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THIS COMMON STOCK PURCHASE  WARRANT AND THE SECURITIES  REPRESENTED  HEREBY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED  IN VIOLATION OF SUCH ACT, THE RULES AND  REGULATIONS  THEREUNDER OR
THE PROVISIONS OF THIS COMMON STOCK PURCHASE WARRANT.

                    Number of Shares of Common Stock: 200,000

                                Warrant No. [__]

                          COMMON STOCK PURCHASE WARRANT

                           To Purchase Common Stock of

                        IFS International Holdings, Inc.

                  THIS IS TO CERTIFY  THAT The Shaar Fund  Ltd.,  or  registered
assigns, is entitled, at any time from the Closing Date (as hereinafter defined)
to  the  Expiration  Date  (as  hereinafter   defined),  to  purchase  from  IFS
International  Holdings,  Inc., a Delaware corporation (the "Company"),  200,000
shares of Common  Stock (as  hereinafter  defined and subject to  adjustment  as
provided herein), in whole or in part, including fractional parts, at a purchase
price per share of $5.44,  subject to adjustment as provided herein,  all on the
terms and conditions and pursuant to the provisions hereinafter set forth.

1.       Definitions

                  As  used  in  this  Common  Stock   Purchase   Warrant   (this
"Warrant"),  the following  terms shall have the  respective  meanings set forth
below:

                  "Additional  Shares of Common  Stock" shall mean all shares of
Common Stock issued by the Company  after the Closing  Date,  other than Warrant
Stock.

                  "Book  Value"  shall  mean,  in respect of any share of Common
Stock on any date herein  specified,  the consolidated book value of the Company
as of the last day of any month immediately  preceding such date, divided by the
number of Fully  Diluted  Outstanding  shares of Common Stock as  determined  in
accordance  with GAAP  (assuming  the  payment of the  exercise  prices for such
shares) by Urbach  Kahn & Werlin PC or any other firm of  independent  certified
public  accountants of recognized  national standing selected by the Company and
reasonably acceptable to the Holder.

                  "Business  Day" shall  mean any day that is not a Saturday  or
Sunday or a day on which  banks are  required or  permitted  to be closed in the
State of New York.

                  "Closing  Date"  shall  have  the  meaning  set  forth  in the
Securities Purchase Agreement.

                  "Commission" shall mean the Securities and Exchange Commission
or any other federal  agency then  administering  the  Securities  Act and other
federal securities laws.

                  "Common Stock" shall mean (except where the context  otherwise
indicates)  the Common  Stock,  par value  $0.001 per share,  of the  Company as
constituted  on the Closing  Date,  and any capital stock into which such Common
Stock may thereafter be changed, and shall also include (i) capital stock of the
Company of any other class (regardless of how denominated) issued to the holders
of shares of Common Stock upon any  reclassification  thereof  which is also not
preferred as to dividends or assets over any other class of stock of the Company
and which is not subject to  redemption  and (ii) shares of common  stock of any
successor or acquiring  corporation received by or distributed to the holders of
Common Stock of the Company in the circumstances contemplated by Section 4.4.

                  "Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other  securities which are convertible into or exchangeable,
with or without  payment of additional  consideration  in cash or property,  for
shares of Common Stock, either immediately or upon the occurrence of a specified
date or a specified event.

                  "Current Market Price" shall mean on any date of determination
the  closing  bid price of a Common  Share on such day as  reported  on  Nasdaq;
provided,  if such  security is not listed or admitted to trading on Nasdaq,  as
reported on the  principal  national  security  exchange or quotation  system on
which such  security  is quoted or listed or  admitted  to  trading,  or, if not
quoted or listed or admitted to trading on any national  securities  exchange or
quotation system, the closing bid price of such security on the over-the-counter
market  on the day in  question  as  reported  by  Bloomberg  LP,  or a  similar
generally accepted reporting service, as the case may be.

                  "Current  Warrant  Price" shall mean, in respect of a share of
Common Stock at any date herein specified,  the price at which a share of Common
Stock may be purchased  pursuant to this  Warrant on such date,  as set forth in
the first paragraph hereof.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended,  or any successor federal statute,  and the rules and regulations of
the Commission thereunder, all as the same shall be in effect from time to time.

                  "Exercise  Period"  shall  mean the period  during  which this
Warrant is exercisable pursuant to Section 2.1.

                  "Expiration Date" shall mean March 23, 2003.

                  "Fully  Diluted   Outstanding"  shall  mean,  when  used  with
reference to Common Stock,  at any date as of which the number of shares thereof
is to be determined, all shares of Common Stock Outstanding at such date and all
shares of Common Stock issuable in respect of this Warrant,  outstanding on such
date, and other options or warrants to purchase, or securities convertible into,
shares  of  Common  Stock  outstanding  on  such  date  which  would  be  deemed
outstanding in accordance  with GAAP for purposes of  determining  Book Value or
net income per share.

                  "Fundamental  Corporate  Change"  shall have the  meaning  set
forth in Section 4.4.

                  "GAAP" shall mean generally accepted accounting  principles in
the United States of America as from time to time in effect.

                  "Holder"  shall mean the  Person in whose name the  Warrant or
Warrant  Stock  set  forth  herein is  registered  on the  books of the  Company
maintained for such purpose.

                  "Market Price" per Common Share means the closing price of the
Common  Shares as  reported  on the Nasdaq  SmallCap  Market  ("Nasdaq")  on the
trading day immediately preceding the Closing Date.

                  "Other  Property"  shall have the meaning set forth in Section
4.4.

                  "Outstanding"  shall mean,  when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all issued  shares of Common  Stock,  except shares then owned or held by or for
the  account of the Company or any  subsidiary  thereof,  and shall  include all
shares issuable in respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock.

                  "Person"  shall  mean  any  individual,  sole  proprietorship,
partnership,  joint  venture,  trust,  incorporated  organization,  association,
corporation,  institution,  public  benefit  corporation,  entity or  government
(whether  federal,  state,  county,  city,  municipal or  otherwise,  including,
without limitation,  any instrumentality,  division,  agency, body or department
thereof).

                  "Registration  Rights  Agreement"  shall mean the Registration
Rights  Agreement  dated as of a date even herewith  between the Company and The
Shaar Fund Ltd., as it may be amended from time to time.

                  "Restricted  Common  Stock"  shall mean shares of Common Stock
which are, or which upon their  issuance on their exercise of this Warrant would
be,  evidenced  by a  certificate  bearing the  restrictive  legend set forth in
Section 9.1(a).

                  "Securities  Act" shall mean the  Securities  Act of 1933,  as
amended, or any successor federal statute,  and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.

                  "Securities  Purchase  Agreement"  shall  mean the  Securities
Purchase  Agreement dated as of a date even herewith between the Company and The
Shaar Fund Ltd., as it may be amended from time to time.

                  "Transfer"  shall  mean  any  disposition  of any  Warrant  or
Warrant  Stock or of any interest in either  thereof,  which would  constitute a
sale thereof within the meaning of the Securities Act.

                  "Transfer  Notice" shall have the meaning set forth in Section
9.2.

                  "Warrant  Price"  shall mean an amount equal to (i) the number
of shares of Common Stock being purchased upon exercise of this Warrant pursuant
to Section 2.1,  multiplied by (ii) the Current  Warrant Price as of the date of
such exercise.

                  "Warrant   Stock"  shall  mean  the  shares  of  Common  Stock
purchased by the holders of the Warrants upon the exercise thereof.

     "Warrants"  shall mean this Warrant and all warrants  issued upon transfer,
division or combination  of, or in substitution  for, any thereof.  All Warrants
shall at all times be identical as to terms and conditions  and date,  except as
to the  number of shares of Common  Stock for which  they may be  exercised.

2. Exercise of Warrant

2.1 Manner of Exercise

                  From and after the Closing Date and until 5:00 p.m.,  New York
time, on the Expiration Date, Holder may exercise this Warrant,  on any Business
Day,  for all or any part of the  number of shares of Common  Stock  purchasable
hereunder.

                  In order to exercise this Warrant, in whole or in part, Holder
shall  deliver to the Company at its principal  office at Rensselaer  Technology
Park, 300 Jordan Rd., Troy, NY 12180,  or at the office or agency  designated by
the Company pursuant to Section 12, (i) a written notice of Holder's election to
exercise this Warrant, which notice shall specify the number of shares of Common
Stock to be purchased,  (ii) to the extent such  exercise is not being  effected
through  a  Cashless  Exercise,  payment  of the  Warrant  Price in cash or wire
transfer  or  cashier's  check  drawn on a United  States  bank and  (iii)  this
Warrant. Such notice shall be substantially in the form of the subscription form
appearing  at the end of this  Warrant as Exhibit A, duly  executed by Holder or
its agent or  attorney.  Upon  receipt of the items  referred to in clauses (i),
(ii) and (iii) above, the Company shall, as promptly as practicable,  and in any
event within five Business Days thereafter,  execute or cause to be executed and
deliver  or cause  to be  delivered  to  Holder a  certificate  or  certificates
representing  the aggregate  number of full shares of Common Stock issuable upon
such  exercise,  together  with  cash in lieu of any  fraction  of a  share,  as
hereinafter  provided.  The stock certificate or certificates so delivered shall
be, to the extent  possible,  in such  denomination or  denominations  as Holder
shall  request in the notice and shall be  registered  in the name of Holder or,
subject to Section 9, such other name as shall be designated in the notice. This
Warrant  shall  be  deemed  to have  been  exercised  and  such  certificate  or
certificates shall be deemed to have been issued, and Holder or any other Person
so  designated  to be named  therein  shall be deemed to have become a holder of
record of such shares for all purposes, as of the date the notice, together with
the cash or check or checks and this  Warrant,  is  received  by the  Company as
described above and all taxes required to be paid by Holder, if any, pursuant to
Section 2.2 prior to the issuance of such shares have been paid. If this Warrant
shall have been exercised in part, the Company shall, at the time of delivery of
the certificate or certificates  representing Warrant Stock, deliver to Holder a
new Warrant  evidencing the rights of Holder to purchase the unpurchased  shares
of Common Stock called for by this Warrant, which new Warrant shall in all other
respects  be  identical  with  this  Warrant,  or,  at the  request  of  Holder,
appropriate  notation  may be made on this  Warrant  and the  same  returned  to
Holder.  Notwithstanding any provision herein to the contrary, the Company shall
not be required to register  shares in the name of any Person who acquired  this
Warrant (or part hereof) or any Warrant Stock  otherwise than in accordance with
this Warrant.

