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EXHIBIT 10.1  

 
 

STOCK PURCHASE AGREEMENT    
  

    STOCK PURCHASE AGREEMENT, dated as of November 21, 2001, between Zenith National Insurance Corp., a Delaware insurance holding company (the "Company"),
and Odyssey Reinsurance Corporation, a Delaware corporation (the "Purchaser", such term to include, subject to the proviso to Section 17, any assignee of Odyssey Reinsurance Corporation
pursuant to Section 17). 

    WHEREAS,
the Company wishes to sell to Purchaser an aggregate of 1,000,000 shares (the "Shares") of common stock, par value U.S.$1.00 per share (the "Common Stock"), of the Company
and Purchaser wishes to purchase from the Company the Shares, upon the terms and subject to the conditions set forth herein; 

    WHEREAS,
Purchaser is purchasing the Shares for investment purposes; 

    WHEREAS,
the Company and Purchaser will be entering into a Reinsurance Agreement (as defined below); 

    WHEREAS,
the Company and Fairfax Financial Holdings Limited have entered into a standstill Agreement, dated as of June 30, 1999 (the "Standstill Agreement"); and 

    WHEREAS,
pursuant to Section 1.1 of the Standstill Agreement, on or prior to the Settlement Date (defined below), a majority of the Board of Directors of the Company who are
not affiliates of, and are not officers, directors or employees of Purchaser, or any corporation or other entity controlled by or affiliated with the Purchaser, will have approved the transactions
contemplated hereby (the "Board Approval"). 

    NOW,
THEREFORE, in consideration of the premises and the mutual agreements and covenants hereinafter set forth, the Company and Purchaser hereby agree as follows: 

    1.  Sale of Shares. Subject to the terms and conditions contained herein, the Company will sell to Purchaser, and
Purchaser will buy from the Company, the Shares for an aggregate cash purchase price of U.S.$25,000,000 (the "Purchase Price"), representing U.S.$25.00 per Share, payable on the Settlement Date (as
defined below). The Purchase Price shall be adjusted upon the terms and conditions described in Section 8 below. The parties acknowledge and agree that the Shares constitute shares of Common
Stock previously issued and currently held in the treasury of the Company. 

    2.  Settlement. 

	(a)
	Settlement
of the sale and purchase under Section 1 of this Agreement shall take place at the offices of Shearman & Sterling, 199 Bay Street, Suite 4405, Toronto,
Ontario, Canada at 11:00 a.m., New York City time, on the third business day after receipt by the Company and Purchaser of all necessary approvals, non-disapprovals or comparable
responses described in Section 4(f) below (the "Settlement Date" and all such approvals, non-disapprovals and other comparable responses being hereafter collectively referred to as
the "Necessary Approvals").

	(b)
	On
the Settlement Date, the Company shall deliver or cause to be delivered to Purchaser (i) stock certificates evidencing the Shares registered in the name of Purchaser, or
such entity as the Purchaser may designate, and (ii) a receipt for the Purchase Price in respect of the Shares.

	(c)
	On
the Settlement Date, Purchaser shall deliver to the Company (i) the Purchase Price by wire transfer of immediately available funds to the Company's account as furnished to
Purchaser in writing prior to the Settlement Date and (ii) a receipt for the Shares. 

    3.  Representations of the Company. As an inducement to Purchaser to enter into this Agreement, the Company represents
and warrants to Purchaser that: 

	(a)
	Each
of the Company and its subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all
requisite 

 

corporate
power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as it has been and is currently conducted. The Company
has
all requisite corporate power and authority to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The Company is duly licensed or
qualified to do business and is in good standing in the State of Delaware and is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction
which requires such qualification. Each insurance company subsidiary of the Company is duly qualified to do business as an insurance company and is in good standing under the laws of each jurisdiction
which requires such qualification. 

	(b)
	All
the outstanding shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued and are fully paid and nonassessable, and all
outstanding shares of capital stock of the subsidiaries are owned by the Company either directly or through wholly owned subsidiaries free and clear of any perfected security interest or any other
security interests, claims, liens or encumbrances.

	(c)
	The
authorized capital stock of the Company consists of 50,000,000 shares of Common Stock and 1,000,000 shares of preferred stock of the Company. As of the date hereof, 17,532,124
shares of Common Stock are issued and outstanding, all of which are validly issued, fully paid and nonassessable. None of the issued and outstanding shares of Common Stock was issued in violation of
any preemptive rights. There are (i) no warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the capital stock of the Company
or obligating the Company to issue or sell any shares of capital stock of, or any other interest in, the Company and (ii) no outstanding contractual obligations of the Company to repurchase,
redeem or otherwise acquire any shares of Common Stock or to provide any material funds to, or make any material investment (in the form of a loan, capital contribution or otherwise) in, any other
person (other than a direct or indirect subsidiary of the Company), except in each case as provided in (A) any share plan of the Company or its subsidiaries disclosed in the SEC Reports
(defined below), (B) the Standstill Agreement or (C) Article IX of the Purchase Agreement dated February 4, 1981, among Reliance Insurance Company, the Company and certain
other parties (the "Reliance Purchase Agreement"). Upon consummation of the transactions contemplated by this Agreement, the Shares will be fully paid and nonassessable.

	(d)
	Subject
to receipt of the Necessary Approvals, the delivery of and payment for the Shares pursuant to this Agreement will transfer to Purchaser good and valid title to the Shares
free and clear of any perfected security interest or any other security interests, claims, liens or encumbrances. Except for the Standstill Agreement, there are no voting trusts, stockholder
agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Shares.

	(e)
	The
execution and delivery of this Agreement by the Company, the performance by the Company of its obligations hereunder and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all requisite corporate action on the part of the Company. This Agreement has been, or will be on or prior to the Settlement Date, duly executed and
delivered by the Company and constitutes a legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws of general application affecting enforcement of creditors' rights generally and (ii) the
availability of the remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable defenses and would be subject to the discretion of the court before
which any proceeding therefor may be brought. 

2

 

	(f)
	Neither
the Company nor any subsidiary is in violation or default of, (i) any provision of its certificate of incorporation or by-laws, (ii) the terms of
any material indenture, mortgage, lease or loan agreement to which the Company or any of its subsidiaries is a party or bound or to which its or their property is subject, or (iii) any statute,
regulation, rule, judgment, order, decree or other restriction of any government, governmental agency or court to which the Company or any of its subsidiaries is subject.

	(g)
	Neither
the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby conflicts with or results in a breach of any of the provisions of,
or constitutes a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, or results in the creation of any encumbrance on any of the Shares under,
(i) the certificate of incorporation or by-laws of the Company or any of its subsidiaries, (ii) any material indenture, mortgage, lease or loan agreement to which the Company
or any of its subsidiaries is a party or bound or to which its or their property is subject, or (iii) violates any statute, regulation, rule, judgment, order, decree or other restriction of any
government, governmental agency or court to which the Company or any of its subsidiaries is subject.

	(h)
	Subject
to the Necessary Approvals, no notice to, filing with or authorization, consent or approval of, any court or governmental agency or body by the Company is necessary for the
consummation of the transactions contemplated by this Agreement.

	(i)
	The
Company and its subsidiaries have conducted their business in material compliance with all laws and governmental orders applicable to the them or any of their assets or their
business, and the Company and its subsidiaries have not received any notice of and are not in material violation of any such laws or governmental orders.

	(j)
	Since
December 31, 2000, except as disclosed in this Agreement or in the Company's filings (the "SEC Reports") with the Securities and Exchange Commission (the "Commission")
or the Company's press releases, the Company and its subsidiaries have conducted their business only in the ordinary course and in a manner consistent with past practice, and since such date through
the date of this Agreement there has not been any change in or effect on the business of the Company and its subsidiaries that is materially adverse to the financial condition, prospects or results of
operation of the Company and its subsidiaries taken as a whole.

	(k)
	All
negotiations relating to this Agreement and the transactions contemplated hereby have been carried on without the intervention of any person acting on behalf of the Company in
such manner as
to give rise to any valid claim against Purchaser for any brokerage or finder's commission, fee or similar compensation.

	(l)
	Assuming
the accuracy of the representations of Purchaser in Sections 4(a), (b) and (c), the offer and sale of the Shares hereunder are exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"). 

    4.  Representations of Purchaser. As an inducement to the Company to enter into this Agreement, Purchaser represents and
warrants to the Company that: 

	(a)
	Purchaser
is acquiring the Shares to be purchased pursuant to this Agreement for investment purposes, for Purchaser's own account and with no present intention of distributing or
reselling the Shares in any transactions which would be in violation of the securities laws of the United States of America or any state thereof or the insurance laws of any state thereof.

	(b)
	Purchaser
is an "accredited investor" as such term is defined in Rule 501(a) of Regulation D under the Securities Act. Purchaser has conducted its own investigation
with respect to the Company, has received all information that it believes is necessary and appropriate in 

3

 

connection
with its purchase of the Shares and has knowledge and experience in financial and business matters such that it is capable of evaluating the risks of the investment in the Shares. 

	(c)
	Purchaser
is aware that the Shares may not be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of without registration or qualification under the
Securities Act and any applicable state securities laws, except pursuant to an exemption from such registration or qualification under the Securities Act and any applicable state securities laws.
Purchaser is aware that the Company has no obligation to register the Shares for resale except pursuant to Sections 9 through 13 of this Agreement.

	(d)
	Purchaser
is a corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite power and authority
to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Purchaser, the performance by
Purchaser of its obligations hereunder and the consummation by Purchaser of the transactions contemplated hereby have been duly authorized by all requisite action on the part of Purchaser. This
Agreement has been duly executed and delivered by Purchaser. This Agreement constitutes a legal, valid and binding obligation of Purchaser, enforceable against it in accordance with its terms, except
(i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws of general application affecting enforcement of creditors' rights generally and (ii) the availability of the
remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable defenses and would be subject to the discretion of the court before which any proceeding
therefor may be brought.

	(e)
	Purchaser
has sufficient cash available to it to consummate the purchase of the Shares contemplated hereby without the need for any financing other than that which is already
available or committed to Purchaser without material condition; provided that Purchaser hereby expressly acknowledges and agrees that the ability of Purchaser to obtain the necessary funds from such
financing shall not be a condition to the consummation of the transactions contemplated hereby.

	(f)
	Neither
the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby conflicts with or results in a breach of any of the provisions
of, or constitutes a default (or event which with the giving of notice or lapse of time or both, would become a default) under, any material indenture, mortgage, lease or loan agreement to which
Purchaser is bound or violates any statute, regulation, rule, judgment, order, decree or other restriction of any government, governmental agency or court to which Purchaser is subject. No notice to,
filing with or authorization, consent or approval of, any government or governmental agency by Purchaser is necessary for the consummation of the transactions contemplated by the Agreement, except
that Purchaser will be required to file a Form 4 and an amendment to Schedule 13D under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), after consummation of
the transactions contemplated by this Agreement.

	(g)
	All
negotiations relating to this Agreement and the transactions contemplated hereby have been carried on without the intervention of any person acting on behalf of Purchaser in
such manner as to give rise to any valid claim against the Company for any brokerage or finder's commission, fee or similar compensation. 

    5.  Covenants of the Company and Purchaser. Each of the Company and Purchaser will: 

	(a)
	file
or supply, or cause to be filed or supplied, all applications, notifications and information required to be filed or supplied by it pursuant to applicable law in connection
with the sale 

4

 

and
purchase of the Shares and the consummation of the transactions contemplated by this Agreement; 

	(b)
	promptly
respond to requests for additional information and give such reasonable undertakings to insurance and other regulatory authorities as may be required to consummate the sale
and purchase of the Shares;

	(c)
	use
its best efforts to take, or cause to be taken, all actions necessary, proper or advisable in order for it to fulfill its obligations under this Agreement; and

	(d)
	take
no action that would result in its representations and warranties becoming untrue. 

