Document:

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                                                                     Exhibit 4.8

                                WARRANT AGREEMENT

                  THIS WARRANT AGREEMENT, dated as of February 11, 2000, by and
between CHROMATICS COLOR SCIENCES INTERNATIONAL, INC., a New York
corporation (the "Issuer"), and LB I GROUP INC. (Lehman Brothers Group Inc.), a
Delaware corporation (the "Warrant Holder").

                               W I T N E S S E T H
                               -------------------

                  WHEREAS, the Issuer and the Warrant Holder are parties to the
Preferred Stock Purchase Agreement, dated as of the date hereof (as the same may
be amended, supplemented or otherwise modified from time to time, the "Stock
Purchase Agreement"), pursuant to which the Warrant Holder agreed to purchase
shares of Class B Series 3 Convertible Preferred Stock (the "Preferred Stock")
from the Issuer; and

                  WHEREAS, in order to induce the Warrant Holder to purchase the
Preferred Stock from the Issuer pursuant to the Stock Purchase Agreement, the
Issuer has agreed to execute and deliver this Warrant Agreement and to issue to
the Warrant Holder the Warrants hereinafter described;

                  NOW, THEREFORE, in consideration of the premises the parties
hereto agree as follows:

                  SECTION 1. Definitions. Capitalized terms used herein which
are defined in the Stock Purchase Agreement and are not otherwise defined herein
shall have the respective meanings given thereto in the Stock Purchase Agreement
(regardless of whether such Stock Purchase Agreement shall still be in effect);
and the following terms used herein shall have the meanings indicated below,
unless the context otherwise requires:

                  "Affiliate" shall have the meaning set forth in Rule 144
         adopted by the Commission pursuant to the Securities Act.

                  "Business Day" shall mean any day except Saturday, Sunday and
         any day which shall be a legal holiday or a day on which banks in New
         York, New York are not authorized to conduct business or are required
         to be closed.

                  "Capital Stock" shall have the meaning specified in Section
         2(d) hereof.

                  "Commission" shall mean the Securities and Exchange Commission
         or any entity succeeding to any or all of its functions.

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                  "Common Stock" shall mean the common stock, $.001 par value,
         of the Issuer.

                  "Contractual Obligation" shall mean, as to any Person, any
         provision of any security issued by such Person or of any agreement,
         instrument or other undertaking to which such Person is a party or by
         which it or any of its property is bound.

                  "Convertible Securities" shall mean any stock or other
         securities convertible into or exchangeable for shares of Common Stock.

                  "Current Market Price Per Share" shall have the meaning
         specified in Section 7 hereof.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
         as amended, or any successor federal statute.

                  "Exercise Price" shall mean the exercise price of a Warrant,
         which shall be $6.99 per Warrant Share, subject to adjustment as
         provided in Section 11 hereof.

                  "Expiration Date" shall mean the five (5) year anniversary of
         the date of the Closing or, if such day is not a Business Day, the next
         succeeding Business Day.

                  "Governmental Authority" shall mean any nation or government,
         any state or other political subdivision thereof and any entity
         exercising executive, legislative, judicial, regulatory or
         administrative functions of or pertaining to government.

                  "Management Option Plan" shall mean the Issuer's 1992 Stock
         Option Plan, as in effect on the date hereof, which plan provides for
         the issuance, upon exercise of the options granted pursuant thereto of
         up to 5,500,000 shares of Common Stock in the aggregate to the
         employees of and certain consultants to the Issuer to be designated by
         the Issuer's Board of Directors.

                  "Management Options" shall mean options granted or issued by
         the Issuer pursuant to the Management Option Plan.

                  "Person" shall mean any natural person, corporation,
         partnership, limited liability company, trust or other entity.

                  "Preferred Stock" shall mean the Class B Series 3 Preferred
         Stock, no par value, of the Issuer.

                  "Requirement of Law" shall mean as to any Person, the
         Certificate of Incorporation and By-Laws or other organizational or
         governing documents of such Person, and any law, treaty, rule or
         regulation or determination of an arbitrator or a court or other
         Governmental Authority, in each case applicable to or binding upon

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         such Person or any of its property or to which such Person or any of
         its property is subject.

                  "Rights" shall mean any rights to subscribe for or to
         purchase, or any options or warrants for the purchase of, shares of
         Common Stock or Convertible Securities. The term "Rights" shall
         include, without limitation, the Warrants and the Management Options.

                  "Securities Act" shall mean the Securities Act of 1933, as
         amended, or any successor federal statute.

                  "Total Warrants" shall mean 254,372, which is the maximum
         number of Warrants contemplated under the Stock Purchase Agreement to
         be issued in connection with the sale of Preferred Stock.

                  "Trading Day" shall mean a day on which the securities market
         on which the Common Stock is listed is open for trading.

                  "Warrant" shall mean a warrant issued pursuant to this Warrant
         Agreement as contemplated under the Stock Purchase Agreement entitling
         the record holder thereof to purchase from the Issuer at the Warrant
         Office one share of Common Stock (subject to adjustment as provided in
         Section 11 hereof) at the Exercise Price at any time before 5:00 P.M.
         local time on the Expiration Date.

                  "Warrant Certificate" shall mean a certificate evidencing one
         or more Warrants, substantially in the form of Exhibit A hereto, with
         such changes therein as may be required to reflect any adjustments made
         pursuant to Section 11 hereof.

                  "Warrant Office" shall mean the office or agency of the Issuer
         at which the Warrant Register shall be maintained and where the
         Warrants may be presented for exercise, exchange, substitution and
         transfer, which office or agency will be the office of the Issuer at 5
         East 80th Street, New York, New York 10021 which office or agency may
         be changed by the Issuer pursuant to notice in writing to the Persons
         named in the Warrant Register as the holders of the Warrants.

                  "Warrant Register" shall mean the register, substantially in
         the form of Exhibit B hereto, maintained by the Issuer at the Warrant
         Office.

                  "Warrant Shares" shall mean the shares of Common Stock
         issuable or issued upon exercise of all or any of the Warrants as the
         number and/or type of such shares may be adjusted from time to time
         pursuant to Section 11 hereof.

         SECTION 2. Representations and Warranties. The Issuer hereby represents
and warrants to the Warrant Holder as follows:

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                  (a) The Issuer is a corporation duly incorporated, validly
         existing and in good standing under the laws of the State of New York
         has the corporate power and authority to execute and deliver this
         Warrant Agreement and the Warrant Certificate, to issue the Warrants
         and to perform its obligations under this Warrant Agreement and the
         Warrant Certificate.

                  (b) The execution, delivery and performance by the Issuer of
         this Warrant Agreement and the Warrant Certificate, the issuance of the
         Warrants and the issuance of the Warrant Shares upon exercise of the
         Warrants have been duly authorized by all necessary corporate action on
         the part of the Issuer and do not and will not violate, or result in a
         breach of, or constitute a default under, or require any consent under,
         or result in the creation of a lien upon the assets of the Issuer
         pursuant to, any Requirement of Law or any Contractual Obligation
         binding upon the Issuer.

                  (c) This Warrant Agreement has been duly executed and
         delivered by the Issuer and constitutes a legal, valid, binding and
         enforceable obligation of the Issuer, except as such enforcement may be
         limited by applicable bankruptcy, insolvency, reorganization,
         moratorium or other similar laws affecting creditors' rights generally
         and except as equitable remedies may be limited by general principles
         of equity. When the Warrants and Warrant Certificates have been issued
         as contemplated hereby, (i) the Warrants and the Warrant Certificates
         will constitute legal, valid, binding and enforceable obligations of
         the Issuer, except as such enforcement may be limited by bankruptcy,
         insolvency, reorganization, moratorium or other similar laws affecting
         creditors' rights generally and except as equitable remedies may be
         limited by general principles of equity (whether such remedies are
         sought in a proceeding at law or in equity) and (ii) the Warrant
         Shares, when issued upon exercise of the Warrants in accordance with
         the terms hereof, will be duly authorized, validly issued, fully paid
         and nonassessable shares of the Common Stock.

                  (d) As of the date of the Closing immediately after giving
         effect to the purchase and sale of the Preferred Stock and Warrants on
         that date (i) the Issuer's capital stock (the "Capital Stock") consists
         of (a) 1,400,000 shares of Class A preferred stock, par value $.01 per
         share, of which 1,380,000 shares are issued and outstanding, (b)
         10,000,000 shares of Class B preferred stock, no par value, of which
         (x) 500,000 shares have been designated Class B Series 1 Preferred
         Stock, par value $.001 per share, of which no shares are issued and
         outstanding, (y) 80,000 shares have been designated Class B Series 2
         Preferred Stock, par value $.001 per share, of which 40,000 shares are
         issued and outstanding, and (z) 40,000 shares have been designated as
         Preferred Stock, all of such Preferred Stock will be issued and
         outstanding upon the consummation of the Closing and (c) 50,000,000
         shares of Common Stock, of which 15,535,481 shares are issued and
         outstanding. All issued and outstanding shares of Capital Stock are
         validly authorized and issued, fully paid and nonassessable and were
         issued in
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         accordance with the registration or qualification provisions of the
         Securities Act or pursuant to valid exemptions therefrom.

         SECTION 3. Issuance of Warrants. The Issuer hereby agrees to issue and
deliver to the Warrant Holder on the date of the Closing Warrants evidencing
rights to purchase 6.3593 shares of Common Stock, subject to adjustment as
provided in Section 11 hereof, for each share of Preferred Stock purchased by
the Warrant Holder pursuant to the Stock Purchase Agreement on the date of the
Closing and at any time on or before 5:00 P.M., New York City time, on the
Expiration Date at a price per share equal to the Exercise Price. On the date of
the Closing simultaneously with the purchase of the Preferred Stock by the
Warrant Holder pursuant to the Stock Purchase Agreement, the Issuer shall
deliver to the Warrant Holder a Warrant Certificate evidencing the Warrants
which the Warrant Holder is entitled to receive at the Closing in accordance
with the terms hereof.

