public  health or  welfare  or the indoor or outdoor
environment;   or  (z)  perform   pre-remedial  studies  and  investigations  or
post-remedial monitoring and care.

         R.  LABOR  MATTERS. The Company is not party to any labor or collective
bargaining agreement and there are no labor or collective  bargaining agreements
which  pertain to  employees  of the  Company.  No  employees of the Company are
represented  by any labor  organization  and none of such  employees  has made a
pending demand for recognition,  and there are no representation  proceedings or
petitions  seeking a  representation  proceeding  presently  pending  or, to the
Company's knowledge,  threatened to be brought or filed, with the National Labor
Relations  Board or  other  labor  relations  tribunal.  There is no  organizing
activity  involving  the  Company  or  pending  or to the  Company's  knowledge,
threatened by any labor organization or group of employees of the Company. There
are no (i) strikes, work stoppages,  slowdowns, lockouts or arbitrations or (ii)
material  grievances or other labor disputes pending or, to the knowledge of the
Company,  threatened against or involving the Company. There are no unfair labor
practice charges,  grievances or complaints  pending or, to the knowledge of the
Company, threatened by or on behalf of any employee or group of employees of the
Company.

         S.  ERISA  MATTERS.  The  Company  and  its  ERISA  Affiliates  are  in
compliance in all material  respects with all provisions of ERISA  applicable to
it.  Neither  the  Company  nor  any  ERISA  Affiliate  maintains,  contributes,
maintained  or  contributed  to a plan subject to the  provisions of Title IV of
ERISA or Section 412 of the Internal Revenue Code.

         For purposes of this Section III.S.:

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, or
any  successor  statute,   together  with  the  final  regulations   promulgated
thereunder, as the same may be amended from time to time.

         "ERISA   AFFILIATE"  means  any  trade  or  business  (whether  or  not
incorporated)  that is a member of a group of which the  Company is a member and

                                       9

<PAGE>

which is treated as a single employer under ss. 414 of the Internal Revenue Code
of 1986, as amended (the "Internal Revenue Code").

         T.  TAX MATTERS. 1. The Company has filed  all Tax Returns  which it is
required to file under applicable  Laws,  except for such Tax Returns in respect
of which the  failure to so file does not and could not have a Material  Adverse
Effect;  all such Tax Returns are true and accurate in all material respects and
have been prepared in compliance with all applicable  Laws; the Company has paid
all Taxes due and owing by it  (whether  or not such  Taxes are  required  to be
shown on a Tax Return) and have withheld and paid over to the appropriate taxing
authorities  all Taxes which they are required to withhold  from amounts paid or
owing to any employee,  stockholder,  creditor or other third parties; and since
December 31, 1999, the charges,  accruals and reserves for Taxes with respect to
the Company  (including any provisions for deferred  income taxes)  reflected on
the  books of the  Company  are  adequate  to cover any Tax  liabilities  of the
Company if its current tax year were treated as ending on the date hereof.

         2. No claim has been made by a taxing authority in a jurisdiction where
the Company does not file tax returns that such corporation is or may be subject
to taxation  by that  jurisdiction.  To the  Company's  knowledge,  there are no
foreign,  federal,  state or local tax  audits  or  administrative  or  judicial
proceedings  pending  or  being  conducted  with  respect  to  the  Company;  no
information  related to Tax matters has been requested by any foreign,  federal,
state or local taxing  authority;  and,  except as disclosed  above,  no written
notice  indicating  an intent to open an audit or other review has been received
by the Company from any foreign,  federal,  state or local taxing authority.  To
the Company's  knowledge,  there are no material unresolved  questions or claims
concerning  the  Company's  Tax  liability.  The Company (A) has not executed or
entered into a closing  agreement  pursuant to ss. 7121 of the Internal  Revenue
Code or any  predecessor  provision  thereof or any similar  provision of state,
local or  foreign  law;  or (B) has not  agreed  to or is  required  to make any
adjustments  pursuant to ss. 481 (a) of the Internal Revenue Code or any similar
provision  of state,  local or foreign  law by reason of a change in  accounting
method  initiated by the Company or has any knowledge  that the IRS has proposed
any such  adjustment  or change in  accounting  method,  or has any  application
pending  with any taxing  authority  requesting  permission  for any  changes in
accounting methods that relate to the business or operations of the Company. The
Company has not been a United States real property  holding  corporation  within
the meaning of ss.  897(c)(2) of the Internal Revenue Code during the applicable
period specified in ss. 897(c)(1)(A)(ii) of the Internal Revenue Code.

         3.  The  Company  has not  made an  election  under  ss. 341(f)  of the
Internal Revenue Code. The Company is not liable for the Taxes of another person
that is not a subsidiary of the Company under (A) Treas.  Reg. ss.  1.1502-6 (or
comparable  provisions of state,  local or foreign law),  (B) as a transferee or
successor,  (C) by contract or indemnity or (D) otherwise.  The Company is not a
party to any tax sharing  agreement.  The Company has not made any payments,  is
obligated to make payments or is a party to an agreement  that could obligate it
to make any payments that would not be deductible under ss. 28OG of the Internal
Revenue Code.

