Document:

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                                                                    EXHIBIT 10.1

                         CLASS A-1 CALL OPTION AGREEMENT

            CLASS A-1 CALL OPTION AGREEMENT, dated as of June 21, 2002 (this
"Agreement"), among CORPORATE ASSET BACKED CORPORATION, a Delaware corporation
(the "Depositor"), as the sole initial Option Holder (as defined below), UBS
WARBURG LLC ("UBSW"), as the initial purchaser from the Depositor, and initial
and sole holder at the time of execution of this Agreement, of the Class A-1
Certificates (as defined below), and THE BANK OF NEW YORK, a New York banking
corporation, as the agent appointed by UBSW to act on behalf of UBSW and its
successors under this Agreement and the Trust Agreement (as defined below), with
respect to the options granted by UBSW to the Depositor under this Agreement.
The Bank of New York, acting for UBSW and any subsequent transferee of a Class
A-1 Certificate as agent with respect to such options as set forth in more
detail below, is referred to herein as the "Option Agent."

                                   WITNESSETH:

            WHEREAS, the Depositor has established the CABCO Series 2002-1 Trust
(AOL Time Warner Inc.) (the "Trust") as a common law trust under the laws of the
State of New York pursuant to the Trust Agreement, dated as of June 21, 2002
(the "Trust Agreement"), between the Depositor and The Bank of New York, as
Trustee and Option Agent; and

            WHEREAS, the Trust issued certificates to the Depositor in two
classes evidencing in the aggregate the beneficial interests in all the assets
of the Trust; and

            WHEREAS, the Depositor is selling all the Class A-1 Callable
Certificates issued by the Trust (the "Class A-1 Certificates") to UBSW and RBC
Dain Rauscher Inc. ("RBC Dain Rauscher," and together with UBSW, the
"Underwriters"), as underwriters, pursuant to the Underwriting Agreement, dated
June 14, 2002 (the "Underwriting Agreement"), between the Depositor and the
Underwriters for resale to investors, and is selling all the Class B-1 Callable
Certificates issued by the Trust (the "Class B-1 Certificates") to UBSW, as
initial purchaser, under the Purchase Agreement, dated June 14, 2002, between
the Depositor and UBSW; and

            WHEREAS, to effectuate the issuance of the Class A-1 Options, RBC
Dain Rauscher instructed UBSW to purchase on its behalf, the Class A-1
Certificates to be purchased by RBC Dain Rauscher and to issue the Class A-1
Options as set forth in this Agreement.

            WHEREAS, as partial consideration for its purchase of each Class A-1
Certificate, UBSW intends to grant (on its behalf and on behalf of RBC Dain
Rauscher) to the Depositor an option to repurchase that Class A-1 Certificate
upon the terms and subject to the conditions set forth in this Agreement; and

            WHEREAS, each option relating to a single Class A-1 Certificate is
referred to herein as a "Class A-1 Option," or the "related Class A-1 Option,"
as the context shall require; and

            WHEREAS, ownership of the Class A-1 Options granted hereunder shall
be evidenced by one or more option certificates issued hereunder in definitive
physical form, each of which option certificates shall be substantially in the
form attached as Exhibit C, and each of which
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option certificates in definitive physical form shall evidence the number of
Class A-1 Options set forth on its face; and

            WHEREAS, the Trust Agreement provides that each subsequent purchaser
of a Class A-1 Certificate agrees, by such purchase, to assume the obligation to
perform the related Class A-1 Option, and further agrees to appoint The Bank of
New York as its agent to act on its behalf with respect thereto under this
Agreement and the Trust Agreement; and

            WHEREAS, upon each such transfer of a Class A-1 Certificate (and the
automatic assumption of the obligations under the related Class A-1 Option by
the transferee), the transferor of the Class A-1 Certificate shall be released
from its obligation to perform the related Class A-1 Option, and the
transferor's appointment of The Bank of New York as its agent with respect
thereto shall terminate; and

            WHEREAS, as partial consideration for its purchase of each Class B-1
Certificate, UBSW intends to grant to the Depositor an option (each, a "Class
B-1 Option") to repurchase that Class B-1 Certificate upon the terms and subject
to the conditions set forth in the Class B-1 Call Option Agreement, dated as of
June 21, 2002 (the "Class B-1 Option Agreement"), among the Depositor, as the
sole initial holder of the Class B-1 Options, UBSW, as the initial purchaser
from the Depositor, and initial and sole holder at the time of execution of such
agreement, of the Class B-1 Certificates, and The Bank of New York, acting as
option agent for the holders of the Class B-1 Certificates from time to time,
which Class B-1 Options shall be granted on terms (other than Call Price)
substantially similar to those contained in this Agreement;

            NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

                                    ARTICLE I

                                   Definitions

            Section 1.1 Definitions.

            (a) As used in this Agreement, unless the context otherwise
requires, the following terms have the following respective meanings:

            "Affiliate" has the meaning specified in the Trust Agreement.

            "Agreement" has the meaning specified in the preamble to this
Agreement.

            "Business Day" has the meaning specified in the Trust Agreement.

            "Call Date" means, with respect to any Class A-1 Option, the date on
which settlement of that Class A-1 Option occurs pursuant to Section 2.2(d).

            "Call Notice" has the meaning specified in Section 2.2(b).

            "Call Options" means, collectively, the Class A-1 Options and the
Class B-1 Options.

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            "Call Price" means, with respect to each Class A-1 Option, an amount
equal to the sum of (i) the outstanding certificate principal balance on the
Call Date of the Class A-1 Certificate subject to such Class A-1 Option, plus
(ii) any accrued and unpaid interest on such Class A-1 Certificate through the
Call Date, plus (iii) if the Call Date occurs prior to June 21, 2007, as a
result of the delivery of a notice of redemption of, tender offer for or other
unscheduled repayment on or repurchase of some or all of the Underlying
Securities, an amount equal to the sum of the present values of the Remaining
Scheduled Interest Payments on each $25 principal amount of the Underlying
Securities due after the Call Date and prior to June 21, 2007, discounted to the
Call Date on a semiannual basis (assuming a 360-day year consisting of twelve
30-day months) at the Treasury Rate with respect to such Call Date, plus 35
basis points.

            "Certificate Notional Amount" has the meaning specified in the Trust
Agreement.

            "Certificate Principal Balance" has the meaning specified in the
Trust Agreement.

            "Certificate Register" has the meaning specified in the Trust
Agreement.

            "Certificateholder" means each Person in whose name a Certificate is
registered on the Certificate Register.

            "Certificates" means the Class A-1 Certificates and the Class B-1
Certificates.

            "Class A-1 Call Option Certificate" has the meaning specified in
Section 2.1.

            "Class A-1 Certificates" has the meaning specified in the recitals
to this Agreement.

            "Class A-1 Option" has the meaning specified in the recitals to this
Agreement.

            "Class B-1 Certificates" has the meaning specified in the recitals
to this Agreement.

            "Class B-1 Option" has the meaning specified in the recitals to this
Agreement.

            "Class B-1 Option Agreement" has the meaning specified in the
recitals to this Agreement.

            "Depositor" has the meaning specified in the preamble to this
Agreement.

            "Option Agent" means The Bank of New York, in its capacity as option
agent appointed under this Agreement, or any successor in such capacity.

            "Option Holder" means, initially, the Depositor, and thereafter with
respect to each Class A-1 Option, the Person to whom such Class A-1 Option has
been transferred as provided herein.

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

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            "Protected Purchaser" has the meaning specified in the Uniform
Commercial Code as is in effect in the State of New York.

            "Rating Agency" has the meaning specified in the Trust Agreement.

            "Remaining Scheduled Interest Payments" means, with respect to any
Call Date, the remaining scheduled payments of interest on the Underlying
Securities that would be due after such Call Date and prior to June 21, 2007
(without taking into account any actual or proposed redemption of, tender offer
for, or other unscheduled repayment or repurchase of the Underlying Securities
for which settlement is made after the Call Date); provided, however, that, if
such Call Date is not an interest payment date with respect to the Underlying
Securities, the amount of the next succeeding scheduled interest payment on the
Underlying Securities will be reduced by the amount of interest accrued on the
Underlying Securities to such Call Date.

            "Responsible Officer" has the meaning specified in the Trust
Agreement.

            "Securities Act" has the meaning specified in Section 2.4(a).

            "Transfer" means, with respect to any Class A-1 Option, the
assignment by the Option Holder of such Class A-1 Option, and "Transferee" and
"Transferor" shall have correlative meanings.

            "Transfer Confirmation" has the meaning specified in Section 2.4(c).

            "Treasury Rate" means, with respect to any Call Date, a benchmark
U.S. Treasury security rate used to discount future cash flows in connection
with an exercise of Call Options, determined by the Option Agent using the same
methodology that the trustee for the Underlying Securities is required to use
upon a redemption of the Underlying Securities, as such methodology is set forth
in the offering documents for the Underlying Securities, provided that each
reference to the Redemption Date in such provisions shall be deemed to be a
reference to the relevant Call Date.

            "Trust" has the meaning specified in the recitals to this Agreement.

            "Trust Agreement" has the meaning specified in the recitals to this
Agreement.

            "Trustee" means the Trustee from time to time under the Trust
Agreement.

            "UBSW" has the meaning specified in the preamble to this Agreement.

            "Underlying Securities" means the $50,000,000 principal amount of
7.700% Debentures due 2032 issued by AOL Time Warner Inc., unconditionally
guaranteed by America Online, Inc. and Time Warner Inc. (whose guarantee is in
turn guaranteed by Time Warner Companies, Inc. and Turner Broadcasting System,
Inc.), deposited in the Trust, exclusive of interest accrued from and including
April 8, 2002, to but excluding the Closing Date (which interest has been
retained by the Depositor), unless the context otherwise requires.

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            "Underlying Securities Default" means an Event of Default (as
defined in the Underlying Securities Indenture) under the Underlying Securities,
or any event that, with the giving of notice or passage of time, or both, would
be an Event of Default (as defined in the Underlying Securities Indenture).

            "Underlying Securities Indenture" has the meaning specified in the
Trust Agreement.

            "Underwriting Agreement" has the meaning specified in the recitals
to this Agreement.

            (b) Capitalized terms used but not defined in this Agreement are
used with the respective meanings specified in the Trust Agreement.

            Section 1.2 Interpretive Provisions.

            For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:

                  (a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the singular,
and nouns and pronouns of each gender include each of the other genders;

                  (b) all accounting terms not otherwise defined in this
Agreement have the meanings assigned to them in accordance with generally
accepted accounting principles in the United States;

                  (c) whenever the words "include," "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation";

                  (d) any reference in this Agreement to any statute, regulation
or agreement is a reference to such statute, regulation or agreement as
supplemented or amended from time to time;

                  (e) the Article and Section headings in this Agreement are for
convenience only and shall not affect the construction of this Agreement;

                  (f) when a reference is made in this Agreement to Articles,
Sections, Exhibits or Schedules, such reference is to Articles or Sections of,
or Exhibits or Schedules to, this Agreement; and

                  (g) all references to a specific time are references to New
York City time.

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                                   ARTICLE II

                              THE CLASS A-1 OPTIONS

            Section 2.1 Grant of Class A-1 Options; Option Holders Are
                        Beneficiaries.

            UBSW, as the initial purchaser from the Depositor, and initial and
sole Certificateholder at the time of execution of this Agreement, of the Class
A-1 Certificates, hereby grants to the Depositor the Class A-1 Options. To
evidence such grant, the Option Agent is hereby directed to concurrently issue
to the Depositor an option certificate in definitive registered physical form (a
"Class A-1 Call Option Certificate") in the Depositor's name in substantially
the form attached as Exhibit C, evidencing two million (2,000,000) Class A-1
Options, and to register the Depositor's ownership of such Class A-1 Options in
the register referred to in Section 2.4(e).

            Each Option Holder shall be an express beneficiary of this
Agreement, entitled to enforce this Agreement directly in its own name against
the Option Agent and the Certificateholders holding Class A-1 Certificates.

            Section 2.2 Manner of and Conditions to Exercise.

            (a) Subject to the terms and conditions of this Agreement, each
Class A-1 Option may be exercised by the relevant Option Holder on any Business
Day occurring (i) at any time on or after June 21, 2007; or (ii) at any time,
whether before or after June 21, 2007, after the occurrence of (A) an Underlying
Securities Default, (B) the Underlying Securities Issuer's announcement of, or
commencement of the formal solicitation of consents to, any amendment to the
Underlying Securities Indenture or the Underlying Securities that changes the
maturity or the scheduled payment date of any principal, interest or other
amount on the Underlying Securities, or reduces the principal amount of or the
interest rate on the Underlying Securities, or changes the currency in which the
principal or interest of the Underlying Securities is payable, or impairs the
right of a holder of the Underlying Securities to institute suit for the
enforcement of any such payment on or after the maturity of the Underlying
Securities, or (C) the delivery by the Underlying Securities Issuer (or any
third party tender offeror, in the case of a tender offer) of a notice of
redemption of, a tender offer for, or other unscheduled repayment on or
repurchase of, some or all of the Underlying Securities held by the Trust. The
parties acknowledge that, under the Trust Agreement, if the Trustee receives any
announcement or proposal of an amendment to the Underlying Securities Indenture
or the Underlying Securities or a notice of a redemption of, tender offer for or
other unscheduled repayment on or repurchase of any Underlying Securities, the
Trustee will be required to deliver a copy of that document to the Option Agent
within two Business Days. The Option Agent agrees to send a copy of each such
document received from the Trustee to the Option Holders on the same day it is
received from the Trustee.