         SECTION 4.     Registration, Transfer and Exchange of Certificates.

                  (a) The Issuer shall maintain at the Warrant Office the
         Warrant Register for registration of the Warrants and Warrant
         Certificates and transfers thereof. On the date hereof the Issuer shall
         register the outstanding Warrants and Warrant Certificates in the name
         of the Warrant Holder. The Issuer may deem and treat the registered
         holder(s) of the Warrant Certificates as the absolute owner(s) thereof
         and the Warrants represented thereby (notwithstanding any notation of
         ownership or other writing on the Warrant Certificates made by any
         Person) for the purpose of any exercise thereof or any distribution to
         the holder(s) thereof, and for all other purposes, and the Issuer shall
         not be affected by any notice to the contrary.

                  (b) Subject to Section 13 hereof, the Issuer shall register
         the transfer of any outstanding Warrants in the Warrant Register upon
         surrender of the Warrant Certificate(s) evidencing such warrants to the
         Issuer at the Warrant Office, accompanied (if so required by it) by a
         written instrument or instruments of transfer in form satisfactory to
         it, duly executed by the registered holder or holders thereof or by the
         duly appointed legal representative thereof. Upon any such registration
         of transfer, new Warrant Certificate(s) evidencing such transferred
         Warrants shall be issued to the transferee(s) and the surrendered
         Warrant Certificate(s) shall be canceled. If less than all the Warrants
         evidenced by Warrant Certificate(s) surrendered for transfer are to be
         transferred, new Warrant Certificate(s) shall be issued to the holder
         surrendering such Warrant Certificate(s) evidencing such remaining
         number of Warrants.

                  (c) Warrant Certificates may be exchanged at the option of the
         holder(s) thereof, when surrendered to the Issuer at the Warrant
         Office, for another Warrant Certificate or other Warrant Certificates
         of like tenor and representing in the aggregate a like number of
         Warrants. Warrant Certificates surrendered for exchange shall be
         canceled.

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                  (d) No charge shall be made for any such transfer or exchange
         except for any tax or other governmental charge imposed in connection
         therewith. Except as provided in Section 13(b) hereof, each Warrant
         Certificate issued upon transfer or exchange shall bear the legend set
         forth in Section 13(b) hereof if the Warrant Certificate presented for
         transfer or exchange bore such legend.

         SECTION 5. Mutilated or Missing Warrant Certificates. If any Warrant
Certificate shall be mutilated, lost, stolen or destroyed, the Issuer shall
issue, in exchange and substitution for and upon cancellation of the mutilated
Warrant Certificate, or in lieu of and substitution for the Warrant Certificate
lost, stolen or destroyed, a new Warrant Certificate of like tenor and
representing an equivalent number of Warrants, but only upon receipt of evidence
satisfactory to the Issuer of such loss, theft or destruction of such Warrant
Certificate and, if reasonably requested, indemnity satisfactory to it. No
service charge shall be made for any such substitution, but all expenses and
reasonable charges associated with procuring such indemnity and all stamp, tax
and other governmental duties that may be imposed in relation thereto shall be
borne by the holder of such Warrant Certificate. Each Warrant Certificate issued
in any such substitution shall bear the legend set forth in Section 13(b) hereof
if the Warrant Certificate for which such substitution was made bore such
legend.

         SECTION 6.   Duration and Exercise of Warrants.

                  (a) The Warrants evidenced by a Warrant Certificate shall be
         exercisable in whole or in part by the registered holder thereof on any
         Business Day at any time from and after the date of the Closing and
         prior to 5:00 P.M. in New York City on the Expiration Date.

                  (b) Subject to the provisions of this Warrant Agreement, upon
         presentation of the Warrant Certificate evidencing the Warrants to be
         exercised, with the form of election to purchase on the reverse thereof
         duly completed and signed by the registered holder or holders thereof,
         to the Issuer at the Warrant Office, and upon payment of the aggregate
         Exercise Price for the number of Warrant Shares in respect of which
         such Warrants are being exercised in lawful money of the United States
         of America, the Issuer shall issue and cause to be delivered to or upon
         the written order of the registered holder(s) of such Warrants and in
         such name or names as such registered holder(s) may designate, a
         certificate for the Warrant Shares issued upon such exercise of such
         Warrants. Any Person(s) so designated to be named therein shall be
         deemed to have become holder(s) of record of such Warrant Shares as of
         the date of exercise of such Warrants. Certificates for the Warrant
         Shares so purchased, representing the aggregate number of shares
         specified in the Warrant Certificate, shall be delivered to the
         registered holder within a reasonable time, not exceeding three (3)
         Business Days, after this Warrant shall have been so exercised. The
         certificates so delivered shall be in such denominations as may be
         requested by the registered holder and shall be registered in the name
         of the registered holder or such other name as shall

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         be designated by such registered holder.

                  (c) If less than all of the Warrants evidenced by a Warrant
         Certificate are exercised at any time, a new Warrant Certificate or
         Certificates shall be issued for the remaining number of Warrants
         evidenced by such Warrant Certificate. Each new Warrant Certificate so
         issued shall bear the legend set forth in Section 13(b) hereof if the
         Warrant Certificate presented in connection with partial exercise
         thereof bore such legend. All Warrant Certificates surrendered upon
         exercise of Warrants shall be canceled.

                  (d) Notwithstanding the foregoing, at any time after the
         six-month anniversary of the date hereof, the Issuer may, at its sole
         option, compel the involuntary conversion of all, but not less than
         all, of the outstanding Warrants into Warrant Shares at the Exercise
         Price in the event that (i) the Current Market Price Per Share (as
         hereinafter defined) is equal to or in excess of two hundred percent
         (200%) of the Exercise Price per Warrant Share for a period of at least
         twenty consecutive Trading Days, (ii) the Warrant Shares have been
         registered under the Securities Act pursuant to Section 6.1 of the
         Stock Purchase Agreement and such registration has been declared
         effective by the Commission and is effective on such date and (iii) the
         Issuer has a sufficient number of authorized shares of Common Stock
         reserved for issuance upon conversion of the Warrants. In the event
         that the Issuer elects to compel such involuntary conversion of all
         outstanding Warrants, it shall promptly notify the Warrant Holder of
         such election at least ten (10) days in advance of the date set forth
         in such conversion notice whereupon the Warrants shall be deemed
         converted into shares of Common Stock as of the date set forth in the
         Issuer's conversion notice.

                  (e) In lieu of physical delivery of the Warrants, provided
         that Issuer's transfer agent is participating in The Depository Trust
         Company ("DTC") Shares Fast Automated Securities Transfer ("FAST")
         program, upon request of the Warrant Holder and in compliance with the
         provisions hereof, the Issuer shall use its best efforts to cause its
         transfer agent to electronically transmit the Warrant Shares to the
         Warrant Holder by crediting the account of the Warrant Holder's prime
         broker with DTC through its Deposit Withdrawal Agent Commission system.
         The time period for delivery described herein shall apply to the
         electronic transmittals described herein.

         SECTION 7. No Fractional Shares. The Issuer shall not be required to
issue fractional shares of Common Stock upon exercise of the Warrants but may
pay for any such fraction of a share an amount in cash equal to the Current
Market Price per Share of Common Stock of such share multiplied by such
fraction. The "Current Market Price Per Share" on any date shall be deemed to
be, for any day, the last bid price for the Common Stock on the principal
securities exchange on which the Common Stock is listed or admitted to trading,
or, if not so listed or admitted to trading on any securities exchange,

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the last sale price for the Common Stock on the National Association of
Securities Dealers National Market System, or, if the Common Stock shall not be
listed on such system, the closing bid price of the Common Stock in the
over-the-counter market.

         SECTION 8. Payment of Taxes. The Issuer will pay all taxes (other than
any applicable income or similar taxes payable by the holders of the Warrants or
Warrant Shares) attributable to the initial issuance of Warrant Shares upon the
exercise of the Warrants; provided that the Issuer shall not be required to pay
any tax which may be payable in respect of any transfer involved in the issue of
any Warrant Certificate or any certificate for Warrant Shares in a name other
than that of the registered holder of a Warrant Certificate surrendered upon the
exercise of a Warrant, and the Issuer shall not be required to issue or deliver
such certificates unless or until the Person or Persons requesting the issuance
thereof shall have paid to the Issuer the amount of such tax or shall have
established to the satisfaction of the Issuer that such tax has been paid.

         SECTION 9.   Reservation and Issuance of Warrant Shares.

                  (a) The Issuer will at all times have authorized, and reserve
         and keep available for the purpose of enabling it to satisfy any
         obligation to issue Warrant Shares upon the exercise of the Warrants,
         the number of shares of Common Stock deliverable upon exercise of all
         outstanding Warrants.

                  (b) Before taking any action which would cause an adjustment
         pursuant to Section 11 hereof reducing the Exercise Price below the
         then par value (if any) of the Warrant Shares issuable upon exercise of
         the Warrants, the Issuer will take any corporate action which may be
         necessary in order that the Issuer may validly and legally issue fully
         paid and nonassessable Warrant Shares at the Exercise Price as so
         adjusted.

                  (c) The Issuer covenants that all Warrant Shares will, upon
         issuance in accordance with the terms of this Warrant Agreement, be
         duly and validly issued, fully paid and nonassessable and free from all
         taxes with respect to the issuance thereof and from all liens, charges
         and security interests created (whether by affirmative action or
         inaction) by the Issuer and shall not have any legends or restrictions
         on resale, except as required by Section 13(b) hereof.

