Document:

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                                   Exhibit 4.6

                          ONE VOICE TECHNOLOGIES, INC.

                          SECURITIES PURCHASE AGREEMENT

                                September 7, 2001

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                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

1.   AGREEMENT TO SELL AND PURCHASE ........................................   1

2.   FEES AND WARRANTS .....................................................   1

3.   CLOSING, DELIVERY AND PAYMENT .........................................   2

     3.1   Closing .........................................................   2

     3.2   Delivery ........................................................   2

4.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY .........................   2

     4.1   Organization, Good Standing and Qualification ...................   2

     4.2   Subsidiaries ....................................................   2

     4.3   Capitalization; Voting Rights ...................................   2

     4.4   Authorization; Binding Obligations ..............................   3

     4.5   Liabilities .....................................................   3

     4.6   Agreements; Action ..............................................   4

     4.7   Obligations to Related Parties ..................................   4

     4.8   Changes .........................................................   4

     4.9   Title to Properties and Assets; Liens, Etc. .....................   5

     4.10  Intellectual Property ...........................................   5

     4.11  Compliance with Other Instruments ...............................   6

     4.12  Litigation ......................................................   6

     4.13  Tax Returns and Payments ........................................   6

     4.14  Employees .......................................................   6

     4.15  Registration Rights and Voting Rights ...........................   7

     4.16  Compliance with Laws; Permits ...................................   7

     4.17  Environmental and Safety Laws ...................................   7

     4.18  Valid Offering ..................................................   7

     4.19  Full Disclosure .................................................   7

     4.20  Insurance .......................................................   7

     4.21  SEC Reports .....................................................   8

     4.22  No Market Manipulation ..........................................   8

     4.23  Listing .........................................................   8

     4.24  No Integrated Offering ..........................................   8

     4.25  Stop Transfer ...................................................   8

     4.26  Dilution ........................................................   8

5.   REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS ......................   8

     5.1   Requisite Power and Authority ...................................   8

                                      -i-

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     5.2   Investment Representations ......................................   9

     5.3   Purchaser Bears Economic Risk ...................................   9

     5.4   Acquisition for Own Account .....................................   9

     5.5   Purchaser Can Protect Its Interest ..............................   9

     5.6   Accredited Investor .............................................   9

     5.7   Regulatory Compliance ...........................................   9

     5.8   Legends .........................................................   9

     5.9   Confidentiality .................................................  10

     5.10  Certain Acknowledgments .........................................  10

6.   Covenants of the Company ..............................................  10

     6.1   Stop-Orders .....................................................  10

     6.2   Listing .........................................................  10

     6.3   Market Regulations ..............................................  10

     6.4   Reporting Requirements ..........................................  11

     6.5   Use of Funds ....................................................  11

     6.6   Access to Facilities ............................................  11

     6.7   Taxes ...........................................................  11

     6.8   Insurance .......................................................  11

     6.9   Books and Records ...............................................  11

     6.10  Intellectual Property ...........................................  11

     6.11  Confidentiality .................................................  12

     6.12  Required Approvals ..............................................  12

     6.13  Reissuance of Securities ........................................  13

     6.14  Opinion .........................................................  13

7.   COVENANTS OF THE COMPANY AND PURCHASERS REGARDING INDEMNIFICATION .....  13

     7.1   Company Indemnification .........................................  13

     7.2   Purchaser's Indemnification .....................................  13

     7.3   Limitations .....................................................  13

     7.4   Procedures ......................................................  13

8.   CONVERSION OF CONVERTIBLE NOTES .......................................  14

     8.1   Mechanics of Conversion .........................................  14

     8.2   Mandatory Redemption ............................................  14

     8.3   Maximum Conversion ..............................................  15

     8.4   Injunction - Posting of Bond ....................................  15

     8.5   Buy-In ..........................................................  15

     8.6   Optional Redemption .............................................  15

                                      -ii-

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     8.7   Nasdaq Approval .................................................  16

9.   Registration Rights ...................................................  16

     9.1   Registration Rights Granted .....................................  16

     9.2   Registration Procedures .........................................  17

     9.3   Provision of Documents ..........................................  18

     9.4   Non-Registration Events .........................................  19

     9.5   Expenses ........................................................  19

     9.6   Indemnification and Contribution ................................  19

10.  OFFERING RESTRICTIONS .................................................  21

11.  SECURITY INTEREST .....................................................  21

12.  MISCELLANEOUS .........................................................  21

     12.1  Governing Law ...................................................  21

     12.2  Survival ........................................................  21

     12.3  Successors and Assigns ..........................................  22

     12.4  Entire Agreement ................................................  22

     12.5  Severability ....................................................  22

     12.6  Amendment and Waiver ............................................  22

     12.7  Delays or Omissions .............................................  22

     12.8  Notices .........................................................  22

     12.9  Attorneys' Fees .................................................  22

     12.10 Titles and Subtitles ............................................  22

     12.11 Counterparts ....................................................  22

     12.12 Broker's Fees ...................................................  23

     12.13 Construction ....................................................  23

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                          ONE VOICE TECHNOLOGIES, INC.
                          SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") is made and entered into as
of September 7, 2001, by and among ONE VOICE TECHNOLOGIES, INC., a Nevada
corporation (the "Company"), and the Purchaser listed on Exhibit A hereto (the
"Purchaser").

                                    RECITALS

WHEREAS, the Company has authorized the sale of 8% Convertible Notes in an
aggregate principal amount of $600,000 (the "Notes"), convertible into shares of
the Company's common stock, $0.001 par value per share (the "Common Stock");

WHEREAS, the Company wishes to issues warrants (the "Warrants") to the Purchaser
to purchase shares of the Company's Common Stock in connection with Purchaser's
purchase of the Notes;

WHEREAS, Purchaser desires to purchase the Notes and Warrants on the terms and
conditions set forth herein; and

WHEREAS, the Company desires to issue and sell the Notes and Warrants to
Purchaser on the terms and conditions set forth herein.