            (b) An Option Holder may exercise any Class A-1 Option only upon
satisfaction of each of the following conditions:

                  (i) Not later than 30 days prior to the proposed Call Date,
            the Class A-1 Option Holder shall deliver a notice substantially in
            the form attached as Exhibit A (each, a "Call Notice") to each of
            the Option Agent and the Trustee specifying the number of

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            Class A-1 Options being exercised, the proposed Call Date with
            respect to such Class A-1 Options, and the account to which the
            Trustee shall deliver the Underlying Securities deliverable pursuant
            to Section 2.15 of the Trust Agreement upon exchange of the Class
            A-1 Certificates purchased as a result of such exercise; provided,
            however, that with respect to any exercise of a Class A-1 Option
            pursuant to Section 2.2(a)(ii)(A), (B) or (C), the Call Notice shall
            be delivered to the Option Agent and the Trustee not later than
            seven Business Days prior to the proposed Call Date.

                  (ii) Simultaneously with such exercise, the Option Holder
            shall exercise Class B-1 Options with respect to a number of Class
            B-1 Certificates equal to the number of Class A-1 Options being
            exercised.

                  (iii) The aggregate Certificate Principal Balance of the Class
            A-1 Certificates subject to the Class A-1 Options exercised by such
            Option Holder on such Call Date shall be an integral multiple of
            $1,000.

                  (iv) (A) As a result of the exercise, the aggregate
            Certificate Principal Balance of the Class A-1 Certificates and the
            aggregate Certificate Notional Amount of Class B-1 Certificates,
            respectively, purchased by the Option Holder is in each case not
            less than $5,000,000 (or, if less, the aggregate outstanding
            Certificate Principal Balance of all the outstanding Class A-1
            Certificates or aggregate outstanding Certificate Notional Amount of
            all the outstanding Class B-1 Certificates, as applicable), and (B)
            after giving effect to such exercise and the related exchange of
            Certificates for Underlying Securities pursuant to Section 2.15 of
            the Trust Agreement, (I) unless the Option Holder has exercised all
            Call Options held by it, the remaining aggregate Certificate
            Principal Balance of Class A-1 Certificates and Certificate Notional
            Amount of Class B-1 Certificates subject to options held by such
            Option Holder that have not been exercised is in each case not less
            than $5,000,000, and (II) the remaining aggregate Certificate
            Principal Balance of Class A-1 Certificates and Certificate Notional
            Amount of Class B-1 Certificates, if greater than zero, is in each
            case not less than $5,000,000.

                  (v) (A) Unless the Option Holder has exercised the Class A-1
            Options in connection with a tender offer, the Option Holder shall
            have made payment of the Call Price under all of the exercised Call
            Options to the Option Agent, by wire transfer in immediately
            available funds, no later than 10:00 a.m. on the proposed Call Date,
            and (B) if the Option Holder has exercised the Class A-1 Options in
            connection with a tender offer, the Trustee shall have received
            payment of the tender price from the Underlying Securities Issuer or
            other purchaser of the Underlying Securities relating to the
            Certificates subject to all of the exercised Call Options (or with
            respect to the portion of the Call Options deemed exercised, if less
            than all Underlying Securities tendered by the Trustee pursuant to
            Section 2.15 of the Trust Agreement have been purchased), in
            immediately available funds, no later than 10:00 a.m. on the later
            of (i) the Call Date specified in the Call Notice, or (ii) the
            earlier to occur of the date immediately following the date on which
            the tender offer is consummated or the date on which it expires
            unconsummated.

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            If Call Options are held or exercised by two or more Affiliates,
then all Call Options held or exercised by such Affiliates on the same date will
be treated as being held or exercised by a single Option Holder for purposes of
satisfying the conditions listed in clauses (b)(i) through (b)(v) above.

            (c) The Option Agent shall notify the Trustee immediately upon its
receipt of a Call Notice. If the number of Class A-1 Certificates specified in
such Call Notice is less than the outstanding number of Class a-1 Certificates,
the Trustee shall select the Class A-1 Certificates to be purchased by the
Option Holder. The Class A-1 Certificates so selected shall be a pro rata
portion of the Class A-1 Certificates held by each Certificateholder, provided
that purchases of a fraction of a single Class A-1 Certificate will not be made,
and the Trustee shall round up or down the number of Class A-1 Certificates to
be purchased from each Certificateholder to avoid such fractional purchases.

            (d) On the date specified in the applicable Call Notice, upon
satisfaction of the conditions specified in Section 2.2(b), the Option Agent
shall (x) notify the Trustee of its receipt of the Call Price and the
satisfaction of such conditions and (y) instruct the Trustee to (i) register the
Class A-1 Certificates selected as provided in Section 2.2(c) in the name of the
Option Holder (or, in the case of called Class A-1 Certificates held in
book-entry form, cause such Class A-1 Certificates to be transferred to the
account of the Option Holder) and (ii) exchange the called Class A-1
Certificates, together with the Class B-1 Certificates called pursuant to the
Class B-1 Options on the same Call Date, for an aggregate principal amount of
Underlying Securities equal to the aggregate outstanding Certificate Principal
Balance of such Class A-1 Certificates as provided in Section 2.15 of the Trust
Agreement; and (z) (I) unless the Call Options were exercised in connection with
a tender offer, remit the amount of the Call Price received from the Option
Holders to the Trustee and instruct the Trustee to pay to each Certificateholder
from whom the Class A-1 Certificates were purchased the Call Price in respect of
such Class A-1 Certificates, or (II) if the Call Options were exercised in
connection with a tender offer, pay to the Option Holder the difference between
the tender offer proceeds and the Call Price. The parties acknowledge that the
Call Price for a call in connection with a tender offer shall be deducted from
the proceeds of a tender offer received by the Trustee, and paid to the holders
of the called Certificates, pursuant to Section 2.15(j) of the Trust Agreement.

            (e) Delivery of a Call Notice does not give rise to an obligation on
the part of the Option Holder to pay the Call Price. The Call Notice shall
automatically expire (i) if the Call Option is being exercised other than in
connection with a tender offer, and the Option Holder has not paid the Call
Price to the Option Agent by 10:00 a.m. on the Call Date, or (ii) in the case of
a tender offer, if the Trustee has not received payment of the tender offer
proceeds from the Underlying Securities Issuer or other purchaser by 10:00 a.m.
on the later of (A) the date specified for settlement in the Call Notice, or (B)
the earlier to occur of the date immediately following the date on which the
tender offer is consummated or the date on which it expired unconsummated.
Furthermore, if any Class A-1 Call Options are exercised in connection with a
tender offer and fewer than all the Underlying Securities are tendered by the
Trustee as provided in Section 2.15 of the Trust Agreement, or fewer than all
the Underlying Securities tendered by the Trustee pursuant to Section 2.15 of
the Trust Agreement are accepted for payment and paid for under the tender
offer, then the number of Class A-1 Call Options deemed exercised will be
reduced so that the Certificate Principal Balance of the Class A-1 Certificates
subject to such

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exercised Class A-1 Call Options is equal to the principal amount of Underlying
Securities tendered by the Trustee that are accepted for payment and paid for,
and the Class A-1 Call Options deemed not exercised will remain outstanding. In
addition, if the tender offer is terminated by the person making the tender
offer before any Underlying Securities are accepted for payment and paid for, or
if all tenders by the Trustee of Underlying Securities are rejected, then the
applicable Call Notice will be of no further force and effect, and any related
Class A-1 Call Options will be deemed not exercised and will remain outstanding.
If a Call Notice shall expire for any reason provided for in this Section
2.2(e), none of the Option Holder, the Option Agent, the Trustee or any
Certificateholder shall have any obligation with respect to the Call Notice, and
the expiration of a Call Notice shall in no way affect the Option Holder's right
to deliver a Call Notice at a later date.

            Section 2.3 Legends on Certificates.

            Each Class A-1 Certificate shall bear a legend notifying any
Certificate Holder of the existence and terms of the Class A-1 Option to which
that Class A-1 Certificate is subject, in substantially the following form:

            BY ACQUIRING OR ACCEPTING ANY INTEREST IN THIS CERTIFICATE, YOU
            ACKNOWLEDGE THAT THIS CERTIFICATE IS SUBJECT TO A PURCHASE OPTION
            GRANTED TO CORPORATE ASSET BACKED CORPORATION, A DELAWARE
            CORPORATION (THE "DEPOSITOR"), BY UBS WARBURG LLC UNDER THE CLASS
            A-1 CALL OPTION AGREEMENT, DATED AS OF JUNE 21, 2002 (THE "CALL
            OPTION AGREEMENT"), AMONG THE DEPOSITOR, AS THE SOLE INITIAL OPTION
            HOLDER, UBS WARBURG LLC, AS THE INITIAL PURCHASER FROM THE
            DEPOSITOR, AND SOLE HOLDER AT THE TIME OF SUCH GRANT, OF THE CLASS
            A-1 CERTIFICATES, AND THE BANK OF NEW YORK, A NEW YORK BANKING
            CORPORATION, ACTING AS OPTION AGENT FOR THE CLASS A-1
            CERTIFICATEHOLDERS WITH RESPECT TO THE CLASS A-1 OPTIONS (THE
            "OPTION AGENT"), WHICH OBLIGATIONS HAVE BEEN ASSUMED BY EACH
            SUBSEQUENT HOLDER OF SUCH CLASS A-1 CERTIFICATES; YOU AGREE TO
            ASSUME THE OBLIGATION OF YOUR TRANSFEROR TO PERFORM SUCH CLASS A-1
            OPTION; AND YOU ACKNOWLEDGE THAT YOUR TRANSFEROR HAS BEEN RELEASED
            FROM ITS OBLIGATION TO PERFORM SUCH CLASS A-1 OPTION. THE CALL
            OPTION AGREEMENT PERMITS THE HOLDER OF THE RELATED CLASS A-1 OPTION
            TO PURCHASE THIS CERTIFICATE FROM YOU, WITHOUT YOUR CONSENT, AT THE
            TIMES AND ON THE CONDITIONS SPECIFIED IN THE CALL OPTION AGREEMENT
            AT THE CALL PRICE SPECIFIED IN THAT AGREEMENT. THE CLASS A-1 OPTION
            MAY BE TRANSFERRED FROM TIME TO TIME. UPON THE EXERCISE OF THE
            RELATED CLASS A-1 OPTION IN THE MANNER SPECIFIED IN THE CALL OPTION
            AGREEMENT, THE CLASS A-1

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            CERTIFICATE WILL BE TRANSFERRED TO THE RELEVANT CLASS A-1 OPTION
            HOLDER BY THE TRUSTEE, AND YOU WILL BE PAID THE CALL PRICE FOR THIS
            CERTIFICATE IN ACCORDANCE WITH THE TERMS OF THE CALL OPTION
            AGREEMENT, WITHOUT THE REQUIREMENT OF ANY FURTHER ACTION BY YOU,
            EXCEPT THAT IF THE CLASS A-1 CERTIFICATES ARE HELD IN DEFINITIVE
            FORM AT SUCH TIME YOU WILL NOT RECEIVE SUCH CALL PRICE UNLESS AND
            UNTIL YOU SURRENDER THIS CERTIFICATE.

            Section 2.4 Transfer of Class A-1 Options.

            (a) Each of the parties to this Agreement acknowledges that the
Class A-1 Options are being issued in a transaction exempt from registration
under the U.S. Securities Act of 1933, as amended (the "Securities Act") and
that the Class A-1 Options have not been and will not be registered under the
Securities Act or any applicable state securities law of any state and may not
be offered, sold, pledged or otherwise transferred except in a transaction
registered pursuant to the Securities Act or exempt from registration under the
Securities Act, and otherwise in accordance with the terms of this Agreement.

            (b) Promptly following the sale of the Class A-1 Certificates to
UBSW pursuant to the Underwriting Agreement and the related grant of the Class
A-1 Options to the Depositor as provided in Section 2.1, and in any event within
45 days thereafter, the Depositor shall sell 100% of the Class A-1 Options to
one or more unaffiliated third parties through UBSW as agent pursuant to the
Placement Agency Agreement, dated June 14, 2002, between the Depositor and UBSW.
Subject to the terms and conditions set forth in this Article II, each Option
Holder may Transfer some or all of the Class A-1 Options it holds to one or more
other Persons at any time and from time to time, provided that under no
circumstances may any Class A-1 Option be re-Transferred to the Depositor.

            (c) The Transfer of any Class A-1 Option shall be effected by the
delivery of the relevant Class A-1 Call Option Certificate to the Transferee, or
to the Option Agent for registration in the name of the Transferee as set forth
in Section 2.4(e) hereof, in each case with a form of assignment executed by the
Transferor and the execution and delivery by the Transferor, the Transferee and
the Option Agent of a confirmation substantially in the form attached as Exhibit
B (a "Transfer Confirmation").

            (d) Each Class A-1 Option may be Transferred only in full. No
fractional interest in a Class A-1 Option may be Transferred, and no interest in
a Class A-1 Option may be transferred except in connection with a Transfer of
all the rights and obligations of the Option Holder under and in respect of the
Class A-1 Option.

            (e) The Option Agent shall keep a register in which it shall provide
for the registration of the Class A-1 Options and the registration of transfers
of the Class A-1 Options. The Option Agent shall record in such register (w) the
name and registered address of each Option Holder, (x) the number of Class A-1
Options held by each Option Holder, (y) the Transfer of any Class A-1 Options,
and (z) the number of Class A-1 Options exercised by each

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Option Holder and the number of Call Options cancelled as provided in Section
2.5. The Trustee and the Option Agent may treat the Person in whose name any
Class A-1 Option is registered on such register as the owner of that Class A-1
Option for all purposes, and the Trustee and the Option Agent shall not be
affected by any notice to the contrary.