         For purposes of this Section III.T.:

         "IRS" means the United States Internal Revenue Service.

                                       10

<PAGE>

         "TAX" or "TAXES" means federal, state, county, local, foreign, or other
income, gross receipts, ad valorem, franchise,  profits, sales or use, transfer,
registration, excise, utility, environmental,  communications,  real or personal
property,   capital  stock,   license,   payroll,  wage  or  other  withholding,
employment, social security, severance, stamp, occupation, alternative or add-on
minimum,  estimated and other taxes of any kind whatsoever  (including,  without
limitation, deficiencies, penalties, additions to tax, and interest attributable
thereto) whether disputed or not.

         "TAX  RETURN"  means any  return,  information  report  or filing  with
respect to Taxes,  including  any schedules  attached  thereto and including any
amendment thereof.

         U.  PROPERTY. The Company does not own any real property. The Company
has good and  marketable  title to all personal  property  owned by it, free and
clear of all liens,  encumbrances  and defects  except such as do not materially
affect the value of such property and do not  materially  interfere with the use
made and  proposed  to be made of such  property  by the  Company;  and any real
property  and  buildings  held under  lease by the  Company are held by it under
valid,  subsisting  and  enforceable  leases  with  such  exceptions  as are not
material and do not interfere  with the use made and proposed to be made of such
property and buildings by the Company.

         V.  INTELLECTUAL  PROPERTY.  The Company owns or possesses adequate and
enforceable  rights  to  use  all  patents,  patent  applications,   trademarks,
trademark  applications,  trade  names,  service  marks,  copyrights,  copyright
applications,  licenses,  know-how (including trade secrets and other unpatented
and/or  unpatentable  proprietary  or  confidential   information,   systems  or
procedures)  and other similar rights and proprietary  knowledge  (collectively,
"Intangibles") necessary for the conduct of its business as now being conducted.
To the Company's  knowledge,  the Company is not infringing  upon or in conflict
with any right of any other  person with respect to any  Intangibles.  No claims
have been asserted by any person to the ownership or use of any  Intangibles and
the Company has no knowledge of any basis for such claim.

         W.  INTERNAL  CONTROLS AND  PROCEDURES. The  Company maintains accurate
books and records and internal  accounting  controls  which  provide  reasonable
assurance that (i) all  transactions to which the Company is a party or by which
its properties are bound are executed with management's authorization;  (ii) the
reported accountability of the Company's assets is compared with existing assets
at regular intervals;  (iii) access to the Company's assets is permitted only in
accordance with management's  authorization;  and (iv) all transactions to which
the  Company is a party or by which its  properties  are bound are  recorded  as
necessary to permit  preparation  of the financial  statements of the Company in
accordance with U.S. generally accepted accounting principles.

         X.  PAYMENTS  AND  CONTRIBUTIONS.  Neither  the  Company nor any of its
directors,  officers  or, to its  knowledge,  other  employees  has (i) used any
Company funds for any unlawful contribution, endorsement, gift, entertainment or
other unlawful expense relating to political  activity;  (ii) made any direct or
indirect unlawful payment of Company funds to any foreign or domestic government
official or employee;  (iii) violated or is in violation of any provision of the
Foreign  Corrupt  Practices  Act of 1977,  as  amended;  or (iv) made any bribe,

                                       11

<PAGE>

rebate,  payoff,  influence  payment,  kickback or other similar  payment to any
person with respect to Company matters.

         Y.  NO MISREPRESENTATION. No representation or warranty of the Company
contained  in this  Agreement,  any  schedule,  annex or  exhibit  hereto or any
agreement,  instrument or certificate furnished by the Company to Buyer pursuant
to this Agreement,  contains any untrue statement of a material fact or omits to
state a material  fact  required to be stated  therein or  necessary to make the
statements  therein,  in light of the circumstances  under which they were made,
not misleading.

         Z.  RIGHT OF FIRST REFUSAL. Except as provided in Section IV.K., the
Company has not granted any right of first refusal to any person with respect to
the issuance of the Preferred Stock, Common Stock or securities convertible into
Common Stock.

         IV. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

         A.  RESTRICTIVE LEGEND.  Buyer acknowledges and agrees that, upon issu-
ance pursuant to this Agreement,  the Securities (and any shares of Common Stock
issued upon  conversion of the Preferred Stock or upon exercise of the Warrants)
shall have endorsed thereon a legend in substantially  the following form (and a
stop-transfer  order may be placed against  transfer of the Preferred  Stock and
the Conversion Shares:

         "THESE  SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE  "SECURITIES  ACT"),  OR THE SECURITIES LAWS OF ANY STATE,
AND ARE BEING  OFFERED AND SOLD PURSUANT TO AN EXEMPTION  FROM THE  REGISTRATION
REQUIREMENTS  OF THE SECURITIES ACT AND SUCH LAWS.  THESE  SECURITIES MAY NOT BE
SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE  EXEMPTION FROM THE  REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR SUCH OTHER LAWS."