    6.  Conditions to Closing. 

	(a)
	The
obligations of Purchaser hereunder to purchase, and of the Company hereunder to sell, the Shares are subject to the fulfillment or waiver by each party of each of the following
conditions:

	(i)
	all
permits, orders, approvals, consents, non-disapprovals or non-objections relating to any governmental or insurance
regulatory authority which are required in connection with the consummation of the transactions contemplated by this Agreement including, but not limited to, such regulatory authorities as require a
permit, order, approval, consent, non-disapproval or non-objection (in the case of any non-disapprovals or non-objections as evidenced by the time
period prescribed by applicable insurance law having elapsed without Purchaser having received any objection), shall have been obtained (and, subject to Purchaser's obligations under
Section 5(b) and (c), not contain any conditions or other terms that are not reasonably acceptable to Purchaser) and such permits, orders, approvals, consents, non-disapprovals
and/or non-objections shall be effective and shall not have been suspended, revoked or stayed;

	(ii)
	no
injunction or law prohibiting or making illegal the consummation of the transactions contemplated by this Agreement shall have been enacted,
issued, promulgated or enforced by any court or governmental authority having jurisdiction over the Company or Purchaser; and

	(iii)
	the
Company and Odyssey America Reinsurance Corporation or an affiliate of Odyssey America Reinsurance Corporation shall have mutually agreed to
the principal terms of, and agreed to finalize after the Settlement Date, the reinsurance agreement referred to in the Company's press release regarding the sale and purchase of the Shares dated
October 18, 2001 (the "Reinsurance Agreement"). 

	(b)
	The
obligations of the Company to consummate the transactions contemplated by this Agreement shall be further subject to the fulfillment, at or prior to the Settlement Date, of the
following conditions: (i) the representations and warranties of Purchaser contained in this Agreement shall have been true and correct when made and shall be true and correct in all material
respects as of the
Settlement Date, with the same force and effect as if made at the Settlement Date (except if made as of a specified earlier date), (ii) the covenants and agreements contained in this Agreement
to be complied with by Purchaser on or before the Settlement Date shall have been complied with in all material respects, and (iii) the Company shall have received a certificate from Purchaser
to the effect set forth in clauses (i) and (ii) signed by a duly authorized representative thereof.

	(c)
	The
obligations of Purchaser to consummate the transactions contemplated by this Agreement shall be further subject to the fulfillment, on or prior to the Settlement Date, of the
following conditions: (i) the representations and warranties of the Company contained in this Agreement shall have been true and correct when made and shall be true and correct in all 

5

 

material
respects as of the Settlement Date, with the same force and effect as if made at the Settlement Date (except if made as of a specified earlier date), (ii) the covenants and agreements
contained in this Agreement to be complied with by the Company on or before the Settlement Date shall have been complied with in all material respects, and (iii) Purchaser shall have received a
certificate from the Company to the effect set forth in clauses (i) and (ii) signed by a duly authorized representative thereof. 

	(d)
	The
Company shall have delivered to Purchaser a certified copy of resolutions duly adopted by the Board of Directors of the Company which shall evidence the Board Approval. 

    7.  Termination. 

    This
Agreement may be terminated as follows: 

	(a)
	by
mutual written consent of the Company and Purchaser;

	(b)
	at
the election of the Company or Purchaser if the conditions set forth in Section 6(a) of this Agreement have not been fulfilled on or prior to April 30, 2002 (so
long as the party seeking to terminate this Agreement has not breached any provision hereof);

	(c)
	at
the election of the Company, in the event that the conditions set forth in Section 6(b) have not been fulfilled by the Settlement Date or have become impossible of
fulfillment prior to the Settlement Date; and

	(d)
	at
the election of Purchaser, in the event that the conditions set forth in Section 6(c) or 6(d) have not been fulfilled by the Settlement Date or have become impossible of
fulfillment prior to the Settlement Date. 

    In
the event of the termination of this Agreement pursuant to the provisions of this Section 7, this Agreement shall become void and have no effect, without any liability on
the part of any party hereto or its directors, officers or stockholders in respect of this Agreement, except for a breach of Section 21 hereof and except that nothing herein shall limit the
right of either party to seek damages from the other for breach of this Agreement. 

    8.  Adjustments for Dividends and Other Distributions; Stock Splits, etc. In the event of a change in the number of
Shares prior to or on the Settlement Date by virtue of a stock split, stock dividend, split-up, recapitalization or other similar transactions, the Company shall deliver to Purchaser on
the Settlement Date, without change in the Purchase Price, that number of shares of Common Stock as adjusted for such stock split, stock dividend, split-up, recapitalization or other
similar transactions, on the Settlement Date as a result of such transactions and all such shares shall be "Shares" under this Agreement. 

    9.  Registration Rights. 

	(a)
	From
and after the Settlement Date, Purchaser may deliver a written request to the Company, which request shall state (i) the aggregate number of Shares which are proposed to
be sold in a public offering, (ii) whether such Shares will be disposed of through an underwriter (an "Underwritten Offering") or otherwise, and (iii) shall request that the Company
effect a registration under the Securities Act of all or part of the Shares then owned by Purchaser. Upon receipt of such request, the Company will promptly use its best efforts to effect the
registration (the "Registration") under the Securities Act of the Shares which Purchaser has so requested to register so as to permit the disposition (in accordance with the intended methods thereof
as aforesaid) by Purchaser of the Shares so to be registered. 

    If
Purchaser requests an Underwritten Offering, the Company shall enter into an agreement with a managing underwriter selected by Purchaser and named in such request and with such
other underwriters as Purchaser shall from time to time name, which agreement shall contain terms 

6

 

customary for a secondary distribution. The Company shall have the right to approve any and all underwriters selected by Purchaser, which approvals shall not be unreasonably withheld. 

    For
the purposes of Sections 9 through 13 of this Agreement, Shares shall also mean shares of Common Stock which become outstanding after the Settlement Date, and securities issued in
respect of the Shares. 

	(b)
	If
the managing underwriter for an Underwritten Offering notifies Purchaser that it is able to dispose of fewer Shares than the aggregate number which Purchaser has requested to be
registered (such difference to be referred to as the "Undisposed Shares"), then the number of Shares to be registered on behalf of Purchaser shall be reduced by such difference.

	(c)
	Purchaser
may make the request for the Registration only once; provided, however, that in the event that an Underwritten Offering results in Undisposed Shares, then, Purchaser may
subsequently request a Registration pursuant to Section 9(a) one or (to the extent that subsequent notice or notices are of Underwritten Offerings which resulted in Undisposed Shares) more
additional times, to the extent necessary to register on behalf of Purchaser that number of Shares equal to the Undisposed Shares which resulted from the first Registration. 

    10.  Registration of Shares by the Company. If the Company proposes to register on a general form for registration under
the Securities Act a sale, disposition or transfer by the Company or any other person of any Common Stock (otherwise than pursuant to Section 9 of this Agreement, a registration relating solely
to the sale of Common Stock to participants in a share plan of the Company or any of its subsidiaries or a registration relating solely to a reorganization or other transaction described under
Rule 145 of the Securities Act) it will at each such time give written notice to Purchaser of its intention to do so and, upon the written request of Purchaser given within ten (10) days
after mailing of any such notice (which request of such entity shall specify the number of Shares intended to be sold or disposed of by such entity and describe the nature of any proposed sale or
other disposition thereof), the Company will use its best efforts to cause all such Shares to be registered under the Securities Act to the extent requisite to permit the sale or other disposition, in
accordance with the method described in the notice; provided, however, that Purchaser shall have no right to participate in any Underwritten Offering by the Company in connection with Shares to be
registered pursuant to this Section 10, notwithstanding their rights to have Shares registered pursuant to such Section; provided further, that the Company may require Purchaser to agree not to
sell or otherwise dispose of such shares pursuant to the registration statement for a period not exceeding 90 days after the closing of the sale of Common Stock to an underwriter (the "Waiting
Period") to the extent that the managing underwriter of the proposed public offering of securities for which the registration statement was to be filed delivers to Purchaser a letter stating that such
sales or other disposition within such Waiting Period could materially and adversely affect such public offering. In the event of a disagreement in good faith between the parties hereto and the
managing underwriter as to the length of the Waiting Period or any other matters relating to a Registration pursuant to Sections 9 through 13 of this Agreement, the decision of any mutually agreed
upon third party, shall control. 

    11.  Certain Obligations Regarding Registration. 

	(a)
	If
and whenever the Company is required to use its best efforts to effect the Registration of any Shares under the Securities Act as provided above in Sections 9 and 10 of this
Agreement, the Company will promptly:

	(i)
	in
the case of Section 9, prepare and, within sixty (60) days of the date such request was made, (provided that the Company shall use
its best efforts to file such registration statement as soon as possible), file with the Commission a registration statement (on any form that is available to the Company and usable by Purchaser in
connection with such 

7

 

Registration)
with respect to such Shares and use its best efforts to cause such registration statement to become effective; 

	(ii)
	afford
to the officers and authorized representatives of Purchaser reasonable access to the Company's and its subsidiaries' plants, properties,
books and records and its and their principal officers in order that Purchaser may have full opportunity to make a reasonable investigation of the statements made in any such registration statement;

	(iii)
	in
the case of Section 9, prepare and file with the Commission such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all
Shares covered by such registration statement until such time as all of such Shares have been disposed of in accordance with the intended methods of disposition by Purchaser set forth in such
registration statement but in no event for a period of more than nine (9) months after such registration becomes effective;

	(iv)
	furnish
to Purchaser such number of copies of such registration statement and of each such amendment and supplement thereto (in each case including
all exhibits), such number of copies of the prospectus contained in such registration statement (including each preliminary prospectus), in conformity with the requirements of the Securities Act, and
such other documents, as Purchaser may reasonably request in order to facilitate the disposition of the Shares owned by Purchaser;

	(v)
	use
its best efforts to register or qualify the Shares covered by such registration statement under such other securities or blue sky laws of such
jurisdictions within the United States as Purchaser shall reasonably request, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified, to subject itself to taxation in any such jurisdiction, or to consent to general service of process in any such jurisdiction; and

	(vi)
	notify
Purchaser at any time when a prospectus relating thereto is required to be delivered under the Securities Act within the period mentioned in
Section 11(a)(iii) of this Agreement of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statement therein not misleading in light of the circumstances then existing,
and at the request of Purchaser, prepare and furnish to Purchaser a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not 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 not misleading in light of the circumstances then existing. 

	(b)
	In
connection with any Registration pursuant to Sections 9 and 10 of this Agreement, the Company may require Purchaser, and Purchaser agrees:

	(i)
	to
furnish the Company such information regarding itself and the distribution of the Shares as to which a registration is being effected as the
Company may from time to time reasonably request in writing and as shall be required by law in connection therewith; and

	(ii)
	in
the event of a Registration pursuant to Section 10 of this Agreement, to cooperate with the Company and enter into such agreements and
take such actions as may be reasonably requested by the Company. 

8

 

    12.  Registration Expenses. 

	(a)
	For
purposes of Sections 9 through 13 of this Agreement, Registration Expenses shall include all expenses incident to the Company's performance of or compliance with Sections 9
through 13 of this Agreement including, without limitation, all registration and filing fees, all fees and expenses of complying with securities or blue sky laws, all registration and other incidental
expenses in connection with the registration of Shares under the Securities Act, all printing expenses, the fees and disbursements of counsel for the Company and of the Company's independent certified
public accountants, and the expenses of any special audits required by or incident to such performance and compliance (but excluding selling expenses, underwriting discounts and commissions and
transfer taxes, if any).

	(b)
	In
the event of a Registration pursuant to Section 9 of this Agreement, Purchaser shall pay all Registration Expenses other than those expenses and costs which would have
been incurred by the
Company notwithstanding such request and other than those Registration Expenses and costs attributable to the overhead of the Company or any of its subsidiaries or the compensation of any employee
thereof.

	(c)
	Purchaser
shall not be required to pay any Registration Expenses in connection with a registration pursuant to Section 10 of this Agreement except for legal or selling
expenses directly incurred by Purchaser. 