                  Simultaneously  with the exercise of this Warrant,  payment in
full of the  Warrant  Price shall be made,  at the option of the Holder,  (i) by
payment of the  Warrant  Price in cash or by wire  transfer or  cashier's  check
drawn on a United States bank,  (ii) through a net exercise  without  payment of
the Warrant  Price in cash by  providing  notice to the Company of the  Holder's
election  to receive a number of shares of Common  Stock in a Cashless  Exercise
equal to the  product  of (1) the  number of shares  for which  such  Warrant is
exercisable with payment in cash of the Warrant Price as of the date of exercise
and (2) the Cashless  Exercise Ratio or (iii) by any  combination of clauses (i)
and (ii). For purposes of this  Agreement,  the "Cashless  Exercise Ratio" shall
equal a fraction,  the  numerator  of which is the excess of the Current  Market
Price per share of the Common  Stock on the date of  exercise  over the  Current
Warrant Price as of the date of exercise,  and the  denominator  of which is the
Current  Market Price per share of the Common Stock on the date of exercise.  An
exercise of a Warrant in  accordance  with clause (ii) above is herein  called a
"Cashless  Exercise."  Following  a Cashless  Exercise,  this  Warrant  shall be
canceled in all respects with regard to (a) the number of shares of Common Stock
issued in  accordance  with the Cashless  Exercise plus (b) the number of shares
used as consideration for the Cashless Exercise.

2.2      Payment of Taxes and Charges

                  All shares of Common Stock  issuable upon the exercise of this
Warrant  pursuant to the terms  hereof shall be validly  issued,  fully paid and
nonassessable,  freely tradable and without any preemptive  rights.  The Company
shall pay all expenses in connection with, and all taxes and other  governmental
charges that may be imposed  with respect to, the issuance or delivery  thereof,
unless  such tax or charge is  imposed  by law upon  Holder,  in which case such
taxes or charges  shall be paid by Holder.  The Company  shall not be  required,
however,  to pay any tax or other charge imposed in connection with any transfer
involved in the issuance of any  certificate for shares of Common Stock issuable
upon exercise of this Warrant in any name other than that of Holder, and in such
case the Company shall not be required to issue or deliver any stock certificate
until such tax or other charge has been paid or it has been  established  to the
satisfaction of the Company that no such tax or other charge is due.

2.3      Fractional Shares

                  The Company shall not be required to issue a fractional  share
of Common  Stock upon  exercise of any  Warrant.  As to any  fraction of a share
which Holder would  otherwise be entitled to purchase  upon such  exercise,  the
Company  shall pay a cash  adjustment  in respect of such final  fraction  in an
amount equal to the same  fraction of the Market Price per share of Common Stock
as of the Closing Date. 2.4 Continued Validity

                  A holder of shares of Common Stock issued upon the exercise of
this Warrant,  in whole or in part (other than a holder who acquires such shares
after the same have been  publicly  sold  pursuant to a  Registration  Statement
under the Securities Act or sold pursuant to Rule 144 thereunder) shall continue
to be entitled  with respect to such shares to all rights to which it would have
been entitled as Holder under Sections 9, 10 and 14 of this Warrant. The Company
will,  at the time of exercise of this  Warrant,  in whole or in part,  upon the
request of Holder,  acknowledge in writing,  in form reasonably  satisfactory to
Holder,  its continuing  obligation to afford Holder all such rights;  provided,
however,  that if Holder shall fail to make any such request, such failure shall
not affect the continuing obligation of the Company to afford to Holder all such
rights.

3.       Transfer, Division and Combination

3.1      Transfer

                  Subject to compliance with Section 9, transfer of this Warrant
and all rights hereunder,  in whole or in part, shall be registered on the books
of the Company to be maintained for such purpose, upon surrender of this Warrant
at the principal  office of the Company referred to in Section 2.1 or the office
or agency  designated  by the Company  pursuant to Section 12,  together  with a
written assignment of this Warrant substantially in the form of Exhibit B hereto
duly executed by Holder or its agent or attorney and funds sufficient to pay any
transfer  taxes payable upon the making of such  transfer.  Upon such  surrender
and, if required, such payment, the Company shall, subject to Section 9, execute
and deliver a new Warrant or Warrants in the name of the  assignee or  assignees
and in the  denomination  specified in such instrument of assignment,  and shall
issue to the assignor a new Warrant  evidencing  the portion of this Warrant not
so assigned, and this Warrant shall promptly be canceled. A Warrant, if properly
assigned in compliance  with Section 9, may be exercised by a new Holder for the
purchase of shares of Common  Stock  without  having a new warrant  issued.  3.2
Division and Combination

                  Subject to Section 9, this  Warrant may be divided or combined
with other Warrants upon  presentation  hereof at the aforesaid office or agency
of the  Company,  together  with a  written  notice  specifying  the  names  and
denominations  in which new Warrants  are to be issued,  signed by Holder or its
agent or  attorney.  Subject to  compliance  with  Sections 3.1 and 9, as to any
transfer  which may be involved in such  division  or  combination,  the Company
shall  execute and deliver a new Warrant or Warrants in exchange for the Warrant
or Warrants to be divided or combined in accordance with such notice.

3.3      Expenses

     The Company shall prepare, issue and deliver at its own expense (other than
transfer taxes) the new Warrants or Warrants under this Section 3.

3.4      Maintenance of Books

     The Company agrees to maintain,  at its aforesaid  office or agency,  books
for the registration and the registration of transfer of the Warrants.

4.       Adjustments

                  The number of shares of Common Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant,  shall be subject to adjustment  from time to time as set forth in
this  Section 4. The  Company  shall give Holder  notice of any event  described
below which  requires an  adjustment  pursuant to this  Section 4 at the time of
such event.

4.1      Stock Dividends, Subdivisions and Combinations

                  If at any time the Company shall:

(a)  take a record  of the  holders  of its  Common  Stock  for the  purpose  of
entitling  them to  receive a dividend  payable  in, or other  distribution  of,
Additional  Shares of Common  Stock;  (b) subdivide  its  outstanding  shares of
Common Stock into a larger number of shares of Common Stock;  or (c) combine its
outstanding  shares of Common  Stock  into a smaller  number of shares of Common
Stock;

then (i) the  number  of  shares of Common  Stock  for  which  this  Warrant  is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record  holder of the same
number of  shares  of  Common  Stock  for  which  this  Warrant  is  exercisable
immediately  prior to the  occurrence  of such event would own or be entitled to
receive  after the happening of such event,  and (ii) the Current  Warrant Price
shall be adjusted  to equal (A) the  Current  Warrant  Price  multiplied  by the
number of  shares  of  Common  Stock  for  which  this  Warrant  is  exercisable
immediately  prior to the  adjustment  divided  by (B) the  number of shares for
which this Warrant is exercisable immediately after such adjustment.

4.2      Certain Other Distributions

                  If at any time the Company  shall take a record of the holders
of its Common Stock for the purpose of entitling them to receive any dividend or
other  distribution  of: (a) cash;  (b) any evidences of its  indebtedness,  any
shares of its stock or any other securities or property of any nature whatsoever
(other than cash,  Convertible Securities or Additional Shares of Common Stock);
or (c) any warrants or other rights to subscribe  for or purchase any  evidences
of its indebtedness, any shares of its stock or any other securities or property
of any nature whatsoever (other than cash,  Convertible Securities or Additional
Shares of Common Stock);

then Holder shall be entitled to receive  such  dividend or  distribution  as if
Holder had exercised the Warrant. A reclassification  of the Common Stock (other
than a change  in par  value,  or from par  value to no par value or from no par
value to par value) into shares of Common Stock and shares of any other class of
stock shall be deemed a distribution by the Company to the holders of its Common
Stock of such  shares of such other  class of stock  within the  meaning of this
Section 4.2 and, if the outstanding shares of Common Stock shall be changed into
a  larger  or  smaller  number  of  shares  of  Common  Stock  as a part of such
reclassification,  such change shall be deemed a subdivision or combination,  as
the case may be, of the outstanding shares of Common Stock within the meaning of
Section 4.1.

4.3      Other Provisions Applicable to Adjustments under this Section

                  The following  provisions shall be applicable to the making of
adjustments  of the number of shares of Common  Stock for which this  Warrant is
exercisable and the Current Warrant Price provided for in this Section 4:

(a) When  Adjustments  to be Made.  The  adjustments  required by this Section 4
shall  be made  whenever  and as  often  as any  specified  event  requiring  an
adjustment shall occur.  For the purpose of any adjustment,  any specified event
shall be deemed to have  occurred  at the close of  business  on the date of its
occurrence.  (b)  Fractional  Interests.  In  computing  adjustments  under this
Section 4,  fractional  interests in Common Stock shall be taken into account to
the nearest 1/10th of a share.

(c) When  Adjustment  not  Required.  If the Company  shall take a record of the
holders  of its Common  Stock for the  purpose  of  entitling  them to receive a
dividend  or   distribution  or  subscription  or  purchase  rights  and  shall,
thereafter and before the distribution to stockholders thereof,  legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights,  then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment  previously made in respect thereof shall
be rescinded and annulled.

(d)  Challenge to Good Faith  Determination.  Whenever the Board of Directors of
the Company shall be required to make a determination  in good faith of the fair
value of any item under this Section 4, such  determination may be challenged in
good faith by the  Holder,  and any dispute  shall be resolved by an  investment
banking  firm of  recognized  national  standing  selected  by the  Company  and
acceptable to Holder.

4.4 Reorganization,  Reclassification,  Merger,  Consolidation or Disposition of
Assets

                  In case the Company shall  reorganize its capital,  reclassify
its capital  stock,  consolidate or merge with or into another Person (where the
Company is not the survivor or where there is a change in or  distribution  with
respect  to the Common  Stock of the  Company),  or sell,  convey,  transfer  or
otherwise dispose of all or substantially  all its property,  assets or business
to another Person, or effectuate a transaction or series of related transactions
in which more than 50% of the voting  power of the Company is disposed of (each,
a "Fundamental Corporate Change") and, pursuant to the terms of such Fundamental
Corporate  Change,  shares  of  common  stock  of  the  successor  or  acquiring
corporation, or any cash, shares of stock or other securities or property of any
nature whatsoever  (including warrants or other subscription or purchase rights)
in  addition  to or in  lieu of  common  stock  of the  successor  or  acquiring
corporation  ("Other  Property"),  are to be received by or  distributed  to the
holders  of  Common  Stock of the  Company,  then  Holder  shall  have the right
thereafter to receive,  upon  exercise of the Warrant,  such number of shares of
common stock of the successor or acquiring  corporation or of the Company, if it
is the surviving  corporation,  and Other Property as is receivable upon or as a
result of such Fundamental  Corporate Change by a holder of the number of shares
of Common Stock for which this Warrant is exercisable  immediately prior to such
Fundamental  Corporate Change. In case of any such Fundamental Corporate Change,
the  successor  or  acquiring  corporation  (if other  than the  Company)  shall
expressly  assume the due and punctual  observance  and  performance of each and
every covenant and condition of this Warrant to be performed and observed by the
Company  and all the  obligations  and  liabilities  hereunder,  subject to such
modifications  as may be deemed  appropriate (as determined by resolution of the
Board of Directors of the Company) in order to provide for adjustments of shares
of Common Stock for which this Warrant is  exercisable  which shall be as nearly
equivalent as practicable to the adjustments provided for in this Section 4. For
purposes of this  Section  4.4,  "common  stock of the  successor  or  acquiring
corporation"  shall include stock of such  corporation of any class which is not
preferred  as to  dividends  or  assets  over any  other  class of stock of such
corporation  and which is not subject to  redemption  and shall also include any
evidences  of  indebtedness,  shares  of  stock or other  securities  which  are
convertible into or exchangeable for any such stock,  either immediately or upon
the arrival of a specified  date or the  happening of a specified  event and any
warrants  or other  rights to  subscribe  for or purchase  any such  stock.  The
foregoing  provisions  of this Section 4.4 shall  similarly  apply to successive
Fundamental Corporate Change.