         B.  FILINGS. The Company shall make all necessary SEC and "blue sky"
filings  required to be made by the Company in  connection  with the sale of the
Securities to the Buyer as required by all applicable  Laws, and shall provide a
copy thereof to the Buyer promptly after such filing.

         C.  REPORTING STATUS. So long as the Buyer beneficially owns any of the
Securities,  the Company shall use its best efforts to file all reports required
to be filed by it with the SEC  pursuant to Section 13 or 15(d) of the  Exchange
Act.

         D.  LISTING.  So long as the Buyer beneficially owns any of the Securi-
ties,  except to the extent the Company  lists its Common  Stock on The New York
Stock  Exchange,  the Company shall use its best efforts to maintain its listing
of the Common Stock on the NASDAQ.

         E.  RESERVED  CONVERSION  SHARES.   Subject  to  Section  5.11  of  the
Certificate  of  Designations,  the Company at all times from and after the date
hereof shall have a sufficient number of shares of Common Stock duly and validly
authorized and reserved for issuance to satisfy the conversion,  in full, of the
Preferred  Stock,  including  payment of the  Additional  Amount  (assuming  for
purposes of this  Section  IV.E.,  a  Conversion  Price of $1.00),  and upon the

                                       12

<PAGE>

exercise  of the  Warrants.  In the event the  average of the Market  Prices (as
defined in the Registration  Rights  Agreement) for any ten consecutive  Trading
Days (as  defined in the  Certificate  of  Designations)  is $1.00 or less,  the
Company  shall,  within 10 days of the  occurrence of such event,  authorize and
reserve for issuance such additional shares of Common Stock sufficient in number
for the conversion,  in full, of the Preferred  Stock,  assuming for purposes of
this Section  IV.E. a  Conversion  Price of $0.50 per share,  subject to Section
5.11 of the Certificate of Designations.

         F.  REGISTRATION RIGHTS AGREEMENT. The Company shall cause the Regis-
tration  Rights  Agreement  to remain in full force and  effect and the  Company
shall comply in all material respects with the terms thereof.

         G.  NOTICE OF CERTAIN EVENTS AFFECTING  REGISTRATION.  The Company will
immediately  notify the Buyer upon the occurrence of any of the following events
in respect of a  registration  statement or related  prospectus in respect of an
offering  of  the  Securities;   (i)  receipt  of  any  request  for  additional
information  by the SEC or any other  federal  or state  governmental  authority
during the period of effectiveness of the Registration  Statement to be supplied
by  amendments  or  supplements  to  the   registration   statement  or  related
prospectus;  (ii)  the  issuance  by the  SEC  or any  other  federal  or  state
governmental  authority of any stop order  suspending the  effectiveness  of the
Registration  Statement or the initiation of any  proceedings  for that purpose;
(iii)  receipt  of  any  notification  with  respect  to the  suspension  of the
qualification or exemption from  qualification of any of the Securities for sale
in any  jurisdiction or the initiation or threatening of any proceeding for such
purpose;  (iv) the happening of any event that makes any  statement  made in the
Registration  Statement or related  prospectus or any document  incorporated  or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in the Registration  Statement,  related
prospectus or documents so that, in the case of the Registration  Statement,  it
will not contain any untrue  statement  of a material  fact or omit to state any
material fact required to be stated  therein or necessary to make the statements
therein not misleading,  and that in the case of the related prospectus, it will
not  contain  any  untrue  statement  of a  material  fact or omit to state  any
material fact required to be stated  therein or necessary to make the statements
therein,  in the light of the  circumstances  under  which they were  made,  not
misleading; and (v) the Company's reasonable determination that a post-effective
amendment to the  Registration  Statement would be appropriate;  and the Company
will  promptly make  available to Buyer any such  supplement or amendment to the
related prospectus.

         H.  CONSOLIDATION; MERGER. The Company shall not, at any time after the
date hereof,  effect any merger or consolidation of the Company with or into, or
a transfer of all or substantially  all of the assets of the Company to, another
entity (a  "Consolidation  Event")  unless the resulting  successor or acquiring
entity (if not the Company) assumes by written instrument or by operation of law
the  obligation  to deliver to Buyer such shares of stock and/or  securities  as
Buyer is entitled to receive pursuant to this Agreement.

         I.  ISSUANCE OF PREFERRED  SHARES AND WARRANT  SHARES.  The sale of the
Preferred  Stock and the issuance of the Warrant Shares  pursuant to exercise of
the Warrant and the  Conversion  Shares upon  conversion of the Preferred  Stock
shall be made in accordance with the provisions and requirements of Section 4(2)

                                       13

<PAGE>

of Regulation D and any applicable  state securities law. The Company shall make
all necessary  SEC and "blue sky" filings  required to be made by the Company in
connection  with  the  sale  of the  Securities  to  Buyer  as  required  by all
applicable  Laws,  and shall provide a copy thereof to Buyer promptly after such
filing.