                  (d) The Issuer shall promptly secure the listing of the shares
         of Common Stock issuable upon exercise of the Warrants upon the
         national securities exchange or automated quotation system, if any,
         upon which shares of Common Stock are then listed (subject to official
         notice of issuance upon exercise of the Warrants) and shall maintain,
         so long as any other shares of Common Stock shall be so listed, such
         listing of all shares of Common Stock from time to time issuable upon
         the exercise of the Warrants.

         SECTION 10. Obtaining of Governmental Approvals and Stock Exchange
Listings.

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The Issuer will, at its own expense, (a) obtain and keep effective any
and all permits, consents and approvals of governmental agencies and authorities
which may from time to time be required of the Issuer in order to satisfy its
obligations hereunder and (b) take all action which may be necessary so that the
Warrant Shares, immediately upon their issuance upon the exercise of the
Warrants, will be listed on each securities exchange or over-the-counter market,
if any, on which the Common Stock is then listed if such listing is permitted by
applicable law, regulation or rule.

         SECTION 11. Adjustment of Exercise Price and Number of Warrant Shares
Purchasable. Prior to the Expiration Date, the Exercise Price and the number of
Warrant Shares purchasable upon the exercise of each Warrant are subject to
adjustment from time to time upon the occurrence of any of the events enumerated
in this Section 11.

                  (a) In the event that the Issuer shall at any time after the
         date of this Agreement (i) declare a dividend on the Common Stock in
         Common Stock, Convertible Securities or other Rights, (ii) split or
         subdivide the outstanding Common Stock, (iii) combine the outstanding
         Common Stock into a smaller number of shares, or (iv) issue by
         reclassification of its Common Stock any shares of Common Stock,
         Convertible Securities or other Rights, then, in each such event, the
         number of Warrant Shares purchasable upon exercise of each Warrant
         immediately prior thereto shall be adjusted so that the holder shall be
         entitled to receive the kind and number of such shares or other
         securities of the Issuer which the holder would have owned or have been
         entitled to receive after the happening of any of the events described
         above, had such Warrant been exercised immediately prior to the
         happening of such event (or any record date with respect thereto). Such
         adjustment shall be made whenever any of the events listed above shall
         occur. An adjustment made pursuant to this paragraph (a) shall become
         effective immediately after the effective date of the event retroactive
         to the record date, if any, for the event.

                  (b) If at any time, as a result of an adjustment made pursuant
         to this Section 11, the holder of any Warrant thereafter exercised
         shall become entitled to receive any shares of the Issuer other than
         shares of Common Stock, thereafter the number of such other shares so
         receivable upon exercise of any Warrant shall be subject to adjustment
         from time to time in a manner and on terms as nearly equivalent as
         practicable to the provisions with respect to the Warrant Shares
         contained in this Section 11, and the provisions of this Agreement with
         respect to the Warrant Shares shall apply on like terms to such other
         shares.

                  (c) Whenever the number of Warrant Shares purchasable upon the
         exercise of each warrant is adjusted pursuant to Section 11(a) hereof,
         the Exercise Price per Warrant Share payable upon exercise of each
         Warrant shall be adjusted by multiplying such Exercise Price
         immediately prior to such adjustment by a fraction, the numerator of
         which shall be the number of Warrant Shares purchasable upon the
         exercise of each Warrant immediately prior to such

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         adjustment, and the denominator of which shall be the number of Warrant
         Shares purchasable immediately after such adjustment; provided,
         however, that in no event shall the Exercise Price be adjusted to an
         amount which is less than the par value of the Common Stock.

                  (d) In the event of any capital reorganization of the Issuer,
         or of any reclassification of the Common Stock (other than a
         reclassification referred to in Section 11(a)(iv) above), or in case of
         the consolidation of the Issuer with or the merger of the Issuer with
         or into any other corporation or of the sale of the properties and
         assets of the Issuer as, or substantially as, an entirety to any other
         Person, each Warrant shall, after such capital reorganization,
         reclassification of Common Stock, consolidation, merger or sale, and in
         lieu of being exercisable for Warrant Shares, be exercisable, upon the
         terms and conditions specified in this Warrant Agreement, for the
         number of shares of stock or other securities or assets to which a
         holder of the number of Warrant Shares purchasable (at the time of such
         capital reorganization, reclassification of Common Stock,
         consolidation, merger or sale) upon exercise of such Warrant would have
         been entitled upon such capital reorganization, reclassification of
         Common Stock, consolidation, merger or sale; and in any such case, if
         necessary, the provisions set forth in this Section 11 with respect to
         the rights thereafter of the holders of the Warrants shall be
         appropriately adjusted so as to be applicable, as nearly as they may
         reasonably be, to any shares of stock or other securities or assets
         thereafter deliverable on the exercise of the Warrants. The Issuer
         shall not effect any such consolidation, merger or sale, unless prior
         to or simultaneously with the consummation thereof the successor
         corporation (if other than the Issuer) resulting from such
         consolidation or merger or the corporation purchasing such assets or
         the appropriate corporation or entity shall assume, by written
         instrument, the obligation to deliver to the holder of each Warrant the
         shares of stock, securities or assets to which, in accordance with the
         foregoing provisions, such holder may be entitled and all other
         obligations of the Issuer under this Warrant Agreement. The provisions
         of this paragraph (d) shall apply to successive reorganizations,
         reclassifications, consolidations, mergers and sales.

                  (e) Except with respect to Excluded Securities (as defined
         below), in case the Issuer shall issue any shares of Common Stock or
         Convertible Securities after the date hereof at a price per share (or
         having a conversion or exercise price per share) of less than the
         Exercise Price per Warrant Share, the Exercise Price per Warrant Share
         shall be appropriately adjusted by decreasing (but not increasing) the
         Exercise Price per Warrant Share to such lower price per share. An
         adjustment made pursuant to clause (a) shall be made the next Business
         Day following the date on which any such issuance is made and shall be
         effective retroactively to the close of business on the date of such
         issuance. For purposes of this clause (e), the consideration receivable
         by the Issuer in connection with the issuance of additional shares of
         Common Stock or of Convertible Securities after the date hereof shall
         be deemed to be equal to (X) in the case the consideration received by
         the Issuer is

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         cash, the sum of the aggregate offering price (before deduction of
         underwriting discounts or commissions and expenses payable to third
         parties, if any) of all such Common Stock and/or Convertible Securities
         plus the minimum aggregate amount, if any, payable upon conversion,
         exchange or exercise of any such Convertible Securities, and (Y) in the
         case the consideration received by the Issuer is other than cash, the
         fair market value of the consideration received by the Issuer as
         determined by the good faith judgment of the Board of Directors of the
         Issuer; provided, however, that in the event the Warrant Holder
         disagrees in good faith with the determination of the Board of
         Directors of the Issuer, such fair market value shall be determined by
         a nationally recognized or major regional investment banking firm or
         firm of independent certified public accountants of recognized standing
         (an "Appraiser") selected in good faith by the Warrant Holder; and
         provided, further, that the Issuer, after receipt of the determination
         by such Appraiser shall have the right to select in good faith an
         additional Appraiser meeting the same qualifications, in which case the
         fair market value shall be equal to the average of the determinations
         by each such Appraiser. The issuance or reissuance of any shares of
         Common Stock or Convertible Securities (whether treasury shares or
         newly issued shares) pursuant to a dividend or distribution on, or
         subdivision, combination or reclassification of, the outstanding shares
         of Common Stock requiring an adjustment in the Exercise Price per
         Warrant Share pursuant to clause (a), shall not be deemed to constitute
         an issuance of Common Stock or Convertible Securities by the Issuer
         pursuant to which this clause (e) applies. Upon the expiration or
         termination of any unconverted, unexchanged or unexercised Convertible
         Securities for which an adjustment has been made pursuant to this
         clause (e), the adjustments shall forthwith be reversed to effect such
         Exercise Price per Warrant Share as would have been in effect at the
         time of such expiration or termination had such Convertible Securities,
         to the extent outstanding immediately prior to such expiration or
         termination, had never been issued. For purposes of this clause (e),
         "Excluded Securities" shall mean: (i) shares of Common Stock issuable
         upon conversion of the Preferred Stock; (ii) shares of Common Stock
         issuable or issued to employees of and consultants to the Issuer
         pursuant to the Management Option Plan; (iii) any capital stock issued
         as a stock dividend or upon any stock split or other subdivision or
         combination of shares of the Issuer's capital stock; (iv) shares of
         Common Stock issuable upon conversion of any Convertible Securities
         issued prior to the date hereof and outstanding on the date hereof, (v)
         shares of Common Stock issuable upon conversion of the Issuer's Class A
         Convertible Preferred Stock outstanding on the date hereof or (vi)
         Common Stock issued upon the conversion or exercise of Convertible
         Securities issued after the date hereof as to which an adjustment to
         the Exercise Price per Warrant Share has been made pursuant to this
         clause (e) upon the issuance of such Convertible Securities.

                  (f) Irrespective of any adjustments in the Exercise Price or
         the number or kind of shares purchasable upon exercise of the Warrants,
         Warrant Certificates theretofore or thereafter issued may continue to
         express the same Exercise Price per share and number and kind of shares
         as are stated on the Warrant Certificates

                                       11

<PAGE>

         initially issuable pursuant to this Agreement.

                  (g) If any question shall at any time arise with respect to
         the adjusted Exercise Price or Warrant Shares issuable upon exercise,
         such question shall be determined by the independent auditors of the
         Issuer and such determination shall be binding upon the Issuer and the
         holders of the Warrants and the Warrant Shares.