    13.  Indemnification. 

	(a)
	In
the event of any registration of Shares pursuant to Sections 9 through 13 of this Agreement, the Company will indemnify and hold harmless Purchaser and each underwriter of such
Shares and each other person, if any, who controls Purchaser or such underwriter within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to
which Purchaser or such underwriter or controlling 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 (i) any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereto (including any material incorporated by reference into
such registration statement, any such preliminary prospectus, final prospectus or any amendment or supplement thereto, but excluding any item in a preliminary prospectus which is corrected in the
final prospectus), or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; and the
Company will, pursuant to the provisions of Section 13(c) of this Agreement, reimburse Purchaser and each such underwriter and each such controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any such loss, claim, damage or liability or action; provided that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration
statement, any such preliminary prospectus, final prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company by Purchaser or such
underwriter or controlling person specifically for use in preparation thereof.

	(b)
	Purchaser
shall indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 13(a)) the Company, each director of the Company, each officer
of the Company who shall sign such registration statement and each underwriter of such Shares and each other person, if any, who controls Shares or such underwriter within the meaning of the
Securities Act, from any losses, claims, damages or liabilities, joint or several, to which the 

9

 

Company,
such directors or officers of the Company or such underwriter or controlling 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 or omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company by Purchaser specifically for use in preparation
thereof. 

	(c)
	Within
sixty (60) days after receipt by an indemnified party of notice of either a claim or the commencement of any action involving a claim referred to in the preceding
paragraphs of this Section 13 such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement of
such action; the failure of any indemnified party to give notice as provided herein shall relieve the indemnifying party of its obligations under the preceding paragraphs of this Section 13,
except where it can be established that the indemnifying party had prior actual notice of such claim or action. In case any such action is brought against an indemnified party, the indemnifying party
will be entitled to participate in and to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof. No indemnifying party, in the defense of any such claim or litigation, shall, except with the consent of each indemnified party, consent to entry of any judgment
or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to
such claim or litigation. 

    14.  Securities Laws. The parties hereto hereby acknowledge that they are aware that the United States securities laws
prohibit any person who has material non-public information about a company from purchasing or selling securities of such company or communicating such information to any other person
under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell securities of such company. 

    15.  Law Governing. This Agreement shall be governed by and construed in accordance with the laws of the State of New
York including, without limitation, New York General Obligations Law Section 5-1401. The headings of the Sections hereof are inserted for convenience only and shall not be deemed to
constitute a part thereof. 

    16.  Jury Trial. THE PARTIES HERETO HEREBY WAIVE ANY RIGHTS TO A TRIAL BY JURY WITH RESPECT TO ANY MATTER RELATING TO
THIS AGREEMENT. 

    17.  Assignment. This Agreement may not be assigned by either party hereto without the prior written consent of the
other party hereto, except that Purchaser may assign this Agreement to Fairfax Financial Holdings Limited and/or any one or more of Fairfax Financial Holdings Limited's (including without limitation
Purchaser's) subsidiaries without the Company's prior written consent; provided that Purchaser shall remain liable for the obligations of Purchaser hereunder as if such assignment had not taken place. 

    18.  Parties in Interest. All the terms and provisions of this Agreement shall be binding upon and inure to the benefit
of and be enforceable by the respective successors and assigns of the parties hereto. 

    19.  Amendments. This Agreement may be amended, modified or terminated only by an instrument in writing signed by the
Company and Purchaser. 

10

 

    20.  Conveyance Taxes. Purchaser and the Company shall each be responsible for any stock transfer and stamp taxes or
other similar taxes which become payable in connection with the sale of the Shares to Purchaser under this Agreement which are such party's obligation under applicable law. Purchaser and the Company
shall execute and deliver all instruments and certificates necessary to enable the other party to make the necessary tax and other filings, if any. 

    21.  Press Releases. Neither party shall issue any press release relating to the transactions contemplated hereby
without having consulted in advance with the other party and the parties shall cooperate as to the timing and contents of any such press release, except in the event that such press release is
required by law or regulations, or by the rules of any securities exchange on which securities of any of the parties hereto are listed or quoted and such consultation and cooperation is not reasonably
practicable within the applicable time periods for issuing the release. 

    22.  Notices. All notices, consents, requests, instructions, approvals and other communications provided herein shall be
validly given or made (and shall be deemed to have been duly given or made upon receipt or delivery), if in writing and delivered personally or sent by nationally recognized overnight courier, by
facsimile transmission (followed up by certified or registered mail, return receipt requested) or by registered or certified mail return receipt requested, (i) if to Purchaser c/o Fairfax
Financial Holdings Limited, 95 Wellington Street West, Suite 800, Toronto, Ontario, Canada M5J 2N7, attention: Eric Salsberg, facsimile (416) 367-2201 with a copy to
Shearman & Sterling, Commerce Court West, Suite 4405, P.O. Box 247, Toronto, Canada M5L IE8, attention: Brice T. Voran, facsimile (416) 360-2958 and (ii) if to
the Company at Zenith National Insurance Corp. at 21255 Califa Street, Woodland Hills, California 91367, attention: Stanley R. Zax, facsimile (818) 713-0177 with a copy to Skadden,
Arps, Slate, Meagher & Flom LLP, 300 South Grand Avenue, Suite 3400, Los Angeles, California 90071, attention: Jerome L. Coben, facsimile (213) 687-5600. 

    23.  Miscellaneous. This Agreement may be executed concurrently in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same instrument. Each counterpart may be delivered by facsimile transmission, which transmission shall be deemed delivery of
an originally executed document. 

    24.  Entire Agreement. This Agreement is intended by the parties as a final expression of their understandings and
intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject matter. 

    25.  Further Action. Each of the parties hereto shall use all commercially reasonable efforts to take, or cause to be
taken, all appropriate action, do or cause to be done all things necessary, proper or advisable under applicable laws and regulations, and execute and deliver such documents and other papers, as may
be required to carry out the provisions of this Agreement and consummate and make effective the transactions contemplated by this Agreement. Each party will consent to any proposal by the other party
for structuring any aspect of the sale of the Shares in a manner which is advantageous to the party making the proposal if such proposal is neutral or advantageous to the party whose consent is sought
(as determined by the party whose consent is sought), provided that such proposal is reasonably feasible, is not contrary to applicable laws and regulations and will be at no cost to such party. 

INTENTIONALLY
LEFT BLANK 

11

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. 

	 	 	ZENITH NATIONAL INSURANCE CORP.
	

 	
 	

By:	
 	

/s/ STANLEY R. ZAX   

	 	 	 	 	Name:	 	Stanley R. Zax
	 	 	 	 	Title:	 	Chairman & President
	

 	
 	

ODYSSEY REINSURANCE CORPORATION
	

 	
 	

By:	
 	

/s/ DONALD L. SMITH   

	 	 	 	 	Name:	 	Donald L. Smith
	 	 	 	 	Title:	 	Senior Vice President

12

QuickLinks

STOCK PURCHASE AGREEMENTSECURITIES PURCHASE AGREEMENT

      This  SECURITIES  PURCHASE  AGREEMENT  (this  "Agreement"),  dated  as  of
November 2, 2001 is made by and among  Atlantic  Technology  Ventures,  Inc.,  a
Delaware  corporation,  with headquarters  located at The Empire State Building,
350 Fifth  Avenue,  Suite  5507,  New York,  NY 10118 (the  "Company"),  and the
investors  named on the signature  pages hereto,  together with their  permitted
transferees (each, an "Investor" and collectively, the "Investors").

                                    RECITALS:

      A.    The Company and the  Investors are  executing  and  delivering  this
Agreement in reliance upon the exemption from securities  registration  afforded
by Section 4(2) of the Securities Act and Rule 506 under Regulation D.

      B.    The Investors  desire,  upon the terms and conditions stated in this
Agreement,  to  purchase,  for an aggregate  purchase  price of a minimum of Two
Million Dollars  ($2,000,000) and a maximumThree  Million Dollars  ($3,000,000),
shares of Common Stock of the Company.

      C.    The capitalized  terms used herein and not otherwise  defined have
the meanings given them in Article VII hereof.

      In consideration of the premises and the mutual covenants contained herein
and other good and valuable consideration,  the receipt and sufficiency of which
are hereby acknowledged, the Company and the Investors hereby agree as follows:

                                    ARTICLE I
                         PURCHASE AND SALE OF SECURITIES

      1.1   Purchase  and Sale of  Securities.  At the Closing the Company  will
issue and sell to each Investor,  and each Investor will (on a several and not a
joint basis)  purchase the Securities  from the Company.  The purchase price per
share of the Common Stock (the "Purchase  Price") shall be $0.24. For each share
of Common Stock purchased by an investor, such investor shall receive a warrant,
substantially  in the form  attached  hereto  as  Exhibit C (the  "Warrant")  to
purchase one (1) share of Common Stock at an exercise price equal to $0.29.

      1.2   Payment.  At the  Closing,  each  Investor  will  pay the  aggregate
Purchase  Price set forth beneath its name on the signature  page hereof by wire
transfer of immediately  available  funds in accordance  with the Company's wire
instructions   set  forth  on  Exhibit  A  hereto.   The  Company  will  deliver
certificates  representing  the  Securities  against  delivery of the  aggregate
Purchase Price as described above.

      1.3   Closing  Date.  The  Closing  will  take  place  at 10 a.m.  Eastern
Standard  Time on  November 2, 2001 or at such other date or time agreed upon by
the parties to this Agreement (the "Closing Date").  The Closing will be held at
the offices of the Company or at such other place as the parties agree.

<PAGE>

                                   ARTICLE II
                    INVESTOR'S REPRESENTATIONS AND WARRANTIES

      Each Investor represents and warrants to the Company, severally and solely
with  respect to itself and its purchase  hereunder  and not with respect to any
other Investor, that:

      2.1   Investment  Purpose.  The Investor is purchasing  the Securities for
its  own  account  and  not  with a  present  view  toward  the  public  sale or
distribution  thereof,  except  pursuant to sales  registered  or exempted  from
registration  under the Securities Act;  provided,  however,  that by making the
representation herein, the Investor does not agree to hold any of the Securities
for any minimum or other  specific term and reserves the right to dispose of the
Securities  at any  time  in  accordance  with  or  pursuant  to a  registration
statement or an exemption under the Securities Act.

      2.2   Accredited Investor Status. The Investor is an "accredited investor"
as defined  in Rule  501(a) of  Regulation  D. The  Investor  has  delivered  an
Investor  Questionnaire  in the form of Exhibit B to the  Company.  The Investor
hereby represents that, either by reason of the Investor's business or financial
experience or the business or financial  experience of the Investor's  advisors,
if any, the Investor has the capacity to protect the Investor's own interests in
connection with the transaction contemplated hereby.

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

      2.4   Information.  The Investor  and  its  advisors,  if any,  have  been
furnished with all materials  relating to the business,  finances and operations
of the Company,  and materials relating to the offer and sale of the Securities,
that have been  requested by the Investor or its  advisors,  if any,  including,
without  limitation,  any Current Reports on Form 8-K filed by the Company since
June 30, 2001 (the "8-Ks"),  the Company's  Quarterly Reports on Form 10-QSB for
the Quarters  ended June 30, 2001,  March 31, 2001,  and September 30, 2000, and
the Company's Annual Report on Form 10-KSB for the year ended December 31, 2000.
The Investor and its advisors, if any, have been afforded the opportunity to ask
questions of the Company.  Neither such  inquiries  nor any other due  diligence
investigation  conducted by Investor or any of its  advisors or  representatives
modify,  amend  or  affect  the  Investor's  right  to  rely  on  the  Company's
representations and warranties contained in Article III below.