                                    AGREEMENT

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises, representations, warranties and covenants hereinafter set forth and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

     1. AGREEMENT TO SELL AND PURCHASE. Pursuant to the terms and conditions set
forth in this Agreement, on the Closing Date (as defined in Section 3), the
Company agrees to sell to the Purchaser, and the Purchaser hereby agrees to
purchase from the Company Notes in the amount set forth next to the Purchaser's
name on Exhibit A under the column heading "Closing Date Notes," convertible in
accordance with the terms thereof into shares of the Company's Common Stock,
which amount shall be equal to $600,000. The Notes purchased on the Closing Date
shall be known as the "Offering." The form of Notes is annexed hereto as Exhibit
B. The Notes will have a Maturity Date (as defined in the Notes) two years from
the date of issuance. Collectively, the Notes and Warrants (as defined in
Section 2) and Common Stock issuable upon conversion of the Notes and exercise
of the Warrants are referred to as the "Securities."

     2. FEES AND WARRANTS.

             (a) The Company will issue and deliver to the persons listed on
Exhibit A under the column heading "Warrant Holders", or to such other persons
as the Purchaser shall otherwise designate (such named persons, as they may be
so otherwise designated, being referred to as the "Warrant Recipients"),
Warrants to purchase shares of Common Stock in the amounts designated on Exhibit
A hereto in connection with the Offering (the "Warrants") pursuant to Section 1
hereof. The Warrants must be delivered on the Closing Date. The aggregate number
of shares of Common Stock purchasable upon exercise of the Warrants granted on
the Closing Date is set forth on Exhibit A hereto. A form of Warrant is annexed
hereto as Exhibit C. The per share "Purchase Price" of Common Stock as defined
in the Warrants shall be equal to the lesser of (i) 120% of the average of the
three lowest closing prices of the Common Stock as reported by Bloomberg
Financial for the Pink Sheets, the NASD OTC Bulletin Board, NASDAQ SmallCap
Market, NASDAQ National Market, American Stock Exchange, or New York Stock
Exchange (each of the foregoing the "Principal Market"), or such other principal
market or exchange where the Common Stock is listed or traded, for the ten (10)
trading days preceding but not including the Closing Date or (ii) 120% of the
average of the three lowest closing prices of the Common Stock as reported by
Bloomberg Financial on the Principal Market for the ten trading days prior to
but not including the date the Warrant is exercised. All the representations,
covenants, warranties, undertakings, and indemnification, and other rights made
or granted to or for the benefit of Purchaser are hereby also made and granted
to the holders of the Warrants in respect of the Warrants and shares of the
Company's Common Stock issuable upon exercise of the Warrants (the "Warrant
Shares").

             (b) The Company shall reimburse Purchaser for its reasonable legal
fees of $15,000 for services rendered to Purchaser in preparation of this
Agreement and the Related Agreements, and an additional amount

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not to exceed $2,500 in connection with its due diligence review of the Company
and relevant matters. Amounts required to be paid hereunder will be paid at the
Closing.

             (c) The Company will pay a cash fee in the amount of ten percent
(10%) of the aggregate gross purchase price to be paid to the Company from the
sale of Notes in the Offering the "Fund Manager's Fee") to the persons listed on
Exhibit A under the column heading "Fund Manager's Fee Recipient." The Fund
Manager's Fee must be paid on the Closing Date. The aforementioned Fund
Manager's Fee and legal fees will be payable at the Closing out of funds held
pursuant to a Funds Escrow Agreement to be entered into by the Company,
Purchaser and an Escrow Agent. Failure to timely deliver the Fund Manager's Fee,
or the Warrants shall be deemed an Event of Default as defined in Article III of
the Notes.

     3. CLOSING, DELIVERY AND PAYMENT.

         3.1 Closing. Subject to the terms and conditions herein, the closing of
the transactions contemplated hereby (the "Closing"), which closing is comprised
of Purchaser's purchase of Notes in the aggregate principal amount of $600,000,
shall take place on the date hereof, at the offices of Daniel M. Laifer, Esq.,
135 West 50th Street, Suite 1700, New York, New York 10020, or at such other
time or place as the Company and Purchaser may mutually agree (such date is
hereinafter referred to as the "Closing Date").

         3.2 Delivery. At the Closing, subject to the terms and conditions
hereof, the Company will deliver to the Purchaser an applicable Note
representing the aggregate principal amount borrowed by the Company at the
Closing from the Purchaser and a warrant certificate registered in the
Purchaser's name representing the number of Warrant Shares as to which the
Warrant is exercisable pursuant to this Agreement, against payment of the
purchase price therefor by certified funds or wire transfer made payable to the
order of the Company, cancellation of indebtedness or any combination of the
foregoing.

     4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company hereby represents and warrants to the Purchaser as of the
date of this Agreement as set forth below.

         4.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada. The Company has the corporate power and authority to own
and operate its properties and assets, to execute and deliver this Agreement,
the Warrants to be issued in connection with this Agreement, the Funds Escrow
Agreement, the Security Agreement and all other agreements referred to herein
(collectively, the "Related Agreements"), to issue and sell the Notes and the
shares of Common Stock issuable upon conversion of the Notes (the "Conversion
Shares"), to issue and sell the Warrants and the Warrant Shares, and to carry
out the provisions of this Agreement and the Related Agreements and to carry on
its business as presently conducted and as presently proposed to be conducted.
The Company is duly qualified and is authorized to do business and is in good
standing as a foreign corporation in all jurisdictions in which the nature of
its activities and of its properties (both owned and leased) makes such
qualification necessary, except for those jurisdictions in which failure to do
so would not have a material adverse effect on the Company or its business.