         SECTION 12. Notices to the Warrant Holder. Upon any adjustment of the
Exercise Price or number of Warrant Shares issuable upon exercise pursuant to
Section 11 hereof the Issuer shall promptly, but in any event within ten
Business Days thereafter, cause to be given to the Warrant Holder, at its
address appearing on the Warrant Register by first- class mail, postage prepaid,
a certificate signed by its chief financial officer setting forth the Exercise
Price as so adjusted and/or the number of shares of Common Stock issuable upon
the exercise of each Warrant as so adjusted and describing in reasonable detail
the facts accounting for such adjustment and the method of calculation used.
Where appropriate, such certificate may be given in advance and included as a
part of the notice required to be mailed under the other provisions of this
Section 12.

         In the event:

                  (a) the Issuer shall authorize issuance to all holders of
         Common Stock of rights or warrants to subscribe for or purchase Capital
         Stock of the Issuer or of any other subscription rights or warrants; or

                  (b) the Issuer shall authorize a dividend or other
         distribution to all holders of Common Stock payable in evidences of its
         indebtedness, cash or assets; or

                  (c) of any consolidation or merger to which the Issuer is a
         party and for which approval of any stockholders of the Issuer is
         required, or of the conveyance or transfer of the properties and assets
         of the Issuer substantially as an entirety, or of any capital
         reorganization or reclassification or change of the Common Stock (other
         than a change in par value, or from par value to no par value, or from
         no par value to par value, or as a result of a subdivision or
         combination); or

                  (d) of the voluntary or involuntary dissolution, liquidation
         or winding up of the Issuer; or

                  (e) the Issuer shall authorize any other action which would
         require an adjustment of the Exercise Price or number of Warrant Shares
         issuable upon exercise pursuant to Section 11 hereof;

then the Issuer shall cause to be given to the Warrant Holder at its address
appearing on the Warrant Register, at least twenty (20) Business Days prior to
the applicable record date hereinafter specified (or as expeditiously as
possible after the occurrence of any

                                       12

<PAGE>

involuntary dissolution, liquidation or winding up referred to in clause (d)
above), by first- class mail, postage prepaid, a written notice stating (i) the
date as of which the holders of record of Common Stock to be entitled to receive
any such rights, warrants or distribution are to be determined, or (ii) the date
on which any such consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up is expected to become effective (or has become
effective, in the case of any involuntary dissolution, liquidation or winding
up), and the date as of which it is expected that holders of record of Common
Stock shall be entitled to exchange their shares for securities or other
property, if any, deliverable upon such reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up. The failure to
give the notice required by this Section 12 or any defect therein shall not
affect the legality or validity of any distribution, right, warrant,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up, or the vote upon any action.

                  SECTION 13.   Restrictions on Transfer.

                  (a) The Warrant Holder represents that it is not acquiring the
         Warrants (and upon any exercise of the Warrants, each holder represents
         that it will not be acquiring the Warrant Shares) with a view to any
         distribution or public offering within the meaning of the Securities
         Act but subject to any requirement of law that the disposition of its
         property shall at all times be within its control. The Warrant Holder
         acknowledges that the Warrant Shares issuable upon exercise of the
         Warrants have not as of the date hereof been registered under the
         Securities Act and agrees that it will not sell or otherwise transfer
         any of its Warrant Shares except upon the terms and conditions
         specified herein.

                  (b) (i) The Warrant Holder agrees, and each subsequent
         transferee described in paragraph (ii) below shall agree, that it will
         not transfer any Warrant Shares except pursuant to an exemption from,
         or otherwise in a transaction not subject to, the registration
         requirements of the Securities Act (as confirmed in an opinion of
         counsel reasonably acceptable to the Issuer to the transferor to the
         effect that the proposed transfer may be effected without registration
         under the Securities Act) or pursuant to an effective registration
         statement under the Securities Act.

                  (ii) Each Warrant Certificate and each certificate for the
         Warrant Shares (unless the legal opinion delivered in connection
         therewith is to the effect that the first paragraph of such legend is
         not required in order to ensure compliance with the Securities Act)
         shall include a legend in substantially the following form:

         THE WARRANTS AND UNDERLYING SHARES REPRESENTED BY THIS CERTIFICATE HAVE
         NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR STATE
         SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO
         AN EFFECTIVE REGISTRATION STATEMENT UNDER, AN EXEMPTION FROM, OR
         OTHERWISE IN A

                                       13

<PAGE>

         TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF SUCH ACT.

         IN ADDITION, THE WARRANTS AND UNDERLYING SHARES MAY BE TRANSFERRED ONLY
         IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THE WARRANT AGREEMENT,
         DATED AS OF JUNE 11, 1999, BETWEEN THE ISSUER AND THE INITIAL HOLDER OF
         THE WARRANTS NAMED THEREIN, A COMPLETE AND CORRECT COPY OF WHICH IS
         AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE ISSUER AND WILL
         BE FURNISHED TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT
         CHARGE.

                  SECTION 14. Amendments and Waivers. Any provision of this
Warrant Agreement may be amended, supplemented, waived, discharged or terminated
by a written instrument signed by the Issuer and the holders of a majority of
the then outstanding Warrants.

         SECTION 15.   Notices.

                  (a) Any notice or demand to be given or made by the holders of
         the Warrants or the Warrant Shares to the Issuer pursuant to this
         Warrant Agreement shall be sufficiently given or made if personally
         delivered, sent by overnight courier or telecopied (in each such case
         delivery will be effective upon receipt) or mailed by certified mail,
         postage prepaid, return receipt requested (delivery will be effective
         three days after the date of mailing) addressed to the Issuer at the
         Warrant Office.

                  (b) Any notice to be given by the Issuer to the Warrant Holder
         shall be sufficiently given if personally delivered, sent by overnight
         courier or telecopied (in each such case delivery will be effective
         upon receipt) or mailed by certified mail, postage prepaid, return
         receipt requested (delivery will be effective three days after the date
         of mailing) addressed to such holder as such holder's name and address
         shall appear on the Warrant Register.

                  SECTION 16. Binding Effect; Third Party Rights. This Warrant
         Agreement shall be binding upon and inure to the sole and exclusive
         benefit of the Issuer, its successors and assigns, the Warrant Holder,
         the registered holders from time to time of the Warrants and the
         Warrant Shares.

                  SECTION 17. Termination. This Warrant Agreement shall
         terminate and be of no further force and effect at 5:00 P.M. New York
         City time on the Expiration Date or the date on which none of the
         Warrants shall be outstanding (whether by reason of the involuntary
         conversion thereof or the expiration thereof by the

                                       14

<PAGE>

Issuer).

                  SECTION 18. Counterparts. This Warrant Agreement may be
         executed in two or more separate counterparts and all of said
         counterparts taken together shall be deemed to constitute one and the
         same instrument.

                  SECTION 19. Governing Law. This Warrant Agreement and each
         Warrant Certificate shall be governed by and construed in accordance
         with the laws of the State of New York without regard to the choice of
         law provisions thereof.

                  SECTION 20. Benefits of this Warrant Agreement. Nothing in
         this Warrant Agreement shall be construed to give to any Person other
         than the Issuer and the registered holders of the Warrants and the
         Warrant Shares any legal or equitable right, remedy or claim under this
         Warrant Agreement.

                                       15

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed and delivered by their proper and duly authorized
officers, as of the date and year first above written.

                                                CHROMATICS COLOR SCIENCES
                                                INTERNATIONAL, INC.

                                                By:_____________________________
                                                   Darby S. Macfarlane
                                                   Chairman and Chief Executive
                                                   Officer

                                                LB I GROUP INC.

                                                By:_____________________________
                                                   Name:
                                                   Title:

                                       16

<PAGE>

                                                                      EXHIBIT  A

                          [FORM OF WARRANT CERTIFICATE]

  THE WARRANTS AND UNDERLYING SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
  BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR STATE SECURITIES LAWS AND
  MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
  STATEMENT UNDER, AN EXEMPTION FROM, OR OTHERWISE IN A TRANSACTION NOT SUBJECT
  TO, THE REGISTRATION REQUIREMENTS OF SUCH ACT. IN ADDITION, THE WARRANTS AND
  UNDERLYING SHARES MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH THE CONDITIONS
  SPECIFIED IN THE WARRANT AGREEMENT, DATED AS OF JUNE 11, 1999, BETWEEN THE
  ISSUER AND THE INITIAL HOLDER OF THE WARRANTS NAMED THEREIN, A COMPLETE AND
  CORRECT COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF
  THE ISSUER AND WILL BE FURNISHED TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND
  WITHOUT CHARGE.

                               WARRANT CERTIFICATE

                               Evidencing Warrants
                           to Purchase Common Stock of

                  CHROMATICS COLOR SCIENCES INTERNATIONAL, INC.

  No. ___-___ Warrants

         This Warrant Certificate certifies that __________________________
  _________________________________________, or registered assigns, is the
  registered holder of ____ Warrants (the "Warrants") to purchase Common Stock,
  $.001 par value (the "Common Stock"), of CHROMATICS COLOR SCIENCES
  INTERNATIONAL, INC., a New York corporation (the "Issuer"). Each Warrant
  entitles the holder, but only subject to the conditions set forth herein and
  in the Warrant Agreement referred to below, to purchase from the Issuer at any
  time prior to 5:00 P.M., New York City time at the Warrant Office, on February
  11, 2005 or, if such day is not a Business Day, the next succeeding Business
  Day (the "Expiration Date"), one fully paid and nonassessable share of the
  Common Stock of the Issuer (the "Warrant Shares") at a price (the "Exercise
  Price") of $______ per Warrant Share payable in lawful money of the United
  States of America, upon surrender of this Warrant Certificate, execution of
  the annexed Form of Election to Purchase and payment of the Exercise Price at
  the principal place of business of the Issuer (the "Warrant Office"). The
  Exercise Price and number of Warrant Shares purchasable upon exercise of the
  Warrants are subject to adjustment

<PAGE>

  upon the occurrence of certain events as set forth in the Warrant Agreement
  referred to below.