      2.5   Acknowledgement of Risk. The Investor  acknowledges  and understands
that its  investment in the  Securities  involves a significant  degree of risk,
including,  without  limitation,  (i) the Company  remains a  development  stage
business  with  limited  operating  history and  requires  substantial  funds in
addition to the proceeds from the sale of Securities;  (ii) an investment in the
Company is highly  speculative,  and only  investors  who can afford the loss of
their  entire  investment  should  consider  investing  in the  Company  and the
Securities; (iii) the Investor may not be able to liquidate its investment; (iv)
transferability  of the Securities is

                                       2
<PAGE>

extremely  limited;  (v) in the event of a disposition  of the  Securities,  the
Investor  could sustain the loss of its entire  investment  and (vi) the Company
has not paid any  dividends  on its Common  Stock since  inception  and does not
anticipate the payment of dividends in the  foreseeable  future.  Such risks are
more  fully set forth in the SEC  Documents  and the risk  factors  set forth on
Exhibit D attached hereto.

      2.6   Governmental Review. The Investor  understands that no United States
federal  or state  agency or any other  government  or  governmental  agency has
passed upon or made any  recommendation  or  endorsement of the Securities or an
investment therein.

      2.7   Transfer or Resale. The Investor understands that:

            (a) except as otherwise  provided in Article V, the Securities  have
not been and are not being registered under the Securities Act or any applicable
state securities laws and, consequently,  the Investor may have to bear the risk
of owning the Securities for an indefinite period of time because the Securities
may not be  transferred  unless (i) the resale of the  Securities  is registered
pursuant to an effective  registration  statement under the Securities Act; (ii)
the  Investor  has  delivered  to the  Company an  opinion of counsel  (in form,
substance   and  scope   customary   for  opinions  of  counsel  in   comparable
transactions) to the effect that the Securities to be sold or transferred may be
sold or transferred  pursuant to an exemption from such  registration;  or (iii)
the Securities are sold or transferred pursuant to Rule 144;

            (b) any sale of the  Securities  made in reliance on Rule 144 may be
made  only in  accordance  with the  terms  of Rule 144 and,  if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the person through whom the sale is made) may be deemed to be an underwriter
(as that term is defined in the Securities Act) may require compliance with some
other exemption under the Securities Act or the rules and regulations of the SEC
thereunder; and

            (c) except as set forth in Article V,  neither  the  Company nor any
other  person is under any  obligation  to  register  the  Securities  under the
Securities  Act or any state  securities  laws or to  comply  with the terms and
conditions of any exemption thereunder.

      2.8   Legends. The Investor understands the certificates  representing the
Securities will bear a restrictive  legend in  substantially  the following form
(and a stop-transfer  order may be placed against  transfer of the  certificates
for such Securities):

      THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN REGISTERED
UNDER THE  SECURITIES  ACT OF 1933, AS AMENDED,  OR THE  SECURITIES  LAWS OF ANY
STATE OF THE UNITED  STATES.  THE  SECURITIES  MAY NOT BE SOLD,  TRANSFERRED  OR
ASSIGNED  IN  THE  ABSENCE  OF  AN  EFFECTIVE  REGISTRATION  STATEMENT  FOR  THE
SECURITIES  UNDER  APPLICABLE  SECURITIES  LAWS,  OR  UNLESS  OFFERED,  SOLD  OR
TRANSFERRED   PURSUANT  TO  AN  AVAILABLE   EXEMPTION   FROM  THE   REGISTRATION
REQUIREMENTS OF THOSE LAWS.

                                       3
<PAGE>

      2.9   Authorization; Enforcement. This Agreement has been duly and validly
authorized,  executed and  delivered on behalf of the Investor and represent the
valid and binding obligations of the Investor enforceable in accordance with its
terms,  subject  to  the  effect  of  any  applicable  bankruptcy,   insolvency,
reorganization,  moratorium  or similar laws  affecting  the rights of creditors
generally and the application of general principles of equity.

      2.10  Residency.  The Investor is a resident of the jurisdiction set forth
immediately below such Investor's name on the signature pages hereto.

      2.11  Acknowledgements    Regarding    Placement   Agent.   The   Investor
acknowledges  that Joseph  Stevens,  Inc.  is acting as a  placement  agent (the
"Placement  Agent")  for  the  Securities  being  offered  hereby  and  will  be
compensated  by the Company for acting in such  capacity.  The Investor  further
acknowledges  that the Placement  Agent has acted solely as a Placement Agent in
connection  with  the  offering  of the  Securities  by the  Company,  that  the
information   and  data  provided  to  the  Investor  in  connection   with  the
transactions   contemplated  hereby  have  not  been  subjected  to  independent
verification  by the  Placement  Agent,  and that the  Placement  Agent makes no
representation  or warranty with respect to the accuracy or completeness of such
information,  data or other related  disclosure  material.  The Investor further
acknowledges  that in making  its  decision  to enter  into this  Agreement  and
purchase the Securities it has relied on its own  examination of the Company and
the terms of, and consequences,  of holding the Securities. The Investor further
acknowledges  that the  provisions  of this Section 2.11 are for the benefit of,
and may be enforced by, the Placement Agent. The placement fee to be paid to the
Placement Agent is equal to 7% of the aggregate  purchase price, plus 10% of the
Warrants and Common Stock purchased herein.

                                  ARTICLE III
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

      The Company represents and warrants to the Investors that:

      3.1   Organization  and Qualification.  The Company is duly  incorporated,
validly  existing and in good  standing  under the laws of the  jurisdiction  in
which it is incorporated, with full power and authority (corporate and other) to
own,  lease,  use and operate its properties and to carry on its business as and
where now owned,  leased,  used,  operated  and  conducted.  The Company is duly
qualified to do business and is in good standing in every  jurisdiction in which
the nature of the business conducted by it makes such  qualification  necessary,
except where the failure to be so qualified or in good standing would not have a
Material Adverse Effect.

      3.2   Authorization;  Enforcement.  (a)  The  Company  has  all  requisite
corporate power and authority to enter into and to perform its obligations under
this Agreement, to consummate the transactions  contemplated hereby and to issue
the Securities in accordance with the terms hereof; (b) the execution,  delivery
and  performance of this Agreement by the Company and the  consummation by it of
the transactions  contemplated hereby (including without limitation the issuance
of the Securities) have been duly authorized by the Company's Board of Directors
and no further consent or authorization of the Company,  its Board of Directors,
or its  shareholders  is required;  (c) this Agreement has been duly executed by
the  Company;  and (d) this  Agreement  constitutes  a legal,  valid and binding
obligation of the Company enforceable against the

                                       4
<PAGE>

Company in accordance  with its terms,  subject to the effect of any  applicable
bankruptcy, insolvency,  reorganization, or moratorium or similar laws affecting
the rights of creditors  generally and the application of general  principles of
equity.

      3.3   Capitalization.  As of the date hereof, the authorized capital stock
of the Company  consists of (a)  50,000,000  shares of Common  Stock,  par value
$.001 per share,  of which  7,201,480  shares are  issued  and  outstanding  and
1,109,200  shares are  reserved for issuance  under the  Company's  employee and
director  stock option plans and warrants to purchase  646,500  shares of Common
Stock at exercise prices between $0.875 and $8.05; and (b) 10,000,000  shares of
preferred stock, par value $.001 per share, of which 1,375,000 are designated as
Series A Convertible  Preferred  Stock,  with  1,146,482  shares and warrants to
purchase 369,170 shares of Series A Convertible Preferred Stock outstanding, and
2,000,000  are  designated as Series B Convertible  Preferred  Stock,  with none
outstanding.  All of such  outstanding  shares of  capital  stock  are,  or upon
issuance will be, duly authorized, validly issued, fully paid and nonassessable.
No shares of capital  stock of the Company,  including the  Securities  issuable
pursuant  to this  Agreement,  are  subject  to  preemptive  rights or any other
similar rights of the  stockholders  of the Company or any liens or encumbrances
imposed  through  the  actions  or  failure  to act of the  Company.  Except  as
disclosed in Schedule 3.3 and except for the transactions  contemplated  hereby,
(i) there are no outstanding options,  warrants, scrip, rights to subscribe for,
puts,  calls,  rights of first refusal,  agreements,  understandings,  claims or
other  commitments  or  rights  of any  character  whatsoever  relating  to,  or
securities or rights convertible into,  exercisable for, or exchangeable for any
shares of capital stock of the Company,  or arrangements by which the Company is
or may become bound to issue additional  shares of capital stock of the Company;
(ii)  there  are no  agreements  or  arrangements  under  which the  Company  is
obligated to register the sale of any of its securities under the Securities Act
and (iii) there are no anti-dilution or price adjustment provisions contained in
any  security  issued by the Company (or in any  agreement  providing  rights to
security holders) that will be triggered by the issuance of the Securities.  The
Company has furnished to the Investors  true and correct copies of the Company's
Certificate of Incorporation,  as amended,  as in effect on the date hereof, the
Company's Bylaws as in effect on the date hereof and the terms of all securities
convertible into or exercisable for Common Stock of the Company and the material
rights of the holders thereof in respect thereto.

      3.4   Issuance  of  Securities. The shares of Common  Stock of the Company
purchased  under this Agreement and all Warrant Shares are duly  authorized and,
upon issuance in accordance  with the terms of this Agreement  (and, in the case
of  Warrant  Shares,  the  Warrants),  will be  validly  issued,  fully paid and
non-assessable,  free from all taxes,  liens,  claims,  encumbrances and charges
with respect to the issue thereof,  will not be subject to preemptive  rights or
other  similar  rights  of  stockholders  of the  Company,  and will not  impose
personal liability on the holders thereof.

      3.5   No Conflicts; No Violation.

            (a)   The execution,  delivery and  performance of this Agreement by
the Company and the consummation by the Company of the transactions contemplated
hereby (including,  without limitation, the issuance of the Securities) will not
(i) conflict with or result in a violation of any  provision of its  Certificate
of Incorporation or Bylaws, (ii) violate or conflict with, or result in a breach
of any  provision  of, or constitute a default (or an event which with

                                       5
<PAGE>

notice or lapse of time or both could become a default) under, or give to others
any  rights  of  termination,   amendment  (including  without  limitation,  the
triggering of any anti-dilution provision), acceleration or cancellation of, any
agreement, indenture, patent, patent license, or instrument to which the Company
is a party, or (iii) result in a violation of any law, rule, regulation,  order,
judgment  or  decree  (including  U.S.  federal  and state  securities  laws and
regulations and regulations of any  self-regulatory  organizations  to which the
Company or its securities are subject) applicable to the Company or by which any
property  or  asset  of the  Company  is  bound  or  affected  (except  for such
conflicts,   breaches,  defaults,   terminations,   amendments,   accelerations,
cancellations  and  violations as would not,  individually  or in the aggregate,
have a Material Adverse Effect).

            (b)   The  Company  is not  in  violation  of  its   Certificate  of
Incorporation,  Bylaws or other organizational  documents and the Company is not
in default (and no event has occurred which with notice or lapse of time or both
could put the Company in default) under any  agreement,  indenture or instrument
to which  the  Company  is a party or by which  any  property  or  assets of the
Company  is bound or  affected,  except  for  possible  defaults  as would  not,
individually or in the aggregate, have a Material Adverse Effect.

            (c)   The Company is not conducting its business in violation of any
law,  ordinance or regulation of any governmental  entity, the failure to comply
with which would,  individually  or in the  aggregate,  have a Material  Adverse
Effect.

            (d)   Except as  specifically  contemplated by this Agreement and as
required under the Securities Act and any applicable  state  securities  laws or
any  listing  agreement  with any  securities  exchange or  automated  quotation
system,  the Company is not  required to obtain any  consent,  authorization  or
order of, or make any filing or  registration  with,  any court or  governmental
agency or any regulatory or self  regulatory  agency in order for it to execute,
deliver or perform any of its  obligations  under this  Agreement in  accordance
with the terms hereof,  or to issue and sell the  Securities in accordance  with
the  terms  hereof.   All   consents,   authorizations,   orders,   filings  and
registrations  which the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof.