         4.2 Subsidiaries. Except as disclosed on Schedule 4.2, the Company does
not own or control any equity security or other interest of any other
corporation, limited partnership or other business entity. If any entity is
listed on Schedule 4.2. and the Company owns a controlling interest in such
entity, each of the representations and warranties set forth in this Section 4
are being hereby restated with respect to such entity (modified as appropriate
to the nature of such entity.)

         4.3 Capitalization; Voting Rights. Except as set forth on Schedule 4.3:

             (a) The authorized capital stock of the Company, immediately prior
to the Closing, consists of (i) 50,000,000 shares of Common Stock, par value
$0.001 per share, 14,549,651 shares of which are issued

                                       -2-

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and outstanding as of August 13, 2001, and (ii) 10,000,000 shares of Preferred
Stock, par value $0.001 per share, no shares of which are issued and
outstanding.

             (b) Other than (i) the shares reserved for issuance under the
Company's Stock Option Plan and (ii) shares which may be granted pursuant to
this Agreement and the Related Agreements, there are no outstanding options,
warrants, rights (including conversion or preemptive rights and rights of first
refusal), proxy or stockholder agreements, or arrangements or agreements of any
kind for the purchase or acquisition from the Company of any of its securities.
Neither the offer, issuance or sale of any of the Notes or Warrants, or the
issuance of any of the Conversion Shares or Warrant Shares, nor the consummation
of any transaction contemplated hereby will result in a change in the price or
number of any securities of the Company outstanding, under anti-dilution or
other similar provisions contained in or affecting any such securities.

             (c) All issued and outstanding shares of the Company's Common Stock
and Preferred Stock (to the extent Preferred Stock has been issued) (i) have
been duly authorized and validly issued and are fully paid and nonassessable and
(ii) were issued in compliance with all applicable state and federal laws
concerning the issuance of securities.

             (d) The rights, preferences, privileges and restrictions of the
shares of Preferred Stock and the Common Stock are as stated in the Articles of
Incorporation (the "Charter"). The Conversion Shares and Warrant Shares have
been duly and validly reserved for issuance. When issued in compliance with the
provisions of this Agreement and the Company's Charter, the Notes, Warrants,
Conversion Shares and Warrant Shares (sometimes collectively referred to herein
as the "Securities") will be validly issued, fully paid and nonassessable, and
will be free of any liens or encumbrances; provided, however, that the
Securities may be subject to restrictions on transfer under state and/or federal
securities laws as set forth herein or as otherwise required by such laws at the
time a transfer is proposed.

             (e) No stock plan, stock purchase, stock option or other agreement
or understanding between the Company and any holder of any equity securities or
rights to purchase equity securities provides for acceleration or other changes
in the vesting provisions or other terms of such agreement or understanding as
the result of any merger, consolidated sale of stock or assets, change in
control or any other transaction(s) by the Company, including the transactions
contemplated hereunder.

         4.4 Authorization; Binding Obligations. All corporate action on the
part of the Company, its officers, directors and stockholders necessary for the
authorization of this Agreement and the Related Agreements, the performance of
all obligations of the Company hereunder at each Closing and the authorization,
sale, issuance and delivery of the Securities pursuant hereto and the Related
Agreements has been taken or will be taken prior to the Closing. The Agreement
and the Related Agreements, when executed and delivered, will be valid and
binding obligations of the Company enforceable in accordance with their terms,
except (a) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights, and (b) general principles of equity that restrict the
availability of equitable remedies. The sale of the Notes and the subsequent
conversion of the Notes into Conversion Shares are not and will not be subject
to any preemptive rights or rights of first refusal that have not been properly
waived or complied with. The sale of the Warrants and the subsequent exercise of
the Warrants for Warrant Shares are not and will not be subject to any
preemptive rights or rights of first refusal that have not been properly waived
or complied with. The Notes and the Warrants, when executed and delivered in
accordance with the terms of this Agreement, will be valid and binding
obligations of the Company, enforceable in accordance with their respective
terms.

         4.5 Liabilities. The Company has no material liabilities and, to the
best of its knowledge, knows of no material contingent liabilities, except
current liabilities incurred in the ordinary course of business which have not
been, either in any individual case or in the aggregate, materially adverse.

                                       -3-

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         4.6 Agreements; Action.

             (a) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or to its knowledge by which it is bound which may
involve (i) obligations (contingent or otherwise) of, or payments to, the
Company in excess of $50,000 (other than obligations of, or payments to, the
Company arising from purchase or sale agreements entered into in the ordinary
course of business), or (ii) the transfer or license of any patent, copyright,
trade secret or other proprietary right to or from the Company (other than
licenses arising from the purchase of "off the shelf" or other standard
products), or (iii) provisions restricting the development, manufacture or
distribution of the Company's products or services, or (iv) indemnification by
the Company with respect to infringements of proprietary rights.

             (b) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities individually in excess of $50,000 or, in the case of
indebtedness and/or liabilities individually less than $50,000, in excess of
$100,000 in the aggregate, (iii) made any loans or advances to any person, other
than ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise
disposed of any of its assets or rights, other than the sale of its inventory in
the ordinary course of business.

             (c) For the purposes of subsections (a) and (b) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.

             (d) Except as set forth on Schedule 4.6, the Company has not
engaged in the past two years in any discussion (i) with any representative of
any corporation or corporations regarding the consolidation or merger of the
Company with or into any such corporation or corporations, (ii) with any
corporation, partnership, association or other business entity or any individual
regarding the sale, conveyance or disposition of all or substantially all of the
assets of the Company, or a transaction or series of related transactions in
which more than 50% of the voting power of the Company is disposed of or (iii)
regarding any other form of acquisition, liquidation, dissolution or winding up
of the Company.