4.5      Other Action Affecting Common Stock

                  In case at any  time or from  time to time the  Company  shall
take any action in respect of its Common Stock,  other than any action described
in this Section 4, which would have a materially  adverse effect upon the rights
of  Holder,  the number of shares of Common  Stock  and/or  the  purchase  price
thereof   shall  be  adjusted  in  such  manner  as  may  be  equitable  in  the
circumstances,  as  determined  in good faith by the Board of  Directors  of the
Company.

4.6      Certain Limitations

                  Notwithstanding  anything herein to the contrary,  the Company
agrees  not to enter into any  transaction  which,  by reason of any  adjustment
hereunder,  would cause the Current  Warrant Price to be less than the par value
per share of Common Stock.

5.       Notices to Holder

5.1      Notice of Adjustments

                  Whenever  the number of shares of Common  Stock for which this
Warrant is  exercisable,  or whenever  the price at which a share of such Common
Stock may be purchased upon exercise of the Warrants, shall be adjusted pursuant
to Section 4, the Company shall  forthwith  prepare a certificate to be executed
by the chief  financial  officer of the Company  setting  forth,  in  reasonable
detail,  the  event  requiring  the  adjustment  and the  method  by which  such
adjustment  was  calculated  (including a description  of the basis on which the
Board of Directors of the Company  determined the fair value of any evidences of
indebtedness, shares of stock, other securities or property or warrants or other
subscription  or purchase  rights  referred to in Section 4.2),  specifying  the
number of shares of Common Stock for which this Warrant is  exercisable  and (if
such  adjustment was made pursuant to Section 4.4 or 4.5)  describing the number
and kind of any other  shares of stock or Other  Property for which this Warrant
is exercisable,  and any change in the purchase price or prices  thereof,  after
giving effect to such  adjustment or change.  The Company shall promptly cause a
signed copy of such certificate to be delivered to the Holder in accordance with
Section 14.2. The Company shall keep at its office or agency designated pursuant
to Section 12 copies of all such certificates and cause the same to be available
for inspection at said office during normal  business hours by the Holder or any
prospective purchaser of a Warrant designated by Holder.

5.2      Notice of Corporate Action

                  If at any time:
(a) the Company  shall take a record of the holders of its Common  Stock for the
purpose of entitling  them to receive a dividend or other  distribution,  or any
right to subscribe for or purchase any evidences of its indebtedness, any shares
of stock of any class or any other  securities  or  property,  or to receive any
other right;  or (b) there shall be any capital  reorganization  of the Company,
any  reclassification or recapitalization of the capital stock of the Company or
any consolidation or merger of the Company with, or any sale,  transfer or other
disposition of all or substantially all the property,  assets or business of the
Company  to,  another  corporation;  or  (c)  there  shall  be  a  voluntary  or
involuntary dissolution, liquidation or winding up of the Company;

then, in any one or more of such cases,  the Company shall give to Holder (i) at
least 30 days' prior written  notice of the date on which a record date shall be
selected for such dividend,  distribution or right or for determining  rights to
vote  in  respect  of  any  such   reorganization,   reclassification,   merger,
consolidation, sale, transfer, disposition,  dissolution, liquidation or winding
up, and (ii) in the case of any such reorganization,  reclassification,  merger,
consolidation, sale, transfer, disposition,  dissolution, liquidation or winding
up, at least 30 days' prior written  notice of the date when the same shall take
place.  Such notice in accordance  with the foregoing  clause also shall specify
(i) the date on which any such  record is to be taken  for the  purpose  of such
dividend,  distribution or right,  the date on which the holders of Common Stock
shall be entitled to any such dividend,  distribution  or right,  and the amount
and  character  thereof,  and (ii) the  date on which  any such  reorganization,
reclassification,    merger,   consolidation,   sale,   transfer,   disposition,
dissolution,  liquidation  or winding  up is to take place and the time,  if any
such  time is to be fixed,  as of which the  holders  of Common  Stock  shall be
entitled  to  exchange  their  shares of Common  Stock for  securities  or other
property  deliverable  upon  such  reorganization,   reclassification,   merger,
consolidation, sale, transfer, disposition,  dissolution, liquidation or winding
up. Each such written notice shall be sufficiently  given if addressed to Holder
at the  last  address  of  Holder  appearing  on the  books of the  Company  and
delivered in accordance with Section 14.2. 6. No Impairment

                  The  Company  shall  not by  any  action,  including,  without
limitation,   amending  its   certificate  of   incorporation   or  through  any
reorganization, transfer of assets, consolidation, merger, dissolution, issuance
or sale of  securities  or other  voluntary  action,  avoid or seek to avoid the
observance or performance  of any of the terms of this Warrant,  but will at all
times in good  faith  assist in the  carrying  out of all such  terms and in the
taking of all such  actions as may be necessary  or  appropriate  to protect the
rights of Holder  against  impairment.  Without  limiting the  generality of the
foregoing,  the  Company  will (a) not  increase  the par value of any shares of
Common  Stock  receivable  upon the  exercise of this  Warrant  above the amount
payable  therefor upon such exercise  immediately  prior to such increase in par
value, (b) take all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant,  and (c) use its best efforts to
obtain  all  such  authorizations,   exemptions  or  consents  from  any  public
regulatory  body having  jurisdiction  thereof as may be necessary to enable the
Company to perform its obligations under this Warrant.

                  Upon the  request  of  Holder,  the  Company  will at any time
during the period this Warrant is outstanding  acknowledge  in writing,  in form
satisfactory  to  Holder,  the  continuing  validity  of  this  Warrant  and the
obligations of the Company hereunder.

7.       Reservation and Authorization of Common Stock

                  From and after the  Closing  Date,  the  Company  shall at all
times reserve and keep available for issuance upon the exercise of Warrants such
number  of its  authorized  but  unissued  shares  of  Common  Stock  as will be
sufficient  to permit the  exercise  in full of all  outstanding  Warrants.  All
shares of Common Stock which shall be so issuable,  when issued upon exercise of
any Warrant and payment  therefor in accordance  with the terms of such Warrant,
shall be duly and  validly  issued  and  fully  paid and  nonassessable  and not
subject to preemptive rights.

                  Before  taking  any action  which  would  cause an  adjustment
reducing  the Current  Warrant  Price  below the then par value,  if any, of the
shares of Common Stock issuable upon exercise of the Warrants, the Company shall
take any  corporate  action which may be necessary in order that the Company may
validly and legally  issue  fully paid and  nonassessable  shares of such Common
Stock at such adjusted Current Warrant Price.

                  Before  taking any action which would result in an  adjustment
in the number of shares of Common Stock for which this Warrant is exercisable or
in the Current Warrant Price,  the Company shall obtain all such  authorizations
or exemptions  thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.

8.       Taking of Record; Stock and Warrant Transfer Books

                  In the case of all  dividends  or other  distributions  by the
Company to the holders of its Common Stock with  respect to which any  provision
of Section 4 refers to the taking of record of such holders, the Company will in
each  case  take  such a record  and will  take  such  record as of the close of
business  on a Business  Day.  The  Company  will not at any time,  except  upon
dissolution,  liquidation or winding up of the Company, close its stock transfer
books or Warrant  transfer  books so as to result in  preventing or delaying the
exercise or transfer of any Warrant.

9.       Restrictions on Transferability

                  The Warrants and the Warrant  Stock shall not be  transferred,
hypothecated or assigned before satisfaction of the conditions specified in this
Section  9,  which  conditions  are  intended  to  ensure  compliance  with  the
provisions of the  Securities Act with respect to the Transfer of any Warrant or
any Warrant Stock. Holder, by acceptance of this Warrant,  agrees to be bound by
the  provisions  of this  Section  9. 9.1  Restrictive  Legend  (a)  Holder,  by
accepting  this  Warrant and any Warrant  Stock agrees that this Warrant and the
Warrant Stock  issuable  upon  exercise  hereof may not be assigned or otherwise
transferred  unless and until (i) the Company has received an opinion of counsel
for Holder  that such  securities  may be sold  pursuant  to an  exemption  from
registration under the Securities Act or (ii) a registration  statement relating
to such  securities has been filed by the Company and declared  effective by the
Commission.

                  Each  certificate  for Warrant Stock issuable  hereunder shall
bear a legend as follows  until such  securities  have been sold  pursuant to an
effective registration statement under the Securities Act:

                  "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) Except as otherwise provided in this Section 9, the Warrant shall be stamped
or otherwise imprinted with a legend in substantially the following form:

                  "THIS  COMMON  STOCK  PURCHASE   WARRANT  AND  THE  SECURITIES
                  REPRESENTED   HEREBY  HAVE  NOT  BEEN  REGISTERED   UNDER  THE
                  SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED
                  IN VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER
                  OR THE PROVISIONS OF THIS COMMON STOCK PURCHASE WARRANT."

9.2      Notice of Proposed Transfers

                  Prior to any Transfer or attempted Transfer of any Warrants or
any shares of  Restricted  Common  Stock,  the Holder shall give ten days' prior
written  notice (a  "Transfer  Notice") to the Company of Holder's  intention to
effect such Transfer,  describing the manner and  circumstances  of the proposed
Transfer, and obtain from counsel to Holder who shall be reasonably satisfactory
to the Company,  an opinion that the proposed  Transfer of such Warrants or such
Restricted  Common  Stock  may  be  effected  without   registration  under  the
Securities  Act. After receipt of the Transfer  Notice and opinion,  the Company
shall, within five days thereof, notify the Holder as to whether such opinion is
reasonably  satisfactory  and, if so, such holder shall thereupon be entitled to
Transfer such Warrants or such  Restricted  Common Stock, in accordance with the
terms of the Transfer Notice.  Each certificate,  if any, evidencing such shares
of Restricted  Common Stock issued upon such Transfer shall bear the restrictive
legend set forth in Section  9.1(a),  and the Warrant  issued upon such Transfer
shall bear the  restrictive  legend set forth in Section  9.1(b),  unless in the
opinion  of such  counsel  such  legend  is not  required  in  order  to  ensure
compliance  with the  Securities  Act.  Holder shall not be entitled to Transfer
such Warrants or such  Restricted  Common Stock until receipt of notice from the
Company under this Section 9.2 that such opinion is reasonably satisfactory.