      3.6   SEC Documents,  Financial  Statements.  The Company has timely filed
all reports,  schedules,  forms,  statements and other documents  required to be
filed by it with the SEC  since  January  1,  2001,  pursuant  to the  reporting
requirements  of the Exchange Act (all of the foregoing  filed prior to the date
hereof and all exhibits included therein and financial  statements and schedules
thereto and documents (other than exhibits)  incorporated by reference  therein,
being hereinafter  referred to herein as the "SEC  Documents").  The Company has
delivered  to each  Investor,  or each  Investor  has had  access  to,  true and
complete copies of the SEC Documents,  except for such exhibits and incorporated
documents.  As of their  respective  dates,  the SEC  Documents  complied in all
material  respects with the  requirements  of the Exchange Act or the Securities
Act, as the case may be, and the rules and  regulations  of the SEC  promulgated
thereunder  applicable to the SEC Documents,  and none of the SEC Documents,  at
the time they were  filed with the SEC,  contained  any  untrue  statement  of a
material fact or omitted to state a material fact required to be stated  therein
or  necessary  in  order  to  make  the  statements  therein,  in  light  of the
circumstances under which they were made, not misleading. As of their respective
dates,  the financial  statements  of the Company  included in the SEC Documents
complied  as to

                                       6
<PAGE>

form in all material  respects with applicable  accounting  requirements and the
published rules and regulations of the SEC with respect thereto.  Such financial
statements  have  been  prepared  in  accordance  with U.S.  generally  accepted
accounting principles, consistently applied, during the periods involved (except
(i) as may be otherwise  indicated  in such  financial  statements  or the notes
thereto, or (ii) in the case of unaudited interim statements, to the extent they
may not include footnotes or may be condensed or summary  statements) and fairly
present in all material respects the financial position of the Company as of the
dates thereof and the results of its  operations  and cash flows for the periods
then ended  (subject,  in the case of unaudited  statements,  to normal year-end
audit adjustments).  Except as set forth in the financial statements included in
the SEC  Documents,  the Company has no  liabilities,  contingent  or otherwise,
other than liabilities incurred in the ordinary course of business subsequent to
June 30, 2001, and liabilities of the type not required under generally accepted
accounting  principles  to be  reflected  in  such  financial  statements.  Such
liabilities  incurred  subsequent to June 30, 2001,  are not, in the  aggregate,
material to the financial condition or operating results of the Company.

      3.7   Absence of Certain Changes. Except as disclosed in the SEC Documents
or on Schedule  3.7,  since June 30,  2001,  there has been no material  adverse
change in the assets, liabilities,  business, properties,  operations, financial
condition, prospects or results of operations of the Company.

      3.8   Absence of  Litigation.  Except as disclosed  in the SEC  Documents,
there is no action, suit, claim, proceeding,  inquiry or investigation before or
by any court, public board, government agency,  self-regulatory  organization or
body  pending  or,  to the  knowledge  of the  Company,  threatened  against  or
affecting  the Company or any of its officers or  directors  acting as such that
could, individually or in the aggregate, have a Material Adverse Effect.

      3.9   Intellectual Property Rights. The Company owns or possesses licenses
or rights to use all patents,  patent applications,  patent rights,  inventions,
know-how,  trade secrets,  trademarks,  trademark  applications,  service marks,
service names, trade names and copyrights  necessary to enable it to conduct its
business as now operated (the "Intellectual  Property").  Except as set forth in
the SEC  Documents,  there  are no  material  options,  licenses  or  agreements
relating to the Intellectual Property, nor is the Company bound by or a party to
any material  options,  licenses or agreements  relating to the patents,  patent
applications,  patent rights, inventions,  know-how, trade secrets,  trademarks,
trademark applications,  service marks, service names, trade names or copyrights
of any other person or entity.  Except as disclosed in the SEC Documents,  there
is no claim or action or  proceeding  pending  or, to the  Company's  knowledge,
threatened  that  challenges  the  right  of the  Company  with  respect  to any
Intellectual Property.

      3.10  Tax Status. The Company has timely made or filed all federal,  state
and foreign income and all other tax returns,  reports and declarations required
by any  jurisdiction  to which it is subject (unless and only to the extent that
the Company has set aside on its books  provisions  reasonably  adequate for the
payment of all unpaid and  unreported  taxes) and has timely  paid all taxes and
other governmental assessments and charges that are material in amount, shown or
determined to be due on such  returns,  reports and  declarations,  except those
being  contested  in good  faith,  and has set  aside  on its  books  provisions
reasonably  adequate for the payment of all taxes for periods  subsequent to the
periods to which such returns,  reports or declarations  apply. To the knowledge
of the Company,  there are no unpaid taxes in any material  amount claimed to

                                       7
<PAGE>

be due by the taxing  authority  of any  jurisdiction,  and the  officers of the
Company  know of no basis for any such claim.  The  Company  has not  executed a
waiver with respect to the statute of limitations  relating to the assessment or
collection  of any foreign,  federal,  state or local tax. None of the Company's
tax returns is presently being audited by any taxing authority.

      3.11  Environmental  Laws.  The  Company  (i) is in  compliance  with  all
applicable foreign federal, state and local laws and regulations relating to the
protection  of human health and safety,  the  environment  or hazardous or toxic
substances or wastes,  pollutants or contaminants  ("Environmental  Laws"), (ii)
has  received all permits,  licenses or other  approvals  required of them under
applicable Environmental Laws to conduct its business and (iii) is in compliance
with all terms and conditions of any such permit,  license or approval where, in
each of the three  foregoing  clauses,  the  failure  to so comply  would  have,
individually or in the aggregate, a Material Adverse Effect

      3.12  No  Integrated  Offering.  Neither  the  Company,  nor  any  of  its
affiliates,  nor any  person  acting on its or their  behalf,  has  directly  or
indirectly  made any offers or sales in any security or solicited  any offers to
buy any security under  circumstances that would require  registration under the
Securities Act of the issuance of the Securities to the Investors.  The issuance
of the  Securities  to the  Investors  will not be  integrated  with  any  other
issuance of the Company's  securities (past,  current or future) for purposes of
the Securities Act or any applicable rules of Nasdaq.

      3.13 No Brokers.  The Company has taken no action which would give rise to
any claim by any person for  brokerage  commissions,  finder's  fees,  placement
agent fees or similar  payments  relating to this Agreement or the  transactions
contemplated  hereby,  except for dealings with Joseph Stevens & Company,  Inc.,
whose commissions and fees will be paid by the Company.

      3.14 Insurance. The Company is insured by insurers of recognized financial
responsibility  against such losses and risks and in such amounts as  management
of the Company  believes to be prudent and customary in the  businesses in which
the Company is engaged.

      3.15  Employment  Matters.  The Company is in compliance with all federal,
state,  local  and  foreign  laws  and  regulations  respecting  employment  and
employment  practices,  terms and  conditions of employment  and wages and hours
except  where  failure to be in  compliance  would not have a  Material  Adverse
Effect.  The  Company  is not bound by or  subject to (and none of its assets or
properties  is bound by or subject to) any written or oral,  express or implied,
contract, commitment or arrangement with any labor union, and no labor union has
requested  or, to the  Company's  knowledge,  has sought to represent any of the
employees, representatives or agents of the Company. There is no strike or other
labor dispute  involving  the Company  pending,  or to the Company's  knowledge,
threatened,  that could have a Material  Adverse Effect nor is the Company aware
of any labor organization  activity involving its employees.  The Company is not
aware that any  officer or key  employee,  or that any group of  officers or key
employees,  intends to terminate their employment with the Company, nor does the
Company  have a present  intention  to terminate  the  employment  of any of the
foregoing.

                                       8
<PAGE>

      3.16  Investment  Company Status. The Company is not and upon consummation
of the sale of the  Securities  will not be an  "investment  company," a company
controlled  by  an  "investment  company"  or  an  "affiliated  person"  of,  or
"promoter" or "principal underwriter" for, an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.

      3.17  Subsidiaries. Except as set forth in the SEC Documents,  the Company
does not presently own or control,  directly or indirectly,  any interest in any
other  corporation,  association,  joint venture,  partnership or other business
entity and the  Company  is not a direct or  indirect  participant  in any joint
venture or partnership.

      3.18  No Conflict of  Interest. The Company is not  indebted,  directly or
indirectly,  to any of its officers or directors or to their respective  spouses
or children,  in any amount whatsoever other than in connection with expenses or
advances of expenses  incurred in the ordinary  course of business or relocation
expenses of employees.  None of the Company's officers,  directors or employees,
or any  members  of their  immediate  families,  are  directly,  or  indirectly,
indebted  to the  Company  (other  than  in  connection  with  purchases  of the
Company's  stock  or as set  forth  on  Schedule  3.18)  or,  to the best of the
Company's  knowledge,  have any direct or  indirect  ownership  interest  in any
entity  with which the  Company is  affiliated  or with which the  Company has a
business  relationship,  or any entity which  competes with the Company,  except
that officers,  directors,  employees and/or stockholders of the Company may own
stock in (but not exceeding five percent (5%) of the  outstanding  capital stock
of) any publicly  traded company that may compete with the Company.  To the best
of the  Company's  knowledge,  none  of the  Company's  officers,  directors  or
employees  or  any  members  of  their  immediate   families  are,  directly  or
indirectly, interested in any material contract with the Company. The Company is
not a guarantor or indemnitor of any indebtedness of any other person or entity.

                                   ARTICLE IV
                                    COVENANTS

      4.1
            Form D; Blue Sky Laws. The Company will timely file a Notice of Sale
of  Securities  on Form D with  respect to the  Securities,  as  required  under
Regulation  D. The Company  will take such action as is necessary to qualify the
Securities  for sale to the  Investors  under this  Agreement  under  applicable
securities (or "blue sky") laws of the states of the United States (or to obtain
an exemption from such qualification).

      4.2   Reporting Status;  Eligibility to Use Form S-3. The Company's Common
Stock  is  registered   under  Section  12  of  the  Exchange  Act.  During  the
Registration  Period (as  defined  below),  the  Company  will  timely  file all
reports,  schedules,  forms, statements and other documents required to be filed
by it with the SEC under the reporting requirements of the Exchange Act, and the
Company  will not  terminate  its status as an issuer  required to file  reports
under the Exchange  Act even if the  Exchange  Act or the rules and  regulations
thereunder would permit such termination.  The Company currently meets, and will
take all  reasonably  necessary  action to  continue  to meet,  the  "registrant
eligibility"  requirements set forth in the general  instructions to Form S-3 to
enable the registration of the Registrable Securities.

                                       9
<PAGE>

      4.3   Expenses. The Company and each Investor is liable for, and will pay,
its own  expenses  incurred in  connection  with the  negotiation,  preparation,
execution  and  delivery  of  this  Agreement,  including,  without  limitation,
attorneys' and consultants' fees and expenses.

      4.4   Financial Information.  The financial statements of the Company will
be prepared in  accordance  with United  States  generally  accepted  accounting
principles,  consistently  applied,  and will  fairly  present  in all  material
respects the consolidated  financial  position of the Company and results of its
operations and cash flows as of, and for the periods  covered by, such financial
statements  (subject,  in the case of unaudited  statements,  to normal year-end
audit adjustments).

      4.5   Compliance  with  Law. As  long  as an  Investor  owns  any  of  the
Securities,  the Company  will  conduct  its  business  in  compliance  with all
applicable  laws,  rules and  regulations  of the  jurisdictions  in which it is
conducting business (including,  without limitation, all applicable local, state
and  federal  environmental  laws and  regulations),  the failure to comply with
which would have a Material Adverse Effect.

      4.6 No  Integration.  The Company will not make any offers or sales of any
security (other than the Securities)  under  circumstances  that would cause the
offering  of  the  Securities  to be  integrated  with  any  other  offering  of
securities  by the  Company  (i) for the  purpose  of any  stockholder  approval
provision  applicable  to the Company or its  securities or (ii) for purposes of
any registration requirement under the Securities Act.