         4.7 Obligations to Related Parties. There are no obligations of the
Company to officers, directors, stockholders or employees of the Company other
than (a) for payment of salary for services rendered, (b) reimbursement for
reasonable expenses incurred on behalf of the Company and (c) for other standard
employee benefits made generally available to all employees (including stock
option agreements outstanding under any stock option plan approved by the Board
of Directors of the Company). None of the officers, directors or stockholders of
the Company, or any members of their immediate families, are indebted to the
Company. None of the officers, directors or, to the best of the Company's
knowledge, key employees or stockholders of the Company or any members of their
immediate families, are indebted to the Company or have any direct or indirect
ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship, or any firm or
corporation which competes with the Company, other than passive investments in
publicly traded companies (representing less than 1% of such company) which may
compete with the Company. No officer, director or stockholder, or any member of
their immediate families, is, directly or indirectly, interested in any material
contract with the Company and no agreements, understandings or proposed
transactions are contemplated between the Company and any such person. The
Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.

         4.8 Changes. Since June 30, 2001, there has not been:

             (a) Any change in the assets, liabilities, financial condition,
prospects or operations of the Company, other than changes in the ordinary
course of business, none of which individually or in the aggregate has had or is
reasonably expected to have a material adverse effect on such assets,
liabilities, financial condition, prospects or operations of the Company;

                                       -4-

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             (b) Any resignation or termination of any officer, key employee or
group of employees of the Company;

             (c) Any material change, except in the ordinary course of business,
in the contingent obligations of the Company by way of guaranty, endorsement,
indemnity, warranty or otherwise;

             (d) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, business or
prospects or financial condition of the Company;

             (e) Any waiver by the Company of a valuable right or of a material
debt owed to it;

             (f) Any direct or indirect loans made by the Company to any
stockholder, employee, officer or director of the Company, other than advances
made in the ordinary course of business;

             (g) Any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder;

             (h) Any declaration or payment of any dividend or other
distribution of the assets of the Company;

             (i) Any labor organization activity related to the Company;

             (j) Any debt, obligation or liability incurred, assumed or
guaranteed by the Company, except those for immaterial amounts and for current
liabilities incurred in the ordinary course of business;

             (k) Any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;

             (l) Any change in any material agreement to which the Company is a
party or by which it is bound which may materially and adversely affect the
business, assets, liabilities, financial condition, operations or prospects of
the Company;

             (m) Any other event or condition of any character that, either
individually or cumulatively, has or may materially and adversely affect the
business, assets, liabilities, financial condition, prospects or operations of
the Company; or

             (n) Any arrangement or commitment by the Company to do any of the
acts described in subsection (a) through (m) above.

         4.9 Title to Properties and Assets; Liens, Etc. The Company has good
and marketable title to its properties and assets, and good title to its
leasehold estates, in each case subject to no mortgage, pledge, lien, lease,
encumbrance or charge, other than (a) those resulting from taxes which have not
yet become delinquent, (b) minor liens and encumbrances which do not materially
detract from the value of the property subject thereto or materially impair the
operations of the Company, and (c) those that have otherwise arisen in the
ordinary course of business. All facilities, machinery, equipment, fixtures,
vehicles and other properties owned, leased or used by the Company are in good
operating condition and repair and are reasonably fit and usable for the
purposes for which they are being used. The Company is in compliance with all
material terms of each lease to which it is a party or is otherwise bound.

         4.10 Intellectual Property.

             (a) The Company owns or possesses sufficient legal rights to all
patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information and other proprietary rights and processes

                                       -5-

<PAGE>

necessary for its business as now conducted and to the Company's knowledge as
presently proposed to be conducted (the "Intellectual Property"), without any
known infringement of the rights of others. There are no outstanding options,
licenses or agreements of any kind relating to the foregoing proprietary rights,
nor is the Company bound by or a party to any options, licenses or agreements of
any kind with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information and other proprietary rights
and processes of any other person or entity other than such licenses or
agreements arising from the purchase of "off the shelf" or standard products.

             (b) The Company has not received any communications alleging that
the Company has violated any of the patents, trademarks, service marks, trade
names, copyrights or trade secrets or other proprietary rights of any other
person or entity, nor is the Company aware of any basis therefor.

             (c) The Company does not believe it is or will be necessary to
utilize any inventions, trade secrets or proprietary information of any of its
employees made prior to their employment by the Company, except for inventions,
trade secrets or proprietary information that have been rightfully assigned to
the Company.

         4.11 Compliance with Other Instruments. The Company is not in violation
or default of any term of its Charter or Bylaws, or of any provision of any
mortgage, indenture, contract, agreement, instrument or contract to which it is
party or by which it is bound or of any judgment, decree, order or writ. The
execution, delivery and performance of and compliance with this Agreement and
the Related Agreements, and the issuance and sale of Securities pursuant hereto,
will not, with or without the passage of time or giving of notice, result in any
such material violation, or be in conflict with or constitute a default under
any such term or provision, or result in the creation of any mortgage, pledge,
lien, encumbrance or charge upon any of the properties or assets of the Company
or the suspension, revocation, impairment, forfeiture or nonrenewal of any
permit, license, authorization or approval applicable to the Company, its
business or operations or any of its assets or properties.

         4.12 Litigation. There is no action, suit, proceeding or investigation
pending or, to the Company's knowledge, currently threatened against the Company
that questions the validity of this Agreement or the Related Agreements or the
right of the Company to enter into any of such agreements, or to consummate the
transactions contemplated hereby or thereby, or which might result, either
individually or in the aggregate, in any material adverse change in the assets,
condition, affairs or prospects of the Company, financially or otherwise, or any
change in the current equity ownership of the Company, nor is the Company aware
that there is any basis for any of the foregoing. The Company is not a party or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company currently pending or which the
Company intends to initiate.