9.3      Required Registration

                  Pursuant to the terms and conditions set forth in Registration
Rights  Agreement,  the Company shall prepare and file with the  Commission  not
later  than the 90th day  after  the  Closing  Date,  a  Registration  Statement
relating to the offer and sale of the Common Stock issuable upon exercise of the
Warrants and shall use its best efforts to cause the  Commission to declare such
Registration  Statement  effective  under  the  Securities  Act as  promptly  as
practicable  but no later than 180 days after the Closing Date. 9.4  Termination
of Restrictions

                  Notwithstanding  the  foregoing  provisions  of Section 9, the
restrictions  imposed by this Section upon the  transferability of the Warrants,
the Warrant Stock and the Restricted Common Stock (or Common Stock issuable upon
the exercise of the Warrants) and the legend  requirements  of Section 9.1 shall
terminate as to any  particular  Warrant or share of Warrant Stock or Restricted
Common Stock (or Common Stock  issuable  upon the exercise of the  Warrants) (i)
when and so long as such security shall have been  effectively  registered under
the  Securities  Act and  disposed of pursuant  thereto or (ii) when the Company
shall have  received an opinion of counsel  reasonably  satisfactory  to it that
such shares may be transferred without registration thereof under the Securities
Act.  Whenever the restrictions  imposed by Section 9 shall terminate as to this
Warrant, as hereinabove provided, the Holder hereof shall be entitled to receive
from the  Company  upon  written  request of the  Holder,  at the expense of the
Company,  a new Warrant bearing the following legend in place of the restrictive
legend set forth hereon:

"THE RESTRICTIONS ON  TRANSFERABILITY OF THE WITHIN WARRANT CONTAINED IN SECTION
9 HEREOF  TERMINATED  ON  __________,  _____,  AND ARE OF NO  FURTHER  FORCE AND
EFFECT."

All Warrants issued upon  registration of transfer,  division or combination of,
or in  substitution  for,  any Warrant or Warrants  entitled to bear such legend
shall have a similar legend endorsed thereon.  Whenever the restrictions imposed
by this Section shall  terminate as to any share of Restricted  Common Stock, as
hereinabove  provided,  the holder thereof shall be entitled to receive from the
Company,  at the Company's expense,  a new certificate  representing such Common
Stock not  bearing  the  restrictive  legend  set forth in Section  9.1(a).  9.5
Listing on Securities Exchange

                  If the  Company  shall list any shares of Common  Stock on any
securities exchange or quotation system, it will, at its expense,  list thereon,
maintain  and,  when  necessary,  increase such listing of, all shares of Common
Stock  issued  or, to the extent  permissible  under the  applicable  securities
exchange rules, issuable upon the exercise of this Warrant so long as any shares
of Common Stock shall be so listed during any such Exercise Period.

10.      Supplying Information

                  The Company  shall  cooperate  with Holder in  supplying  such
information  as may be reasonably  necessary for Holder to complete and file any
information reporting forms presently or hereafter required by the Commission as
a condition to the  availability of an exemption from the Securities Act for the
sale of any Warrant or Restricted Common Stock.

11.      Loss or Mutilation

                  Upon receipt by the Company from Holder of evidence reasonably
satisfactory  to it of the  ownership  of and the loss,  theft,  destruction  or
mutilation of this Warrant and indemnity reasonably satisfactory to it (it being
understood  that  the  written  agreement  of the  Holder  shall  be  sufficient
indemnity),  and in case of mutilation upon surrender and  cancellation  hereof,
the Company  will execute and deliver in lieu hereof a new Warrant of like tenor
to Holder; provided, in the case of mutilation no indemnity shall be required if
this  Warrant  in   identifiable   form  is   surrendered  to  the  Company  for
cancellation.

12.      Office of the Company

     As  long as any of the  Warrants  remain  outstanding,  the  Company  shall
maintain an office or agency  (which may be the principal  executive  offices of
the Company) where the Warrants may be presented for exercise,  registration  of
transfer, division or combination as provided in this Warrant.

13.      Limitation of Liability

                  No provision hereof,  in the absence of affirmative  action by
Holder to purchase  shares of Common  Stock,  and no  enumeration  herein of the
rights or  privileges  of Holder  hereof,  shall give rise to any  liability  of
Holder for the  purchase  price of any Common Stock or as a  stockholder  of the
Company,  whether  such  liability is asserted by the Company or by creditors of
the Company.

14.      Miscellaneous

14.1     Nonwaiver and Expenses

                  No course of dealing or any delay or failure to  exercise  any
right hereunder on the part of Holder shall operate as a waiver of such right or
otherwise prejudice Holder's rights, powers or remedies. If the Company fails to
make, when due, any payments provided for hereunder, or fails to comply with any
other provision of this Warrant, the Company shall pay to Holder such amounts as
shall  be  sufficient  to  cover  any  costs  and  expenses  including,  without
limitation,   reasonable   attorneys'   fees,   including   those  of  appellate
proceedings, incurred by Holder in collecting any amounts due pursuant hereto or
in otherwise enforcing any of its rights, powers or remedies hereunder.

14.2     Notice Generally

                  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 days after the date of deposit in the United States mails,  as
follows:

                  (a)      if to the Company, to:

                           IFS International Holdings, Inc.
                           Rensselaer Technology Park
                           300 Jordan Rd.
                           Troy, NY 12180
                           Attention:
                           (518) 283-7900
                           [                        ] (Fax)
                            ------------------------

                           with a copy to:

                           Parker Duryee Rosoff & Haft
                           529 Fifth Avenue
                           New York, NY 10017
                           Attention:  Michael D. DiGiovanna, Esq.
                           (212) 599-0500
                           (212) 972-9487 (Fax)

                  (b)      if to the Holder, to:

                           The Shaar Fund Ltd.,
                           c/o Levinson Capital Management
                           2 World Trade Center, Suite 1820
                           New York, NY 10048
                           Attention:  Samuel Levinson
                           (212) 432-7711
                           (212) 432-7771 (Fax)

                           with a copy to:

                           Cadwalader, Wickersham & Taft
                           100 Maiden Lane
                           New York, NY 10038
                           Attention:  Dennis J. Block, Esq.
                           (212) 504-5555
                           (212) 504-5557 (Fax)

The  Company or the Holder may  change  the  foregoing  address by notice  given
pursuant to this Section 14.2.

14.3     Indemnification

                  The Company agrees to indemnify and hold harmless  Holder from
and against any liabilities,  obligations,  losses, damages, penalties, actions,
judgments,  suits, claims, costs, attorneys' fees, expenses and disbursements of
any kind which may be imposed upon,  incurred by or asserted  against  Holder in
any manner  relating  to or arising out of any failure by the Company to perform
or  observe  in  any  material   respect  any  of  its  covenants,   agreements,
undertakings or obligations set forth in this Warrant;  provided,  however, that
the Company  will not be liable  hereunder  to the extent that any  liabilities,
obligations,  losses, damages,  penalties,  actions,  judgments,  suits, claims,
costs,  attorneys'  fees,  expenses  or  disbursements  are  found  in  a  final
nonappealable  judgment  by  a  court  to  have  resulted  from  Holder's  gross
negligence,  bad faith or willful misconduct in its capacity as a stockholder or
warrantholder of the Company.

14.4     Remedies

                  Holder in  addition to being  entitled to exercise  all rights
granted by law,  including  recovery  of  damages,  will be entitled to specific
performance  of its rights under Section 9 of this Warrant.  The Company  agrees
that monetary  damages would not be adequate  compensation for any loss incurred
by reason of a breach by it of the  provisions  of Section 9 of this Warrant and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.

14.5     Successors and Assigns

                  Subject to the  provisions of Sections 3.1 and 9, this Warrant
and the rights  evidenced  hereby  shall  inure to the benefit of and be binding
upon the successors of the Company and the successors and assigns of Holder. The
provisions  of this  Warrant  are  intended to be for the benefit of all Holders
from time to time of this Warrant and, with respect to Section 9 hereof, holders
of  Warrant  Stock,  and shall be  enforceable  by any such  Holder or holder of
Warrant Stock.

14.6     Amendment

This Warrant and all other Warrants may be modified or amended or the provisions
hereof waived with the written consent of the Company and Holder.

14.7     Severability

                  Wherever  possible,  each  provision of this Warrant  shall be
interpreted  in such manner as to be effective and valid under  applicable  law,
but if any  provision of this Warrant  shall be  prohibited  by or invalid under
applicable  law, such provision  shall only be ineffective to the extent of such
prohibition or invalidity,  without invalidating the remainder of such provision
or the remaining provisions of this Warrant. 14.8 Headings

     The headings used in this Warrant are for the convenience of reference only
and shall not, for any purpose, be deemed a part of this Warrant.

14.9     Governing Law

                  This Warrant shall be governed by the laws of the State of New
York, without regard to the provisions thereof relating to conflicts of law.

                                             [SIGNATURE PAGE FOLLOWS.]

<PAGE>

CWT\NYLIB1\456847.4

                  IN WITNESS WHEREOF,  the Company has caused this Warrant to be
duly executed and its corporate seal to be impressed  hereon and attested by its
Secretary or an Assistant Secretary.

Dated:  March 23, 2000

                        IFS INTERNATIONAL HOLDINGS, INC.

                        By: ____________________________________________________
                            Name:
                            Title:

Attest:

  By:
      Name:
      Title:

<PAGE>

                                                                       EXHIBIT A

                                SUBSCRIPTION FORM

                                  [To be executed only upon exercise of Warrant]

                  The undersigned  registered owner of this Warrant  irrevocably
exercises this Warrant for the purchase of __________  shares of Common Stock of
IFS International Holdings, Inc. and herewith makes payment therefor, all at the
price and on the terms and  conditions  specified  in this  Warrant and requests
that  certificates  for the shares of Common  Stock  hereby  purchased  (and any
securities or other property  issuable upon such exercise) be issued in the name
of and delivered to

whose address is

and,  if such  shares of Common  Stock  shall not  include  all of the shares of
Common Stock  issuable as provided in this  Warrant,  that a new Warrant of like
tenor and date for the balance of the shares of Common Stock issuable  hereunder
be delivered to the undersigned.

-----------------------------------------------------------------------------
                                   (Name of Registered Owner)

-----------------------------------------------------------------------------
                                 (Signature of Registered Owner)

-----------------------------------------------------------------------------
                                        (Street Address)

-----------------------------------------------------------------------------
                  (City)            (State)            (Zip Code)

                                                          Notice:  The signature
                                                          on  this  subscription
                                                          must  correspond  with
                                                          the  name  as  written
                                                          upon  the  face of the
                                                          within    Warrant   in
                                                          every      particular,
                                                          without  alteration or
                                                          enlargement   or   any
                                                          change whatsoever.

<PAGE>

                                                                       EXHIBIT B

                                 ASSIGNMENT FORM

                  FOR VALUE RECEIVED the  undersigned  registered  owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named below all of
the rights of the undersigned under this Warrant,  with respect to the number of
shares of Common Stock set forth below:

                                                            No. of Shares of

Name and Address of Assignee                                  Common Stock

and does hereby irrevocably constitute and appoint

attorney-in-fact  to register  such  transfer on the books of IFS  International
Holdings,  Inc.  maintained for the purpose,  with full power of substitution in
the premises.

Dated:

--------------------------------------------------------------------------
                                       (Print Name)

--------------------------------------------------------------------------
                                        (Signature)

--------------------------------------------------------------------------
                                  (Print Name of Witness)

--------------------------------------------------------------------------
                                   (Witness's Signature)

                                                          Notice:  The signature
                                                          on   this   assignment
                                                          must  correspond  with
                                                          the  name  as  written
                                                          upon  the  face of the
                                                          within    Warrant   in
                                                          every      particular,
                                                          without  alteration or
                                                          enlargement   or   any
                                                          change whatsoever.Executed Version

                          REGISTRATION RIGHTS AGREEMENT

     This  REGISTRATION  RIGHTS  AGREEMENT,  dated as of March  23,  2000  (this
"Agreement"),  by and  between  IFS  International  Holdings,  Inc.,  a Delaware
corporation,  with principal executive offices located at Rensselaer  Technology
Park,  300 Jordan Rd., Troy, NY 12180 (the  "Company"),  and The Shaar Fund Ltd.
(the "Initial Investor").