         J.  LIMITATION ON FUTURE FINANCING. The Company agrees that it will not
enter  into any  financing  at a  discount  to Market  Price (as  defined in the
Certificate  of  Designations)  which  contains  dividend,   interest,  payment,
liquidation,  redemption,  exchange,  conversion  or similar  terms which may be
calculated  by  formulas  based  in  part on the  varying  market  price  of the
Company's  securities (a "Variable Rate Financing"),  other than under a private
equity line of credit  with J. E.  Matthews,  LLC for not less than  $5,000,000,
which provides for the issuance of convertible exchangeable term notes and other
than any  equity  line of  credit  with any  other  investor  for not less  than
$5,000,000 (an "Equity Line Financing"), until (i) six months from the effective
date of the  Registration  Statement,  or (ii) Buyer gives written  approval for
such additional financing; provided, however, anything to the contrary appearing
herein  notwithstanding,  neither  this Section nor any other  provision  hereof
shall be construed to restrict or prohibit the Company's  right to  restructure,
amend or modify any financing facility existing on the date hereof.

         K.  RIGHT OF FIRST  REFUSAL. Except for Variable  Rate  Financings  and
Equity Line  Financings,  the Company  shall not enter into any  financing  at a
discount  to Market  Price with  Persons  other  than the Buyers (a  "Restricted
Financing")  during  the  period  commencing  on the date  hereof and ending six
months  after the  effective  date of the  Registration  Statement,  unless  the
Company shall first have satisfied its obligations under this Section IV.K.

             (a)  If the  Company  receives  a  written  offer  from any
                  Person or group of Persons other than the Buyers,  the
                  Company shall give the Buyers a written notice of such
                  offer stating the type,  terms,  and purchase price of
                  the  securities  offered  as part  of such  Restricted
                  Financing and the other  material terms and conditions
                  of the proposed  Restricted  Financing and attaching a
                  copy of the  offer  signed by the  Person  or  Persons
                  making such offer.

             (b)  The Buyers shall have the right to purchase all or any
                  part of the securities offered as part of such Restricted
                  Financing on the same terms and conditions as are set forth
                  in the Company's written notice.  Each Buyer may exercise
                  its right to purchase such securities by giving a written
                  notice of exercise to the Company within three Trading
                  Days after such Buyer's receipt of the Company's notice.
                  Each Buyer shall have the right to purchase such securities
                  pro rata in accordance with their investment in the
                  Company as a result of their purchase of Preferred Stock
                  under this Agreement.  Each Buyer may also notify the Company
                  that it will purchase its pro rata share of any such
                  securities not purchased by the other Buyers.

                                       14

<PAGE>

             (c)  If the Buyers shall not have exercised their rights to
                  purchase  all of such  securities,  then  the  Company
                  shall  have  the  right  to sell  all  securities  not
                  subscribed  by  the  Buyers  on  the  same  terms  and
                  conditions as those set forth in the Company's notice.
                  If the Company shall not have sold all such securities
                  within  30 days  after  the  expiration  of the  three
                  Trading Day period in  paragraph  (b) above,  then the
                  Company shall not sell any such  securities  unless it
                  first offers to sell such  securities to the Buyers in
                  accordance  with  the  procedures  set  forth  in this
                  Section IV.K.

         V.  TRANSFER AGENT INSTRUCTIONS.

         A.  The Company undertakes and agrees that no instruction other than
the  instructions  referred to in this  Section V and  customary  stop  transfer
instructions  prior to the registration and sale of the Common Stock pursuant to
an effective Securities Act registration statement will be given to its transfer
agent for the Common Stock and that the Common Stock issuable upon conversion of
the Preferred Stock,  including the payment of the Additional  Amount,  and upon
exercise of the Warrants otherwise shall 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  contained in this
Section V.A. shall affect in any way Buyer's obligations and agreement to comply
with all applicable securities laws upon resale of such Common Stock. If, at any
time,  Buyer  provides  the  Company  with  an  opinion  of  counsel  reasonably
satisfactory  to the Company  that  registration  of the resale by Buyer of such
Common Stock is not required  under the  Securities  Act and that the removal of
restrictive  legends is permitted under applicable law, the Company shall permit
the transfer of such Common Stock and, promptly instruct the Company's  transfer
agent to issue one or more certificates for Common Stock without any restrictive
legends endorsed thereon.

         B.  The Company shall permit Buyer to exercise its right to convert the
Preferred Stock by telecopying an executed and completed Notice of Conversion to
the Company.  Each date on which a Notice of  Conversion  is  telecopied  to and
received by the Company in accordance with the provisions hereof shall be deemed
a Conversion  Date. The Company shall transmit the  certificates  evidencing the
shares of Common Stock issuable upon conversion of any Preferred Stock (together
with  certificates  evidencing  any  Preferred  Stock not being so converted) to
Buyer via express  courier,  by electronic  transfer or otherwise,  within three
business  days after  receipt by the  Company of the Notice of  Conversion  (the
"Delivery  Date").  Within 30 days after Buyer delivers the Notice of Conversion
to the Company,  Buyer shall  deliver to the Company the  Preferred  Stock being
converted. Buyer shall indemnify the Company for any damages to third parties as
a result of a claim by such third  party to  ownership  of the  Preferred  Stock
converted prior to receipt of the Preferred Stock by the Company.