      4.7 Sales by Investors.  Each Investor will sell any Securities sold by it
in compliance  with  applicable  prospectus  delivery  requirements,  if any, or
otherwise in compliance with the requirements for an exemption from registration
under the Securities Act and the rules and regulations  promulgated  thereunder.
No Investor will make any sale,  transfer or other disposition of the Securities
in violation of federal or state securities laws.

                                   ARTICLE V
                               REGISTRATION RIGHTS

      5.1   As used in this  Agreement,  the  following  terms  shall  have  the
following meanings:

            (a)   "Affiliate" shall mean, with respect to any Person (as defined
below), any other Person controlling,  controlled by or under direct or indirect
common control with such Person (for the purposes of this definition  "control,"
when used with respect to any specified  Person,  shall mean the power to direct
the  management  and policies of such person,  directly or  indirectly,  whether
through ownership of voting securities,  by contract or otherwise; and the terms
"controlling"   and  "controlled"   shall  have  meanings   correlative  to  the
foregoing).

            (b)   "Business Day" shall mean a day Monday through Friday on which
banks are generally open for business in New York.

                                       10
<PAGE>

            (c)   "Holders" shall  mean the  Investors  and any  person  holding
Registrable  Securities  or any person to whom the rights  under  Article V have
been transferred in accordance with Section 5.9 hereof.

            (d)   "Person"  shall  mean  any  person,  individual,  corporation,
limited liability company, partnership, trust or other nongovernmental entity or
any  governmental  agency,  court,  authority  or other body  (whether  foreign,
federal, state, local or otherwise).

            (e)   The terms "register," "registered" and "registration" refer to
the  registration  effected by preparing and filing a registration  statement in
compliance with the Act, and the declaration or ordering of the effectiveness of
such registration statement.

            (f)   "Registrable  Securities" shall  mean (i) the shares of Common
Stock  sold in the  Offering;  (ii) the  shares of Common  Stock  issuable  upon
exercise of the  Warrants  (the  "Warrant  Shares");  (iii) the shares of Common
Stock issuable upon exercise of the Unit Purchase Options  (including the shares
of Common Stock  issuable  upon  exercise of the Warrants  which are  themselves
issued upon exercise of the Unit Purchase  Options);  (iv) the additional shares
("Additional  Shares") of Common Stock  issuable upon exercise of the Additional
Warrants (as defined in Section 5.11(a)), if any; (v) any shares of Common Stock
issued to the  Placement  Agent,  and any shares of Common Stock  issuable  upon
exercise of warrants granted to the Placement Agent, in connection with purchase
and sale of the Securities  under this Agreement;  and (vi) any shares of Common
Stock issued as (or issuable upon the conversion of any warrant,  right or other
security which is issued as) a dividend or other distribution with respect to or
in replacement of the Common Stock;  provided,  however,  that securities  shall
only be treated as  Registrable  Securities  if and only for so long as they (A)
have  not  been  disposed  of  pursuant  to a  registration  statement  declared
effective  by the SEC, (B) have not been sold in a  transaction  exempt from the
registration  and  prospectus  delivery  requirements  of the  Act so  that  all
transfer  restrictions and restrictive  legends with respect thereto are removed
upon the  consummation  of such sale or (C) are held by a Holder or a  permitted
transferee pursuant to Section 5.9.

            (g)   "Registration  Expenses"  shall mean all expenses  incurred by
the Company in complying with Section 5.2 hereof, including, without limitation,
all registration, qualification and filing fees, printing expenses, escrow fees,
fees and expenses of counsel for the Company, blue sky fees and expenses and the
expense of any special audits  incident to or required by any such  registration
(but excluding the fees of legal counsel for any Holder).

            (h)   "Registration  Statement"  shall have the meaning  ascribed to
such term in Section 5.2.

            (i)   "Registration  Period" shall have the meaning ascribed to such
term in Section 5.4.

                                       11
<PAGE>

            (j)   "Selling  Expenses" shall mean all underwriting  discounts and
selling  commissions  applicable to the sale of  Registrable  Securities and all
fees and expenses of legal counsel for any Holder.

      5.2   No later than thirty (30) days after the Closing  Date (the  "Filing
Date"),  the Company shall file a "shelf"  registration  statement  covering the
Registrable  Securities on the appropriate form (the  "Registration  Statement")
with the SEC and use its best efforts to effect the registration, qualifications
or compliances  (including,  without  limitation,  the execution of any required
undertaking to file  post-effective  amendments,  appropriate  qualifications or
exemptions  under  applicable  blue  sky or  other  state  securities  laws  and
appropriate   compliance  with  applicable  securities  laws,   requirements  or
regulations)  prior to the date which is 90 days after the Final  Closing  Date.
Notwithstanding the foregoing,  the Company shall not be obligated to enter into
any underwriting agreement for the sale of any of the Registrable Securities.

      5.3   All  Registration   Expenses   incurred  in   connection   with  any
registration,  qualification,  exemption or  compliance  pursuant to Section 5.2
shall be borne by the  Company.  All  Selling  Expenses  relating to the sale of
securities  registered by or on behalf of Holders shall be borne by such Holders
pro rata on the basis of the number of securities so registered.

      5.4   In  the  case  of  the  registration,  qualification,  exemption  or
compliance  effected by the  Company  pursuant  to this  Agreement,  the Company
shall,  upon  reasonable  request,  inform  each Holder as to the status of such
registration,  qualification,  exemption  and  compliance.  At its  expense  the
Company shall:

            (a)   use its  best  efforts  to  keep  such  registration,  and any
qualification,  exemption or compliance  under state  securities  laws which the
Company  determines  to obtain,  continuously  effective  until the Holders have
completed the  distribution  described in the  registration  statement  relating
thereto.  The period of time during  which the Company is required  hereunder to
keep  the  Registration  Statement  effective  is  referred  to  herein  as "the
Registration Period."  Notwithstanding the foregoing, at the Company's election,
the Company may cease to keep such  registration,  qualification,  exemption  or
compliance  effective  with  respect  to any  Registrable  Securities,  and  the
registration  rights  of a  Holder  shall  expire,  at such  time as they are no
longer,  by reason of Rule 144 of the Act (or other exemption from  registration
acceptable to the Company) required to register for the sale thereof; and

            (b)   advise the Holders:

                  (i) when the Registration  Statement or any amendment  thereto
has  been  filed  with  the SEC  and  when  the  Registration  Statement  or any
post-effective amendment thereto has become effective;

                                       12
<PAGE>

                  (ii) of any request by the SEC for  amendments or  supplements
to  the  Registration  Statement  or  the  prospectus  included  therein  or for
additional information;

                  (iii) of the issuance by the SEC of any stop order  suspending
the  effectiveness  of  the  Registration  Statement  or the  initiation  of any
proceedings for such purpose;

                  (iv) of the  receipt by the Company of any  notification  with
respect to the suspension of the  qualification  of the  Registrable  Securities
included  therein for sale in any  jurisdiction or the initiation or threatening
of any proceeding for such purpose; and

                  (v) of the  happening of any event that requires the making of
any changes in the Registration  Statement or the prospectus so that, as of such
date,  the  statements  therein  are not  misleading  and do not omit to state a
material fact required to be stated  therein or necessary to make the statements
therein (in the case of the prospectus,  in the light of the circumstances under
which they were made) not misleading;

            (c)   make every  reasonable  effort to obtain the withdrawal of any
order suspending the effectiveness of any Registration Statement at the earliest
possible time;

            (d)   furnish to each  Holder, without  charge, at least one copy of
such Registration Statement and any post-effective amendment thereto,  including
financial  statements and schedules,  and, if the Holder so requests in writing,
all exhibits  (including those incorporated by reference) in the form filed with
the SEC;

            (e)   during  the  Registration  Period,  deliver  to  each  Holder,
without charge,  as many copies of the prospectus  included in such Registration
Statement and any amendment or supplement  thereto as such Holder may reasonably
request;  and the Company  consents to the use,  consistent  with the provisions
hereof, of the prospectus or any amendment or supplement  thereto by each of the
selling  Holders of Registrable  Securities in connection  with the offering and
sale of the Registrable Securities covered by the prospectus or any amendment or
supplement thereto.  In addition,  upon the reasonable request of the Holder and
subject in all cases to confidentiality protections reasonably acceptable to the
Company, the Company will meet with a Holder or a representative  thereof at the
Company's headquarters to discuss all information relevant for disclosure in the
Registration Statement covering the Registrable  Securities,  and will otherwise
cooperate  with any  Holder  conducting  an  investigation  for the  purpose  of
reducing or  eliminating  such  Holder's  exposure to  liability  under the Act,
including   the   reasonable   production  of   information   at  the  Company's
headquarters;

                                       13
<PAGE>

            (f)   during  the  Registration  Period,  deliver  to  each  Holder,
without charge, (i) as soon as practicable (but in the case of the annual report
of the Company to its stockholders, within 120 days after the end of each fiscal
year of the  Company)  one copy of the  following  documents,  other  than those
documents available via EDGAR: (A) its annual report to its stockholders, if any
(which annual report shall contain  financial  statements  audited in accordance
with generally accepted accounting principles in the United States of America by
a firm of certified  public  accountants  of  recognized  standing);  (B) if not
included in substance in its annual report to stockholders, its annual report on
Form  10-KSB  (or  similar  form);  (C)  each of its  quarterly  reports  to its
stockholders,  and, if not  included in substance  in its  quarterly  reports to
stockholders,  its quarterly  report on Form 10-QSB (or similar form), and (D) a
copy of the full Registration Statement (the foregoing,  in each case, excluding
exhibits);  and (ii) upon  reasonable  request,  all  exhibits  excluded  by the
parenthetical to the immediately preceding clause (D), and all other information
that is generally available to the public;

            (g)   prior  to  any  public  offering  of  Registrable   Securities
pursuant  to any  Registration  Statement,  register  or  qualify  or  obtain an
exemption  for offer  and sale  under  the  securities  or blue sky laws of such
jurisdictions as any such Holders reasonably  request in writing,  provided that
the Company  shall not for any such purpose be required to qualify  generally to
transact business as a foreign  corporation in any jurisdiction  where it is not
so  qualified  or  to  consent  to  general  service  of  process  in  any  such
jurisdiction,  and do any and all other acts or things  reasonably  necessary or
advisable to enable the offer and sale in such  jurisdictions of the Registrable
Securities covered by such Registration Statement;

            (h)   cooperate   with  the   Holders  to   facilitate   the  timely
preparation and delivery of certificates  representing Registrable Securities to
be sold pursuant to any Registration  Statement free of any restrictive  legends
to the extent not required at such time and in such denominations and registered
in such names as Holders  may request at least five (5)  business  days prior to
sales of Registrable Securities pursuant to such Registration Statement;

            (i)   upon the  occurrence  of any  event  contemplated  by  Section
5.4(b)(v) above,  the Company shall promptly prepare a post-effective  amendment
to the Registration Statement or a supplement to the related prospectus, or file
any other  required  document so that, as thereafter  delivered to purchasers of
the Registrable Securities included therein, the prospectus will not include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements  therein,  in the light of the circumstances  under which
they were made, not misleading; and

      5.5   The  Holders  shall  have no right to take any  action to  restrain,
enjoin or otherwise delay any  registration  pursuant to Section 5.2 hereof as a
result of any controversy that may arise with respect to the  interpretation  or
implementation of this Agreement.