                  WHEREAS,  upon the terms and subject to the  conditions of the
Securities  Purchase  Agreement  dated as of March 23, 2000,  by and between the
Initial  Investor and the Company (the  "Securities  Purchase  Agreement"),  the
Company has agreed to issue and sell to the Initial  Investor (i) 200,000 shares
of Series B 5%  Convertible  Preferred  Stock,  par value  $0.001 per share (the
"Preferred  Shares")  which,  upon the terms of and subject to the conditions of
the Company's  Certificate of  Designation of Series B 5% Convertible  Preferred
Stock (the  "Certificate of  Designation"),  are convertible  into shares of the
Company's common stock, par value $0.001 per share (the "Common Stock") and (ii)
Common Stock Purchase  Warrants (the  "Warrants")  to purchase  shares of Common
Stock; and

                  WHEREAS, to induce the Initial Investor to execute and deliver
the  Securities  Purchase  Agreement,  the  Company  has agreed to provide  with
respect to the Common Stock issued or issuable in lieu of cash dividend payments
on the Preferred Shares, upon conversion of the Preferred Shares and exercise of
the Warrants certain registration rights under the Securities Act;

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

(i)  "Affiliate,"  of any specified  Person means any other Person who directly,
     or  indirectly  through  one or more  intermediaries,  is in control of, is
     controlled by, or is under common control with, such specified Person.  For
     purposes of this definition,  control of a Person means the power, directly
     or  indirectly,  to direct or cause the  direction  of the  management  and
     policies of such  Person  whether by  contract,  securities,  ownership  or
     otherwise; and the terms "controlling" and "controlled" have the respective
     meanings correlative to the foregoing.

(ii) "Closing  Date"  means  the date and time of the  issuance  and sale of the
     Preferred Shares and the Warrants.

(iii) "Commission" means the Securities and Exchange Commission.

(iv) "Current Market Price" on any date of  determination  means the closing bid
     price of a share of the Common  Stock on such day as reported on the Nasdaq
     SmallCap  Market  ("Nasdaq");  provided,  if such security is not listed or
     admitted to trading on the Nasdaq,  as reported on the  principal  national
     security  exchange or quotation  system on which such security is quoted or
     listed or admitted  to trading,  or, if not quoted or listed or admitted to
     trading on any  national  securities  exchange  or  quotation  system,  the
     closing bid price of such  security on the  over-the-counter  market on the
     day in  question  as  reported  by  Bloomberg  LP, or a  similar  generally
     accepted reporting service, as the case may be.

(v)  "Exchange Act" means the Securities  Exchange Act of 1934, as amended,  and
     the rules and  regulations  of the  Commission  thereunder,  or any similar
     successor statute.

(vi) "Investor"  means  each  of the  Initial  Investor  and any  transferee  or
     assignee of Registrable  Securities  which agrees to become bound by all of
     the terms and  provisions of this  Agreement in  accordance  with Section 8
     hereof.

(vii)"Person" means any individual, partnership,  corporation, limited liability
     company,   joint  stock   company,   association,   trust,   unincorporated
     organization, or a government or agency or political subdivision thereof.

(viii) "Prospectus" means the prospectus  (including,  without  limitation,  any
     preliminary  prospectus  and any final  prospectus  filed  pursuant to Rule
     424(b) under the Securities  Act,  including any prospectus  that discloses
     information  previously  omitted  from a  prospectus  filed  as  part of an
     effective  registration  statement  in  reliance  on Rule  430A  under  the
     Securities  Act)  included  in the  Registration  Statement,  as amended or
     supplemented by any prospectus  supplement with respect to the terms of the
     offering  of any  portion  of the  Registrable  Securities  covered  by the
     Registration  Statement and by all other amendments and supplements to such
     prospectus,  including  all  material  incorporated  by  reference  in such
     prospectus and all documents filed after the date of such prospectus by the
     Company under the Exchange Act and incorporated by reference therein.

(ix) "Public  Offering"  means an offer  registered  with the Commission and the
     appropriate state securities commissions by the Company of its Common Stock
     and made pursuant to the Securities Act.

(x)  "Registrable  Securities"  means the Common Stock issued or issuable (i) in
     lieu  of  cash  dividend  payments  on  the  Preferred  Shares,  (ii)  upon
     conversion or redemption of the Preferred  Shares or (iii) upon exercise of
     the Warrants;  provided, however, a share of Common Stock shall cease to be
     a Registrable  Security for purposes of this Agreement when it no longer is
     a Restricted Security.

(xi) "Registration  Statement"  means a  registration  statement  of the Company
     filed on an  appropriate  form under the  Securities  Act providing for the
     registration  of,  and the sale on a  continuous  or  delayed  basis by the
     holders of, all of the  Registrable  Securities  pursuant to Rule 415 under
     the Securities Act, including the Prospectus  contained therein and forming
     a  part  thereof,  any  amendments  to  such  registration   statement  and
     supplements  to such  Prospectus,  and all  exhibits to and other  material
     incorporated by reference in such registration statement and Prospectus.

(xii)"Restricted Security" means any share of Common Stock issued or issuable in
     lieu of cash dividend payments on the Preferred Shares,  upon conversion or
     redemption of the Preferred  Shares or exercise of the Warrants  except any
     such  share  that  (i)  has  been  registered   pursuant  to  an  effective
     registration  statement  under  the  Securities  Act and  sold in a  manner
     contemplated  by the prospectus  included in such  registration  statement,
     (ii) has been transferred in compliance with the resale  provisions of Rule
     144 under the  Securities  Act (or any successor  provision  thereto) or is
     transferable pursuant to paragraph (k) of Rule 144 under the Securities Act
     (or  any  successor  provision  thereto),   or  (iii)  otherwise  has  been
     transferred  and a new  share of  Common  Stock  not  subject  to  transfer
     restrictions under the Securities Act has been delivered by or on behalf of
     the Company.

(xiii) "Securities  Act" means the Securities  Act of 1933, as amended,  and the
     rules  and  regulations  of  the  Commission  thereunder,  or  any  similar
     successor statute.

(b) All  capitalized  terms  used and not  defined  herein  have the  respective
meaning assigned to them in the Securities Purchase  Agreement.

 2. Registration

(a) Filing and  Effectiveness  of  Registration  Statement.  The  Company  shall
prepare  and file with the  Commission  not later than 90 days after the Closing
Date, a Registration Statement relating to the offer and sale of the Registrable
Securities  and shall use its best  efforts to cause the  Commission  to declare
such  Registration  Statement  effective under the Securities Act as promptly as
practicable but in no event later than 180 days after the Closing Date, assuming
for purposes  hereof a Conversion  Price under the Certificate of Designation of
$2.50 per share.  The Company shall promptly (and, in any event, no more than 24
hours after it receives comments from the Commission), notify the Buyer when and
if it receives any comments from the  Commission on the  Registration  Statement
and promptly  forward a copy of such  comments,  if they are in writing,  to the
Buyer. At such time after the filing of the Registration  Statement  pursuant to
this Section 2(a) as the Commission indicates, either orally or in writing, that
it has no further comments with respect to such  Registration  Statement or that
it  is  willing  to  entertain   appropriate   requests  for   acceleration   of
effectiveness of such Registration Statement, the Company shall promptly, and in
no event later than two business days after receipt of such  indication from the
Commission,  request that the  effectiveness of such  Registration  Statement be
accelerated  within 48 hours of the  Commission's  receipt of such request.  The
Company  shall not include any other  securities in the  Registration  Statement
relating to the offer and sale of the Registrable Securities.  The Company shall
notify the Initial Investor by written notice that such  Registration  Statement
has  been  declared  effective  by  the  Commission  within  24  hours  of  such
declaration by the Commission.

(b) Registration Default. If the Registration Statement covering the Registrable
Securities  required to be filed by the Company pursuant to Section 2(a), is not
(i) filed  with the  Commission  within 90 days after the  Closing  Date or (ii)
declared  effective  by the  Commission  within 180 days after the Closing  Date
(either of which,  without  duplication,  an "Initial  Date"),  then the Company
shall make the payments to the Initial Investor as provided in the next sentence
as liquidated damages and not as a penalty. The amount to be paid by the Company
to the Initial  Investor  shall be  determined as of each  Computation  Date (as
defined  below),  and such amount shall be equal to 2% (the  "Liquidated  Damage
Rate") of the Purchase Price (as defined in the Securities  Purchase  Agreement)
from the Initial  Date to the first  Computation  Date and for each  Computation
Date  thereafter,  calculated  on a pro rata  basis  to the  date on  which  the
Registration  Statement is filed with (in the event of an Initial Date  pursuant
to clause (i) above) or declared  effective  by (in the event of an Initial Date
pursuant to clause (ii) above) the Commission (the "Periodic  Amount") provided,
however,  that in no event shall the  liquidated  damages be less than  $25,000;
provided,  further,  however, that if the Registration Statement is not declared
effective by the Commission  within 210 days after the Initial Date set forth in
clause  (ii)  above,  then the  Liquidated  Damage  Rate shall  increase  to 4%;
provided, further, however, that the Liquidated Damage Rate shall increase by 1%
for each 30 day period  after the 210th day after the Initial  Date set forth in
clause (ii) above that the Registration  Statement is not declared  effective by
the  Commission.  The full  Periodic  Amount shall be paid by the Company to the
Initial  Investor by wire transfer of immediately  available  funds within three
days after each  Computation  Date.  In no event shall the Company be liable for
damages  hereunder if any delay relates  solely to an action or a failure to act
on the part of the  Investor and the Company is  diligently  pursuing the timely
filing and effectiveness of the Registration Statement.

                  As used in this  Section  2(b),  "Computation  Date" means the
date which is 30 days after the Initial Date and, if the Registration  Statement
required to be filed by the Company pursuant to Section 2(a) has not theretofore
been declared effective by the Commission,  each date which is 30 days after the
previous  Computation  Date until such  Registration  Statement  is so  declared
effective.

(c)  Eligibility for Use of Form S-3. The Company agrees that at such time as it
meets all the requirements for the use of Securities Act Registration  Statement
on Form S-3 it shall file all reports and information required to be filed by it
with the  Commission  in a timely manner and take all such other action so as to
maintain such eligibility for the use of such form.