         C.  The Company shall  permit  Buyer to exercise  its right to purchase
shares of Common Stock  pursuant to exercise of the Warrants in accordance  with
its applicable terms of the Warrants. The last date that the Company may deliver
shares of Common  Stock  issuable  upon any  exercise of Warrants is referred to
herein as the "Warrant Delivery Date."

                                       15

<PAGE>

         D.  The Company understands  that a delay in the issuance of the shares
of Common Stock issuable upon the conversion of the Preferred  Stock  (including
the payment of the  Additional  Amount) or upon exercise of the Warrants  beyond
the applicable  Delivery Date or Warrant  Delivery Date could result in economic
loss to Buyer.  As  compensation  to Buyer for such loss (and not as a penalty),
the Company  agrees to pay to Buyer for late  issuance of Common Stock  issuable
upon conversion of the Preferred Stock or exercise of the Warrants in accordance
with the following  schedule (where "No. Business Days" is defined as the number
of business  days beyond  three (3) days from the  Delivery  Date or the Warrant
Delivery Date, as applicable):

                                                        Compensation For Each
                                                        5 Shares of Preferred
                                                         Stock Not Converted
                                                     Timely or Shares of Common
                                                    Stock Issuable Upon Exercise
                                                        of Each 250 Warrants
         No. Business Days                                Not Issued Timely
         -----------------                                -----------------

                   1                                          $ 100
                   2                                          $ 200
                   3                                          $ 300
                   4                                          $ 400
                   5                                          $ 500
                   6                                          $ 600
                   7                                          $ 700
                   8                                          $ 800
                   9                                          $ 900
                   10                                         $1000
         more than 10                                         $ 200 for each
                                                              Business Day Late
                                                              beyond 10 days

The Company shall pay to Buyer the compensation  described above by the transfer
of immediately  available funds upon Buyer's demand.  Nothing herein shall limit
Buyer's  right to pursue actual  damages for the Company's  failure to issue and
deliver  Common Stock to Buyer  (which  actual  damages  shall be reduced by the
amount  of any  compensation  paid by the  Company  as  described  above in this
Section  V.D.),  and in addition to any other remedies which may be available to
Buyer,  in the event the Company fails for any reason to effect delivery of such
shares of Common Stock  within five  business  days after the relevant  Delivery
Date or the Warrant  Delivery  Date, as  applicable,  Buyer shall be entitled to
rescind the relevant  Notice of Conversion or exercise of Warrants by delivering
a notice to such  effect to the  Company  whereupon  the Company and Buyer shall
each be restored to their respective  original  positions  immediately  prior to
delivery  of such  Notice of  Conversion  on  delivery.  The Company may pay the
compensation described above in additional shares of Common Stock based upon the
Market Price (as defined in the  Certificate of  Designations)  as determined on
the date of payment.

         E.  Upon the execution and delivery  hereof,  the Company is issuing to
the transfer  agent for its Common Stock (and to any  substitute or  replacement
transfer  agent for its Common Stock upon the Company's  appointment of any such
substitute  or  replacement   transfer  agent)  instructions   relating  to  the

                                       16

<PAGE>

Securities. Such instructions shall be irrevocable by the Company from and after
the date hereof or from and after the issuance thereof to any such substitute or
replacement  transfer agent,  as the case may be, except as otherwise  expressly
provided in the Registration  Rights Agreement.  It is the intent and purpose of
such instructions,  to require the transfer agent for the Common Stock from time
to time upon transfer of Securities  by Buyer to issue  certificates  evidencing
such  Registrable  Securities  free of legends and without  consultation  by the
transfer  agent with the  Company or its  counsel  and  without the need for any
further advice or instruction or  documentation to the transfer agent by or from
the Company or its counsel or Buyer.

         VI. DELIVERY INSTRUCTIONS.

         The   Securities   shall   be   delivered   by   the   Company   on   a
"delivery-against-payment basis" at the Closing.

         VII. CLOSING DATE.

         The date and time of the issuance and sale of the Preferred Shares (the
"Closing  Date")  shall be the date  hereof or such  other as shall be  mutually
agreed upon in writing.  The issuance and sale of the Securities  shall occur on
the Closing Date at the offices of the Escrow Agent.

         VIII. CONDITIONS TO THE COMPANY'S OBLIGATIONS.

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

         A.  Delivery by Buyer of the Purchase Price;

         B.  The accuracy in all  material  respects on the Closing  Date of the
representations  and warranties of Buyer  contained in this Agreement as if made
on the Closing Date (except for  representations  and warranties which, by their
express  terms,  speak as of and relate to a specified  date, in which case such
accuracy  shall be measured as of such  specified  date) and the  performance by
Buyer in all material  respects on or before the Closing  Date of all  covenants
and  agreements  of  Buyer  required  to be  performed  by it  pursuant  to this
Agreement on or before the Closing Date;

         C.  There shall not be in effect any Law or order, ruling,  judgment or
writ of any court or public or governmental authority restraining,  enjoining or
otherwise prohibiting any of the transactions contemplated by this Agreement.