         The Issuer may deem and treat the registered holder(s) of the Warrants
  evidenced hereby as the absolute owner(s) thereof (notwithstanding any
  notation of ownership or other writing hereon made by anyone), for the purpose
  of any exercise hereof and of any distribution to the holder(s) hereof, and
  for all other purposes, and the Issuer shall not be affected by any notice to
  the contrary.

         Warrant Certificates, when surrendered at the Warrant Office by the
  registered holder hereof in person or by a legal representative duly
  authorized in writing, may be exchanged, in the manner and subject to the
  limitations provided in the Warrant Agreement, but without payment of any
  service charge, for another Warrant Certificate or Warrant Certificates of
  like tenor evidencing in the aggregate a like number of Warrants.

         Upon due presentment for registration of transfer of this Warrant
  Certificate at the Warrant Office, a new Warrant Certificate or Warrant
  Certificates of like tenor and evidencing in the aggregate a like number of
  Warrants shall be issued in exchange for this Warrant Certificate to the
  transferee(s) and, if less than all the Warrants evidenced hereby are to be
  transferred, to the registered holder hereof, subject to the limitations
  provided in the Warrant Agreement, without charge except for any tax or other
  governmental charge imposed in connection therewith.

         This Warrant Certificate is one of the Warrant Certificates referred to
  in the Warrant Agreement, dated as of February 11, 2000, by and between the
  Issuer and the Warrant Holder named therein (the "Warrant Agreement"). Said
  Warrant Agreement is hereby incorporated by reference in and made a part of
  this Warrant Certificate and is hereby referred to for a description of the
  rights, limitation of rights, obligations, duties and immunities thereunder of
  the Issuer and the holders.

             [The remainder of this page intentionally left blank]

                                        2

<PAGE>

         IN WITNESS WHEREOF, the Issuer has caused this Warrant Certificate to
  be signed by its duly authorized officers and has caused its corporate seal to
  be affixed hereunto.

                                                       CHROMATICS COLOR SCIENCES
                                                       INTERNATIONAL, INC.

                                                       By:___________________
                                                          Name:
                                                          Title:

  (CORPORATE SEAL)

  ATTEST:

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

                                        3

<PAGE>

                                                                        ANNEX TO
                                                             WARRANT CERTIFICATE

                         [FORM OF ELECTION TO PURCHASE]

                    (To be executed upon exercise of Warrant)

         The undersigned hereby irrevocably elects to exercise the right,
  represented by this Warrant Certificate, to purchase Warrant Shares and
  herewith tenders payment for such Warrant Shares to the order of the Issuer in
  the amount of $__________ in accordance with the terms hereof. The undersigned
  requests that a certificate for such Warrant Shares be registered in the name
  of __________________________ whose address is _______________ and that such
  certificate be delivered to ________________ whose address is
  ____________________. If said number of Warrant Shares is less than all of the
  Warrant Shares purchasable hereunder, the undersigned requests that a new
  Warrant Certificate representing the remaining balance of the Warrant Shares
  be registered n the name of _______________ whose address is
  _______________________ and that such Warrant Certificate be delivered to
  _______________________ whose address is _______________________________.

                                   Signature:
                                             -----------------------------------

                  (Signature must conform in all respects to name of holder as
specified on the face of the Warrant Certificate)

                                             Date:______________________________

<PAGE>

                                                                       EXHIBIT B
                                                            TO WARRANT AGREEMENT

                  CHROMATICS COLOR SCIENCES INTERNATIONAL, INC.

Warrant No.                    Holder                  Shares Underlying Warrant
----------                     ------                  -------------------------

  A-101                  LB I Group Inc.                        220,690
                         3 World Financial Center
                         New York, New York  10285

  A-102                  LB I Group Inc.                        50,000
                         3 World Financial Center
                         New York, New York  10285

  A-103                  LB I Group Inc.                        254,372
                         3 World Financial Center
                         New York, New York  10285

  A-104                  LB I Group Inc.                        50,000
                         3 World Financial Center
                         New York, New York  10285<PAGE>

                                                                   Exhibit 10.13

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

                          SECURITIES PURCHASE AGREEMENT

                                     Between

                               CYBERSHOP.COM, INC.

                                       and

                         THE INVESTORS SIGNATORY HERETO

                          Dated as of December 8, 1999

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

<PAGE>

         SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of December
8, 1999, among Cybershop.Com, Inc., a Delaware corporation (the "Company"), and
the investors signatory hereto on the date hereof (each such investor is a
"Purchaser" and all such investors are, collectively, the "Purchasers").

         WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchasers and the
Purchasers, severally and not jointly, desire to purchase from the Company,
shares of the Company's common stock, $.001 par value per share (the "Common
Stock"), and certain other securities of the Company as more fully described in
this Agreement.

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

                                    ARTICLE I
                                PURCHASE AND SALE

         1.1 The Closing.

                  (a) The Closing. (i) Subject to the terms and conditions set
forth in this Agreement, the Company shall issue and sell to the Purchasers and
the Purchasers shall purchase an aggregate of 528,634 shares of Common Stock
(the "Shares") for an aggregate purchase price of $6,000,000. The closing of the
purchase and sale of the Shares (the "Closing") shall take place at the offices
of Robinson Silverman Pearce Aronsohn & Berman LLP ("Robinson Silverman"), 1290
Avenue of the Americas, New York, New York 10104, immediately following the
execution hereof or such later date as the parties shall agree. The date of the
Closing is hereinafter referred to as the "Closing Date."

                           (ii) At the Closing, the parties shall deliver or
shall cause to be delivered the following: (A) the Company shall deliver to each
Purchaser (1) a stock certificate representing the number of Shares indicated
below such Purchaser's name on the signature page of this Agreement, registered
in the name of such Purchaser, (2) a Common Stock purchase warrant, in the form
of Exhibit A, registered in the name of such Purchaser, pursuant to which such
Purchaser shall have the right to acquire shares of Common Stock upon the terms
and in such number as set forth therein (each an "Adjustable Warrant"), (3) a
Common Stock purchase warrant, in the form of Exhibit B, registered in the name
of such Purchaser, pursuant to which such Purchaser shall have the right to
acquire the number of shares of Common Stock indicated below such Purchaser's
name on the signature page of this Agreement, upon the terms set forth therein,
at an exercise price per share (subject to adjustment as provided therein) of
$12.00 (each, a "Closing Warrant" and together with the Adjustable Warrants, the
"Warrants"), (4) the legal opinion of Davis & Gilbert LLP, outside counsel to
the Company, substantially in the form of Exhibit C, and (5) all other
documents, instruments and writings required to be delivered at or prior to the
Closing by the Company pursuant to this Agreement, including an executed
Registration Rights Agreement, dated the date hereof, among the Company and the
Purchasers, in the form of Exhibit D (the "Registration Rights Agreement"), and
the Transfer Agent

<PAGE>

Instructions, in the form of Exhibit E, delivered to and acknowledged by the
Company's transfer agent (the "Transfer Agent Instructions"); and (B) each
Purchaser shall deliver to the Company (1) the purchase price indicated below
such Purchaser's name on the signature page to this Agreement in United States
dollars in immediately available funds by wire transfer to an account designated
for such purpose prior to the Closing Date in writing by the Company, and (2)
all documents, instruments and writings required to have been delivered at or
prior to the Closing Date by such Purchaser pursuant to this Agreement,
including an executed Registration Rights Agreement.

         1.2 Certain Defined Terms. For purposes of this Agreement,"Trading Day"
and "Per Share Market Value" shall have the meanings set forth in Exhibit A and
"Business Day" shall mean 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 generally are authorized or required by law or other
governmental action to close. A "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

                                   ARTICLE II
                         REPRESENTATIONS AND WARRANTIES

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

                  (a) Organization and Qualification. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, with the requisite corporate power and authority
to own and use its properties and assets and to carry on its business as
currently conducted. The Company has no subsidiaries other than as set forth in
Schedule 2.1(a) (collectively, the "Subsidiaries"). Each of the Subsidiaries is
an entity, duly 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 do 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 case may be, could not, individually or in the aggregate, (x) adversely
affect the legality, validity or enforceability of the Securities (as defined
below) or any of this Agreement, the Registration Rights Agreement, the Transfer
Agent Instructions or the Warrants (collectively, the "Transaction Documents"),
(y) have or result in a material adverse effect on the results of operations,
assets, prospects, or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (z) adversely impair the Company's ability to
perform fully on a timely basis its obligations under any of the Transaction
Documents (any of (x), (y) or (z), a "Material Adverse Effect").

                  (b) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of

<PAGE>

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 of the Transaction Documents has
been 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. Neither the
Company nor any Subsidiary is in violation of any of the provisions of its
respective articles of incorporation, by-laws or other charter or organizational
documents.

                  (c) Capitalization. The number of authorized, issued and
outstanding capital stock of the Company is set forth in Schedule 2.1(c). Except
as disclosed in Schedule 2.1(c), the Company owns all of the capital stock of
each Subsidiary. Except as disclosed in Schedule 2.1(c), no securities of the
Company or any Subsidiary are entitled to preemptive or similar rights, nor is
any holder of securities of the Company or any Subsidiary entitled to preemptive
or similar rights arising out of any agreement or understanding with the Company
or any Subsidiary by virtue of any of the Transaction Documents. Except as
disclosed in Schedule 2.1(c), there are no outstanding options, warrants, script
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, except as a result of the purchase and sale of the
Securities, or rights or obligations convertible into or exchangeable for, or
giving any Person (as defined below) 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. To the knowledge of the Company,
except as specifically disclosed in the SEC Reports (as defined below) or
Schedule 2.1(c), no Person or group of related Persons beneficially owns (as
determined pursuant to Rule 13d-3 promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), or has the right to acquire by
agreement with or by obligation binding upon the Company, beneficial ownership
of in excess of 5% of the Common Stock..