         4.13 Tax Returns and Payments. The Company has timely filed all tax
returns (federal, state and local) required to be filed by it. All taxes shown
to be due and payable on such returns, any assessments imposed, and to the
Company's knowledge all other taxes due and payable by the Company on or before
the Closing, have been paid or will be paid prior to the time they become
delinquent. The Company has not been advised (a) that any of its returns,
federal, state or other, have been or are being audited as of the date hereof,
or (b) of any deficiency in assessment or proposed judgment to its federal,
state or other taxes. The Company has no knowledge of any liability of any tax
to be imposed upon its properties or assets as of the date of this Agreement
that is not adequately provided for.

         4.14 Employees. To the Company's knowledge, no employee of the Company,
nor any consultant with whom the Company has contracted, is in violation of any
term of any employment contract, proprietary information agreement or any other
agreement relating to the right of any such individual to be employed by, or to
contract with, the Company because of the nature of the business to be conducted
by the Company; and to the Company's knowledge the continued employment by the
Company of its present employees, and the performance of the Company's contracts
with its independent contractors, will not result in any such violation. The
Company is not aware that any of its employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with their duties to the Company. The Company has
not received any notice alleging that any such violation has occurred. No
employee of the Company has been granted the right to continued employment by
the Company or to any material compensation

                                       -6-

<PAGE>

following termination of employment with the Company. The Company is not aware
that any officer, key employee or group of employees intends to terminate his,
her or their employment with the Company, nor does the Company have a present
intention to terminate the employment of any officer, key employee or group of
employees.

         4.15 Registration Rights and Voting Rights. Except as set forth on
Schedule 4.15, the Company is presently not under any obligation, and has not
granted any rights, to register any of the Company's presently outstanding
securities or any of its securities that may hereafter be issued. To the
Company's knowledge, no stockholder of the Company has entered into any
agreement with respect to the voting of equity securities of the Company.

         4.16 Compliance with Laws; Permits. To its knowledge, the Company is
not in violation of any applicable statute, rule, regulation, order or
restriction of any domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business or the ownership of its
properties which violation would materially and adversely affect the business,
assets, liabilities, financial condition, operations or prospects of the
Company. No governmental orders, permissions, consents, approvals or
authorizations are required to be obtained and no registrations or declarations
are required to be filed in connection with the execution and delivery of this
Agreement and the issuance of any of the Securities, except such as has been
duly and validly obtained or filed, or with respect to any filings that must be
made after the Closing, as will be filed in a timely manner. The Company has all
franchises, permits, licenses and any similar authority necessary for the
conduct of its business as now being conducted by it, the lack of which could
materially and adversely affect the business, properties, prospects or financial
condition of the Company.

         4.17 Environmental and Safety Laws. The Company is not in violation of
any applicable statute, law or regulation relating to the environment or
occupational health and safety, and to its knowledge, no material expenditures
are or will be required in order to comply with any such existing statute, law
or regulation. No Hazardous Materials (as defined below) are used or have been
used, stored, or disposed of by the Company or, to the Company's knowledge, by
any other person or entity on any property owned, leased or used by the Company.
For the purposes of the preceding sentence, "Hazardous Materials" shall mean (a)
materials which are listed or otherwise defined as "hazardous" or "toxic" under
any applicable local, state, federal and/or foreign laws and regulations that
govern the existence and/or remedy of contamination on property, the protection
of the environment from contamination, the control of hazardous wastes, or other
activities involving hazardous substances, including building materials, or (b)
any petroleum products or nuclear materials.

         4.18 Valid Offering. Assuming the accuracy of the representations and
warranties of the Purchaser contained in this Agreement, the offer, sale and
issuance of the Securities will be exempt from the registration requirements of
the Securities Act of 1933, as amended (the "Securities Act"), and will have
been registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
state securities laws. Neither the Company nor any agent on its behalf has
solicited or will solicit any offers to sell or has offered to sell or will
offer to sell all or any part of the Securities to any person or persons so as
to bring the sale of such Securities by the Company within the registration
provisions of the Securities Act or any state securities laws.

         4.19 Full Disclosure. The Company has provided the Purchaser with all
information requested by the Purchaser in connection with its decision to
purchase the Notes and Warrants, including all information the Company believes
is reasonably necessary to make such investment decision. Neither this
Agreement, the exhibits and schedules hereto, the Related Agreements nor any
other document delivered by the Company to Purchaser in connection herewith or
therewith or with the transactions contemplated hereby or thereby, contain any
untrue statement of a material fact nor omit to state a material fact necessary
in order to make the statements contained herein or therein not misleading. To
the Company's knowledge, there are no facts which (individually or in the
aggregate) materially adversely affect the business, assets, liabilities,
financial condition, prospects or operations of the Company that have not been
set forth in the Agreement, the exhibits and schedules hereto, the Related
Agreements or in other documents delivered to Purchaser in connection herewith.

         4.20 Insurance. The Company has general commercial, product liability,
fire and casualty insurance policies with coverage customary for companies
similarly situated to the Company.