                                       14
<PAGE>

      5.6   (a) To the extent permitted by law, the Company shall indemnify each
Holder,  each  underwriter  of  the  Registrable   Securities  and  each  person
controlling  such  Holder  within the  meaning  of  Section 15 of the Act,  with
respect to which any registration, qualification or compliance has been effected
pursuant to this Agreement,  against all claims, losses, damages and liabilities
(or action in respect  thereof),  including  any of the  foregoing  incurred  in
settlement of any litigation, commenced or threatened (subject to Section 5.6(c)
below),  arising  out of or based on any untrue  statement  (or  alleged  untrue
statement)  of  a  material  fact  contained  in  any  registration   statement,
prospectus  or  offering  circular,  or any  amendment  or  supplement  thereof,
incident to any such registration,  qualification or compliance, or based on any
omission (or alleged  omission) to state  therein a material fact required to be
stated therein or necessary to make the statements

                                       15
<PAGE>

therein not misleading,  in light of the  circumstances in which they were made,
and will reimburse each Holder,  each underwriter of the Registrable  Securities
and each person controlling such Holder, for reasonable legal and other expenses
reasonably  incurred in  connection  with  investigating  or defending  any such
claim, loss, damage, liability or action as incurred;  provided that the Company
will not be liable in any such case to the extent that any untrue  statement  or
omission or allegation  thereof is made in reliance upon and in conformity  with
written information  furnished to the Company by or on behalf of such Holder and
stated to be specifically for use in preparation of such registration statement,
prospectus or offering circular; provided that the Company will not be liable in
any such case where the claim,  loss,  damage or  liability  arises out of or is
related to the failure of the Holder to comply with the covenants and agreements
contained in this  Agreement  respecting  sales of Registrable  Securities,  and
except that the foregoing  indemnity agreement is subject to the condition that,
insofar as it relates to any such untrue  statement or alleged untrue  statement
or  omission  or  alleged  omission  made  in  the  preliminary  prospectus  but
eliminated  or remedied in the  amended  prospectus  on file with the SEC at the
time the registration  statement becomes effective or in the amended  prospectus
filed  with the SEC  pursuant  to Rule  424(b) or in the  prospectus  subject to
completion  and term sheet under Rule 434 of the Act,  which  together  meet the
requirements  of  Section  10(a)  of the  Act  (the  "Final  Prospectus"),  such
indemnity  agreement shall not inure to the benefit of any such Holder, any such
underwriter or any such  controlling  person,  if a copy of the Final Prospectus
furnished  by the Company to the Holder for  delivery  was not  furnished to the
person or entity asserting the loss,  liability,  claim or damage at or prior to
the time such furnishing is required by the Act and the Final  Prospectus  would
have cured the defect giving rise to such loss, liability, claim or damage.

            (b)   Each Holder will severally,  if Registrable Securities held by
such  Holder are  included  in the  securities  as to which  such  registration,
qualification  or compliance is being effected,  indemnify the Company,  each of
its directors and officers,  each underwriter of the Registrable  Securities and
each person who  controls  the  Company  within the meaning of Section 15 of the
Act, against all claims,  losses, damages and liabilities (or actions in respect
thereof),  including  any  of  the  foregoing  incurred  in  settlement  of  any
litigation,  commenced or threatened (subject to Section 5.6(c) below),  arising
out of or based on any untrue  statement  (or  alleged  untrue  statement)  of a
material fact contained in any  registration  statement,  prospectus or offering
circular,  or  any  amendment  or  supplement  thereof,  incident  to  any  such
registration,  qualification or compliance, or based on any omission (or alleged
omission)  to state  therein a material  fact  required to be stated  therein or
necessary  to make  the  statements  therein  not  misleading,  in  light of the
circumstances  in which they were made,  and will  reimburse  the Company,  such
directors and officers,  each underwriter of the Registrable Securities and each
person  controlling  the Company  for  reasonable  legal and any other  expenses
reasonably  incurred in  connection  with  investigating  or defending  any such
claim,  loss,  damage,  liability  or  action as  incurred,  in each case to the
extent,  but only to the  extent,  that such  untrue  statement  or  omission or
allegation  thereof is made in  reliance  upon and in  conformity  with  written
information furnished to the Company by or on behalf of the Holder and stated to
be  specifically  for  use  in  preparation  of  such  registration   statement,
prospectus or offering circular;  provided that the indemnity shall not apply to
the extent that such claim, loss, damage or liability results from the fact that
a current copy of the  prospectus  was not made available to the Holder and such
current copy of the  prospectus  would have cured the defect giving rise to such
loss, claim,  damage or liability.  Notwithstanding  the foregoing,  in no event
shall a Holder be liable for any such claims,  losses, damages or liabilities in
excess of the proceeds  received by such Holder in the  offering,  except in the
event of fraud by such Holder.

            (c)   Each party entitled to indemnification  under this Section 5.6
(the  "Indemnified  Party")  shall give notice to the party  required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the  Indemnifying  Party to assume  the  defense of any such claim or any
litigation  resulting  therefrom,  provided  that  counsel for the  Indemnifying
Party,  who shall  conduct  the  defense of such claim or  litigation,  shall be
approved by the  Indemnified  Party (whose  approval shall not  unreasonably  be
withheld),  and the  Indemnified  Party may  participate in such defense at such
Indemnified  Party's  expense,  and  provided  further  that the  failure of any
Indemnified  Party to give  notice as  provided  herein  shall not  relieve  the
Indemnifying Party of its obligations under this Agreement,  unless such failure
is materially  prejudicial to the Indemnifying  Party in defending such claim or
litigation.  An Indemnifying  Party shall not be liable for any settlement of an
action or claim effected  without its written consent (which consent will not be
unreasonably withheld).

            (d)   If the  indemnification  provided  for in this  Section 5.6 is
held by a court of competent  jurisdiction  to be  unavailable to an Indemnified
Party with respect to any loss, liability,  claim, damage or expense referred to
therein,  then the Indemnifying  Party, in lieu of indemnifying such Indemnified
Party  thereunder,  shall  contribute  to the  amount  paid or  payable  by such
Indemnified Party as a result of such loss, liability,  claim, damage or expense
in such  proportion  as is  appropriate  to reflect  the  relative  fault of the
Indemnifying  Party on the one hand and of the Indemnified Party on the other in
connection  with the  statements  or  omissions  which  resulted  in such  loss,
liability,  claim,  damage or  expense as well as any other  relevant  equitable
considerations.  The  relative  fault  of  the  Indemnifying  Party  and  of the
Indemnified  Party shall be  determined  by reference  to,  among other  things,
whether  the  untrue or  alleged  untrue  statement  of a  material  fact or the
omission  to state a  material  fact  relates  to  information  supplied  by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge,  access to  information  and  opportunity  to correct or prevent such
statement or omission.

                                       16
<PAGE>

      5.7   (a)   Each Holder agrees that,  upon  receipt of any notice from the
Company of the happening of any event  requiring the preparation of a supplement
or amendment to a prospectus  relating to  Registrable  Securities  so that,  as
thereafter delivered to the Holders, such prospectus shall not contain an untrue
statement of a material  fact or omit to state any material  fact required to be
stated therein or necessary to make the statements therein not misleading,  each
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to the registration  statement  contemplated by Section 5.2 until its receipt of
copies of the  supplemented  or amended  prospectus  from the Company and, if so
directed by the Company,  each Holder  shall  deliver to the Company all copies,
other than  permanent  file  copies  then in such  Holder's  possession,  of the
prospectus  covering such Registrable  Securities current at the time of receipt
of such notice.

            (b)   Each Holder shall suspend,  upon  request of the  Company, any
disposition of Registrable Securities pursuant to the Registration Statement and
prospectus  contemplated  by Section 5.2 during (i) any period not to exceed two
30-day periods within any one 12-month period the Company requires in connection
with a primary  underwritten  offering of equity securities and (ii) any period,
not to exceed  one 45-day  period  per  circumstance  or  development,  when the
Company  determines in good faith that offers and sales pursuant  thereto should
not be made by reason of the presence of material  undisclosed  circumstances or
developments with respect to which the disclosure that would be required in such
a prospectus  is  premature,  would have an adverse  effect on the Company or is
otherwise inadvisable.

            (c)   As a condition to the inclusion of its Registrable Securities,
each Holder shall furnish to the Company such information  regarding such Holder
and the  distribution  proposed  by such  Holder as the  Company  may request in
writing  or  as  shall  be  required  in  connection   with  any   registration,
qualification or compliance referred to in this Article V.

            (d)   Each Holder hereby  covenants with the Company (i) not to make
any  sale  of  the  Registrable   Securities  without  effectively  causing  the
prospectus delivery requirements under the Act to be satisfied, and (ii) if such
Registrable  Securities are to be sold by any method or in any transaction other
than on a national securities exchange,  Nasdaq National Market, Nasdaq SmallCap
Market or in the over-the-counter  market, in privately negotiated transactions,
or in a  combination  of such  methods,  to notify the Company at least five (5)
business  days  prior to the date on which the Holder  first  offers to sell any
such Registrable Securities.

            (e)  Each  Holder  acknowledges  and  agrees  that the  Registrable
Securities sold pursuant to the  Registration  Statement are not transferable on
the books of the Company unless the stock certificate  submitted to the transfer
agent  evidencing  such  Registrable  Securities is accompanied by a certificate
reasonably  satisfactory  to the Company to the effect that (i) the  Registrable
Securities  have been sold in accordance  with such  Registration  Statement and
(ii) the requirement of delivering a current prospectus has been satisfied.

                                       17
<PAGE>

            (f)   Each Holder  agrees not to take any action with respect to any
distribution  deemed to be made pursuant to such  Registration  Statement  which
would constitute a violation of Regulation M under the Exchange Act or any other
applicable rule, regulation or law.

            (g)   At the end  of  the  Registration  Period  the  Holders  shall
discontinue sales of shares pursuant to such Registration Statement upon receipt
of notice from the Company of its  intention  to remove  from  registration  the
shares covered by such  Registration  Statement  which remain  unsold,  and such
Holders shall notify the Company of the number of shares registered which remain
unsold immediately upon receipt of such notice from the Company.

      5.8   With a view to making  available  to the  Holders  the  benefits  of
certain  rules and  regulations  of the SEC which at any time permit the sale of
the Registrable Securities to the public without registration, the Company shall
use its reasonable best efforts to:

            (a)   make and keep public information available, as those terms are
understood and defined in Rule 144 under the Act, at all times;

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

            (c)   so  ong  as  a  Holder  owns  any   unregistered   Registrable
Securities,  furnish to such  Holder,  upon any  reasonable  request,  a written
statement by the Company as to its  compliance  with Rule 144 under the Act, and
of the Exchange Act, a copy of the most recent annual or quarterly report of the
Company,  and such other reports and documents of the Company as such Holder may
reasonably  request  in  availing  itself of any rule or  regulation  of the SEC
allowing a Holder to sell any such securities without registration.

      5.9   The rights to cause the Company to register  Registrable  Securities
granted to the Holders by the Company  under Section 5.1 may be assigned in full
by a Holder in  connection  with a transfer  by such  Holder of its  Registrable
Securities,  provided, however, that (i) such transfer may otherwise be effected
in accordance  with  applicable  securities  laws;  (ii) such Holder gives prior
written notice to the Company;  and (iii) such transferee  agrees to comply with
the terms and  provisions of this  Agreement,  and such transfer is otherwise in
compliance with this Agreement. Except as specifically permitted by this Section
5.9, the rights of a Holder with respect to  Registrable  Securities  as set out
herein shall not be transferable to any other Person, and any attempted transfer
shall cause all rights of such Holder therein to be forfeited.

      5.10  With the written consent of the  Company and the Holders  holding at
least a majority of the Registrable  Securities that are then  outstanding,  any
provision of this Article V may be waived  (either  generally or in a particular
instance,  either  retroactively  or  prospectively  and either for a  specified
period of time or indefinitely)  or amended.  Upon the effectuation of each such
waiver or amendment,  the Company shall  promptly give written

                                       18
<PAGE>

notice thereof to the Holders,  if any, who have not previously  received notice
thereof or consented thereto in writing.