                  (d) Issuance of the Securities. The Securities are duly
authorized and, when issued and paid for in accordance with the terms hereof and
the Warrants, shall have been duly and validly issued, fully paid and
nonassessable, free and clear of all liens, encumbrances and rights of first
refusal of any kind (collectively, "Liens"). The Company has reserved a number
of duly authorized number of shares of Common Stock for issuance hereunder upon
exercise of the Warrants that is not less than the sum of (i) the aggregate
number of Shares to be issued hereunder; (ii) the maximum number of Underlying
Shares (as defined below) issuable upon exercise of the Adjustable Warrants,
assuming that the Per Share Market Value utilized to determine the number of
such Underlying Shares is 50% of the average Per Share Market Value on the
Trading Day immediately preceding the Closing Date; and (iii) the number of
Underlying Shares issuable upon exercise in full of the Closing Warrants (such
number of shares of Common Stock as contemplated in clauses (i), (ii) and (iii),
the "Initial Minimum"). The shares of Common Stock issuable upon exercise of the
Warrants are referred to herein as the "Underlying Shares." The Shares, the
Warrants and the Underlying Shares are collectively referred to herein as, the
"Securities."

<PAGE>

                  (e) 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 articles of
incorporation, bylaws or other charter documents (each as amended through the
date hereof), or (ii) subject to obtaining the Required Approvals (as defined
below), and except as set forth in Schedule 2.1(e), conflict with, or constitute
a default (or an event which 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 in the case of each of clauses (ii) and (iii), as could not, individually
or in the aggregate, have or result in a Material Adverse Effect. The business
of the Company is not being conducted in violation of any law, ordinance or
regulation of any governmental authority, except for violations which,
individually or in the aggregate, could not have or result in a Material Adverse
Effect.

                  (f) 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 filings required pursuant to Section
3.11, (ii) the filing with the Securities and Exchange Commission (the
"Commission") of a registration statement meeting the requirements set forth in
the Registration Rights Agreement and covering the resale of the Shares and the
Underlying Shares by the Purchasers (the "Underlying Shares Registration
Statement"), (iii) the application(s) to the Nasdaq National Market ("NASDAQ")
for the listing of the Shares and the Underlying Shares with the NASDAQ (and
with any other national securities exchange of market in which the Common Stock
is then listed) in the time and manner required thereby , (vi) applicable Blue
Sky filings, and (v) in all other cases where the failure to obtain such
consent, waiver, authorization or order, or to give such notice or make such
filing or registration could not have or result in, individually or in the
aggregate, a Material Adverse Effect (the items described in clauses (i)-(vi)
are collectively, the "Required Approvals").

                  (g) Litigation; Proceedings. Except as specified in the SEC
Reports, there is no action, suit, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries or any of their respective
properties before or by any court, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) could, individually or in
the aggregate, have or result in a Material Adverse Effect.

<PAGE>

                  (h) No Default or Violation. Neither the Company nor any
Subsidiary (i) is in default under or in violation of (and no event has occurred
which has not been waived which, 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 in violation of any statute, rule or regulation of any governmental
authority, except as could not individually or in the aggregate, have or result
in a Material Adverse Effect.

                  (i) Private Offering. Assuming the accuracy of the
representations and warranties of the Purchasers set forth in Sections
2.2(b)-(g), the offer, issuance and sale of the Securities to the Purchasers as
contemplated hereby are exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"). Neither the Company
nor any Person acting on its behalf has taken or is, to the knowledge of the
Company, contemplating taking any action which could subject the offering,
issuance or sale of the Securities to the registration requirements of the
Securities Act including soliciting any offer to buy or sell the Securities by
means of any form of general solicitation or advertising.

                  (j) SEC Reports; Financial Statements. The Company has filed
all reports required to be filed by it under the Securities Act of 1933, as
amended (the "Securities Act"), and the Exchange Act for the two years preceding
the date hereof (or such shorter period as the Company was required by law to
file such material) (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. As of their respective dates, the SEC Reports
complied in 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. All material
agreements to which the Company is a party or to which the property or assets of
the Company are subject have been filed as exhibits to the SEC Reports. 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. Since June 30,1999, except as
specifically disclosed in the SEC Reports, (a) there has been no event,
occurrence or development that has or that could result in a Material Adverse
Effect, (b) the Company has not incurred any liabilities (contingent or
otherwise) other than (x) liabilities incurred in the ordinary course of
business consistent with past practice and (y) liabilities not required to be
reflected in

<PAGE>

the Company's financial statements pursuant to GAAP or required to be disclosed
in filings made with the Commission, (c) the Company has not altered its method
of accounting or the identity of its auditors and (d) the Company has not
declared or made any payment or distribution of cash or other property to its
stockholders or officers or directors (other than in compliance with existing
Company stock or stock option plans) with respect to its capital stock, or
purchased, redeemed (or made any agreements to purchase or redeem) any shares of
its capital stock.

                  (k) Investment Company. The Company is not, and is not an
Affiliate (as defined in Rule 405 under the Securities Act) of, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.

                  (l) Certain Fees. No fees or commissions 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. The Company
shall indemnify and hold harmless the Purchasers, their employees, officers,
directors, agents, and partners, and its respective Affiliates, from and against
all claims, losses, damages, costs (including the costs of preparation and
attorney's fees) and expenses suffered in respect of any such claimed or
existing fees, as such fees and expenses are incurred.

                  (m) Form S-3 Eligibility. The Company is eligible to register
its Common Stock for resale under Form S-3 promulgated under the Securities Act.

                  (n) Listing and Maintenance Requirements. The Company has not,
in the two years preceding the date hereof, except for notice sent by NASDAQ to
the Company in error, received notice (written or oral) from the NASDAQ or any
other stock exchange, market or trading facility on which the Common Stock is or
has been listed (or on which it has been quoted) to the effect that the Company
is not in compliance with the listing or maintenance requirements of such
exchange, market or trading facility. 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.

                  (o) Patents and Trademarks. The Company and its Subsidiaries
have, or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses and
rights (collectively, the "Intellectual Property Rights") which are necessary or
material for use in connection with their respective business as described in
the SEC Reports and as contemplated to be conducted, and which the failure to so
have would have a Material Adverse Effect. Neither the Company nor any
Subsidiary has received a written notice that the Intellectual Property Rights
used by the Company or its Subsidiaries violates or infringes upon the rights of
any Person, to the best 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.

<PAGE>

                  (p) Regulatory Permits. The Company and its Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits could not, individually or in the aggregate, have or
result in a Material Adverse Effect ("Material Permits"), and neither the
Company nor any such Subsidiary has received any notice of proceedings relating
to the revocation or modification of any Material Permit.

                  (q) Title. Except as set forth in Schedule 2.1(q), the Company
and the Subsidiaries have good and marketable title in fee simple to all real
property and personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all Liens,
except for Liens as do not materially affect the value of such property and do
not materially interfere with the use made and proposed to be made of such
property by the Company and its Subsidiaries. Any real property and facilities
held under lease by the Company and its Subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not materially interfere with the use made and proposed to be
made of such property and buildings by the Company and its Subsidiaries.

                  (r) Disclosure. The Company confirms that neither it nor any
Person acting on its behalf has provided 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
shall be relying 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 not misleading.

         2.2 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 and otherwise to carry out its
obligations thereunder. The purchase by such Purchaser of the Securities
hereunder has been duly authorized by all necessary 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 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 and the Registration Rights 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 and in compliance
with applicable federal and

<PAGE>

state securities laws or under an exemption from such registration. Nothing
contained herein shall be deemed a representation or warranty by such Purchaser
to hold Securities for any amount of time.

                  (c) Purchaser Status. At the time such Purchaser was offered
the Securities, it was, and at the date hereof it is, and at each exercise date
under the Warrants, it will be, an "accredited investor" as defined in Rule
501(a)(8) under the Securities 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, and has so
evaluated the merits and risks of such investment.

                  (e) Ability of Purchaser to Bear Risk of Investment. Such
Purchaser is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such investment.

                  (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 and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Company's
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 which 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 any Purchaser
or its representatives or counsel shall modify, amend or affect a 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.

                  (g) General Solicitation. Such Purchaser is not purchasing the
Securities as a result of or subsequent to any advertisement, article, notice or
other communication regarding the Securities 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.

                  (h) Reliance. Such Purchaser understands and acknowledges that
(i) the Securities are being offered and sold to it without registration under
the Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and the Company will rely upon the accuracy and truthfulness
of, the foregoing representations and such Purchaser hereby consents to such
reliance.

                  The Company acknowledges and agrees that no Purchaser makes or
has made representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 2.2.