            Section 2.5 Pro Rata Reduction of Class A-1 Options Upon Partial
Redemption of Underlying Securities.

            If Underlying Securities are redeemed in part by the Underlying
Securities Issuer and the Option Holders do not exercise Call Options with
respect to all the Underlying Securities redeemed in such partial redemption,
the number of Class A-1 Options held by each Option Holder shall be reduced
proportionately so that the aggregate amount of Class A-1 Certificates callable
by the exercise of Class A-1 Options shall equal the outstanding Certificate
Principal Balance of outstanding Class A-1 Certificates after giving effect to
such partial redemption. The Option Agent shall make such adjustments to its
records as shall be necessary to reflect such reductions and shall notify each
Option Holder of such adjustments.

            Section 2.6 Expiration.

            The Class A-1 Options shall expire, and the right to exercise the
Class A-1 Options shall terminate, on the earlier to occur of (a) the
termination of the Trust Agreement, and (b) the liquidation of the Trust.

            Section 2.7. Mutilated, Destroyed, Lost or Stolen Class A-1 Call
Option Certificates.

            (a) If (i) any Class A-1 Call Option Certificate that has been
mutilated is surrendered to the Option Agent, or the Option Agent receives
evidence to its satisfaction of the destruction, loss or theft of any Class A-1
Call Option Certificate, and (ii) there is delivered to the Option Agent such
security or indemnity as may be required by it to hold it harmless, then, in the
absence of notice to the Option Agent that such Class A-1 Call Option
Certificate has been acquired by a Protected Purchaser, the Option Agent shall
execute on behalf of the Certificateholders holding Class A-1 Certificates, and
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Class A-1 Call Option Certificate, a
replacement Class A-1 Call Option Certificate in respect of a like aggregate
Certificate Principal Balance of Class A-1 Certificates.

            (b) If, after the delivery of a replacement Class A-1 Call Option
Certificate in respect of a mutilated, destroyed, lost or stolen Class A-1 Call
Option Certificate pursuant to Section 2.7(a), a Protected Purchaser of the
original Class A-1 Call Option Certificate in lieu of which such replacement
Class A-1 Call Option Certificate was issued exercises such original Class A-1
Call Option Certificate, the Option Agent shall be entitled to recover such
replacement Class A-1 Call Option Certificate from the Person to whom it was
delivered or any Person taking such replacement Class A-1 Call Option
Certificate from such Person to whom such replacement Class A-1 Call Option
Certificate was delivered or any assignee of such Person, except a Protected
Purchaser, and shall be entitled to recover upon the security or indemnity
provided

                                       11
<PAGE>
therefor to the extent of any loss, damage, cost or expense incurred by the
Option Agent in connection with such exercise.

            (c) In connection with the issuance of any replacement Class A-1
Call Option Certificate under this Section 2.7, the Option Agent may require the
payment by the holder of the Class A-1 Call Option Certificate of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including the fees and
expenses of the Option Agent) connected therewith.

            (d) Any Class A-1 Call Option Certificate issued pursuant to this
Section 2.7 in replacement of any mutilated, destroyed, lost or stolen Class A-1
Call Option Certificate shall be entitled to all the benefits of this Agreement
equally and proportionately with any and all other Class A-1 Call Option
Certificates duly issued hereunder.

            (e) The provisions of this Section 2.7 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement of mutilated, destroyed, lost or stolen Class A-1 Call Option
Certificates.

            Section 2.8. Representations and Warranties of UBSW.

            UBSW represents and warrants to and agrees with the Depositor and
the Option Agent as of the date of this Agreement and as of the time of delivery
of the Class A-1 Call Option Certificates by the Option Agent to the Depositor
that each of the execution of this Agreement, and the grant of the Class A-1
Options and the direction to the Option Agent to issue the Class A-1 Call Option
Certificates in the manner provided for in Section 2.1 of this Agreement, has
been duly authorized by UBSW.

            Section 2.9. Representations and Warranties of the Depositor.

            The Depositor represents and warrants to and agrees with UBSW and
the Option Agent as of the date of this Agreement and as of the time of delivery
of the Class A-1 Call Option Certificates by the Option Agent to the Depositor
that each of the execution of this Agreement and the receipt by the Depositor of
the Class A-1 Options, is within the corporate power and authority of the
Depositor.

                                   ARTICLE III

                                  OPTION AGENT

            Section 3.1 Limitation on Liability.

            The Option Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection with
its administration of the Class A-1 Options in reliance upon any instrument of
assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement or other paper or

                                       12
<PAGE>
document in good faith believed by it to be genuine and to be signed, executed
and, where necessary, verified and acknowledged, by the proper Person or
Persons.

            Section 3.2 Duties of Option Agent.

            The Option Agent undertakes only the specific duties and obligations
imposed under this Agreement upon the following terms and conditions, by all of
which the Depositor, each Option Holder and each Certificateholder shall be
bound:

            (a) The Option Agent may consult with legal counsel (who may be
legal counsel for the Depositor or any of its Affiliates), and the opinion of
such counsel shall be full and complete authorization and protection to the
Option Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion, provided the Option Agent shall have exercised
reasonable care in the selection by it of such counsel.

            (b) Whenever in the performance of its duties under this Agreement,
the Option Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Depositor or the Trustee prior to taking or
suffering any action under this Agreement, such fact or matter may be deemed to
be conclusively proved and established by a Depositor Order or a certificate
signed by a Responsible Officer of the Trustee and delivered to the Option
Agent; and such certificate shall be full authorization to the Option Agent for
any action taken or suffered in good faith by it under this Agreement in
reliance upon such certificate.

            (c) The Option Agent shall be liable under this Agreement only for
its own negligence, willful misconduct or bad faith.

            (d) The Option Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Depositor only.

            (e) The Option Agent shall not have any responsibility in respect of
and makes no representation as to the validity of the Class A-1 Options or the
execution and delivery of this Agreement (except the due execution of this
Agreement by the Option Agent); nor shall it be responsible for any breach by
the Trustee or any Option Holder of any covenant or condition contained in this
Agreement; nor shall it by any act under this Agreement be deemed to make any
representation or warranty as to the Certificates or the Underlying Securities.

            (f) The Option Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties under this Agreement
from the Chairman of the Board, the Chief Executive Officer, the Chief Financial
Officer, the Chief Operating Officer, the President, a Vice President, a Senior
Vice President, a Managing Director, the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of the Depositor, and any Responsible
Officer of the Trustee, and to apply to such officers for advice or instructions
in connection with its duties, and it shall not be liable for any action taken
or suffered to be taken by it in good faith in accordance with instructions of
any such officer.

                                       13
<PAGE>
            (g) The Option Agent and any shareholder, director, officer or
employee of the Option Agent may buy, sell or deal in any of the Class A-1
Options, the Class B-1 Options or the Certificates or otherwise act as fully and
freely as though it were not Option Agent under this Agreement, so long as such
persons do so in full compliance with all applicable laws and, to the extent
applicable, the Trust Agreement. Nothing in this Agreement shall preclude The
Bank of New York from acting in any other capacity for the Trust, the Depositor
or for any other legal entity.

            (h) The Option Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty under this Agreement either
itself or by or through its attorneys or agents.

            (i) The Option Agent shall act solely as the agent of the Option
Holders under this Agreement. The Option Agent shall not be liable except for
the failure to perform such duties as are specifically set forth in this
Agreement, and no implied covenants or obligations shall be read into this
Agreement against the Option Agent, whose duties shall be determined solely by
the express provisions of this Agreement. The Option Agent shall not be deemed
to be a fiduciary of any other person.

            (j) The Option Agent shall not be under any obligation or duty to
institute, appear in or defend any action, suit or legal proceeding in respect
of this Agreement, unless first indemnified to its satisfaction, but this
provision shall not affect the power of the Option Agent to take such action as
the Option Agent may consider proper, whether with or without such indemnity.
The Option Agent shall promptly notify the Depositor and the Trustee in writing
of any claim made or action, suit or proceeding instituted against it arising
out of or in connection with this Agreement.

            Section 3.3 Change of Option Agent.

            (a) The Option Agent may resign and be discharged from its duties
under this Agreement upon thirty days' notice in writing mailed to the Depositor
and the Trustee by registered or certified mail, and to the Option Holders by
first-class mail at the expense of the Depositor; provided that no such
resignation or discharge shall become effective until a successor Option Agent
shall have been appointed under this Agreement. The Depositor may remove the
Option Agent upon three Business Days' notice in writing, mailed to the Option
Agent and to the Option Holders by first-class mail; provided that no such
removal shall become effective until a successor Option Agent shall have been
appointed under this Agreement.

            (b) If the Option Agent shall resign or be removed or shall
otherwise become incapable of acting, the Depositor shall promptly appoint a
successor to the Option Agent. If the Depositor shall fail to make such
appointment of a permanent successor within a period of thirty (30) days after
such removal or within sixty (60) days after notification in writing of such
resignation or incapacity by the resigning or incapacitated Option Agent or by
the Option Holder, then the Option Agent or any registered Option Holder may
apply to any court of competent jurisdiction for the appointment of such a
successor.

                                       14
<PAGE>
            (c) Any entity which may be merged or consolidated with or which
shall otherwise succeed to substantially all of the trust or agency business of
the Option Agent shall be deemed to be the successor Option Agent without any
further action.

            (d) The Option Agent shall at all times be a bank that is not an
Affiliate of the Depositor (but may have normal banking relationships with the
Depositor or the Underlying Securities Issuer and its respective Affiliates),
which (i) is organized and doing business under the laws of any State or the
United States; (ii) is authorized under such laws to exercise corporate trust
powers; (iii) has a combined capital and surplus of at least $50,000,000; (iv)
is subject to supervision or examination by federal or state authority; and (v)
has (or has a parent which has) a long-term unsecured debt rating of at least
BBB- by Standard & Poor's Ratings Services, a Division of The McGraw-Hill
Companies, Inc. and at least Baa3 by Moody's Investors Service, Inc., or their
respective successors, if any. If the bank publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purpose of this Section 3.3(d),
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Option Agent shall cease to be eligible in
accordance with the provisions of this Section 3.3(d), the Option Agent shall
resign immediately in the manner and with the effect specified in Section
3.3(a).

                                   ARTICLE IV

                                  MISCELLANEOUS

            Section 4.1 Remedies.

            The remedies at law of the Option Holder in the event of any default
or threatened default by a Certificate Holder in the performance of or
compliance with any of the terms of this Agreement are not and will not be
adequate and, to the full extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained in this Agreement or by an injunction against a violation of any of
the terms of this Agreement or otherwise.

            Section 4.2 Limitation on Liabilities of Option Holder.

            Nothing contained in these Class A-1 Options shall be construed as
imposing any obligation on any Option Holder to exercise any Class A-1 Option or
to purchase any of the Class A-1 Certificates.

            Section 4.3 Notices.

            All notices and other communications under this Agreement shall be
in writing and shall be delivered, or mailed by registered or certified mail,
return receipt requested, by a nationally recognized overnight courier, postage
prepaid, addressed (a) if to any Option Holder, at the registered address of
such Option Holder as set forth in the register kept by the Option Agent
pursuant to Section 2.4(e), or (b) if to the Option Agent, to The Bank of New
York, 5 Penn Plaza, New York, New York 10001, Attention: Corporate Trust, or to
such other address notice of which the Option Agent shall have given to the
Option Holder and the Trustee, or (c) if

                                       15
<PAGE>
to the Trust or the Trustee, to the Corporate Trust Office specified in the
Trust Agreement. Any such notice shall be effective on the Business Day
following the date on which it is provided to a nationally recognized overnight
courier and on the fifth Business Day following the day on which it is deposited
in the mails, in each case as provided above. Subject to Section 2.2(a), the
Option Agent shall promptly forward to each Option Holder a copy of any notice
or other communication received by it under this Agreement.

            Section 4.4 Amendment.

            (a) This Agreement may be amended from time to time by the Depositor
and the Option Agent without the consent of any Option Holder, upon receipt of
an opinion of counsel satisfactory to the Option Agent that the execution of the
amendment is authorized or permitted by this Agreement and all conditions
provided for in this Agreement relating to such amendment have been complied
with and that such amendment would not alter the status of the Trust as a
grantor trust under the Internal Revenue Code of 1986, as amended, for any of
the following purposes: (i) to cure any ambiguity or to correct or supplement
any provision in this Agreement that may be defective or inconsistent with any
other provision in this Agreement or to provide for any other terms or modify
any other provisions with respect to matters or questions arising under this
Agreement that shall not adversely affect in any material respect the interests
of any Option Holder or any holder of a Class A-1 Certificate or alter the terms
on which the Class A-1 Options are exercisable or the amounts payable upon
exercise of an Class A-1 Option or (ii) to evidence and provide for the
acceptance of appointment under this Agreement of a successor Option Agent.