         IX. CONDITIONS TO BUYER'S OBLIGATIONS.

         The  Company  understands  that  Buyer's  obligation  to  purchase  the
Securities on the Closing Date pursuant to this Agreement is conditioned upon:

         A.  Delivery by the Company of one or more certificates (I/N/O Buyer)
evidencing the Securities to be purchased by Buyer pursuant to this Agreement;

         B.  The accuracy in all  material  respects on the Closing  Date of the
representations  and warranties of the Company contained in this Agreement as if

                                       17

<PAGE>

made on the Closing Date (except for  representations  and warranties  which, by
their express terms,  speak as of and relate to a specified  date, in which case
such accuracy shall be measured as of such specified  date) and the  performance
by the Company in all  material  respects  on or before the Closing  Date of all
covenants and agreements of the Company  required to be performed by it pursuant
to this Agreement on or before the Closing Date;

         C.  Buyer having received an opinion of counsel for the Company, dated
the Closing Date, in form,  scope and substance  reasonably  satisfactory to the
Buyer.

         D.  There not having occurred (i) any general suspension of trading in,
or  limitation  on prices  listed for, the Common Stock on the NASDAQ,  (ii) the
declaration of a banking  moratorium or any suspension of payments in respect of
banks in the United States,  (iii) the commencement of a war, armed  hostilities
or other international or national calamity directly or indirectly involving the
United States or any of its territories,  protectorates or possessions,  or (iv)
in the case of the foregoing existing at the date of this Agreement,  a material
acceleration or worsening thereof.

         E.  There not having occurred any event or development, and there being
in existence no condition, having or which reasonably and foreseeably would have
a Material Adverse Effect.

         F.  The Company shall have delivered to Buyer reimbursement  of Buyer's
out-of-pocket  costs and expenses  incurred in connection with the  transactions
contemplated by the Preferred  Stock and this Agreement  (including the fees and
disbursements  of legal  counsel,  which is being  held in escrow by the  Escrow
Agent).

         G.  There shall not be in effect any Law or order, ruling,  judgment or
writ of any court or public or governmental authority restraining,  enjoining or
otherwise prohibiting any of the transactions contemplated by this Agreement.

         H.  Delivery of Irrevocable Instructions to the Transfer Agent.

         X.  TERMINATION.

         A.  TERMINATION BY MUTUAL WRITTEN CONSENT. This Agreement may be termi-
nated and the transactions  contemplated hereby may be abandoned, for any reason
and at any time prior to the Closing Date, by the mutual written  consent of the
Company and Buyer.

         B.  TERMINATION  BY  THE  COMPANY  OR  BUYER.  This  Agreement  may  be
terminated and the transactions  contemplated  hereby may be abandoned by action
of the Company or Buyer if (i) the Closing  shall not have  occurred at or prior
to 5:00 p.m., New York City time, on June 30, 2000; PROVIDED,  HOWEVER, that the
right to terminate this  Agreement  pursuant to this Article X.B(i) shall not be
available  to any party whose  failure to fulfill any of its  obligations  under
this  Agreement  has been the cause of or resulted in the failure of the Closing
to occur  at or  before  such  time and  date or (ii)  any  court or  public  or
governmental authority shall have issued an order, ruling,  judgment or writ, or
there  shall  be  in  effect  any  Law,  restraining,   enjoining  or  otherwise

                                       18

<PAGE>

prohibiting  the  consummation of any of the  transactions  contemplated by this
Agreement.

         C.  TERMINATION  BY BUYER.  This  Agreement may be  terminated  and the
transactions  contemplated hereby may be abandoned by Buyer at any time prior to
the Closing Date, if (i) the Company shall have failed to comply in any material
respect with any of its  covenants or  agreements  contained in this  Agreement,
(ii)  there  shall  have  been a  breach  by the  Company  with  respect  to any
representation  or warranty made by it in this  Agreement,  or (iii) there shall
have  occurred  any event or  development,  or there shall be in  existence  any
condition,  having or  reasonably  and  foreseeably  likely  to have a  Material
Adverse Effect.

         D.  TERMINATION BY THE COMPANY.This Agreement may be terminated and the
transactions  contemplated  hereby may be  abandoned  by the Company at any time
prior to the  Closing  Date,  if (i) Buyer  shall  have  failed to comply in any
material  respect  with any of its  covenants  or  agreements  contained in this
Agreement  or (ii) there  shall have been a breach by Buyer with  respect to any
representation or warranty made by it in this Agreement.

         XI. SURVIVAL; INDEMNIFICATION.

         A.  The representations,  warranties  and covenants made by each of the
Company and Buyer in this Agreement, the annexes,  schedules and exhibits hereto
and in each instrument,  agreement and certificate entered into and delivered by
them pursuant to this Agreement,  shall survive the Closing and the consummation
of the transactions  contemplated  hereby. In the event of a breach or violation
of any of such representations,  warranties or covenants, the party to whom such
representations,  warranties  or covenants  have been made shall have all rights
and remedies for such breach or violation  available to it under the  provisions
of this Agreement or otherwise, whether at law or in equity, irrespective of any
investigation  made by or on  behalf  of such  party on or prior to the  Closing
Date.