<PAGE>

                                   ARTICLE III
                         OTHER AGREEMENTS OF THE PARTIES

         3.1 Transfer Restrictions. (a) Securities may only be disposed of
pursuant to an effective registration statement under the Securities Act, to the
Company or pursuant to an available exemption from or in a transaction not
subject to the registration requirements of the Securities Act, and in
compliance with any applicable federal and state securities laws. In connection
with any transfer of Securities other than pursuant to an effective registration
statement or to the Company, except as otherwise set forth herein, 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 under the Securities Act. Notwithstanding
the foregoing, the Company, without requiring a legal opinion as described in
the immediately preceding sentence, hereby consents to and agrees to register on
the books of the Company and with any transfer agent for the securities of the
Company any transfer of Securities by a Purchaser to an Affiliate of such
Purchaser or to one or more funds or managed accounts under common management
with such Purchaser, and any transfer among any such Affiliates or one or more
funds or managed accounts, provided that the transferee certifies to the Company
that it is an "accredited investor" within the meaning of Rule 501(a) under the
Securities Act and that it is acquiring the Securities solely for investment
purposes (subject to the qualifications hereof). Any such transferee shall agree
in writing to be bound by the terms of this Agreement and shall have the rights
of the Purchaser under this Agreement and the Registration Rights Agreement.

                  (b) The Purchasers agree to the imprinting, so long as is
required by this Section 3.1(b), of the following legend on the Securities:

                  [NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH
         THESE SECURITIES ARE EXERCISABLE] HAVE 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.

                  Neither Shares nor Underlying Shares shall contain the legend
set forth above nor any other legend at any time while an Underlying Shares
Registration Statement is effective under the Securities Act or, in the event
there is not an effective Registration Statement at such time 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 day that such Registration Statement is declared effective by the
Commission. The Company agrees that if any Shares or Underlying

<PAGE>

Shares are issued with a legend in accordance with this Section 3.1(b), it will,
within three (3) Trading Days after request therefor by a Purchaser and the
surrender by such Purchaser of the certificate representing the applicable
Shares or Underlying Shares, provide such Purchaser with a certificate or
certificates representing such Shares or Underlying Shares, free from such
legend at such time as such legend would not have been required under this
Section 3.1(b) had such issuance occurred on the date of such request. The
Company may not make any notation on its records or give instructions to any
transfer agent of the Company which enlarge the restrictions of transfer set
forth in this Section.

         3.2 Acknowledgment of Dilution. The Company acknowledges that the
issuance of Underlying Shares upon exercise of the Warrants will result in
dilution of the outstanding shares of Common Stock, which dilution may be
substantial under certain market conditions. The Company further acknowledges
that its obligation to issue Underlying Shares upon exercise of the Warrants
pursuant to the terms thereof is unconditional and absolute regardless of the
effect of any such dilution.

         3.3 Furnishing of Information. As long as the Purchasers own
Securities, 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. So long as the Purchasers own Securities, 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)
promulgated under the Securities Act such information as is required for the
Purchasers to sell the Securities under Rule 144 promulgated under the
Securities Act. The Company further covenants that it will take such further
action as any holder of Securities may reasonably request, all to the extent
required from time to time to enable such Person to sell Underlying Shares
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 promulgated under the Securities Act, including
the legal opinion referenced above in this Section. 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 such requirements.

         3.4 Integration. The Company shall not, and shall use its best efforts
to ensure that, no Affiliate 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 Securities to the Purchasers or that would be integrated
with the offer or sale of the Securities for purposes of the rules and
regulations of the Nasdaq Stock Market.

         3.5 Increase in Authorized Shares. If on any date the Company would be,
if a notice of exercise were to be delivered on such date, precluded from
issuing 200% of the number of Underlying Shares as would then be issuable upon
exercise in full of the Adjustable Warrants (the "Current Required Minimum") 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 (and in any case, within 30 Business Days from such date) prepare
and mail to the stockholders of the Company proxy materials requesting
authorization to amend the Company's articles of incorporation to increase the
number of shares of Common Stock which the Company is authorized to issue to at
least such number of shares as is reasonably adequate to enable the

<PAGE>

Company to comply with its issuance, exercise and reservation of shares
obligations as set forth in this Agreement and the Warrants (the sum of (x) the
number of shares of Common Stock then outstanding plus all shares of Common
Stock issuable upon exercise of all outstanding options, warrants and
convertible instruments other than the Adjustable Warrants, and (y) the Current
Required Minimum, shall be a reasonable number). 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 no later than the earlier to occur of the 60th day after
delivery of the proxy materials relating to such meeting and the 90th day after
request by a holder of Warrants to issue the number of Underlying Shares in
accordance with the terms hereof) and (c) within five (5) Business Days of
obtaining such stockholder authorization, file an appropriate amendment to the
Company's articles of incorporation to evidence such increase.

         3.6 Reservation and Listing of Underlying Shares. (a) The Company shall
(i) in the time and manner required by the NASDAQ and such other national
securities exchange or market or trading or quotation facility on which the
Common Stock is then listed for trading, prepare and file with the NASDAQ (and
such other national securities exchange or market or trading or quotation
facility on which the Common Stock is then listed for trading) an additional
shares listing application covering a number of shares of Common Stock which is
not less than the Initial Minimum, (ii) take all steps necessary to cause such
shares of Common Stock to be approved for listing in the NASDAQ (as well as on
any such other national securities exchange or market or trading or quotation
facility on which the Common Stock is then listed) as soon as possible
thereafter, and (iii) provide to the Purchasers evidence of such listing, and
the Company shall maintain the listing of its Common Stock thereon. If the
number of Underlying Shares issuable upon exercise of the then unexercised
portion of the Adjustable Warrants exceeds 85% of the number of Underlying
Shares previously listed on account thereof with NASDAQ (and any such other
required exchanges), then the Company shall take the necessary actions to
immediately list a number of Underlying Shares as equals no less than the then
Current Required Minimum with respect thereto.

                  (b) The Company shall maintain a reserve of shares of Common
Stock for issuance upon exercise in full of the Warrants in accordance with the
Warrants, in such amount as may be required to fulfill its obligations in full
under the Warrants, which reserve shall equal no less than the then Current
Required Minimum.

         3.7 Exercise Procedures. The Transfer Agent Instructions and Form of
Election to Purchase under the Warrants set forth the totality of the procedures
with respect to the exercise of the Warrants, including the form of legal
opinion, if necessary, that shall be rendered to the Company's transfer agent
and such other information and instructions as may be reasonably necessary to
enable the Purchasers to exercise the Warrants.

         3.8 Notice of Breaches. Each of the Company and the Purchasers shall
give prompt written notice to the other of any breach by it of any
representation, warranty or other agreement contained in any Transaction
Document, as well as any events or occurrences arising after the date hereof
which would reasonably be likely to cause any representation or warranty or
other agreement of such party, as the case may be, contained therein to be
incorrect or breached as of

<PAGE>

the Closing Date. However, no disclosure by a party pursuant to this Section
shall be deemed to cure any breach of any representation, warranty or other
agreement contained in any Transaction Document.

         3.9 Right of First Refusal; Subsequent Registrations. (a) The Company
shall not, directly or indirectly, without the prior written consent of the
Purchasers, offer, sell, grant any option to purchase, or otherwise dispose of
(or announce any offer, sale, grant or any option to purchase or other
disposition) any of its or its Affiliates' equity or equity-equivalent
securities or a transaction intended to be exempt or not subject to registration
under the Securities Act (a "Subsequent Placement") until the 180th day after
the Underlying Shares Registration Statement is first declared effective by the
Commission, except (i) the granting of options or warrants to employees,
officers and directors, and the issuance of shares upon exercise of options
granted, under any stock option plan heretofore or hereinafter duly adopted by
the Company, (ii) shares of Common Stock issuable upon exercise of currently
outstanding options and warrants and upon conversion of any currently
outstanding convertible securities of the Company, in each case to the extent
disclosed in Schedule 2.1(c) but not with respect to any amendment or
modification thereof, and (iii) shares of Common Stock issuable upon exercise of
the Warrants in accordance with the terms thereof, unless (A) the Company
delivers to each Purchaser a written notice (the "Subsequent Placement Notice")
of its intention to effect such Subsequent Placement, which Subsequent Placement
Notice shall describe in reasonable detail the proposed terms of such Subsequent
Placement, the amount of proceeds intended to be raised thereunder, the Person
with whom such Subsequent Placement shall be effected, and attached to which
shall be a term sheet or similar document relating thereto and (B) such
Purchaser shall not have notified the Company by 5:30 p.m. (New York City time)
on the fifth (5th) Trading Day after its receipt of the Subsequent Placement
Notice of its willingness to cause such Purchaser to provide (or to cause its
sole designee to provide), subject to completion of mutually acceptable
documentation, financing to the Company on the same terms set forth in the
Subsequent Placement Notice. If the Purchasers shall fail to notify the Company
of their intention to enter into such negotiations within such time period, the
Company may effect the Subsequent Placement substantially upon the terms and to
the Persons (or Affiliates of such Persons) set forth in the Subsequent
Placement Notice; provided, that the Company shall provide the Purchasers with a
second Subsequent Placement Notice, and the Purchasers shall again have the
right of first refusal set forth above in this Section (a), if the Subsequent
Placement subject to the initial Subsequent Placement Notice shall not have been
consummated for any reason on the terms set forth in such Subsequent Placement
Notice within thirty (30) Trading Days after the date of the initial Subsequent
Placement Notice with the Person (or an Affiliate of such Person) identified in
the Subsequent Placement Notice. The rights of the Purchasers under this Section
shall apply to each Subsequent Placement contemplated by the Company or such
Subsidiary, regardless of any prior waivers or non-participation.

                  (b) Except for (w) Shares, (x) Underlying Shares, (y) other
"Registrable Securities" (as such term is defined in the Registration Rights
Agreement) to be registered, and securities of the Company as set forth in
Schedule 6(b) of the Registration's Rights Agreement to be registered, in the
Underlying Shares Registration Statement in accordance with the Registration
Rights Agreement, and (z) Common Stock permitted to be issued pursuant to
paragraph (a)(i) - (iii) of Section 3.9 (a), the Company shall not, for a period
of not less than 90 Trading Days after the date that the Underlying Shares
Registration Statement is declared

<PAGE>

effective by the Commission, without the prior written consent of the Purchasers
(i) issue or sell any of its or any of its Affiliates' equity or
equity-equivalent securities pursuant to Regulation S promulgated under the
Securities Act, or (ii) file a registration statement for the issuance or resale
of any securities of the Company. Any days that a Purchaser is not permitted or
unable to utilize the prospectus or otherwise to sell Underlying Shares under
the Underlying Shares Registration Statement shall be added to such 90 Trading
Day period for the purposes of this Section.