            (b) This Agreement may also be modified or amended from time to time
by the Depositor and the Option Agent with the consent of Option Holders holding
662/3% of the Class A-1 Options, upon receipt of an opinion of counsel
satisfactory to the Option Agent that the execution of the amendment is
authorized or permitted by this Agreement and all conditions provided for in
this Agreement relating to such amendment have been complied with, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or the Class A-1 Options or modifying in any
manner the rights of the Option Holders; provided, however, that no such
amendment shall (i) adversely affect in any material respect the interests of
the holders of the Class A-1 Certificates without (x) the consent of all the
holders of the Class A-1 Certificates and (y) written confirmation from each of
the Rating Agencies that such amendment will not result in a downgrading or
withdrawal of its rating of the Class A-1 Certificates, if then rated by the
Rating Agencies; (ii) alter the terms on which the Class A-1 Options are
exercisable or the amounts payable upon exercise of an Class A-1 Option without
the consent of the holders of all the Class A-1 Certificates and all the Class
A-1 Options; or (iii) reduce the modify the vote required by clause (i) or (ii)
of this proviso without the consent of the holders of 100% of the Class A-1
Certificates. Notwithstanding any other provision of this Agreement, this
Section 4.4(b) shall not be amended without the consent of 100% of the Class A-1
Option Holders.

            (c) Promptly after the execution of any amendment or modification to
this Agreement, the Option Agent shall furnish a copy of such amendment or
modification to each Option Holder, to the Trustee and to the Rating Agencies.
It shall not be necessary for the consent of the Option Holders or the Class A-1
Certificates to approve the particular form of any

                                       16
<PAGE>
proposed amendment or modification, but it shall be sufficient if such consent
shall approve the substance of such amendment or modification. The manner of
obtaining and evidencing the authorization of the execution of such consents
shall be subject to such reasonable regulations as the Option Agent may
prescribe.

            Section 4.5 Governing Law.

            THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REFERENCE TO ANY CONFLICT OF LAW PROVISIONS, OTHER
THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW.

            Section 4.6 Judicial Proceedings.

            Any judicial proceeding brought against any party with respect to
this Agreement may be brought in any court of competent jurisdiction in the
County of New York, State of New York or of the United States of America for the
Southern District of New York and, by execution and delivery of this Agreement
or acceptance of a Class A-1 Certificate, as applicable, each party (a) accepts,
generally and unconditionally, the nonexclusive jurisdiction of such courts and
any related appellate court, and agrees that such party shall be bound by any
judgment rendered thereby in connection with this Agreement, subject to any
rights of appeal, and (b) irrevocably waives any objection that such party may
now or hereafter have as to the venue of any such suit, action or proceeding
brought in such a court or that such court is an inconvenient forum.

            Section 4.7 Nonpetition Covenant.

            Each of the Option Agent and each Option Holder agrees that it shall
not (and, in the case of the Option Holder, that it shall not direct the Option
Agent to), until the date which is one year and one day after the payment in
full of all securities issued by the Trust, the Depositor or other trusts
formed, established or settled by the Depositor, acquiesce, petition or
otherwise invoke or cause the Trust, the Depositor, or any such other trust to
invoke the process of the United States of America or any State or other
political subdivision of the United States or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government for the purpose of commencing or sustaining a case by or against
the Trust, the Depositor or any such other trust under a federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Trust, the Depositor or any such other trust or all or any part of the property
or assets of the Trust, the Depositor or any such other trust or ordering the
winding up or liquidation of the affairs of the Trust, the Depositor or any such
other trust.

            Section 4.8 No Recourse.

            Each of the Option Agent and each Option Holder agrees that it shall
not have any recourse to the Trust for any amounts due under this Agreement.
This Section 4.8 shall not affect any rights or remedies that an Option Holder
may have against the Option Agent or the Certificateholders hereunder.

            Section 4.9 New Issuances.

                                       17
<PAGE>
            The Depositor agrees that it shall not cause the Trust to issue
additional Certificates unless it obtains from the holders of such Certificates
options on substantially the same terms as the Class A-1 Options and the Class
B-1 Options, as the case may be, and either (x) it resells such options to the
then-current holders of the Class A-1 Options and the Class B-1 Options, in
proportion to their holdings of Class A-1 Options and Class B-1 Options, as
applicable, or to such Persons' designees, or (y) takes such measures as shall
be necessary to ensure that the issuance of such additional Certificates does
not impair the right of the holder of any Class A-1 Option to exercise such
Class A-1 Option on the terms set forth in this Agreement.

                                       18
<PAGE>
                                                                    EXHIBIT 10.1

            IN WITNESS WHEREOF, the parties hereto have caused this Class A-1
Call Option Agreement to be executed by their duly authorized officers as of the
first date specified above.

                              CORPORATE ASSET BACKED CORPORATION,
                              as sole initial Option Holder

                              By:  /s/ Robert Vascellaro
                                   --------------------------------------------
                                   Name: Robert Vascellaro
                                   Title: Vice President

                              UBS WARBURG LLC

                              By:  /s/ Michael Sabatino
                                   --------------------------------------------
                                   Name: Michael Sabatino
                                   Title:  Director
                                           Fixed Income Syndicate

                              By:  /s/ Joel J. McKoan
                                   --------------------------------------------
                                   Name:  Joel J. McKoan
                                   Title:  Managing Director
                                           Fixed Income Syndicate

                              THE BANK OF NEW YORK, as Option Agent and
                              Attorney-in-Fact for the Option Holders

                              By:  /s/ Melissa Quan-Soon
                                   --------------------------------------------
                                   Name:  Melissa Quan-Soon
                                   Title:  Assistant Vice-President
<PAGE>
                                                                    EXHIBIT 10.1

                                                                       EXHIBIT A

                              [Form of Call Notice]

                              CLASS A-1 CALL NOTICE

To:         The Bank of New York, as Option Agent
            5 Penn Plaza
            New York, New York 10001
            Attention: Corporate Trust

            This Call Notice is delivered pursuant to the Class A-1 Call Option
Agreement, dated as of June 21, 2002 (the "Class A-1 Call Option Agreement"),
among Corporate Asset Backed Corporation, a Delaware corporation (the
"Depositor"), as the sole initial Option Holder, UBS Warburg LLC, as the initial
purchaser from the Depositor, and initial and sole holder, at the time of
execution of the Class A-1 Call Option Agreement, of the Class A-1 Certificates,
and The Bank of New York, a New York banking corporation, acting as Option Agent
for the holders of Class A-1 Certificates from time to time (the "Option
Agent").

            The undersigned registered holder of ____ Class A-1 Options hereby
exercises Class A-1 Options for the purchase of Class A-1 Certificates upon and
subject to the terms specified in the Class A-1 Call Option Agreement.

            Subject to the satisfaction of the conditions specified in the Class
A-1 Call Option Agreement, the Call Date in respect of the Class A-1 Options so
exercised shall be: ___________________ (which date shall be at least 30 days
after the date of delivery of this Call Notice or, if this Call Notice is
delivered with respect to any exercise of an Class A-1 Option pursuant to
Section 2.2(a)(ii)(B) or (C), at least 7 Business Days after the date of
delivery of this Call Notice).

            The undersigned hereby agrees that (i) if the Call Option is being
exercised other than in connection with a tender offer, and the undersigned has
paid the Call Price to the Option Agent by 10:00 a.m. (New York City time) on
the Call Date, or (ii) in the case of a tender offer, if the Trustee has
received payment of the Call Price from the Underlying Securities Issuer or
other purchaser by 10:00 a.m. (New York City time) on the later of (A) the date
specified for settlement in the Call Notice, or (B) the earlier to occur of the
date immediately following the date on which the tender offer is consummated or
the date on which it expires unconsummated, the undersigned will have purchased
the Class A-1 Certificates deliverable pursuant to such Class A-1 Options at the
time such payment is made. The aggregate Call Price in respect of such Class A-1
Options shall be _________________) (insert number calculated in accordance with
the definition of "Call Price" in the Class A-1 Call Option Agreement).
<PAGE>
            The undersigned requests that the Underlying Securities deliverable
in exchange for the Class A-1 Certificates purchased in such exercise be
transferred to the following account in accordance with the following
instructions:__________________________________________________________________
_______________________________________________________________________________
(insert information required for transfer of Underlying Securities).

                                       2
<PAGE>
            All capitalized terms used but not defined in this Call Notice shall
have the meanings assigned to such terms in the Class A-1 Call Option Agreement,
and this Call Notice is subject to the terms and conditions of that Agreement.

Dated:
                                              [NAME OF OPTION HOLDER]

                                              By
                                                  ----------------------------
                                                  Name:
                                                  Title:

                                       3
<PAGE>
                                                                       EXHIBIT B

                         [Form of Transfer Confirmation]

                         CLASS A-1 TRANSFER CONFIRMATION

            This Transfer Confirmation is delivered pursuant to the Class A-1
Call Option Agreement, dated as of June 21, 2002 (the "Class A-1 Call Option
Agreement"), among Corporate Asset Backed Corporation, a Delaware corporation
(the "Depositor"), as the sole initial Option Holder, UBS Warburg LLC, as the
initial purchaser from the Depositor, and initial and sole holder, at the time
of execution of the Class A-1 Call Option Agreement, of the Class A-1
Certificates, and The Bank of New York, a New York banking corporation, acting
as Option Agent for the holders of Class A-1 Certificates from time to time (the
"Option Agent").

            [Name of Transferor] (the "Transferor") and [Name of Transferee]
(the "Transferee") hereby instruct the Option Agent to register a transfer (the
"Transfer") of _________ [Must be whole number] Class A-1 Options on the books
of the Option Agent maintained for such purpose.

            As a condition to such Transfer, the Transferee hereby represents
and warrants to, and agrees with, the Transferor, the Option Agent and the
Trustee referred to in the Class A-1 Call Option Agreement, for the benefit of
the Trust referred to therein, that:

                  (1) The Transferee acknowledges that the Class A-1 Options
have not been and will not be registered under the Securities Act of 1933, as
amended (the "Securities Act"), or any state securities laws, and may not be
offered or sold in the United States except in accordance with an exemption
under the Securities Act.

                  (2) The Transferee is a "qualified institutional buyer" within
the meaning of Rule 144A under the Securities Act;

                  (3) [With respect to any initial Transfer from the Depositor
only: Such information regarding the Class A-1 Options, the Trust and the Class
A-1 Certificates as the Transferee has required is, or has been made, available
to it and it has been afforded the opportunity to ask questions and receive
answers concerning the terms and conditions of the Class A-1 Options, and to
obtain such additional information as the Transferor possesses or can acquire
without unreasonable effort or expense that is necessary to verify the accuracy
of such information;]

                  (4) The Transferee agrees that the Class A-1 Options may be
offered, resold, pledged or otherwise transferred only (A) to a person who the
seller reasonably believes is a "qualified institutional buyer" within the
meaning of Rule 144A under the Securities Act that purchases for its own account
or for the account of a qualified institutional buyer, pursuant to an exemption
from registration under the Securities Act, and in compliance with applicable
state securities laws, and (B) in compliance with the securities laws of each
other applicable jurisdiction;
<PAGE>
            (5) Neither the Transferee, nor any person acting on its
behalf, has offered the Class A-1 Options for sale, or solicited any offer to
buy the Class A-1 Options by means of any form of general solicitation or
general advertising, including but not limited to the methods described in Rule
502(c) under the Securities Act or in any other manner that would render the
issuance and sale of the Class A-1 Options a violation of the Securities Act or
require registration pursuant to the Securities Act;

            (6) The Transferee will notify, and cause each subsequent transferee
of the Class A-1 Options to agree to notify, each subsequent holder of the Class
A-1 Options of the restrictions referred to in paragraph (4) above.

            The address to which any notices addressed to the Transferee should
be addressed is as follows: _______________________________________.

            All capitalized terms used but not defined in this Transfer
Confirmation are used with the meanings specified in the Class A-1 Call Option
Agreement, and this Transfer Confirmation is subject to the terms and conditions
of that Agreement.

            This Transfer Confirmation shall be governed by and construed in
accordance with the laws of the State of New York.

            IN WITNESS WHEREOF, the parties have signed their names as of the
date set forth below.

                                             [NAME OF TRANSFEROR],
                                             as Transferor

                                             By
                                                 ----------------------------
                                                 Name:
                                                 Title:

                                             [NAME OF TRANSFEROR],
                                             as Transferor

                                             By
                                                 ----------------------------
                                                 Name:
                                                 Title:

                                             THE BANK OF NEW YORK, as
                                             Option Agent

                                             By
                                                 ----------------------------
                                                 Name:
                                                 Title:

                                       2
<PAGE>
                                                                       EXHIBIT C

                               Option Certificate

                                       for

                                CLASS A-1 OPTIONS

                  relating to Class A-1 Certificates issued by
                CABCO SERIES 2002-1 TRUST (AOL TIME WARNER INC.)

THESE CALL OPTIONS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EXEMPTION UNDER SUCH ACT. THE CALL OPTIONS REPRESENTED HEREBY MAY
BE TRANSFERRED ONLY IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THE CALL
OPTION AGREEMENT (AS DEFINED BELOW).

                             Class A-1 Call Options

                                [-] Call Options
  (Each Call Option relates to $25 principal amount of Class A-1 Certificates)

No. O-[-]                                                           June -, 2002

            In connection with CABCO Series 2002-1 Trust (AOL Time Warner Inc.)
(the "Trust"), a trust created under the laws of the State of New York pursuant
to the Trust Agreement, dated as of June 21, 2002 (the "Trust Agreement"),
between Corporate Asset Backed Corporation, a Delaware corporation (the
"Depositor") and The Bank of New York, a New York banking corporation, as
trustee (the "Trustee") and option agent, for value received, this Option
Certificate certifies that [-] or registered assigns, is entitled to purchase,
in whole or part, [-] 7.625% Class A-1 Certificates issued by CABCO Series
2002-1 Trust (AOL Time Warner Inc.) on any Call Date designated by the holder of
these options (these "Call Options") at a purchase price equal to the Call
Price, all subject to the terms and conditions of the Class A-1 Call Option
Agreement, dated as of June 21, 2002 (the "Call Option Agreement"), among the
Depositor, as the sole initial Option Holder, UBS Warburg LLC, as the initial
purchaser from the Depositor, and sole holder at the time of execution of the
Call Option Agreement, of the Class A-1 Certificates, and the Option Agent.