                                       -7-

<PAGE>

         4.21 SEC Reports. The Company has filed all proxy statements, reports
and other documents required to be filed by it under the Exchange Act. The
Company has furnished the Purchaser with copies of (i) its Annual Report on Form
10-K for the fiscal year ended December 31, 2000, (ii) its Quarterly Reports on
Form 10-Q for the fiscal quarters ended March 30, 2001 and June 30, 2001 and
(iii) its Proxy Statement dated September 5, 2000 (collectively, the "SEC
Reports"). Each SEC Report was in substantial compliance with the requirements
of its respective form and none of the SEC Reports, nor the financial statements
(and the notes thereto) included in the SEC Reports, as of their respective
dates, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

         4.22 No Market Manipulation. The Company has not taken, and will not
take, directly or indirectly, any action designed to, or that might reasonably
be expected to, cause or result in stabilization or manipulation of the price of
the Common Stock of the Company to facilitate the sale or resale of any of the
Securities being offered hereby or affect the price at which any of the
Securities being offered hereby may be issued.

         4.23 Listing. The Company's Common Stock is listed for trading on the
NASDAQ SmallCap Market. The Company has received a notice that its Common Stock
may be delisted from the NASDAQ SmallCap Market and that the Common Stock does
not meet all requirements for the continuation of such listing.

         4.24 No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would cause the offering of the
Securities pursuant to this Agreement to be integrated with prior offerings by
the Company for purposes of the 1933 Act which would prevent the Company from
selling the Securities pursuant to Rule 506 under the 1933 Act, or any
applicable exchange-related stockholder approval provisions. Nor will the
Company or any of its affiliates or subsidiaries take any action or steps that
would cause the offering of the Securities to be integrated with other
offerings.

         4.25 Stop Transfer. The Securities are restricted securities as of the
date of this Agreement. The Company will not issue any stop transfer order or
other order impeding the sale and delivery of any of the Securities at such time
as the Securities are registered for public sale or an exemption from
registration is available, except as required by federal securities laws.

         4.26 Dilution. The number of shares of Common Stock issuable upon
conversion of the Notes and exercise of the Warrants may increase substantially
in certain circumstances, including, but not necessarily limited to, the
circumstance wherein the trading price of the Common Stock declines prior to
conversion or exercise of such securities. The Company's executive officers have
studied and fully understand the nature of the Securities being sold hereby and
recognize that they have a potential dilutive effect. The Company specifically
acknowledges that its obligation to issue the shares of Common Stock upon
conversion of the Notes and exercise of the Warrants is binding upon the Company
and enforceable regardless of the dilution such issuance may have on the
ownership interests of other shareholders of the Company.

     5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.

         The Purchaser hereby represents and warrants to the Company with
respect to itself or himself as follows (such representations and warranties do
not lessen or obviate the representations and warranties of the Company set
forth in this Agreement):

         5.1 Requisite Power and Authority. Purchaser has all necessary power
and authority under all applicable provisions of law to execute and deliver this
Agreement and the Related Agreements and to carry out their provisions. All
action on Purchaser's part required for the lawful execution and delivery of
this Agreement and the Related Agreements have been or will be effectively taken
prior to the Closing. Upon their execution and delivery, this Agreement and the
Related Agreements will be valid and binding obligations of Purchaser,
enforceable in accordance with their terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of

                                       -8-

<PAGE>

general application affecting enforcement of creditors' rights, and (b) as
limited by general principles of equity that restrict the availability of
equitable remedies.

         5.2 Investment Representations. Purchaser understands that the
Securities are being offered and sold pursuant to an exemption from registration
contained in the Securities Act based in part upon Purchaser's representations
contained in the Agreement.

         5.3 Purchaser Bears Economic Risk. Purchaser has substantial experience
in evaluating and investing in private placement transactions of securities in
companies similar to the Company so that it is capable of evaluating the merits
and risks of its investment in the Company and has the capacity to protect its
own interests. Purchaser must bear the economic risk of this investment until
the Securities are registered pursuant to the Securities Act, or an exemption
from registration is available.

         5.4 Acquisition for Own Account. Purchaser is acquiring the Notes for
Purchaser's own account for investment only, and not with a view towards their
distribution.

         5.5 Purchaser Can Protect Its Interest. Purchaser represents that by
reason of its, or of its management's, business or financial experience,
Purchaser has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement, and the Related Agreements.
Further, Purchaser is aware of no publication of any advertisement in connection
with the transactions contemplated in the Agreement.

         5.6 Accredited Investor. Purchaser represents that it is an accredited
investor within the meaning of Regulation D under the Securities Act.

         5.7 Regulatory Compliance. Purchaser agrees that Purchaser will comply
with all relevant rules and regulations of the Securities Exchange Act of 1934,
as amended, including the provisions of Regulation M promulgated thereunder.

         5.8 Legends.

             (a) The Notes shall bear the following legend until the Notes and
Conversion Shares are covered by an effective registration statement filed with
the SEC:

         "THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF
         THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
         OF 1933, AS AMENDED, OR, IF APPLICABLE, STATE SECURITIES
         LAWS. THIS NOTE AND THE COMMON STOCK ISSUABLE UPON
         CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE,
         PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
         REGISTRATION STATEMENT AS TO THIS NOTE OR SUCH SHARES UNDER
         SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION
         OF COUNSEL REASONABLY SATISFACTORY TO ONE VOICE
         TECHNOLOGIES, INC. THAT SUCH REGISTRATION IS NOT REQUIRED."

             (b) The Conversion Shares and the Warrant Shares shall bear a
legend which shall be in substantially the following form until such shares are
covered by an effective registration statement filed with the SEC:

         "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
         REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
         IF APPLICABLE, STATE SECURITIES LAWS.

                                       -9-

<PAGE>

         THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
         HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
         STATEMENT UNDER SUCH SECURITIES ACT AND APPLICABLE STATE
         LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
         ONE VOICE TECHNOLOGIES, INC. THAT SUCH REGISTRATION IS NOT
         REQUIRED."