(d)  Additional  Registration  Statement.  In the event the Current Market Price
declines  to $3.00 per share or less and each time  thereafter  that the Current
Market  Price  declines by 20% (each such date, a "Decline  Date"),  the Company
shall,  to the extent  required by the  Securities  Act (because the  additional
shares were not covered by the Registration  Statement filed pursuant to Section
2(a)),  as  reasonably  determined by the Initial  Investor,  file an additional
Registration  Statement  with the  Commission  for  such  additional  number  of
Registrable  Securities  as would be issuable  upon  conversion of the Preferred
Shares and exercise of the Warrants (the "Additional Registrable Securities") in
addition to those previously registered,  assuming (x) with respect to the first
Additional Registration Statement, a Conversion Price of $1.50 per share and (y)
with respect to each succeeding Additional  Registration Statement, a Conversion
Price  of 20%  less  than the  Conversion  Price  assumed  with  respect  to the
immediately preceding Additional Registration  Statement.  The Company shall, to
the extent  required by the  Securities  Act, as  reasonably  determined  by the
Initial  Investor,  prepare and file with the Commission not later than the 30th
day thereafter,  a Registration Statement relating to the offer and sale of such
Additional  Registrable  Securities  and shall use its best efforts to cause the
Commission to declare such Registration Statement effective under the Securities
Act as  promptly  as  practicable  but not later  than 60 days  thereafter.  The
Company  shall not include any other  securities in the  Registration  Statement
relating to the offer and sale of such Additional Registrable Securities.

                  If the Additional Registration Statement is not (i) filed with
the Commission within 30 days after the Decline Date or (ii) declared  effective
by the  Commission  within 90 days  after the  Decline  Date  (either  of which,
without duplication,  an "Additional Registration Date"), then the Company shall
make the payments to the Initial Investor at the Liquidated Damage Rate from the
Additional  Registration  Date to the first Additional  Computation Date and for
each Additional  Computation Date thereafter,  calculated on a pro rata basis to
the date on which the  Additional  Registration  Statement is filed with (in the
event of an  Additional  Registration  Date  pursuant  to clause  (i)  above) or
declared effective by (in the event of an Additional  Registration Date pursuant
to  clause  (ii)  above)  the  Commission  (the  "Additional  Periodic  Amount")
provided,  however,  that in no event shall the liquidated  damages be less than
$25,000;  provided,  further,  however,  that  if  the  Additional  Registration
Statement is not declared  effective by the Commission within 120 days after the
Additional Registration Date set forth in clause (ii) above, then the Liquidated
Damage  Rate  shall  increase  to  4%;  provided,  further,  however,  that  the
Liquidated  Damage Rate shall  increase  by 1% for each 30 day period  after the
120th day after the Additional  Registration Date set forth in clause (ii) above
that the  Additional  Registration  Statement is not  declared  effective by the
Commission.  The full Additional Periodic Amount shall be paid by the Company to
the Initial  Investor by wire  transfer of  immediately  available  funds within
three days after each Additional Computation Date.

                  As used in this Section 2(d),  "Additional  Computation  Date"
means the date which is 30 days after the Additional  Registration  Date and, if
the  Additional  Registration  Statement  required  to be filed  by the  Company
pursuant to this Section 2(d) has not theretofore been declared effective by the
Commission, each date which is 30 days after the previous Additional Computation
Date until such Additional Registration Statement is so declared effective.

3.       Obligations of the Company

                  In  connection  with  the   registration  of  the  Registrable
Securities,  the  Company  shall:  (a)  Promptly  (i)  prepare and file with the
Commission  such  amendments  (including   post-effective   amendments)  to  the
Registration  Statement and supplements to the Prospectus as may be necessary to
keep the Registration  Statement  continuously  effective and in compliance with
the  provisions of the  Securities  Act  applicable  thereto so as to permit the
Prospectus  forming  part  thereof to be current  and useable by  Investors  for
resales of the  Registrable  Securities for a period of five years from the date
on  which  the  Registration  Statement  is  first  declared  effective  by  the
Commission  (the  "Effective  Time") or such shorter  period that will terminate
when all the Registrable  Securities covered by the Registration  Statement have
been sold pursuant thereto in accordance with the plan of distribution  provided
in the Prospectus,  transferred pursuant to Rule 144 under the Securities Act or
otherwise transferred in a manner that results in the delivery of new securities
not subject to transfer restrictions under the Securities Act (the "Registration
Period") and (ii) take all lawful action such that each of (A) the  Registration
Statement and any amendment thereto does not, when it becomes effective, contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, not misleading
and (B) the  Prospectus  forming  part of the  Registration  Statement,  and any
amendment or supplement  thereto,  does not at any time during the  Registration
Period  include  an  untrue  statement  of a  material  fact or omit to  state a
material fact required to be stated  therein or necessary to make the statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.  (b) During the Registration  Period,  comply with the provisions of
the  Securities  Act with respect to the  Registrable  Securities of the Company
covered by the Registration Statement until such time as all of such Registrable
Securities  have been  disposed of in  accordance  with the intended  methods of
disposition by the Investors as set forth in the Prospectus  forming part of the
Registration  Statement;  (c) (i) Prior to the filing with the Commission of any
Registration  Statement  (including any amendments thereto) and the distribution
or delivery of any Prospectus (including any supplements  thereto),  provide (A)
draft copies  thereof to the  Investors  and reflect in such  documents all such
comments as the Investors (and their counsel)  reasonably may propose and (B) to
the Investors a copy of the  accountant's  consent  letter to be included in the
filing and (ii)  furnish  to each  Investor  whose  Registrable  Securities  are
included in the Registration  Statement and its legal counsel  identified to the
Company, (A) promptly after the same is prepared and publicly distributed, filed
with the Commission,  or received by the Company,  one copy of the  Registration
Statement,  each Prospectus,  and each amendment or supplement thereto,  and (B)
such  number of copies of the  Prospectus  and all  amendments  and  supplements
thereto and such other  documents,  as such Investor may  reasonably  request in
order to facilitate the disposition of the Registrable  Securities owned by such
Investor  and, in each case  specified  in this clause (c), the  Investors  will
promptly  provide any comments to the  Company;  (d) (i) Register or qualify the
Registrable   Securities  covered  by  the  Registration  Statement  under  such
securities or "blue sky" laws of such  jurisdictions as the Investors who hold a
majority-in-interest  of the  Registrable  Securities  being offered  reasonably
request,  (ii) prepare and file in such jurisdictions such amendments (including
post-effective   amendments)   and   supplements  to  such   registrations   and
qualifications as may be necessary to maintain the effectiveness  thereof at all
times during the Registration  Period,  (iii) take all such other lawful actions
as may be necessary to maintain such  registrations and qualifications in effect
at all times during the Registration Period, and (iv) take all such other lawful
actions reasonably necessary or advisable to qualify the Registrable  Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection  therewith or as a condition thereto to (A) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d),  (B) subject  itself to general  taxation in any such
jurisdiction  or (C) file a general  consent  to  service of process in any such
jurisdiction; (e) As promptly as practicable after becoming aware of such event,
notify each Investor of the  occurrence  of any event,  as a result of which the
Prospectus included in the Registration  Statement,  as then in effect, includes
an  untrue  statement  of a  material  fact or omits to  state a  material  fact
required to be stated  therein or necessary to make the statements  therein,  in
light of the  circumstances  under  which they were made,  not  misleading,  and
promptly  prepare an amendment to the  Registration  Statement and supplement to
the  Prospectus  to correct such untrue  statement  or  omission,  and deliver a
number of copies of such  supplement  and  amendment  to each  Investor  as such
Investor may reasonably  request;  (f) As promptly as practicable after becoming
aware of such event, notify each Investor who holds Registrable Securities being
sold (or, in the event of an underwritten  offering,  the managing underwriters)
of the issuance by the  Commission of any stop order or other  suspension of the
effectiveness  of the Registration  Statement at the earliest  possible time and
take all lawful  action to effect the  withdrawal,  recession or removal of such
stop order or other suspension; (g) Cause all the Registrable Securities covered
by the Registration  Statement to be listed on the principal national securities
exchange,  and  included in an  inter-dealer  quotation  system of a  registered
national securities association,  on or in which securities of the same class or
series  issued by the  Company  are then  listed or  included;  (h)  Maintain  a
transfer agent and registrar,  which may be a single entity, for the Registrable
Securities not later than the effective date of the Registration Statement;  (i)
Cooperate with the Investors who hold  Registrable  Securities  being offered to
facilitate  the  timely   preparation  and  delivery  of  certificates  for  the
Registrable  Securities to be offered pursuant to the registration statement and
enable  such  certificates  for  the  Registrable   Securities  to  be  in  such
denominations  or amounts,  as the case may be, as the Investors  reasonably may
request and  registered in such names as the Investor may request;  and,  within
three business days after a registration  statement  which includes  Registrable
Securities  is declared  effective  by the  Commission,  deliver and cause legal
counsel  selected  by the  Company  to  deliver  to the  transfer  agent for the
Registrable   Securities  (with  copies  to  the  Investors  whose   Registrable
Securities  are  included  in  such   registration   statement)  an  appropriate
instruction and, to the extent necessary,  an opinion of such counsel;  (j) Take
all such other lawful  actions  reasonably  necessary to expedite and facilitate
the disposition by the Investors of their  Registrable  Securities in accordance
with  the  intended  methods  therefor  provided  in the  Prospectus  which  are
customary under the circumstances;  (k) Make generally available to its security
holders as soon as practicable, but in any event not later than three (3) months
after (i) the  effective  date (as defined in Rule 158(c)  under the  Securities
Act)  of the  Registration  Statement,  and  (ii)  the  effective  date  of each
post-effective  amendment to the Registration  Statement, as the case may be, an
earnings  statement of the Company and its  subsidiaries  complying with Section
11(a) of the  Securities  Act and the rules and  regulations  of the  Commission
thereunder (including, at the option of the Company, Rule 158); (l) In the event
of an  underwritten  offering,  promptly  include or incorporate in a Prospectus
supplement  or  post-effective  amendment  to the  Registration  Statement  such
information as the managers  reasonably  agree should be included therein and to
which the Company does not  reasonably  object and make all required  filings of
such Prospectus  supplement or  post-effective  amendment as soon as practicable
after it is  notified of the  matters to be  included  or  incorporated  in such
Prospectus  supplement  or  post-effective  amendment;  (m) (i) Make  reasonably
available for  inspection by Investors,  any  underwriter  participating  in any
disposition pursuant to the Registration Statement, and any attorney, accountant
or other agent retained by such Investors or any such  underwriter  all relevant
financial and other records, pertinent corporate documents and properties of the
Company and its subsidiaries,  and (ii) cause the Company's officers,  directors
and employees to supply all information  reasonably  requested by such Investors
or any such  underwriter,  attorney,  accountant or agent in connection with the
Registration  Statement, in each case, as is customary for similar due diligence
examinations;  provided,  however,  that all records,  information and documents
that are designated in writing by the Company,  in good faith, as  confidential,
proprietary  or  containing  any material  nonpublic  information  shall be kept
confidential by such Investors and any such underwriter, attorney, accountant or
agent (pursuant to an appropriate  confidentiality  agreement in the case of any
such  holder or agent),  unless  such  disclosure  is made  pursuant to judicial
process in a court  proceeding  (after first  giving the Company an  opportunity
promptly  to seek a  protective  order  or  otherwise  limit  the  scope  of the
information  sought to be  disclosed)  or is required  by law, or such  records,
information or documents  become  available to the public generally or through a
third party not in violation of an accompanying  obligation of  confidentiality;
and  provided,  further,  that,  if the  foregoing  inspection  and  information
gathering would otherwise  disrupt the Company's  conduct of its business,  such
inspection and information  gathering shall, to the maximum extent possible,  be
coordinated on behalf of the Investors and the other parties entitled thereto by
one firm of counsel  designed  by and on behalf of the  majority  in interest of
Investors and other parties;  (n) In connection with any underwritten  offering,
make such representations and warranties to the Investors  participating in such
underwritten  offering and to the managers,  in form, substance and scope as are
customarily  made by the  Company  to  underwriters  in  secondary  underwritten
offerings; (o) In connection with any underwritten offering,  obtain opinions of
counsel  to the  Company  (which  counsel  and  opinions  (in  form,  scope  and
substance)  shall be reasonably  satisfactory to the managers)  addressed to the
underwriters,  covering  such  matters as are  customarily  covered in  opinions
requested in secondary  underwritten offerings (it being agreed that the matters
to be covered by such opinions shall include, without limitation, as of the date
of the opinion and as of the  Effective  Time of the  Registration  Statement or
most recent  post-effective  amendment thereto,  as the case may be, the absence
from the  Registration  Statement  and the  Prospectus,  including any documents
incorporated by reference therein,  of an untrue statement of a material fact or
the omission of a material  fact  required to be stated  therein or necessary to
make the  statements  therein  (in the case of the  Prospectus,  in light of the
circumstances  under which they were made) not misleading,  subject to customary
limitations);  (p) In connection with any  underwritten  offering,  obtain "cold
comfort" letters and updates thereof from the independent  public accountants of
the Company (and, if necessary,  from the independent  public accountants of any
subsidiary  of the Company or of any business  acquired by the Company,  in each
case for which  financial  statements and financial data are, or are required to
be,  included in the  Registration  Statement),  addressed  to each  underwriter
participating  in such  underwritten  offering (if such underwriter has provided
such letter,  representations  or documentation,  if any, required for such cold
comfort  letter to be so addressed),  in customary form and covering  matters of
the type  customarily  covered  in "cold  comfort"  letters in  connection  with
secondary  underwritten  offerings;  (q) In  connection  with  any  underwritten
offering,  deliver such documents and certificates as may be reasonably required
by the managers, if any; and (r) In the event that any broker-dealer  registered
under the Exchange Act shall be an "Affiliate" (as defined in Rule 2729(b)(1) of
the rules and  regulations of the National  Association  of Securities  Dealers,
Inc. (the "NASD Rules") (or any successor  provision thereto)) of the Company or
has a "conflict of interest"  (as defined in Rule  2720(b)(7)  of the NASD Rules
(or any successor  provision  thereto)) and such broker-dealer shall underwrite,
participate as a member of an underwriting  syndicate or selling group or assist
in the  distribution of any Registrable  Securities  covered by the Registration
Statement,  whether  as a  holder  of  such  Registrable  Securities  or  as  an
underwriter,  a  placement  or sales  agent or a broker  or  dealer  in  respect
thereof, or otherwise,  the Company shall assist such broker-dealer in complying
with the requirements of the NASD Rules, including,  without limitation,  by (A)
engaging a "qualified  independent  underwriter" (as defined in Rule 2720(b)(15)
of the NASD Rules (or any successor  provision  thereto)) to  participate in the
preparation  of  the  Registration   Statement   relating  to  such  Registrable
Securities,  to exercise usual standards of due diligence in respect thereof and
to recommend  the public  offering  price of such  Registrable  Securities,  (B)
indemnifying  such  qualified  independent  underwriter  to  the  extent  of the
indemnification of underwriters  provided in Section 6 hereof, and (C) providing
such  information  to such  broker-dealer  as may be  required in order for such
broker-dealer  to comply with the requirements of the NASD Rules. 4. Obligations
of the Investors