            Certain capitalized terms used in this Option Certificate are
defined in the Call Option Agreement and capitalized terms used but not defined
herein or therein shall have the respective meanings set forth in the Trust
Agreement.
<PAGE>
            Each of (i) the Option Holder, by its acceptance hereof, and (ii)
the Option Agent agrees, that, without affecting any rights or remedies that the
Option Holder may have against the Option Agent or any Certificateholders under
the Call Option Agreement, it shall not have any recourse to the Trust for any
amount due under these Class A-1 Options.

                                             THE BANK OF NEW YORK,
                                                   as Option Agent

                                             By:_______________________________
                                                   Authorized Signatory

                                       2
<PAGE>
                                                                       Exhibit D

                               FORM OF ASSIGNMENT

         [To be executed only upon transfer of these Class A-1 Options]

            For value received, the undersigned registered holder of these Class
A-1 Options hereby sells, assigns and transfers unto _____________ Class A-1
Options [Must be whole number] to purchase Class A-1 Certificates, and appoints
an Attorney to make such transfer on the books of the Option Agent maintained
for such purpose, with full power of substitution in the premises. The
undersigned hereby certifies that it has executed, together with its transferee
and the Option Agent, a Class A-1 Transfer Confirmation in the form attached to
the Class A-1 Call Option Agreement in connection with such transfer.

Dated:

            (Signature must conform in all respects to name of holder as
specified on the face of these Call Options)

            (Street Address)
            (City State) (Zip Code)

Signed in the presence of:

                                       3<PAGE>
                                                                     EXHIBIT 4.3

                          SECURITIES PURCHASE AGREEMENT

      This Securities Purchase Agreement is entered into and dated as of June
19, 2002 (this "AGREEMENT"), among Millennium Cell Inc., a Delaware corporation
(the "COMPANY"), Pine Ridge Financial, Inc. ("PINE RIDGE") and ZLP Master
Technology Fund, Ltd. ("ZLP"). Each of Pine Ridge and ZLP (including its
respective successors and assigns ) are sometimes individually referred to as a
"PURCHASER" and collectively, as the "PURCHASERS").

      WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and Rule 506 promulgated thereunder, the Company desires to
issue and sell to the Purchasers, and the Purchasers, severally and not jointly,
desire to purchase from the Company, certain securities of the Company pursuant
to the terms set forth herein.

      NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers agree
as follows:

                                   ARTICLE I.
                                   DEFINITIONS

      1.1   Definitions. As used in this Agreement, the following terms shall
have the meanings set forth in this Section 1.1:

            "ADDITIONAL DEBENTURES" means $3,000,000 in aggregate principal
amount of secured convertible debentures due on the third year anniversary of
the issuance date thereof, issuable to Pine Ridge, subject to the terms hereof,
on the Additional Settlement Date, in the form of Exhibit A hereto.

            "ADDITIONAL SETTLEMENT DATE" means the second Business Day
immediately following the date Shareholder Approval is obtained, provided, that
such date may not occur later than the sixth month anniversary of the Closing
Date.

            "AFFILIATE" means any Person that, directly or indirectly through
one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 144.

            "BUSINESS DAY" means any day except Saturday, Sunday and any day
which shall be a federal legal holiday or a day on which banking institutions in
the State of New York or the State of New Jersey are authorized or required by
law or other governmental action to close.

            "CLOSING" means the closing of the purchase and sale of the Shares
and First Warrants pursuant to Section 2.1.
<PAGE>
            "CLOSING DATE" means the date of the Closing.

            "COMMISSION" means the Securities and Exchange Commission.

            "COMMON STOCK" means the common stock of the Company, $.001 par
value per share, and any securities into which such common stock may hereafter
be reclassified.

            "COMMON STOCK EQUIVALENTS" means any securities of the Company or
the Subsidiaries which would entitle the holder thereof to acquire Common Stock,
including without limitation, any debt, preferred stock or other instrument that
is at any time convertible into or exchangeable for, or otherwise entitles the
holder thereof to receive, Common Stock.

            "COMPANY COUNSEL" means Gibbons, Del Deo, Dolan, Griffinger
& Vecchione, P.C.

            "DEBENTURES" means, collectively, the Initial Debentures and the
Additional Debentures.

            "EFFECTIVE DATE" means the date that the initial Registration
Statement required by the Registration Rights Agreement is first declared
effective by the Commission.

            "ELIGIBLE MARKET" means any of the New York Stock Exchange, the
American Stock Exchange, the Nasdaq National Market or the Nasdaq Small Cap
Market.

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

            "FIRST WARRANT" means the Common Stock purchase warrant, in the form
of Exhibit C, issuable to a Purchaser at the Closing to purchase the aggregate
number of Underlying Shares indicated below such Purchaser's name on its
signature page to this Agreement.

            "INITIAL DEBENTURES" means $9,000,000 in aggregate principal amount
of secured convertible debentures due on the third year anniversary of the
issuance date thereof, issuable to Pine Ridge, subject to the terms hereof, on
the Initial Settlement Date, in the form of Exhibit A hereto.

            "INITIAL SETTLEMENT DATE" means the second Business Day immediately
following the Effective Date.

            "PERSON" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.

            "PROCEEDING" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened in writing.

                                      -2-
<PAGE>
            "PURCHASER COUNSEL" means Robinson Silverman Pearce Aronsohn &
Berman LLP.

            "PURCHASER PERCENTAGE" means, with respect to a Purchaser, the
percentage equal to the product of (x) a fraction, the numerator of which shall
be the aggregate purchase price paid by such Purchaser for Shares under this
Agreement and the denominator of which shall be the aggregate purchase price
paid by all Purchasers for Shares under this Agreement and (y) 100.

            "REGISTRATION STATEMENT" means a registration statement meeting the
requirements set forth in the Registration Rights Agreement and covering the
resale by the Purchasers of the Shares and Underlying Shares.

            "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date of this Agreement, among the Company and the
Purchasers, in the form of Exhibit B hereto.

            "REQUIRED MINIMUM" means, as of any date, the maximum aggregate
number of shares of Common Stock then issued or potentially issuable in the
future pursuant to the Transaction Documents, including any Underlying Shares
issuable upon exercise of conversion in full of all Warrants and Debentures and
assuming that: (a) the Debentures are held until the third anniversary of the
Closing Date and all interest on the Debentures is accreted to the principal
amount of the Debentures, (b) the maximum number of Underlying Shares is issued
pursuant to the Warrants and (c) the Conversion Price (as defined in the
Debentures) will be adjusted to 50% of the Initial Conversion Price (as defined
in the Debentures) pursuant to the terms of the Debentures.

            "RULE 144" means Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

            "SECOND WARRANT" means the Common Stock purchase warrant, in the
form of Exhibit D, issuable to Pine Ridge on the Initial Settlement Date,
pursuant to Section 2.3(a), to purchase the aggregate number of Underlying
Shares indicated below Pine Ridge's name on its signature page to this
Agreement.

            "SECURITIES" means the Shares, the Debentures, the Warrants and the
Underlying Shares issued or issuable (as applicable) to the applicable Purchaser
pursuant to the Transaction Documents.

            "SHAREHOLDER APPROVAL" means the approval of the shareholders of the
Company owning no less than 50% of the issued and outstanding Common Stock in
favor of issuance of Shares and Underlying Shares upon conversion of the
Debentures and exercise of the Warrants in excess of 20% of the number of shares
of Common Stock outstanding on the Closing Date, pursuant to the rules of
Nasdaq.

                                      -3-
<PAGE>
            "SHARES" means the shares of Common Stock issuable to each Purchaser
on the Closing Date pursuant to the terms hereof.

            "SHARES INVESTMENT AMOUNT" means, with respect to each Purchaser,
the purchase price for the Shares issuable to such Purchaser, as indicated below
such Purchaser's name on its signature page to this Agreement.

            "SUBSIDIARY" means any subsidiary of the Company that is required to
be listed in Schedule 3.1(a).

            "THIRD WARRANT" means the Common Stock purchase warrant, in the form
of Exhibit D, issuable to Pine Ridge on the Additional Settlement Date, pursuant
to Section 2.4(a), to purchase the aggregate number of Underlying Shares
indicated below Pine Ridge's name on its signature page to this Agreement.

            "TRADING DAY" means: (i) a day on which the Common Stock is traded
on a Trading Market, or (ii) if the Common Stock is not listed on a Trading
Market, a day on which the Common Stock is traded in the over-the-counter
market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is
not quoted on the OTC Bulletin Board, a day on which the Common Stock is quoted
in the over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding its functions of
reporting prices); provided, that in the event that the Common Stock is not
listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day
shall mean a Business Day.

            "TRANSACTION DOCUMENTS" means this Agreement, the Registration
Rights Agreement, the Warrants, the Debentures, the Transfer Agent Instructions
and any other documents or agreements executed or delivered in connection with
the transactions contemplated hereunder.

            "TRANSFER AGENT INSTRUCTIONS" means the Company's transfer agent
instructions in the form of Exhibit E.

            "UNDERLYING SHARES" means the shares of Common Stock issuable upon:
(i) conversion of the Debentures and (ii) exercise of the Warrants.

            "WARRANTS" means collectively, the First Warrants, the Second
Warrants and the Third Warrant issuable to the applicable Purchasers in
accordance with this Agreement.

                                   ARTICLE II.
                                PURCHASE AND SALE

      2.1   Closing. Subject to the terms and conditions set forth in this
Agreement, at the Closing the Company shall issue and sell to the Purchasers,
and the Purchasers shall, severally and not jointly, purchase from the Company,
the Shares and the First Warrants for an aggregate purchase price of $3,000,000.
The Closing shall take place at the offices of Purchaser Counsel

                                      -4-
<PAGE>
concurrently with the execution and delivery of this Agreement by the parties or
at such other location or time as the parties may agree.

      2.2   Closing Deliveries.

            (a)   At the Closing, the Company shall deliver or cause to be
delivered to each Purchaser the following:

                  (i)   this Agreement duly executed by the Company;

                  (ii)  a stock certificate, registered in the name of such
Purchaser, evidencing a number of Shares equal to the quotient obtained by
dividing: (i) such Purchaser's Shares Investment Amount by (ii) $2.79;

                  (iii) a First Warrant, registered in the name of such
Purchaser, pursuant to which such Purchaser shall have the right to acquire on
the terms set forth therein, the number of Underlying Shares indicated below
such Purchaser's name on its signature page to this Agreement;

                  (iv)  the legal opinion of Company Counsel, in agreed form,
addressed to the Purchasers;

                  (v)   the Registration Rights Agreement duly executed by the
Company; and

                  (vi)  the Transfer Agent Instructions duly executed by the
Company and acknowledged by the Company's transfer agent.

            (b)   At the Closing, each Purchaser shall deliver or cause to be
delivered to the Company the following:

                  (i)   this Agreement duly executed by such Purchaser;

                  (ii)  such Purchaser's Shares Investment Amount, in United
States dollars, by wire transfer to an account designated in writing by the
Company for such purpose; and

                  (iii) the Registration Rights Agreement duly executed by such
Purchaser.

      2.3   Initial Settlement Date; Initial Debentures and Second Warrants.

            (a)   If each of the conditions set forth in Section 2.3(b) have
been either satisfied by the Company or waived by Pine Ridge, then on the
Initial Settlement Date, the Company shall issue to Pine Ridge, the Initial
Debentures and the Second Warrant for an aggregate purchase price of $9,000,000.
On the Initial Settlement Date, the Company will deliver to Pine Ridge: (1) the
Initial Debentures, registered in the name of Pine Ridge, in the aggregate
principal amount of $9,000,000 and (2) the Second Warrant, registered in the
name of Pine Ridge, pursuant to which Pine Ridge shall have

                                      -5-
<PAGE>
the right to acquire the aggregate number of Underlying Shares indicated below
its name on its signature page to this Agreement. Pine Ridge will, against
delivery of its Initial Debentures and Second Warrant, deliver to the Company,
$9,000,000, in United States dollars in immediately available funds by wire
transfer to an account designated in writing by the Company for such purpose.

            (b)   Conditions Precedent to the Purchase of Initial Debentures.
Notwithstanding anything to the contrary contained in this Agreement, the
obligation of Pine Ridge to purchase the Initial Debentures on the Initial
Settlement Date is subject to the satisfaction by the Company or waiver by Pine
Ridge of each of the following conditions:

                  (i)   Accuracy of the Company's Representations and
Warranties. The representations and warranties of the Company contained in this
Agreement shall be true and correct as of the date when made and as of the
Initial Settlement Date, as though made on and as of the Initial Settlement Date
(other than representations and warranties which relate to a specific date
(which shall not include representations and warranties relating to the "date
hereof") which representations and warranties shall be true as of such specific
date).

                  (ii)  Performance by the Company. The Company shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by the Transaction Documents to be performed,
satisfied or complied with by the Company between the Closing Date and the
Initial Settlement Date.

                  (iii) Registration Statement. The Registration Statement shall
have been declared effective under the Securities Act by the Commission and
shall have remained effective (and the prospectus therein shall have remained
available for use by the Purchasers to resell Underlying Shares (including,
without limitation, Underlying Shares issuable upon conversion of the Initial
Debentures and exercise of the Second Warrants) thereunder at all times, not
subject to any actual or threatened stop order or subject to any actual or
threatened suspension at any time prior to the Initial Settlement Date.