             (c) The Warrants shall bear the following legend:

         "THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE
         OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
         SECURITIES LAWS. THIS WARRANT AND THE COMMON SHARES
         ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
         OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF
         AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT OR
         THE UNDERLYING SHARES OF COMMON STOCK UNDER SAID ACT AND
         APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
         REASONABLY SATISFACTORY TO ONE VOICE TECHNOLOGIES, INC.
         THAT SUCH REGISTRATION IS NOT REQUIRED."

         5.9 Confidentiality. The Purchaser agrees that it will not include in
any public announcement, the name of the Company, unless expressly agreed to by
the Company or unless and until such disclosure is required by law or applicable
regulation, and then only to the extent of such requirement.

         5.10 Certain Acknowledgements. The Purchaser hereby acknowledges that
it is aware that (i) the Company currently has no revenue, (ii) the Company has
suffered significant losses, and (iii) the Company's accountant has issue a
"going concern" opinion.

     6. COVENANTS OF THE COMPANY. The Company covenants and agrees with the
Purchaser as follows:

         6.1 Stop-Orders. The Company will advise the Purchaser, promptly after
it receives notice of issuance by the Securities and Exchange Commission (the
"SEC"), any state securities commission or any other regulatory authority of any
stop order or of any order preventing or suspending any offering of any
securities of the Company, or of the suspension of the qualification of the
Common Stock of the Company for offering or sale in any jurisdiction, or the
initiation of any proceeding for any such purpose.

         6.2 Listing. The Company shall promptly secure the listing of the
shares of Common Stock issuable upon conversion of the Notes and upon the
exercise of the Warrants upon the Principal Market upon which shares of Common
Stock are then listed (subject to official notice of issuance) and shall
maintain such listing so long as any other shares of Common Stock shall be so
listed. The Company will maintain the listing of its Common Stock on a Principal
Market, and will comply in all respects with the Company's reporting, filing and
other obligations under the bylaws or rules of the National Association of
Securities Dealers ("NASD") and such exchanges, as applicable. The Company will
provide the Purchaser copies of all notices it receives notifying the Company of
the threatened and actual delisting of the Common Stock from any Principal
Market.

         6.3 Market Regulations. The Company shall notify the SEC, NASD and
applicable state authorities, in accordance with their requirements, of the
transactions contemplated by this Agreement, and shall take all other necessary
action and proceedings as may be required and permitted by applicable law, rule
and regulation, for the legal and valid issuance of the Securities to Purchaser
and promptly provide copies thereof to Purchaser.

                                      -10-

<PAGE>

         6.4 Reporting Requirements. (a) Until at least two (2) years after the
effectiveness of the Registration Statement on Form SB-2 or such other
Registration Statement described in Section 9.1(d) hereof, the Company will (i)
cause its Common Stock to continue to be registered under Sections 12(b) or
12(g) of the Exchange Act, (ii) comply in all material respects with its
reporting and filing obligations under the Exchange Act, (iii) comply with all
reporting requirements that is applicable to an issuer with a class of shares
registered pursuant to Section 12(g) of the Exchange Act, and (iv) comply with
all requirements related to any registration statement filed pursuant to this
Agreement. The Company will not take any action or file any document (whether or
not permitted by the Securities Act or the Exchange Act or the rules thereunder)
to terminate or suspend such registration or to terminate or suspend its
reporting and filing obligations under said Acts until the earlier of (y) two
(2) years after the effective date of the Registration Statement on Form SB-2 or
such other Registration Statement described in Section 9.1(d) hereof, or (z) the
sale by the Purchaser of all the Securities issuable by the Company pursuant to
this Agreement. Until at least two (2) years after the Warrants have been
exercised, the Company will use its commercial best efforts to continue the
listing of the Common Stock on the NASDAQ SmallCap Market and will comply in all
respects with the Company's reporting, filing and other obligations under the
bylaws or rules of the NASD and NASDAQ.

         6.5 Use of Funds. The Company undertakes to use the proceeds of the
Purchaser's funds for the purposes set forth on Schedule 6.5 attached hereto. A
deviation form the use of proceeds set forth on Schedule 6.5 of more than 10%
per item or more than 20% in the aggregate shall be deemed a material breach of
the Company's obligations hereunder.

         6.6 Access to Facilities. For so long as 20% of the principal amount of
the Notes is outstanding,the Company will permit any representatives designated
by the Purchaser (or any transferee of the Purchaser), so long as such person
holds any Securities upon reasonable notice and during normal business hours, at
such person's expense and accompanied by a representative of the Company, to (a)
visit and inspect any of the properties of the Company and (b) examine the
corporate and financial records of the Company (unless such examination is not
permitted by federal, state or local law or by contract) and make copies thereof
or extracts therefrom.

         6.7 Taxes. The Company will promptly pay and discharge, or cause to be
paid and discharged, when due and payable, all lawful taxes, assessments and
governmental charges or levies imposed upon the income, profits, property or
business of the Company; provided, however, that any such tax, assessment,
charge or levy need not be paid if the validity thereof shall currently be
contested in good faith by appropriate proceedings and if the Company shall have
set aside on its books adequate reserves with respect thereto, and provided,
further, that the Company will pay all such taxes, assessments, charges or
levies forthwith upon the commencement of proceedings to foreclose any lien
which may have attached as security therefor.

         6.8 Insurance. The Company will keep its assets which are of an
insurable character insured by financially sound and reputable insurers against
loss or damage by fire, explosion and other risks customarily insured against by
companies in the Company's line of business, in amounts sufficient to prevent
the Company from becoming a co-insurer and not in any event less than 100% of
the insurable value of the property insured; and the Company will maintain, with
financially sound and reputable insurers, insurance against other hazards and
risks and liability to persons and property to the extent and in the manner
customary for companies in similar businesses similarly situated and to the
extent available on commercially reasonable terms.