                  In  connection  with  the   registration  of  the  Registrable
Securities, the Investors shall have the following obligations:  (a) It shall be
a  condition  precedent  to the  obligations  of the  Company  to  complete  the
registration  pursuant  to  this  Agreement  with  respect  to  the  Registrable
Securities  of a particular  Investor  that such  Investor  shall furnish to the
Company such information regarding itself, the Registrable Securities held by it
and the intended method of disposition of the Registrable  Securities held by it
as shall be reasonably  required to effect the  registration of such Registrable
Securities and shall execute such documents in connection with such registration
as the Company may  reasonably  request.  As least seven days prior to the first
anticipated filing date of the Registration Statement,  the Company shall notify
each Investor of the  information  the Company  requires from each such Investor
(the  "Requested  Information")  if such  Investor  elects  to  have  any of its
Registrable Securities included in the Registration  Statement.  If at least two
business days prior to the anticipated  filing date the Company has not received
the Requested Information from an Investor (a "Non-Responsive  Investor"),  then
the Company may file the Registration  Statement without  including  Registrable
Securities of such  Non-Responsive  Investor and have no further  obligations to
the  Non-Responsive  Investor;  (b)  Each  Investor  by  its  acceptance  of the
Registrable  Securities  agrees to cooperate with the Company in connection with
the preparation and filing of the Registration Statement hereunder,  unless such
Investor  has  notified the Company in writing of its election to exclude all of
its  Registrable  Securities  from  the  Registration  Statement;  and (c)  Each
Investor  agrees  that,  upon  receipt  of any  notice  from the  Company of the
occurrence of any event of the kind  described in Section 3(e) or 3(f), it shall
immediately  discontinue its disposition of Registrable  Securities  pursuant to
the  Registration  Statement  covering such  Registrable  Securities  until such
Investor's  receipt of the  copies of the  supplemented  or  amended  Prospectus
contemplated  by Section 3(e) and, if so directed by the Company,  such Investor
shall  deliver to the Company (at the  expense of the  Company) or destroy  (and
deliver  to the  Company  a  certificate  of  destruction)  all  copies  in such
Investor's  possession,  of the Prospectus covering such Registrable  Securities
current at the time of receipt of such notice. 5. Expenses of Registration

                  All   expenses,   other  than   underwriting   discounts   and
commissions,   incurred   in   connection   with   registrations,   filings   or
qualifications  pursuant to Section 3, but including,  without  limitation,  all
registration,  listing,  and qualifications  fees,  printing and engraving fees,
accounting fees, and the fees and disbursements of counsel for the Company,  and
the  reasonable  fees of one firm of  counsel to the  holders  of a majority  in
interest  of the  Registrable  Securities  shall be borne by the  Company  in an
amount not to exceed $20,000.

6.       Indemnification and Contribution

(a) The  Company  shall  indemnify  and hold  harmless  each  Investor  and each
underwriter,   if  any,  which   facilitates   the  disposition  of  Registrable
Securities,  and each of their respective officers and directors and each person
who controls  such Investor or  underwriter  within the meaning of Section 15 of
the  Securities  Act or Section 20 of the  Exchange  Act (each such person being
sometimes  hereinafter referred to as an "Indemnified  Person") from and against
any losses,  claims,  damages or  liabilities,  joint or several,  to which such
Indemnified  Person may become  subject under the  Securities  Act or otherwise,
insofar as such losses,  claims,  damages or liabilities  (or actions in respect
thereof)  arise out of or are based upon an untrue  statement or alleged  untrue
statement  of a material  fact  contained  in any  Registration  Statement or an
omission or alleged  omission to state  therein a material  fact  required to be
stated therein or necessary to make the statements therein,  not misleading,  or
arise out of or are based upon an untrue  statement or alleged untrue  statement
of a  material  fact  contained  in any  Prospectus  or an  omission  or alleged
omission  to state  therein a 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 the Company  hereby agrees to
reimburse such  Indemnified  Person for all reasonable  legal and other expenses
incurred by them in connection with  investigating  or defending any such action
or claim as and when such expenses are  incurred;  provided,  however,  that the
Company shall not be liable to any such  Indemnified  Person in any such case to
the extent that any such loss,  claim,  damage or liability  arises out of or is
based upon (i) an untrue  statement or alleged  untrue  statement made in, or an
omission or alleged omission from, such Registration  Statement or Prospectus in
reliance  upon and in  conformity  with  written  information  furnished  to the
Company by such Indemnified Person expressly for use therein or (ii) in the case
of the  occurrence of an event of the type specified in Section 3(e), the use by
the Indemnified Person of an outdated or defective  Prospectus after the Company
has provided to such  Indemnified  Person an updated  Prospectus  correcting the
untrue  statement or alleged  untrue  statement or omission or alleged  omission
giving rise to such loss, claim, damage or liability.

(b) Indemnification by the Investors and Underwriters.  Each Investor agrees, as
a  consequence  of the  inclusion  of any of  its  Registrable  Securities  in a
Registration  Statement,  and each  underwriter,  if any, which  facilitates the
disposition  of  Registrable   Securities  shall  agree,  as  a  consequence  of
facilitating  such  disposition  of  Registrable  Securities,  severally and not
jointly,  to  (i)  indemnify  and  hold  harmless  the  Company,  its  directors
(including any person who, with his or her consent, is named in the Registration
Statement  as a director  nominee of the  Company),  its  officers  who sign any
Registration  Statement and each person, if any, who controls the Company within
the  meaning  of either  Section 15 of the  Securities  Act or Section 20 of the
Exchange Act,  against any losses,  claims,  damages or liabilities to which the
Company or such other persons may become  subject,  under the  Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect  thereof) arise out of or are based upon an untrue  statement or alleged
untrue statement of a material fact contained in such Registration  Statement or
Prospectus or arise out of or are based upon the omission or alleged omission to
state therein 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,  in the  case of the  Prospectus),  not  misleading,  in each  case to the
extent,  but only to the extent,  that such untrue  statement or alleged  untrue
statement  or omission  or alleged  omission  was made in  reliance  upon and in
conformity with written  information  furnished to the Company by such holder or
underwriter  expressly for use therein;  provided,  however, that no Investor or
underwriter  shall be liable under this Section 6(b) for any amount in excess of
the net proceeds paid to such Investor or  underwriter in respect of shares sold
by it, and (ii) reimburse the Company for any legal or other  expenses  incurred
by the Company in connection with  investigating or defending any such action or
claim as such expenses are incurred.

(c)  Notice  of  Claims,   etc.  Promptly  after  receipt  by  a  party  seeking
indemnification  pursuant to this Section 6 (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  6 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 as to which  both  the  Indemnifying  Party  and the
Indemnified  Party are  parties,  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 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, costs
and  expenses,  (y) the  Indemnified  Party  and the  Indemnifying  Party  shall
reasonably have concluded that  representation  of the Indemnified  Party by 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,
potentially  differing  interests  between  such  parties in the  conduct of the
defense  of such  Claim,  or 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,  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 counsel for the  Indemnified  Party  (together  with  appropriate  local
counsel).  The Indemnified Party shall not, without the prior written consent of
the  Indemnifying  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  Indemnifying  Party  from  all
liabilities with respect to such Claim or judgment.