         3.10 Certain Securities Laws Disclosures; Publicity. The Company shall:
(i) on the Closing Date, issue a press release acceptable to the Purchasers
disclosing the transactions contemplated hereby, (ii) file with the Commission a
Report on Form 8-K or Form 10-Q (as applicable) disclosing the transactions
contemplated hereby within ten (10) Business Days after the Closing Date, and
(iii) timely file with the Commission a Form D promulgated under the Securities
Act as required under Regulation D promulgated under the Securities Act and
provide a copy thereof to the Purchasers promptly after the filing thereof. The
Company shall, no less than two (2) Business Days prior to the filing of any
disclosure required by clauses (ii) and (iii) above, provide a copy thereof to
the Purchasers. The Company and the Purchasers shall consult with each other in
issuing any press releases or otherwise making public statements or filings and
other communications with the Commission or any regulatory agency or stock
market or trading facility with respect to the transactions contemplated hereby
and neither party shall issue any such press release or otherwise make any such
public statement, filings or other communications pertaining to the transactions
contemplated hereby without the prior written consent of the other, which
consent shall not be unreasonably withheld or delayed, except that no prior
consent shall be required if such disclosure is required by law and such consent
can not reasonably be expected to be received prior to the time required to
complete such filing or make such statement in accordance with such applicable
law, in which such case the disclosing party shall provide the other party with
prior notice of such public statement, filing or other communication.
Notwithstanding the foregoing, the Company shall not publicly disclose the name
of a Purchaser, or include the name of a Purchaser in any filing with the
Commission, or any regulatory agency, trading facility or stock market without
the prior written consent of such Purchaser, except to the extent such
disclosure (but not any disclosure as to the controlling Persons thereof) is
required by law, in which case the Company shall provide such Purchaser with
prior notice of such disclosure.

         3.11 Transfer of Intellectual Property Rights. Except in connection
with the sale of all or substantially all of the assets of the Company, the
Company shall not transfer, sell or otherwise dispose of any Intellectual
Property Rights, or allow any of the Intellectual Property Rights to become
subject to any Liens, or fail to renew such Intellectual Property Rights (if
renewable and it would otherwise lapse if not renewed).

         3.12 Use of Proceeds. The Company shall use the net proceeds from the
sale of Securities hereunder for working capital purposes and not for the
satisfaction of any portion of the Company's debt (other than trade payables in
the ordinary course of business), to redeem any Company equity or
equity-equivalent securities or to settle any outstanding litigation. Pending
application of the proceeds of this placement in the manner permitted hereby,
the Company will invest such proceeds in interest bearing accounts and/or
short-term, investment grade interest bearing securities.

<PAGE>

         3.13 Reimbursement. If any Purchaser, other than by reason of its gross
negligence or willful misconduct, becomes involved in any capacity in any
action, proceeding or investigation brought by or against any Person, including
stockholders of the Company, in connection with or as a result of the
consummation of the transactions contemplated by Transaction Documents, the
Company will reimburse such Purchaser for its reasonable legal and other
expenses (including the cost of any investigation and preparation and travel in
connection therewith) incurred in connection therewith, as such expenses are
incurred. The reimbursement obligations of the Company under this paragraph
shall be in addition to any liability which the Company may otherwise have,
shall extend upon the same terms and conditions to any Affiliates of the
Purchasers who are actually named in such action, proceeding or investigation,
and partners, directors, agents, employees and controlling persons (if any), as
the case may be, of the Purchasers and any such Affiliate, and shall be binding
upon and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, the Purchasers and any such Affiliate and any
such Person. The Company also agrees that neither the Purchasers nor any such
Affiliates, partners, directors, agents, employees or controlling persons shall
have any liability to the Company or any Person asserting claims on behalf of or
in right of the Company in connection with or as a result of the consummation of
the Transaction Documents except to the extent that any losses, claims, damages,
liabilities or expenses incurred by the Company result from the gross negligence
or willful misconduct of the applicable Purchaser or entity in connection with
the transactions contemplated by this Agreement.

         3.14 Purchasers' Obligations Under Letter Agreement. The parties agree
that upon the Closing hereunder, the obligations of the Purchasers under the
letter agreement between the parties, dated September 30, 1999, will be
satisfied in full.

         3.15 Warrant Shares. The parties agree that, notwithstanding anything
to the contrary contained therein, the Adjustable Warrants issued to the
Purchasers on September 30, 1999, will no longer vest from and after the Closing
Date. However, any vesting for a prior Vesting Date (as defined in Section 3(a)
of the Adjustable Warrant dated September 30, 1999) will be honored.

                                   ARTICLE IV
                                  MISCELLANEOUS

                  4.1 Fees and Expenses. At the Closing the Company shall
reimburse the Purchasers for their legal fees and expenses incurred in
connection with the preparation and negotiation of the Transaction Documents by
paying to Robinson Silverman $25,000 for the preparation and negotiation of the
Transaction Documents. The $25,000 may be deducted from the proceeds of the
Purchase Price payable to the Company and paid directly by the Purchasers to
Robinson Silverman. Other than the amounts contemplated in the immediately
preceding sentence, and except as otherwise set forth in the Registration Rights
Agreement, 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 stamp and other taxes
and duties levied in connection with the issuance of the Securities.

<PAGE>

                  4.2 Entire Agreement; Amendments. 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.

                  4.3 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 (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 8:00 p.m. (New
York City time) on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Agreement later than 8:00 p.m. (New
York City time) on any date and earlier than 11:59 p.m. (New York City time) on
such date, (iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual receipt by
the party to whom such notice is required to be given. The address for such
notices and communications shall be as follows:

         If to the Company:         Cybershop.Com, Inc.
                                    116 Newark Avenue,
                                    Jersey City, New Jersey 07302
                                    Facsimile No.: (201) 234-5052
                                    Attn:  Chief Financial Officer

         With copies to:            Davis & Gilbert LLP
                                    1740 Broadway
                                    New York, NY 10019
                                    Facsimile No.: (212) 468-4888
                                    Attn: Walter M. Epstein, Esq.

         If to a Purchaser:         To the address
                                    set forth under such
                                    Purchaser's name on the
                                    signature pages hereto.

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

                  4.4 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 both the Company and 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 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 accruing to it thereafter.

<PAGE>

                  4.5 Headings. 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.

                  4.6 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. Except as set
forth in Section 3.1(a), the Purchasers may not assign this Agreement or any of
the rights or obligations hereunder without the consent of the Company.

                  4.7 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.

                  4.8 Governing Law. The corporate laws of the State of Delaware
shall govern all issues concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party 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 suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof 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.

                  4.9 Survival. The representations, warranties, agreements and
covenants contained herein shall survive the Closing and the delivery and
exercise of the Warrants.

                  4.10 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) the same with the same force and effect as if such facsimile signature
page were an original thereof.

                  4.11 Severability. In case any one or more of the provisions
of this Agreement shall 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

<PAGE>

the parties will attempt to agree upon a valid and enforceable provision which
shall be a reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Agreement.

                  4.12 Remedies. In addition to being entitled to exercise all
rights provided herein or granted by law, including recovery of damages, the
Purchasers will be entitled to specific performance of the obligations of the
Company under the Transaction Documents. Each of the Company and the Purchasers
agree that monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of its 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.

                  4.13 Independent Nature of Purchasers' Obligations and Rights.
The obligations of each Purchaser under any Transaction Document is several and
not joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to 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 Document. 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 Transaction
Documents, and it shall not be necessary for any other Purchaser to be joined as
an additional party in any proceeding for such purpose.

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                             SIGNATURE PAGE FOLLOWS]

<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.

                           .                CYBERSHOP.COM, INC..

                                            By:_________________________________
                                               Name:
                                               Title:

<PAGE>

                               STRONG RIVER INVESTMENTS, INC.

                               By:_________________________________
                                  Kenneth L. Henderson
                                  Attorney-in-Fact

                               Purchase Price for Common Stock
                               to be acquired at Closing:             $3,000,000

                               Number of Shares to be acquired at
                               Closing:                                  264,317

                               Warrant Shares subject to Closing
                               Warrant;                                  118,943

                               Address for Notice:

                               Strong River Investments, Inc.
                               c/o Gonzalez-Ruiz & Aleman (BVI) Limited
                               Wickhams Cay I, Vanterpool Plaza
                               P.O. Box 873
                               Road Town, Tortolla. BVI

                               With copies 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:  Kenneth L. Henderson, Esq.
                                      Eric L. Cohen, Esq.

<PAGE>

                               MONTROSE INVESTMENTS LTD.

                               By:_________________________________
                                  Name:
                                  Title:

                               Purchase Price for Common Stock
                               to be acquired at Closing:             $3,000,000

                               Number of Shares to be acquired at
                               Closing:                                  264,317

                               Warrant Shares subject to Closing
                               Warrant;                                  118,942

                               Address for Notice:

                               Montrose Investments, Ltd.
                               300 Crescent Court, Suite 700
                               Dallas, TX 75201
                               Facsimile: (214) 758-1221
                               Attn: Will Rose
                               Kim Rozman

                               With copies 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:  Kenneth L. Henderson, Esq.
                                      Eric L. Cohen, Esq.

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