                  (iv)  No Injunction. Since the Closing Date, no statute, rule,
regulation, executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated, amended, modified or endorsed by any court of
governmental authority of competent jurisdiction or governmental authority,
stock market or trading facility which prohibits the consummation of any of the
transactions contemplated by the Transaction Documents.

                  (v)   Adverse Changes. Since the Closing Date, no event or
series of events which reasonably would be expected to have or result in a
material adverse effect on the results of operations, assets or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as a whole.

                  (vi)  Initial Letter of Credit. The Company shall have
obtained a letter of credit issued by First Union National Bank in the form of
Exhibit F hereto, in an amount equal to $9,000,000 (the "INITIAL LETTER OF
CREDIT").

                                      -6-
<PAGE>
                  (vii) Compliance Certificate. The Company shall have delivered
to Pine Ridge, an officer's certificate stating that the conditions specified in
clauses (i)-(vi) above have been satisfied.

      2.4   Additional Settlement Date; Additional Debentures and Third
Warrants.

            (a)   If each of the conditions set forth in Section 2.4(b) have
been either satisfied by the Company or waived by Pine Ridge, then on the
Additional Settlement Date, the Company shall issue to Pine Ridge, the
Additional Debentures and the Third Warrant for an aggregate purchase price of
$3,000,000. On the Additional Settlement Date, the Company will deliver to Pine
Ridge: (1) the Additional Debentures, registered in the name of Pine Ridge, in
the aggregate principal amount of $3,000,000 and (2) the Third Warrant,
registered in the name of Pine Ridge, pursuant to which Pine Ridge shall have
the right to acquire the aggregate number of Underlying Shares indicated below
its name on its signature page to this Agreement. Pine Ridge will, against
delivery of its Additional Debentures and Third Warrant, deliver to the Company,
$3,000,000 less the applicable amount pursuant to Section 5.1, in United States
dollars in immediately available funds by wire transfer to an account designated
in writing by the Company for such purpose.

            (b)   Conditions Precedent to the Purchase of Additional Debentures.
Notwithstanding anything to the contrary contained in this Agreement, the
obligation of Pine Ridge to purchase the Additional Debentures on the Additional
Settlement Date is subject to the satisfaction by the Company or waiver by Pine
Ridge of each of the following conditions:

                  (i)   Accuracy of the Company's Representations and
Warranties. The representations and warranties of the Company contained in this
Agreement shall be true and correct as of the date when made and as of the
Additional Settlement Date, as though made on and as of the Additional
Settlement Date (other than representations and warranties which relate to a
specific date (which shall not include representations and warranties relating
to the "date hereof") which representations and warranties shall be true as of
such specific date).

                  (ii)  Performance by the Company. The Company shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by the Transaction Documents to be performed,
satisfied or complied with by the Company between the Closing Date and the
Additional Settlement Date.

                  (iii) Registration Statement. The Registration Statement shall
have been declared effective under the Securities Act by the Commission and
shall have remained effective (and the prospectus therein shall have remained
available for use by the Purchasers to resell Underlying Shares (including,
without limitation, Underlying Shares issuable upon conversion of the Additional
Debentures and exercise of the Third Warrants) thereunder at all times, not
subject to any actual or threatened stop order or subject to any actual or
threatened suspension at any time prior to the Additional Settlement Date.

                                      -7-
<PAGE>
                  (iv)  No Injunction. Since the Closing Date, no statute, rule,
regulation, executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated, amended, modified or endorsed by any court of
governmental authority of competent jurisdiction or governmental authority,
stock market or trading facility which prohibits the consummation of any of the
transactions contemplated by the Transaction Documents.

                  (v)   Adverse Changes. Since the Closing Date, no event or
series of events which reasonably would be expected to have or result in a
material adverse effect on the results of operations, assets or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as a whole.

                  (vi)  Additional Letter of Credit. The Company shall have
obtained a letter of credit issued by First Union National Bank in the form of
Exhibit F hereto, in an amount equal to $3,000,000 (the "ADDITIONAL LETTER OF
CREDIT").

                  (vii) Shareholder Approval The Company shall have obtained the
Shareholder Approval by the sixth month anniversary of the Closing Date.

                  (viii) Compliance Certificate. The Company shall have
delivered to Pine Ridge, an officer's certificate stating that the conditions
specified in clauses (i)-(vii) above have been satisfied.

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

      3.1   Representations and Warranties of the Company. The Company hereby
makes the following representations and warranties to the Purchasers:

            (a)   Subsidiaries. The Company has no direct or indirect
subsidiaries other than those listed in Schedule 3.1(a). Except as disclosed in
Schedule 3.1(a), the Company owns, directly or indirectly, all of the capital
stock of each Subsidiary free and clear of any lien, charge, security interest,
encumbrance, right of first refusal or other restriction (collectively,
"LIENS"), and all the issued and outstanding shares of capital stock of each
Subsidiary are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights. If the Company has no subsidiaries, then
references in the Transaction Documents to the Subsidiaries will be disregarded.

            (b)   Organization and Qualification. Each of the Company and the
Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Each of the Company and the Subsidiaries is duly
qualified to conduct business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the

                                      -8-
<PAGE>
case may be, could not, individually or in the aggregate have or reasonably be
expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material adverse effect on
the results of operations, assets, business or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a
material adverse effect on the Company's ability to perform fully on a timely
basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
a "MATERIAL ADVERSE EFFECT"). Except as could not have or could not reasonably
be expected to result in a Material Adverse Effect, neither the Company nor any
Subsidiary is in violation of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or
charter documents.

            (c)   Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company. Each
Transaction Document has been (or upon delivery will be) duly executed by the
Company and, when delivered in accordance with the terms hereof, will constitute
the valid and binding obligation of the Company enforceable against the Company
in accordance with its terms.

            (d)   No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not: (i) conflict with or
violate any provision of the Company's or any Subsidiary's certificate or
articles of incorporation, bylaws or other organizational or charter documents,
or (ii) subject to obtaining the Required Approvals (as defined below), conflict
with, or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other understanding to
which the Company or any Subsidiary is a party or by which any property or asset
of the Company or any Subsidiary is bound or affected, or (iii) result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Company or
a Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected (except to the extent that stockholder approval may be
required pursuant to the rules of the NASDAQ for the issuance for a number of
Underlying Shares together with the Shares (at a price below the closing price
of the Common Stock on the Trading Day immediately preceding the Closing Date)
greater than 19.99% of the number of shares of Common Stock outstanding
immediately prior to the Closing Date (the "19.99% Rule"); except in the case of
each of clauses (ii) and (iii), such as could not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect.

                                      -9-
<PAGE>
            (e)   Filings, Consents and Approvals. Neither the Company nor any
Subsidiary is required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any court or other
federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than: (i) the filing with the Commission of the
Registration Statement, (ii) the filings required by Section 4.8, (iii) the
application with the Trading Market for the listing of the Shares and Underlying
Shares for trading thereon in the time and manner required thereby, (iv) to the
extent that the stockholder approval required pursuant to the 19.99% Rule and
(v) as required by blue sky filings (collectively, the "REQUIRED APPROVALS").

            (f)   Issuance of the Securities. The Securities have been duly
authorized and, when issued and paid for in accordance with the Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens. The Company has reserved from its duly authorized
capital stock a number of shares of Common Stock to be issued to the applicable
Purchasers upon conversion or exercise of the Debentures or Warrants and such
number of reserved shares of Common Stock shall be at least equal to the
Required Minimum calculated as of the date hereof.

            (g)   Capitalization. The number of shares and type of all
authorized, issued and outstanding capital stock of the Company is set forth in
Schedule 3.1(g). No securities of the Company are entitled to preemptive or
similar rights, and no Person has any right of first refusal, preemptive right,
right of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as a result of the purchase
and sale of the Securities and except as disclosed in Schedule 3.1(g), there are
no outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common Stock.
The issuance and sale of the Securities will not obligate the Company to issue
shares of Common Stock or other securities to any Person (other than the
Purchasers) and will not result in a right of any holder of Company securities
to adjust the exercise, conversion, exchange or reset price under such
securities.

            (h)   SEC Reports; Financial Statements. The Company has filed all
reports required to be filed by it under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required by
law to file such reports) (the foregoing materials being collectively referred
to herein as the "SEC REPORTS" and, together with the Schedules to this
Agreement, the "DISCLOSURE MATERIALS") on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. The Company has delivered to the Purchasers a
copy of all SEC Reports filed within the 10 days preceding the date hereof. As
of their respective dates, the SEC Reports complied in

                                      -10-
<PAGE>
all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, 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. The financial
statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
("GAAP"), except as may be otherwise specified in such financial statements or
the notes thereto, and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments.

            (i)   Material Changes. Since the date of the latest audited
financial statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports: (i) there has been no event, occurrence or
development that has had or that could reasonably be expected to result in a
Material Adverse Effect, (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than: (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice and
(B) liabilities not required to be reflected in the Company's financial
statements pursuant to GAAP or required to be disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting or the
identity of its auditors, (iv) the Company has not declared or made any dividend
or distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option plans.
The Company does not have pending before the Commission any request for
confidential treatment of information.

            (j)   Litigation. There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company, any Subsidiary or any of
their respective properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an "ACTION") which: (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or
the Securities or (ii) could, if there were an unfavorable decision,
individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect. Except as disclosed in Schedule 3.1(j), neither the
Company nor any Subsidiary, nor any officer thereof, is or has been, nor any
director thereof is or has been for the last three years, the subject of any
Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has not been, and,
to the knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former
director that was a director of the Company at any time during the last three
years or

                                      -11-
<PAGE>
officer of the Company. The Commission has not issued any stop order or other
order suspending the effectiveness of any registration statement filed by the
Company or any Subsidiary under the Exchange Act or the Securities Act.

            (k)   Compliance. Neither the Company nor any Subsidiary (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws relating to taxes, environmental protection, occupational health
and safety, product quality and safety and employment and labor matters, except
in each case as could not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect.

            (l)   Patents and Trademarks. The Company and the Subsidiaries have,
or have rights to use, patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights that are necessary or material for use in connection with their
respective businesses as described in the SEC Reports and which the failure to
so have could have, or reasonably be expected to result in, a Material Adverse
Effect (collectively, the "INTELLECTUAL PROPERTY RIGHTS"). Neither the Company
nor any Subsidiary has received a written notice that the Intellectual Property
Rights used by the Company or any Subsidiary violates or infringes upon the
rights of any Person which if determined adversely to the Company would,
individually or in the aggregate have a Material Adverse Effect. To the
knowledge of the Company, all such Intellectual Property Rights are enforceable
and there is no existing infringement by another Person of any of the
Intellectual Property Rights.

            (m)   Transactions With Affiliates and Employees. Except as set
forth in SEC Reports and except as set forth on the attached Schedule 3.1(m),
none of the officers or directors of the Company and, to the knowledge of the
Company, none of the employees of the Company is presently a party to any
transaction with the Company or any Subsidiary (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.

            (n)   Internal Accounting Controls. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,

                                      -12-
<PAGE>
(iii) access to assets is permitted only in accordance with management's general
or specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.

            (o)   Solvency. Based on the financial condition of the Company as
of the Closing Date, (i) the Company's fair saleable value of its assets exceeds
the amount that will be required to be paid on or in respect of the Company's
existing debts and other liabilities (including known contingent liabilities) as
they mature; (ii) the Company's assets do not constitute unreasonably small
capital to carry on its business for the current fiscal year as now conducted
and as proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the Company,
and projected capital requirements and capital availability thereof; and (iii)
the current cash flow of the Company, together with the proceeds the Company
would receive, were it to liquidate all of its assets, after taking into account
all anticipated uses of the cash, would be sufficient to pay all amounts on or
in respect of its debt when such amounts are required to be paid. The Company
does not intend to incur debts beyond its ability to pay such debts as they
mature (taking into account the timing and amounts of cash to be payable on or
in respect of its debt).

            (p)   Certain Fees. Except for fees or commissions payable by the
Company to Banc of America Securities LLC, no brokerage or finder's fees or
commissions are or will be payable by the Company to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or other
Person with respect to the transactions contemplated by this Agreement. The
Purchasers shall have no obligation with respect to any fees or with respect to
any claims made by or on behalf of other Persons for fees of a type contemplated
in this Section that may be due in connection with the transactions contemplated
by this Agreement.

            (q)   Private Placement. Assuming the accuracy of the Purchasers
representations and warranties set forth in Section 3.2(b)-(e), no registration
under the Securities Act is required for the offer, issuance and sale of the
Securities by the Company to the Purchasers as contemplated hereby.

            (r)   Form S-3 Eligibility. The Company is eligible to register the
resale of shares of Common Stock for resale by the Purchasers under Form S-3
promulgated under the Securities Act.

            (s)   Listing and Maintenance Requirements. The Company has not, in
the two years preceding the date hereof, received notice (written or oral) from
any Eligible Market on which the Common Stock is or has been listed or quoted to
the effect that the Company is not in compliance with the listing or maintenance
requirements of such Eligible Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance
with all such listing and maintenance requirements. The issuance and sale of the
Securities hereunder does not contravene the rules and regulations of the
Trading Market and no approval of the shareholders of the Company is required
for the Company to issue and deliver to

                                      -13-
<PAGE>
the Purchasers the maximum number of Securities contemplated by this Agreement
assuming exercise of the Warrants and conversion of the Debentures on the date
hereof.