(d)  Contribution.  If the  indemnification  provided  for in this  Section 6 is
unavailable  to or  insufficient  to hold harmless an  Indemnified  Person under
subsection  (a) or (b)  above in  respect  of any  losses,  claims,  damages  or
liabilities  (or actions in respect  thereof)  referred  to  therein,  then each
Indemnifying  Party  shall  contribute  to the  amount  paid or  payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities (or
actions in respect  thereof) in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and the Indemnified Party in connection
with the statements or omissions which resulted in such losses,  claims, damages
or liabilities  (or actions in respect  thereof),  as well as any other relevant
equitable  considerations.  The relative  fault of such  Indemnifying  Party and
Indemnified  Party shall be  determined  by reference  to,  among other  things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged  omission to state a material  fact relates to  information  supplied by
such Indemnifying  Party or by such Indemnified Party, and the parties' relative
intent,  knowledge,  access to information and opportunity to correct or prevent
such  statement or omission.  The parties hereto agree that it would not be just
and equitable if  contribution  pursuant to this Section 6(d) were determined by
pro rata allocation (even if the Investors or any  underwriters  were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable  considerations  referred to in this Section 6(d).
The amount  paid or payable by an  Indemnified  Party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
shall be  deemed  to  include  any legal or other  fees or  expenses  reasonably
incurred by such Indemnified Party in connection with investigating or defending
any such  action or  claim.  No person  guilty of  fraudulent  misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution   from  any  person   who  was  not   guilty  of  such   fraudulent
misrepresentation. The obligations of the Investors and any underwriters in this
Section 6(d) to contribute  shall be several in proportion to the  percentage of
Registrable  Securities registered or underwritten,  as the case may be, by them
and not joint. (e)  Notwithstanding any other provision of this Section 6, in no
event shall any (i)  Investor be required to  undertake  liability to any person
under  this  Section 6 for any  amounts  in excess of the  dollar  amount of the
proceeds  to be  received  by such  Investor  from the  sale of such  Investor's
Registrable  Securities  (after  deducting any fees,  discounts and  commissions
applicable  thereto)  pursuant to any  Registration  Statement  under which such
Registrable  Securities  are to be registered  under the Securities Act and (ii)
underwriter be required to undertake  liability to any Person  hereunder for any
amounts in excess of the aggregate  discount,  commission or other  compensation
payable  to  such  underwriter  with  respect  to  the  Registrable   Securities
underwritten by it and distributed pursuant to the Registration Statement.

(f) The  obligations of the Company under this Section 6 shall be in addition to
any liability which the Company may otherwise have to any Indemnified Person and
the  obligations  of any  Indemnified  Person  under this  Section 6 shall be in
addition to any liability  which such  Indemnified  Person may otherwise have to
the Company. The remedies provided in this Section 6 are not exclusive and shall
not limit  any  rights  or  remedies  which may  otherwise  be  available  to an
indemnified party at law or in equity.

7.       Rule 144

                  With a view to making  available to the Investors the benefits
of Rule 144 under the  Securities Act or any other similar rule or regulation of
the Commission  that may at any time permit the Investors to sell  securities of
the Company to the public without  registration ("Rule 144"), the Company agrees
to use its best efforts to:

(a)      comply with the provisions of paragraph (c) (1) of Rule 144; and
(b) file with the Commission in a timely manner all reports and other  documents
required  to be filed by the  Company  pursuant to Section 13 or 15(d) under the
Exchange Act; and, if at any time it is not required to file such reports but in
the past had  been  required  to or did file  such  reports,  it will,  upon the
request of any Investor, make available other information as required by, and so
long as  necessary to permit sales of, its  Registrable  Securities  pursuant to
Rule 144.

8.       Assignment

                  The rights to have the Company register Registrable Securities
pursuant to this Agreement shall be  automatically  assigned by the Investors to
any permitted  transferee of all or any portion of such  Registrable  Securities
(or all or any portion of any  Preferred  Shares or Warrant of the Company which
is convertible into such securities) only if: (a) the Investor agrees in writing
with the  transferee  or  assignee  to assign  such  rights,  and a copy of such
agreement  is  furnished  to the  Company  within a  reasonable  time after such
assignment,  (b) the Company is, within a reasonable time after such transfer or
assignment,  furnished  with written  notice of (i) the name and address of such
transferee  or  assignee  and (ii) the  securities  with  respect  to which such
registration rights are being transferred or assigned, (c) immediately following
such transfer or  assignment,  the  securities so transferred or assigned to the
transferee or assignee constitute  Restricted  Securities,  and (d) at or before
the time the Company  received the written notice  contemplated by clause (b) of
this sentence the  transferee or assignee  agrees in writing with the Company to
be bound by all of the provisions contained herein. 9. Amendment and Waiver

     Any provision of this Agreement may be amended and the  observance  thereof
may  be  waived  (either  generally  or  in a  particular  instance  and  either
retroactively  or  prospectively),  only with the written consent of the Company
and Investors who hold a majority-in-interest of the Registrable Securities. Any
amendment or waiver  effected in accordance with this Section 9 shall be binding
upon each Investor and the Company.

10.      Changes in Common Stock

                  If, and as often as, there are any changes in the Common Stock
by  way  of  stock  split,  stock  dividend,   reverse  split,   combination  or
reclassification,   or  through   merger,   consolidation,   reorganization   or
recapitalization, or by any other means, appropriate adjustment shall be made in
the  provisions  hereof,  as may be required,  so that the rights and privileges
granted hereby shall continue with respect to the Common Stock as so changed.

11.      Miscellaneous

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

(b) If,  after  the date  hereof  and  prior  to the  Commission  declaring  the
Registration  Statement to be filed pursuant to Section 2(a) effective under the
Securities  Act, the Company grants to any Person any  registration  rights with
respect to any Company  securities which are more favorable to such other Person
than those provided in this  Agreement,  then the Company  forthwith shall grant
(by means of an amendment to this Agreement or otherwise) identical registration
rights to all Investors hereunder.

(c)  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 days after the date of deposit in the United States mails, as follows:

                  (i)      if to the Company, to:

                           IFS International Holdings, Inc.
                           Rensselaer Technology Park
                           300 Jordan Rd.
                           Troy, NY 12180
                           Attention:
                           (518) 283-7900
                           [                        ] (Fax)
                            ------------------------

                           with a copy to:

                           Parker Duryee Rosoff & Haft
                           529 Fifth Avenue
                           New York, NY 10017
                           Attention:  Michael D. DiGiovanna, Esq.
                           (212) 599-0500
                           (212) 972-9487 (Fax)

                  (ii)     if to the Initial Investor, to:

                           The Shaar Fund Ltd.,
                           c/o Levinson Capital Management
                           2 World Trade Center, Suite 1820
                           New York, NY  10048
                           Attention:  Samuel Levinson
                           (212) 432-7711
                           (212) 432-7771 (Fax)

                           with a copy to:

                           Cadwalader, Wickersham & Taft
                           100 Maiden Lane
                           New York, NY 10038
                           Attention:  Dennis J. Block, Esq.
                           (212) 504-5555
                           (212) 504-5557 (Fax)

                           (iii) if to any other  Investor,  at such  address as
         such Investor shall have provided in writing to the Company.

The  Company,  the Initial  Investor or any  Investor  may change the  foregoing
address by notice given pursuant to this Section 11(c). (d) Failure of any party
to exercise any right or remedy under this Agreement or otherwise, or delay by a
party in exercising such right or remedy, shall not operate as a waiver thereof.

(e) This Agreement  shall be governed by and  interpreted in accordance with the
laws of the State of New York. Each of the parties  consents to the jurisdiction
of the federal courts whose districts encompass any part of the City of New York
or the state  courts of the State of New York sitting in the City of New York in
connection with any dispute  arising under this Agreement and hereby waives,  to
the maximum extent permitted by law, any objection including any objection based
on  forum  non  conveniens,  to the  bringing  of any  such  proceeding  in such
jurisdictions.

(f) The remedies  provided in this Agreement are cumulative and not exclusive of
any remedies provided by law. If any term, provision, covenant or restriction of
this  Agreement  is held by a court of  competent  jurisdiction  to be  invalid,
illegal,  void  or  unenforceable,  the  remainder  of  the  terms,  provisions,
covenants  and  restrictions  set forth  herein  shall  remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an  alternative  means to
achieve the same or substantially  the same result as that  contemplated by such
term, provision,  covenant or restriction.  It is hereby stipulated and declared
to be the  intention of the parties that they would have  executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

(g) The  Company  shall  not  enter  into  any  agreement  with  respect  to its
securities  that is  inconsistent  with the  rights  granted  to the  holders of
Registrable  Securities  in this  Agreement  or  otherwise  conflicts  with  the
provisions  hereof.  The  Company  is not  currently  a party  to any  agreement
granting any  registration  rights with respect to any of its  securities to any
person which  conflicts  with the Company's  obligations  hereunder or gives any
other party the right to include any  securities in any  Registration  Statement
filed  pursuant  hereto,  except  for such  rights  and  conflicts  as have been
irrevocably  waived.  Without limiting the generality of the foregoing,  without
the written  consent of the holders of a majority in interest of the Registrable
Securities, the Company shall not grant to any person the right to request it to
register any of its  securities  under the  Securities  Act unless the rights so
granted  are  subject  in all  respect  to the prior  rights of the  holders  of
Registrable  Securities  set forth herein,  and are not otherwise in conflict or
inconsistent  with the provisions of this  Agreement.  The  restrictions  on the
Company's  rights  to grant  registration  rights  under  this  paragraph  shall
terminate on the date the Registration Statement to be filed pursuant to Section
2(a) is declared effective by the Commission.

(h) This Agreement,  the Securities Purchase Agreement, the Escrow Instructions,
dated as of a date  even  herewith  (the  "Escrow  Instructions"),  between  the
Company,  the Initial Investor and Cadwalader,  Wickersham & Taft, the Preferred
Shares and the Warrants constitute the entire agreement among the parties hereto
with respect to the subject matter hereof. There are no restrictions,  promises,
warranties  or  undertakings,  other than those set forth or referred to herein.
This Agreement, the Securities Purchase Agreement, the Escrow Instructions,  the
Certificate of Designation and the Warrants  supersede all prior  agreements and
undertakings among the parties hereto with respect to the subject matter hereof.

(i) Subject to the requirements of Section 8 hereof,  this Agreement shall inure
to the benefit of and be binding upon the  successors and assigns of each of the
parties  hereto.  (j) All  pronouns  and any  variations  thereof  refer  to the
masculine, feminine or neuter, singular or plural, as the context may require.

(k) The headings in this  Agreement are for  convenience  of reference  only and
shall not  limit or  otherwise  affect  the  meaning  thereof.  (l) The  Company
acknowledges  that any failure by the Company to perform its  obligations  under
Section 3, or any delay in such  performance  could result in direct  damages to
the  Investors and the Company  agrees that, in addition to any other  liability
the Company may have by reason of any such failure or delay,  the Company  shall
be liable for all direct damages caused by such failure or delay.

(m) This  Agreement may be executed in two or more  counterparts,  each of which
shall be deemed an original but all of which shall  constitute  one and the same
agreement.  A facsimile transmission of this signed Agreement shall be legal and
binding on all parties hereto.

                                             [SIGNATURE PAGE FOLLOWS.]

<PAGE>

                  In Witness Whereof,  the parties have caused this Agreement to
be duly executed and delivered as of the date first above written.

                                IFS International Holdings, Inc.

                                By:
                                    Name:
                                    Title:

                                The Shaar Fund Ltd.

             By:

                                    Name:  Samuel Levinson
                                    Title:  Managing Director

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