      5.11  Additional Common Stock Issuable Upon Delay of Registration and
            Other Events.

            (a)   Except  to the  extent  any delay is due to the  failure  of a
Holder to reasonably  cooperate in providing to the Company such  information as
shall  be  reasonably  requested  by  the  Company  in  writing  for  use in the
Registration  Statement, if the Registration Statement is not filed with the SEC
within 45 days  following  the Closing Date (the  "Outside  Target  Date"),  the
Company  shall be required to  immediately  issue to each Holder of  Registrable
Securities  issued  in  the  Offering   (including,   without  limitation,   the
Registrable  Securities  issuable  upon  exercise  of  the  Placement  Warrants)
additional  Warrants  (the  "Additional  Warrants")  to  purchase  a  number  of
additional shares of Common Stock equal to one-half of one percent (0.5%) of the
aggregate number of shares of Common Stock (including the shares of Common Stock
underlying the Warrants)  issued to such Holder in the Offering (as adjusted but
without  reference to any shares  issued  pursuant to this Section  5.11(a)) for
each week after the Outside Target Date that the Registration  Statement remains
unfiled.

            (b)   Except  to the  extent  any delay is due to the  failure  of a
Holder to reasonably  cooperate in providing to the Company such  information as
shall  be  reasonably  requested  by  the  Company  in  writing  for  use in the
Registration  Statement, if the Registration Statement is not declared effective
by the SEC by the date  that is 120 days  after  the  Final  Closing  Date  (the
"Targeted  Effective Date"),  the Company shall immediately be required to issue
to each Holder of  Registrable  Securities  issued in the  Offering  (including,
without  limitation,  the Registrable  Securities  issuable upon exercise of the
Placement  Warrants)  Additional  Warrants  to  purchase a number of  additional
shares of Common Stock equal to one-half of one percent  (0.5%) of the aggregate
number of  shares  of  Common  Stock  (including  the  shares  of  Common  Stock
underlying the Warrants)  issued to such Holder in the Offering (as adjusted but
without  reference to any shares  issued  pursuant to Section  5.11(a)) for each
week the Registration  Statement is not declared  effective by the SEC following
the Targeted Effective Date.

            (c)   All Additional Warrants issuable pursuant to this Section 5.11
shall be duly  authorized  and all shares of Common Stock issuable upon exercise
of the Additional Warrants,  when issued in accordance with the terms hereof for
the  consideration  expressed  herein,  will have been duly and validly  issued,
fully paid and nonassessable and shall be included in the Registration Statement
contemplated  by Section 5.2.  Such shares shall be  registered  in the Holders'
names or the name of the nominee(s) of Holders in such  denominations as Holders
shall request pursuant to instructions delivered to the Company.

            (d)   In no event, however, shall the aggregate number of Additional
Warrants  exceed  fifteen  percent (15%) of the  aggregated  number of shares of
Common Stock (as adjusted)  included sold in the Offering  (including the shares
of Common Stock underlying the Warrants).

                                       19
<PAGE>

                                   ARTICLE VI
                                 INDEMNIFICATION

      In  consideration  of  each  Investor's  execution  and  delivery  of this
Agreement and its  acquisition of the Securities  hereunder,  and in addition to
all of the Company's other  obligations  under this Agreement,  the Company will
indemnify  and  hold  harmless  each  Investor  and  each  other  holder  of the
Securities and all of their  stockholders,  officers,  directors,  employees and
direct or indirect  investors and any of the foregoing  person's agents or other
representatives  (including,  without  limitation,  those retained in connection
with  the  transactions  contemplated  by  this  Agreement)  (collectively,  the
"Indemnitees")  from and against any and all actions,  causes of action,  suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection  therewith  (regardless of whether any such  Indemnitee is a party to
the  action  for which  indemnification  hereunder  is  sought),  and  including
reasonable  attorneys' fees and disbursements  (the "Indemnified  Liabilities"),
incurred by an  Indemnitee as a result of, or arising out of, or relating to (a)
any breach of any  representation  or warranty made by the Company  herein or in
any other certificate,  instrument or document  contemplated  hereby or thereby,
(b) any breach of any covenant, agreement or obligation of the Company contained
herein or in any other certificate,  instrument or document  contemplated hereby
or  thereby or (c) any cause of action,  suit or claim  brought or made  against
such  Indemnitee and arising out of or resulting  from the execution,  delivery,
performance,  breach or  enforcement  of this  Agreement by the Company.  To the
extent that the foregoing  undertaking by the Company is  unenforceable  for any
reason,  the  Company  will make the  maximum  contribution  to the  payment and
satisfaction of each of the Indemnified  Liabilities  that is permissible  under
applicable law.

                                   ARTICLE VII
                                   DEFINITIONS

      7.1   "Closing"  means  the  closing  of  the  purchase  and  sale  of the
Securities under this Agreement.

      7.2   "Closing Date" has the meaning set forth in Section 1.3.

      7.3   "Common Stock" means the common stock, par value $.001 per share, of
the Company.

      7.4   "Company" means Atlantic Technology Ventures, Inc.

      7.5   "Exchange  Act"  means  the  Securities  Exchange  Act of  1934,  as
amended.

      7.6   "Indemnified Liabilities" has the meaning set forth in Article VI.

      7.7   "Indemnitees" has the meaning set forth in Article VI.

      7.8   "Investors"  means the  investors  whose  names are set forth on the
signature pages of this Agreement, and their permitted transferees.

      7.9   "Material Adverse Effect" means a material adverse effect on (a) the
business,  operations,  assets or financial  condition of the Company or (b) the
ability of the Company to

                                       20
<PAGE>

perform  its  obligations  pursuant  to the  transactions  contemplated  by this
Agreement or under any  instruments  to be entered  into or filed in  connection
herewith.

      7.10  "Nasdaq" means the Nasdaq National Market System.

      7.11  "Regulation D" means  Regulation D as  promulgated  under by the SEC
under the Securities Act.

      7.12  "Rule 144" means Rule 144  promulgated  under the Securities Act, or
any successor rule.

      7.13  "SEC" means the United States Securities and Exchange Commission.

      7.14  "SEC Documents" has the meaning set forth in Section 3.6.

      7.15  "Securities"  means the Common Stock and Warrants  sold  pursuant to
this Agreement.

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

      7.17  "to the  Company's knowledge"  and  variations  thereon  mean to the
actual knowledge of Frederic P. Zotos.

                                  ARTICLE VIII
                          GOVERNING LAW; MISCELLANEOUS

      8.1   Governing Law; Jurisdiction.  This Agreement will be governed by and
interpreted in accordance  with the laws of the State of New York without regard
to the  principles of conflict of laws.  The parties hereto hereby submit to the
exclusive  jurisdiction of the United States federal and state courts located in
the State of New York with respect to any dispute  arising under this  Agreement
or the transactions contemplated hereby or thereby.

      8.2   Counterparts;   Signatures  by  Facsimile.  This  Agreement  may  be
executed in two or more  counterparts,  all of which are  considered one and the
same agreement and will become effective when  counterparts  have been signed by
each party and delivered to the other parties. This Agreement,  once executed by
a party, may be delivered to the other parties hereto by facsimile  transmission
of a copy of this  Agreement  bearing the  signature of the party so  delivering
this Agreement.

      8.3   Headings.  The headings of this  Agreement  are for  convenience  of
reference  only,  are  not  part  of  this  Agreement  and  do  not  affect  its
interpretation.

      8.4   Severability. If any  provision  of this  Agreement  is  invalid  or
unenforceable  under any applicable  statute or rule of law, then such provision
will be deemed  modified in order to conform  with such  statute or rule of law.
Any provision hereof that may prove invalid or unenforceable  under any law will
not affect the validity or enforceability of any other provision hereof.

                                       21
<PAGE>

      8.5   Entire  Agreement;   Amendments.   This  Agreement   (including  all
schedules  and  exhibits  hereto)  constitutes  the entire  agreement  among the
parties hereto with respect to the subject matter hereof and thereof.  There are
no  restrictions,  promises,  warranties or  undertakings,  other than those set
forth or referred  to herein or therein.  This  Agreement  supersedes  all prior
agreements  and  understandings  among the parties  hereto  with  respect to the
subject matter  hereof.  No provision of this Agreement may be waived or amended
other than by an  instrument  in writing  signed by the party to be charged with
enforcement.

      8.6   Notices.  Any notices  required or  permitted  to be given under the
terms of this  Agreement  must be sent by certified or  registered  mail (return
receipt requested) or delivered personally or by courier (including a recognized
overnight  delivery  service) and will be effective five days after being placed
in the mail,  if mailed by regular  U.S.  mail,  or upon  receipt,  if delivered
personally,  or by courier (including a recognized  overnight delivery service),
in each case addressed to a party. The addresses for such communications are:

      If to the Company:      Chief Executive Officer
                              Atlantic Technology Ventures, Inc.
                              350 Fifth Avenue, Suite 5507
                              New York, NY 10118

      With a copy to:         Ezra G. Levin, Esq.
                              Kramer, Levin, Naftalis & Frankel
                              919 Third Avenue
                              New York, NY 10022

      If to an  Investor:  To the  address  set  forth  immediately  below  such
Investor's name on the signature pages hereto.

      Each party will provide  written notice to the other parties of any change
in its address.

      8.7   Successors and Assigns. This Agreement is binding upon and inures to
the benefit of the parties and their  successors  and assigns.  The Company will
not assign this  Agreement or any rights or  obligations  hereunder  without the
prior  written  consent  of the  Investors,  and no  Investor  may  assign  this
Agreement  or any rights or  obligations  hereunder  without  the prior  written
consent of the Company.  Notwithstanding  the foregoing,  an Investor may assign
all or part of its rights and obligations  hereunder to any of its "affiliates,"
as that term is defined  under the  Securities  Act,  without the consent of the
Company so long as the affiliate is an accredited  investor  (within the meaning
of Regulation D under the  Securities  Act) and agrees in writing to be bound by
this Agreement.  This provision does not limit the Investor's  right to transfer
the  Securities  pursuant  to the  terms  of this  Agreement  or to  assign  the
Investor's rights hereunder to any such transferee pursuant to the terms of this
Agreement.

      8.8   Third  Party  Beneficiaries.  This  Agreement  is  intended  for the
benefit of the parties  hereto and their  respective  permitted  successors  and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

      8.9   Further  Assurances.  Each party will do and perform, or cause to be
done and  performed,  all such  further  acts and things,  and will  execute and
deliver  all other  agreements,

                                       22
<PAGE>

certificates, instruments and documents, as another party may reasonably request
in order to carry out the intent and  accomplish  the purposes of this Agreement
and the consummation of the transactions contemplated hereby.

      8.10  No Strict  Construction.  The  language  used in this  Agreement  is
deemed to be the language  chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

      8.11  Equitable  Relief.  The  Company  recognizes  that,  if it  fails to
perform or discharge any of its obligations under this Agreement,  any remedy at
law may prove to be inadequate  relief to the Investors.  The Company  therefore
agrees  that  the  Investors  are  entitled  to  seek  temporary  and  permanent
injunctive relief in any such case.

      IN WITNESS WHEREOF, the undersigned  Investors and the Company have caused
this Agreement to be duly executed as of the date first above written.

                                    COMPANY:

                                    Atlantic Technology Ventures, Inc.

                                    By: /s/ Frederic P. Zotos
                                       ---------------------------------------

                                    Name: Frederic P. Zotos
                                          ------------------------------------

                                    Title: President and CEO
                                          ------------------------------------

                                       23
<PAGE>

                            OMNIBUS SIGNATURE PAGE TO
                       ATLANTIC TECHNOLOGY VENTURES, INC.
                          SECURITIES PURCHASE AGREEMENT

      The  undersigned  hereby  executes and delivers  the  Securities  Purchase
Agreement to which this  signature  page is attached,  which,  together with all
counterparts  of the Agreement and signature pages of the other parties named in
said  Agreement,  shall  constitute one and the same document in accordance with
the terms of the Agreement.

                                   Sign Name:
                                                ------------------------------

                                   Print Name:
                                                ------------------------------

                                   Address:
                                                ------------------------------

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

                                                ------------------------------
                                   Telephone:
                                                ------------------------------
                                   Facsimile:
                                                ------------------------------

                                   Number of Securities Purchased
                                                                  ------------
                                   Aggregate Purchase Price
                                                            ------------------

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