            (t)   Registration Rights. Except as described in Schedule 3.1(t),
the Company has not granted or agreed to grant to any Person any rights
(including "piggy back" registration rights) to have any securities of the
Company registered with the Commission or any other governmental authority that
have not been satisfied.

            (u)   Investment Company. The Company is not, and is not an
Affiliate of, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.

            (v)   Application of Takeover Protections. The Company and its Board
of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar anti
takeover provision under the Company's Certificate of Incorporation (or similar
charter documents) or the laws of its state of incorporation that is or could
become applicable to the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation the Company's issuance of
the Securities and the Purchasers' ownership of the Securities.

            (w)   Disclosure. The Company confirms that neither it nor any other
Person acting on its behalf has provided any of the Purchasers or their agents
or counsel with any information that constitutes or might constitute material,
non-public information. The Company understands and confirms that the Purchasers
will rely on the foregoing representations in effecting transactions in
securities of the Company. All disclosure provided to the Purchasers regarding
the Company, its business and the transactions contemplated hereby, including
the Schedules to this Agreement, furnished by or on behalf of the Company are
true and correct and do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.

            (x)   Seniority. As of the date of this Agreement, no indebtedness
of the Company is senior to the Debentures in right of payment, whether with
respect to interest or upon liquidation or dissolution, or otherwise.

      3.2   Representations and Warranties of the Purchasers. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants to the
Company as follows:

            (a)   Organization; Authority. Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents to which it is a party and otherwise
to carry out its obligations thereunder. The purchase by such Purchaser of the
Securities issued or issuable to it pursuant to the terms hereof has been duly
authorized by all necessary corporate

                                      -14-
<PAGE>
action on the part of such Purchaser. Each of this Agreement and the
Registration Rights Agreement has been duly executed by such Purchaser, and,
when delivered by such Purchaser in accordance with the terms hereof, will
constitute the valid and legally binding obligation of such Purchaser,
enforceable against it in accordance with its terms.

            (b)   Investment Intent. Such Purchaser is acquiring the Securities
issued or issuable to it as principal for its own account for investment
purposes only and not with a view to or for distributing or reselling such
Securities or any part thereof, without prejudice, however, to such Purchaser's
right, subject to the provisions of this Agreement, at all times to sell or
otherwise dispose of all or any part of such Securities pursuant to an effective
registration statement under the Securities Act or under an exemption from such
registration and in compliance with applicable federal and state securities
laws. Nothing contained herein shall be deemed a representation or warranty by
such Purchaser to hold the Securities issued or issuable to it for any period of
time. Such Purchaser is acquiring the Securities issued or issuable to it
hereunder in the ordinary course of its business. Such Purchaser does not have
any agreement or understanding, directly or indirectly, with any Person to
distribute any of the Securities issued or issuable to it.

            (c)   Purchaser Status. At the time such Purchaser was offered the
Securities issued or issuable to it, it was, and at the date hereof it is, and
as of each date of exercise of Warrants, it will be, an "accredited investor" as
defined in Rule 501(a) under the Securities Act. Such Purchaser has not been
formed solely for the purpose of acquiring the Securities issued or issuable to
it. Such Purchaser is not a registered broker-dealer under Section 15 of the
Exchange Act.

            (d)   Experience of such Purchaser. Such Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities issued or
issuable to it, and has so evaluated the merits and risks of such investment.
Such Purchaser is able to bear the economic risk of an investment in the
Securities issued or issuable to it and, at the present time, is able to afford
a complete loss of such investment.

            (e)   General Solicitation. Such Purchaser is not purchasing the
Securities issued or issuable to it as a result of any advertisement, article,
notice or other communication regarding the Securities issued or issuable to it
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
solicitation or general advertisement.

            (f)   Access to Information. Such Purchaser acknowledges that it has
reviewed the Disclosure Materials and has been afforded (i) the opportunity to
ask such questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Securities issued or issuable to it and the merits and risks of
investing in the Securities issued or issuable to it; (ii) access to information
about the

                                      -15-
<PAGE>
Company and the Subsidiaries and their respective financial condition, results
of operations, business, properties, management and prospects sufficient to
enable it to evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment
decision with respect to the investment. Neither such inquiries nor any other
investigation conducted by or on behalf of such Purchaser or its representatives
or counsel shall modify, amend or affect such Purchaser's right to rely on the
truth, accuracy and completeness of the Disclosure Materials and the Company's
representations and warranties contained in the Transaction Documents.

      The Company acknowledges and agrees that no Purchaser makes or has made
any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2.

                                   ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

      4.1   Transfer Restrictions.

            (a)   Securities may only be disposed of in compliance with state
and federal securities laws. In connection with any transfer of the Securities
other than pursuant to an effective registration statement, to the Company, to
an Affiliate of a Purchaser who is an "accredited investor" as defined in Rule
501(a) under the Securities Act or in connection with a pledge as contemplated
in Section 4.1(b), the Company may require the transferor thereof to provide to
the Company an opinion of counsel selected by the transferor, the form and
substance of which opinion shall be reasonably satisfactory to the Company, to
the effect that such transfer does not require registration of such transferred
Securities under the Securities Act. As a condition of transfer, any such
transferee shall agree in writing to be bound by the terms of this Agreement and
shall have the rights of a Purchaser under this Agreement and the Registration
Rights Agreement.

            (b)   The Purchasers agree to the imprinting, so long as is required
by this Section 4.1(b), of the following legend on the certificates evidencing
the Securities:

            [NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE
            SECURITIES ARE CONVERTIBLE/EXERCISABLE] HAVE [NOT] BEEN REGISTERED
            WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
            COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
            REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
            "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
            EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
            SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
            TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
            SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
            LAWS AS EVIDENCED BY A

                                      -16-
<PAGE>
            LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
            SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
            THESE SECURITIES [AND THE SECURITIES ISSUABLE UPON
            CONVERSION/EXERCISE OF THESE SECURITIES] MAY BE PLEDGED IN
            CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY
            SUCH SECURITIES.

            The Company acknowledges and agrees that a Purchaser may from time
to time pledge pursuant to a bona fide margin agreement or grant a security
interest in some or all of the Securities issued or issuable to it and, if
required under the terms of such arrangement, such Purchaser may transfer
pledged or secured Securities to the pledgees or secured parties. Such a pledge
or transfer would not be subject to approval of the Company and no legal opinion
of the pledgee, secured party or pledgor shall be required in connection
therewith, provided, that the Company's transfer agent may require a legal
opinion to issue a certificate in the name of such pledgee or secured party if
such pledgee or secured party requires registration of the applicable Securities
in its name. Further, no notice shall be required of such pledge. At the
appropriate Purchaser's expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the Securities
including the preparation and filing of any required prospectus supplement under
Rule 424(b)(3) of the Securities Act or other applicable provision of the
Securities Act to appropriately amend the list of Selling Stockholders
thereunder.

            (c)   Certificates evidencing the Shares or Underlying Shares shall
not contain any legend (including the legend set forth in Section 4.1(b)): (i)
while a registration statement (including the Registration Statement) covering
the resale of such Shares or Underlying Shares is effective under the Securities
Act, or (ii) following any sale of such Shares or Underlying Shares pursuant to
Rule 144, or (iii) if such Shares or Underlying Shares are eligible for sale
under Rule 144(k), or (iv) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the Staff of the Commission). The Company shall cause
its counsel to issue the legal opinion included in the Transfer Agent
Instructions to the Company's transfer agent on the Effective Date. If all or
any portion of a Warrant or Debenture is exercised or converted at a time when
there is a effective registration statement to cover the resale of the
Underlying Shares, such Underlying Shares shall be issued free of all legends.
The Company agrees that following the Effective Date or at such time as such
legend is no longer required for Shares or Underlying Shares under this Section
4.1(c), it will, no later than three Trading Days following the delivery by a
Purchaser to the Company or the Company's transfer agent of a certificate
representing Shares or Underlying Shares issued with a restrictive legend,
deliver or cause to be delivered to such Purchaser a certificate representing
such Shares or Underlying Shares that is free from all restrictive or other
legends. The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Section.

      4.2   Unconditional Performance. The Company acknowledges that the
issuance of the Securities will result in dilution of the outstanding shares of
Common Stock. The Company

                                      -17-
<PAGE>
further acknowledges that its obligations under the Transaction Documents,
including without limitation its obligation to issue the Underlying Shares
pursuant to the Transaction Documents, are unconditional and absolute and not
subject to any right of set off, counterclaim, delay or reduction, regardless of
the effect of any such dilution or any claim that the Company may have against
any Purchaser and shall only be subject to a non-appealable order of the
Commission.

      4.3   Furnishing of Information. As long as any Purchaser owns the
Securities issued or issuable to it, the Company covenants to timely file (or
obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act. Upon the request of any such Person, the Company
shall deliver to such Person a written certification of a duly authorized
officer as to whether it has complied with the preceding sentence. As long as
any Purchaser owns the Securities issued or issuable to it, if the Company is
not required to file reports pursuant to such laws, it will prepare and furnish
to the Purchasers and make publicly available in accordance with Rule 144(c)
such information as is required for the Purchasers to sell the Securities under
Rule 144.

      4.4   Integration. The Company shall not, and shall use its best efforts
to ensure that no Affiliate of the Company shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the applicable Securities to the
Purchasers, or that would be integrated with the offer or sale of the applicable
Securities for purposes of the rules and regulations of any Trading Market, if
such integration would result in a violation of any such rule or regulation.

      4.5   Listing of Securities. The Company shall: (i) in the time and manner
required by each Trading Market, prepare and file with such Trading Market an
additional shares listing application covering the Shares and the Underlying
Shares, (ii) take all steps necessary to cause such shares to be approved for
listing on each Trading Market as soon as possible thereafter, (iii) provide to
the Purchasers evidence of such listing, and (iv) maintain the listing of such
shares on each such Trading Market or another eligible securities market.

      4.6   Reservation of Shares. The Company shall maintain a reserve from its
duly authorized shares of Common Stock to comply with its conversion and
exercise obligations under the Debentures and Warrants pursuant to the
Transaction Documents. If on any date the Company would be, if notice of
exercise or conversion were to be delivered on such date, precluded from issuing
the number of Underlying Shares, as the case may be, issuable upon exercise in
full of all of the Warrants and issuable upon conversion in full of the
Debentures due to the unavailability of a sufficient number of authorized but
unissued or reserved shares of Common Stock, then the Board of Directors of the
Company shall promptly prepare and mail to the stockholders of the Company proxy
materials requesting authorization to amend the Company's certificate of
incorporation to increase the number of shares of Common Stock which the Company
is authorized to issue so as to provide enough shares for issuance of the
Underlying Shares. In connection therewith, the Board of Directors shall (a)
adopt proper resolutions authorizing such increase, (b) recommend to and
otherwise use its best efforts to promptly and duly obtain stockholder approval
to carry out such resolutions (and hold a special meeting of the stockholders as
soon as practicable, but in any event not later than the 60th day

                                      -18-
<PAGE>
after delivery of the proxy materials relating to such meeting) and (c) within
five Business Days of obtaining such stockholder authorization, file an
appropriate amendment to the Company's certificate of incorporation to evidence
such increase.

      4.7   Subsequent Placements and Registration Statements.

            (a)   From the date hereof through and including the Effective Date,
the Company will not: (i) directly or indirectly, offer, sell or grant any
option to purchase (or announce any offer, sale, grant or any option to
purchase) any of its Common Stock Common Stock Equivalents, or (ii) file a
registration statement (other than on a Form S-8 and pursuant to the
Registration Rights Agreement) with the Commission with respect to any
securities of the Company.

            (b)   The Company will not, directly or indirectly, offer, sell or
issue any Common Stock or Common Stock Equivalents, in a transaction intended to
be exempt from the registration requirements of the Securities Act (a
"SUBSEQUENT PRIVATE PLACEMENT") from the Closing Date until the earlier to occur
of (x) eighteen months from the Closing Date, or (y) with respect to each
individual Purchaser, the date on which such Purchaser no longer holds 20% or
more of the Securities (including Underlying Shares), issued or issuable to such
Purchaser pursuant to the Transaction Documents, unless (i) the Company delivers
to each of the Purchasers a written notice (the "SUBSEQUENT PRIVATE PLACEMENT
NOTICE") of its intention to effect such Subsequent Private Placement, which
Subsequent Private Placement Notice shall describe in reasonable detail the
proposed terms of such Subsequent Private Placement, the amount of proceeds
intended to be raised thereunder, the Person with whom such Subsequent Private
Placement is proposed to be effected, and attached to which shall be a term
sheet or similar document relating thereto and (ii) such Purchaser shall not
have notified the Company by 6:30 p.m. (New York City time) on the tenth Trading
Day after its receipt of the Subsequent Placement Notice of its willingness to
provide (or to cause its designee to provide), subject to completion of mutually
acceptable documentation, up to the greater of 20% of such financing or six
million dollars ($6,000,000) (the "SUBSEQUENT FINANCING AMOUNT") to the Company
on the same terms set forth in the Subsequent Private Placement Notice. If the
Purchasers shall fail to so notify the Company of their willingness to
participate in the Subsequent Financing Amount, the Company may effect the
remaining portion of such Subsequent Placement on the terms and to the Persons
set forth in the Subsequent Private Placement Notice. The Company shall provide
the Purchasers with a second Subsequent Private Placement Notice and the
Purchasers will again have the right of first refusal set forth above in this
paragraph (b), if the Subsequent Placement subject to the initial Subsequent
Private Placement Notice is not consummated for any reason on the terms set
forth in such Subsequent Placement Notice within 45 Trading Days after the date
of the initial Subsequent Placement Notice with the Person identified in the
Subsequent Placement Notice. If the Purchasers indicate a willingness to provide
financing in excess of the Subsequent Financing Amount, then each Purchaser will
be entitled to provide financing pursuant to such Subsequent Placement Notice up
to an amount equal to such Purchaser's Percentage, but the Company shall not be
required to accept financing from the Purchasers in an amount in excess of the
Subsequent Financing Amount.