         B.  The Company hereby agrees to indemnify and hold harmless the Buyer,
its Affiliates and their respective  officers,  directors,  partners and members
(collectively,  the "Buyer  Indemnitees"),  from and against any and all losses,
claims,   damages,   judgments,   penalties,    liabilities   and   deficiencies
(collectively,  "Losses"), and agrees to reimburse the Buyer Indemnitees for all
out-of-pocket  expenses  (including  the  reasonable  fees and expenses of legal
counsel),  in each case promptly as incurred by the Buyer Indemnitees and to the
extent arising out of or in connection with:

             1.     any misrepresentation, omission of fact or breach of any of
         the Company's representations or warranties contained in this Agree-
         ment, the annexes, schedules or exhibits hereto or any instrument,
         agreement or certificate entered into or delivered by the Company
         pursuant to this Agreement; or

             2.     any  failure by the  Company  to  perform  in any  material
         respect any of its covenants,  agreements,  undertakings or obligations
         set forth in this Agreement, the annexes,  schedules or exhibits hereto
         or any instrument,  agreement or certificate  entered into or delivered
         by the Company pursuant to this Agreement.

                                       19

<PAGE>

         C.  Buyer hereby agrees to indemnify and hold harmless the Company, its
Affiliates  and their  respective  officers,  directors,  partners  and  members
(collectively, the "Company Indemnitees"),  from and against any and all Losses,
and agrees to reimburse the Company  Indemnitees for all out-of-pocket  expenses
(including  the  reasonable  fees and expenses of legal  counsel),  in each case
promptly as incurred by the Company Indemnitees and to the extent arising out of
or in connection with:

             1.     any misrepresentation, omission of fact, or breach of any of
         Buyer's representations or warranties contained in this Agreement, the
         annexes, schedules or exhibits hereto or any instrument, agreement or
         certificate entered into or delivered by Buyer pursuant to this Agree-
         ment; or

             2.     any failure by Buyer to perform in any material respect any
         of its covenants, agreements,  undertakings or obligations set forth in
         this Agreement or any instrument, certificate or agreement entered into
         or delivered by Buyer pursuant to this Agreement.

         D.  Promptly   after   receipt   by  either   party   hereto   seeking
indemnification  pursuant to this Section XI (an "Indemnified Party") of written
notice of any  investigation,  claim,  proceeding  or other action in respect of
which  indemnification is being sought (each, a "Claim"),  the Indemnified Party
promptly  shall notify the party against whom  indemnification  pursuant to this
Section  XI is being  sought  (the  "Indemnifying  Party")  of the  commencement
thereof;  but the omission to so notify the Indemnifying Party shall not relieve
it from any  liability  that it  otherwise  may have to the  Indemnified  Party,
except to the extent that the  Indemnifying  Party is materially  prejudiced and
forfeits  substantive  rights  and  defenses  by  reason  of  such  failure.  In
connection with any Claim,  the  Indemnifying  Party shall be entitled to assume
the defense thereof.  Notwithstanding the assumption of the defense of any Claim
by the Indemnifying  Party, the Indemnified Party shall have the right to employ
separate  legal  counsel  (together  with  appropriate  local  counsel)  and  to
participate in the defense of such Claim, and the Indemnifying  Party shall bear
the  reasonable  fees,  out-of-pocket  costs and expenses of such separate legal
counsel to the Indemnified  Party if (and only if): (x) the  Indemnifying  Party
shall have agreed to pay such fees,  out-of-pocket  costs and expenses,  (y) the
Indemnified  Party and the  Indemnifying  Party  reasonably shall have concluded
that  representation of the Indemnified Party and the Indemnifying  Party by the
same   legal   counsel   would  not  be   appropriate   due  to  actual  or,  as
reasonably-determined by legal counsel to the Indemnified Party, (i) potentially
differing  interests  between such parties in the conduct of the defense of such
Claim, or (ii) if there may be legal defenses available to the Indemnified Party
that are in addition to or disparate  from those  available to the  Indemnifying
Party and which can not be presented by counsel to the  Indemnifying  Party,  or
(z) the Indemnifying  Party shall have failed to employ legal counsel reasonably
satisfactory to the Indemnified  Party within a reasonable  period of time after
notice of the  commencement  of such Claim.  If the  Indemnified  Party  employs
separate legal counsel in circumstances  other than as described in clauses (x),
(y) or (z) above,  the fees,  costs and expenses of such legal  counsel shall be
borne  exclusively  by the  Indemnified  Party.  Except as provided  above,  the
Indemnifying  Party  shall  not,  in  connection  with  any  Claim  in the  same
Jurisdiction, be liable for the fees and expenses of more than one firm of legal

                                       20

<PAGE>

counsel for the Indemnified Party (together with appropriate local counsel). The
Indemnifying  Party  shall  not,  without  the  prior  written  consent  of  the
Indemnified Party (which consent shall not unreasonably be withheld),  settle or
compromise  any  Claim or  consent  to the entry of any  judgment  that does not
include an unconditional  release of the Indemnified  Party from all liabilities
with respect to such Claim or judgment.

         E.  In  the  event  one  party  hereunder   should  have  a  claim  for
indemnification  that does not  involve a claim or demand  being  asserted  by a
third party,  the Indemnified  Party promptly shall deliver notice of such claim
to the  Indemnifying  Party. If the Indemnified  Party disputes the claim,  such
dispute shall be resolved by mutual  agreement of the Indemnified  Party and the
Indemnifying  Party  or by  binding  arbitration  in San  Francisco,  California
conducted in accordance with the commercial procedures and rules of the American
Arbitration Association. Judgment upon any award rendered by any arbitrators may
be entered in any court having competent jurisdiction thereof.

         XII. GOVERNING LAW: MISCELLANEOUS.

         This Agreement  shall be governed by and interpreted in accordance with
the laws of the State of  California,  without  regard to the  conflicts  of law
principles of such state.  Each of the parties  consents to the  jurisdiction of
the  federal  courts  whose  districts  encompass  any  part of the  City of San
Francisco or the state courts of the State of California  sitting in the City of
San Francisco 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.  A  facsimile  transmission  of this  signed
Agreement shall be legal and binding on all parties  hereto.  This Agreement may
be  signed  in one or more  counterparts,  each of  which  shall  be  deemed  an
original.  The headings of this  Agreement are for  convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.  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.  This Agreement may
be amended only by an  instrument  in writing  signed by the party to be charged
with   enforcement.   This  Agreement   supersedes  all  prior   agreements  and
understandings  among the  parties  hereto with  respect to the  subject  matter
hereof.

         XIII. NOTICES. Except as may be otherwise provided herein, any notice
or other  communication or delivery required or permitted  hereunder shall be in
writing and shall be delivered  personally  or sent by certified  mail,  postage
prepaid, or by a nationally  recognized  overnight courier service, and shall be
deemed given when so delivered  personally or by overnight courier service,  or,
if mailed,  three (3) days after the date of deposit in the United States mails,
as follows:

         (1)      if to the Company, to:

                  Adatom.com, Inc.
                  920 Hillview Court, Suite 160
                  Milpitas, California 95305

                                       21

<PAGE>

                  Attention: Richard Barton

                  with a copy to:

                  Henry D. Evans, Jr., Esq.
                  McCutchen, Doyle, Brown & Enersen, LLP
                  3 Embarcadero Center
                  San Francisco, California 94111-4067

         (2)      if to Buyer, to the address set forth on the signature page
         hereof.

         with a copy to:

         Snow Becker Krauss P.C.
         605 Third Avenue
         New York, New York 10158
         Attention: Mark Orenstein, Esq.

The Company or Buyer may change the foregoing  address by notice given  pursuant
to this Section XVIII.

         XIV. CONFIDENTIALITY. Each of the Company and Buyer agrees to keep
confidential  and not to  disclose  to or use for the benefit of any third party
the  terms  of this  Agreement  or any  other  information  which at any time is
communicated by the other party as being confidential  without the prior written
approval of the other party;  provided,  however,  that this provision shall not
apply to information  which,  at the time of disclosure,  is already part of the
public domain  (except by breach of this  Agreement)  and  information  which is
required to be disclosed by law (including, without limitation, pursuant to Item
10 of Rule 601 of Regulation S-K under the Securities Act and the Exchange Act).

         XV. ASSIGNMENT. This Agreement shall not be assignable by either of the
parties  hereto prior to the Closing  without the prior  written  consent of the
other party,  and any attempted  assignment  contrary to the  provisions  hereby
shall be null and void; PROVIDED,  HOWEVER, that Buyer may assign its rights and
obligations  hereunder,  in whole  or in part,  to any  affiliate  of Buyer  who
furnishes to the Company the representations and warranties set forth in Section
II hereof and otherwise agrees to be bound by the terms of this Agreement.

         XVI. BROKERS.  Each of the parties hereto represents that it has had no
dealings in connection with this  transaction with any finder or broker who will
demand payment of any fee or commission  from the other party,  except for Astor
Capital  who is the  agent of the  Company  and  whose  fee shall be paid by the
Company.  The Company on the one hand,  and Buyer,  on the other hand,  agree to
indemnify  the  other  against  and hold  the  other  harmless  from any and all
liabilities  to any person  claiming  brokerage  commissions or finder's fees on
account  of  services   purported  to  have  been  rendered  on  behalf  of  the
indemnifying  party  in  connection  with  this  Agreement  or the  transactions
contemplated hereby.

                                       22

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the date first above written.

                                   ADATOM.COM, INC.

                                   By: /s/RICHARD S. BARTON
                                       ---------------------------
                                          Name:  Richard S. Barton
                                          Title: President & CEO

                                   BUYER

                                   Name:  Alborz Select Opportunities Fund
                                   By:    Jacques Tizabi
                                          Investment Manager

                                   BUYER

                                   Name:  Yasser Hosny Moustafa

                                   BUYER

                                   Name:  Robert DelGuercio

                                   BUYER

                                   Name:   Pietro Gattini

                                       23

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