                                      -19-
<PAGE>
            (c)   The restrictions contained in Section 4.7(a) and (b) shall not
apply to any grant or issuance by the Company of any of the following:

                  (i)   Any grant of an option or warrant for Common Stock or
issuance of any shares of Common Stock upon the exercise of any options or
warrants to employees, officers and directors of or consultants to the Company
pursuant to any stock option plan, employee stock purchase plan or similar plan
or incentive or consulting arrangement approved by the Company's board of
directors;

                  (ii)  Any rights or agreements to purchase Common Stock
Equivalents outstanding on the date hereof and as specified in Schedule 3.1(g)
(but not as to any amendments or other modifications to the number of Common
Stock issuable thereunder, the terms set forth therein, or the exercise price
set forth therein);

                  (iii) Any Common Stock or Common Stock Equivalents issued for
consideration other than cash pursuant to a merger, consolidation, acquisition
or other similar business combination;

                  (iv)  Any issuances of Common Stock or Common Stock
Equivalents to a Person which is or will be, itself or through its subsidiaries,
an operating company in a business related to or complementary with the business
of the Company and in which the Company receives reasonably material benefits in
addition to the investment of funds, but shall not include a transaction in
which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in securities;

                  (v)   Any Common Stock Equivalents that entitle the holders
thereof to acquire up to 500,000 shares of Common Stock issued pursuant to any
equipment leasing arrangement;

                  (vi)  Any Common Stock or Common Stock Equivalents issued to
pay all or a portion of any investment banking, finders or similar fee or
commission, which entitles the holders thereof to acquire shares of Common Stock
at a price not less than the market price of the Common Stock on the date of
such issuance and which is not subject to any adjustments other than on account
of stock splits and reverse stock splits;

                  (vii) Any shares of Common Stock issued upon: (x) the exercise
of the Warrants or any similar warrant issued pursuant to this Agreement and (y)
the conversion of the Debentures;

                  (viii) a bona fide underwritten public offering of the Common
Stock resulting in gross proceeds in excess of $15 million to the Company (it
being understood that equity line transactions, including any on going warrant
financing, or any similar arrangements shall not constitute a bona fide
underwritten public offering of the Common Stock for the purposes hereof).

                                      -20-
<PAGE>
      4.8   Securities Laws Disclosure; Publicity. The Company shall, within one
Business Day after each of the Closing Date, the Initial Settlement Date and the
Additional Settlement Date, issue a press release or file a Current Report on
Form 8-K reasonably acceptable to the Purchasers disclosing all material terms
of the transactions contemplated hereby. The Company and the Purchasers shall
consult with each other in issuing any press releases with respect to the
transactions contemplated hereby. Notwithstanding the foregoing, other than in
any registration statement filed pursuant to the Registration Rights Agreement
and filings related thereto, the Company shall not publicly disclose the name of
any Purchaser, or include the name of any Purchaser in any filing with the
Commission or any regulatory agency or Trading Market, without the prior written
consent of such Purchaser, except to the extent such disclosure is required by
law or Trading Market regulations, in which case the Company shall provide the
Purchasers with prior notice of such disclosure.

      4.9   Non-Public Information. The Company covenants and agrees that
neither it nor any other Person acting on its behalf will provide any Purchaser
or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto such Purchaser
shall have executed a written agreement regarding the confidentiality and use of
such information. The Company understands and confirms that each Purchaser shall
be relying on the foregoing representations in effecting transactions in
securities of the Company.

      4.10  Use of Proceeds. The Company shall not use any of the net proceeds
from the sale of the Securities hereunder for the satisfaction of any portion of
the Company's debt (other than payment of trade payables in the ordinary course
of the Company's business and prior practices), to redeem any Company equity or
equity equivalent securities or to extend any loans to its Affiliates.

      4.11  Indemnification of Purchasers. The Company hereby indemnifies and
holds the Purchasers and their directors, officers, shareholders, partners,
employees and agents (each, a "PURCHASER PARTY") harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys' fees and costs of investigation (collectively, "LOSSES")
that any such Purchaser Party may suffer or incur as a result of or relating to
any misrepresentation, breach or inaccuracy, or any allegation by a third party
that, if true, would constitute a breach or inaccuracy, of any of the
representations, warranties, covenants or agreements made by the Company in this
Agreement or in the other Transaction Documents. The Company will reimburse such
Purchaser for its reasonable legal and other expenses (including the cost of any
investigation, preparation and travel in connection therewith) incurred in
connection therewith, as such expenses are incurred. The Company and the
Purchaser Party may not, without the prior written consent of the other, agree
to any settlement of any claim or action with respect to which the Company is
required to indemnify the Purchaser Party pursuant to this Section 4.9.

      4.12  Shareholders Rights Plan. No claim will be made or enforced by the
Company or any other Person that any Purchaser is an "Acquiring Person" under
any shareholders rights plan

                                      -21-
<PAGE>
or similar plan or arrangement in effect or hereafter adopted by the Company, or
that any Purchaser could be deemed to trigger the provisions of any such plan or
arrangement, by virtue of receiving Shares or Underlying Shares under the
Transaction Documents or under any other agreement between the Company and the
Purchasers.

      4.13  Letter of Credit. No later than the Initial Settlement Date, as
material inducement for the Purchasers to purchase the Initial Debentures, the
Company shall obtain the Initial Letter of Credit from First Union National
Bank. No later than the Additional Settlement Date, as material inducement for
the Purchasers to purchase the Additional Debentures, the Company shall obtain
the Additional Letter of Credit from First Union National Bank. The failure of
the Company to comply with any part of this covenant, may be deemed by Pine
Ridge to be a material violation of this Agreement.

      4.14  Shareholder Approval. The Company shall use its best efforts to
obtain the Shareholder Approval no later than the sixth month anniversary of the
Closing Date. The failure of the Company to comply this covenant, may be deemed
by Pine Ridge to be a material violation of this Agreement.

                                   ARTICLE V.
                                  MISCELLANEOUS

      5.1   Fees and Expenses. The Company has agreed to pay $40,000 at the
Closing to the Purchasers as reimbursement for their legal and other fees and
expenses incurred in connection with the investigation and negotiation of the
transaction and the preparation and negotiation of the Transaction Documents of
which $30,000 has been paid as of the date hereof. Accordingly, in lieu of the
foregoing payment, the Company, on the Closing Date, will direct that the
aggregate amount that the Purchasers are to pay for the Shares and First
Warrants at the Closing, will be reduced by $10,000. The Company has agreed to
pay $25,000 on the Additional Settlement Date to Pine Ridge as reimbursement for
its legal and other fees and expenses incurred in connection with the
investigation and negotiation of the transaction and the preparation and
negotiation of the Transaction Documents. Accordingly, in lieu of the foregoing
payment, the Company, on the Second Settlement Date, will direct that the
aggregate amount that Pine Ridge has to pay for the Additional Debentures and
Third Warrants on the Second Additional Closing Date, will be reduced by
$25,000. Other than as specified above, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all transfer agent fees, stamp taxes and other taxes and duties levied
in connection with the issuance of any Securities.

      5.2   Entire Agreement. The Transaction Documents, together with the
Exhibits and Schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules. At or
after the Closing, and without further consideration, the Company

                                      -22-
<PAGE>
will execute and deliver to the Purchasers such further documents as may be
reasonably requested in order to give practical effect to the intention of the
parties under the Transaction Documents.

      5.3   Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 6:30 p.m. (New York City time) on a Trading
Day, (b) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a Trading Day or later than 6:30 p.m. (New
York City time) on any Trading Day, (c) the Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service, or (d)
upon actual receipt by the party to whom such notice is required to be given.
The addresses for such notices and communications are those set forth on the
signature pages hereof, or such other address as may be designated in writing
hereafter, in the same manner, by such Person.

      5.4   Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and each of the Purchasers or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right.

      5.5   Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be 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.

      5.6   Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers. Any Purchaser may assign
its rights under this Agreement and the Registration Rights Agreement to any
Person to whom such Purchaser assigns or transfers any Securities.

      5.7   No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.11.

      5.8   Governing Law; Venue; Waiver of Jury Trial. All questions concerning
the construction, validity, enforcement and interpretation of this Agreement
shall be governed by and construed and enforced in accordance with the internal
laws of the State of New York,

                                      -23-
<PAGE>
without regard to the principles of conflicts of law thereof. Each party agrees
that all Proceedings concerning the interpretations, enforcement and defense of
the transactions contemplated by this Agreement and any other Transaction
Documents (whether brought against a party hereto or its respective affiliates,
directors, officers, shareholders, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York,
Borough of Manhattan. Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of
New York, Borough of Manhattan for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of the any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any
Proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such Proceeding is improper. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby. If either party shall
commence a Proceeding to enforce any provisions of a Transaction Document, then
the prevailing party in such Proceeding shall be reimbursed by the other party
for its attorneys fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such Proceeding.

      5.9   Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing and the Settlement Date, as
applicable, and the delivery, conversion and exercise of the Securities, as
applicable.

      5.10  Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.

      5.11  Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

      5.12  Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents,

                                      -24-
<PAGE>
whenever any Purchaser exercises a right, election, demand or option under a
Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then such Purchaser may rescind
or withdraw, in its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights.

      5.13  Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.

      5.14  Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.

      5.15  Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

      5.16  Independent Nature of Purchasers' Obligations and Rights. The rights
and obligations of each Purchaser under any Transaction Document are several and
not joint with the rights and obligations of the other Purchaser and a Purchaser
shall not be responsible in any way for the performance of the obligations of
the other Purchaser under any Transaction Document. Nothing contained herein or
in any Transaction Document, and no action taken by any Purchaser pursuant
thereto shall constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert with respect to such obligations or
the transactions contemplated by the Transaction Documents.

                                      -25-
<PAGE>
      5.17  Each Purchaser shall be entitled to independently protect and
enforce its rights, including without limitation the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for the other Purchaser to be joined as an additional party in any
proceeding for such purpose.

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                     SIGNATURE PAGES FOR PURCHASERS FOLLOW]

                                      -26-
<PAGE>
            IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

                                    MILLENNIUM CELL INC.

                                    By: /s/ Norman R. Harpster, Jr.
                                        -----------------------------------
                                        Name: Norman R. Harpster, Jr.
                                        Title: Vice President - Finance and
                                               International Business

                                    Address for Notice:

                                    1 Industrial Way West
                                    Eatontown, NJ 07724
                                    Phone No.: (732) 542-5721
                                    Facsimile No.: (732) 542-4010
                                    Attn: Chief Financial Officer

                                    With a copy to:
                                    Gibbons, Del Deo, Dolan, Griffinger
                                     & Vecchione, P.C
                                    One Riverfront Plaza
                                    Newark, NJ 07102-5496
                                    Phone (973) 596-4500
                                    Fax   (973) 596-0545
                                    Attn: Alyce C. Halchak, Esq.

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGES OF PURCHASERS FOLLOW]
<PAGE>
                                PINE RIDGE FINANCIAL, INC.

                                By: /s/ Kenneth L. Henderson
                                    -----------------------------------
                                Name:  Kenneth L. Henderson
                                Title: Attorney-in-Fact

<TABLE>
                                <S>                                   <C>
                                Shares Investment Amount:             $2,500,000

                                Number of Shares to be acquired:         896,057

                                Maximum Number of Underlying Shares
                                issuable under First Warrant:            224,014

                                Maximum Number of Underlying Shares
                                issuable under Second Warrant:           624,029

                                Maximum Number of Underlying Shares
                                issuable under Third Warrant:            208,010
</TABLE>

                                Address for Notice:

                                c/o Cavallo Capital Corp.
                                660 Madison Avenue, 18th Floor
                                New York, NY 10022
                                Facsimile No.: (212) 651-9010
                                Attn.: Avi Vigder and Eldad Gal

                                With a copy to:
                                Robinson Silverman Pearce Aronsohn
                                & Berman LLP
                                1290 Avenue of the Americas
                                New York, NY  10104
                                Facsimile No.: (212) 541-4630 and (212) 541-1432
                                Attn: Eric L. Cohen, Esq.
<PAGE>
                                ZLP MASTER TECHNOLOGY FUND, LTD

                                By: /s/ Stuart J. Zimmer
                                    -----------------------------------
                                Name: Stuart J. Zimmer
                                Title: Director

<TABLE>
                                <S>                                     <C>
                                Shares Investment Amount:               $500,000

                                Number of Shares to be acquired:         179,211

                                Maximum Number of Underlying Shares
                                issuable under First Warrant:             44,803
</TABLE>

                                Address for Notice:

                                c/o Zimmer Lucas Partners, LLC
                                45 Broadway - 28th Floor
                                New York, NY  10006
                                Attn: John Lee
                                Fax: 212-440-0750

                                With a copy to:
                                Robinson Silverman Pearce Aronsohn & Berman LLP
                                1290 Avenue of the Americas
                                New York, NY  10104
                                Facsimile No.: (212) 541-4630 and (212) 541-1432
                                Attn: Eric L. Cohen, Esq.

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