         6.9 Books and Records. The Company will keep true records and books of
account in which full, true and correct entries will be made of all dealings or
transactions in relation to its business and affairs in accordance with
generally accepted accounting principles applied on a consistent basis.

         6.10 Intellectual Property. The Company shall maintain in full force
and effect its corporate existence, rights and franchises and all licenses and
other rights to use Intellectual Property owned or possessed by it and
reasonably deemed to be necessary to the conduct of its business.

                                      -11-

<PAGE>

         6.11 Confidentiality. The Company agrees that it will not disclose, and
will not include in any public announcement, the name of the Purchaser, unless
expressly agreed to by the Purchaser or unless and until such disclosure is
required by law or applicable regulation, and then only to the extent of such
requirement.

         6.12 Required Approvals. For so long as at least $500,000 of the
principal amount of the Notes are outstanding, the Company, without the prior
written consent of the Purchaser, shall not:

             (a) enter into any transaction or series of transactions with any
stockholder, director, officer or employee which would require disclosure
pursuant to Rule 404 of the Regulation S-K under the Securities Act;

             (b) authorize, create or issue any securities (or any rights or
securities directly or indirectly convertible into or exercisable or
exchangeable for securities) having rights, preferences or privileges superior
to the Conversion Shares;

             (c) directly or indirectly declare or pay any dividends or make any
distributions upon any of its capital stock or other equity securities (or any
securities directly or indirectly convertible into or exercisable or
exchangeable for equity securities);

             (d) directly or indirectly redeem, purchase or otherwise acquire
any of the Corporation's capital stock or other equity securities (including,
without limitation, the Securities or any warrants, options and other rights to
acquire such capital stock or other equity securities) or directly or indirectly
redeem, purchase or make any payments with respect to any stock appreciation
rights, phantom stock plans or similar rights or plans;

             (e) merge or consolidate with any entity or enter into an agreement
to do so;

             (f) sell, lease or otherwise dispose of more than 10% of the assets
of the Company (computed on the basis of book value, determined in accordance
with GAAP consistently applied, or fair market value, determined by the Board of
Directors in its reasonable good faith judgment) in any transaction or series of
related transactions (other than sales of inventory in the ordinary course of
business) or sell or permanently dispose of any of its intellectual property;

             (g) liquidate, dissolve or effect a recapitalization,
reclassification or reorganization in any form of transaction (including,
without limitation, any reorganization into a limited liability company, a
partnership or any other non-corporate entity which is treated as a partnership
for federal income tax purposes or a stock split or "reverse" stock split of the
Common Stock);

             (h) acquire any interest in any company or business (whether by a
purchase of assets, purchase of stock, merger or otherwise), enter into any
joint venture or make any investments in any other entity;

             (i) become subject to (including, without limitation, by way of
amendment to or modification of) any agreement or instrument which by its terms
would (under any circumstances) restrict the Company's right to perform the
provisions of this Agreement or any of the agreements contemplated thereby;

             (j) create, incur, assume or suffer to exist indebtedness exceeding
an aggregate principal amount of $375,000 outstanding at any time;

             (k) amend, alter or repeal the Company's Charter or Bylaws as to
increase the number of authorized shares of the Common Stock or any series of
preferred stock, or materially affect the rights or other powers of the
Conversion Shares, or otherwise take any action which is designed to, or could
have the effect of, adversely affecting the rights or other powers of the
Conversion Shares; or

             (l) materially alter or change the business of the Company.

                                      -12-

<PAGE>

Notwithstanding the above, if the Purchaser elects not to further fund the
Company within 75 days following the effectiveness of the Registration Statement
required to be filed pursuant to Section 9.1(d) hereof, this Agreement shall be
terminated except for Sections 6.4, 6.13, 7, 8 and 9.

         6.13 Reissuance of Securities. The Company agrees to reissue
certificates representing the Securities without the legends set forth in
Section 5.7 above at such time as (a) the holder thereof is permitted to dispose
of such Securities pursuant to Rule 144(k) under the Act, or (b) upon resale
subject to an effective registration statement after such Securities are
registered under the Act. The Company agrees to cooperate with the Purchaser in
connection with all resales pursuant to Rule 144(d) and Rule 144(k) and provide
legal opinions necessary to allow such resales provided the Company and its
counsel receive reasonably requested representations from the selling Purchaser
and broker, if any.

         6.14 Opinion. On the Closing Date, the Company will deliver to the
Purchaser an opinion acceptable to the Purchaser from the Company's legal
counsel in the form annexed hereto as Exhibit D. The Company will provide, at
the Company's expense, such other legal opinions in the future as are reasonably
necessary for the conversion of the Notes and exercise of the Warrants.

     7. COVENANTS OF THE COMPANY AND PURCHASER REGARDING INDEMNIFICATION.

         7.1 Company Indemnification. The Company agrees to indemnify, hold
harmless, reimburse and defend the Purchaser, each of the Purchaser's officers,
directors, agents, affiliates, control persons, and principal shareholders,
against any claim, cost, expense, liability, obligation, loss or damage
(including reasonable legal fees) of any nature, incurred by or imposed upon the
Purchaser which results, arises out of or is based upon (i) any
misrepresentation by Company or breach of any warranty by Company in this
Agreement or in any exhibits or schedules attached hereto or any Related
Agreement, or (ii) any breach or default in performance by Company of any
covenant or undertaking to be performed by Company hereunder, or any other
agreement entered into by the Company and the Purchaser relating hereto.

         7.2 Purchaser's Indemnification. The Purchaser agrees to indemnify,
hold harmless, reimburse and defend the Company at all times against any claim,
cost, expense, liability, obligation, loss or damage (including reasonable legal
fees) of any nature, incurred by or imposed upon the Company which results,
arises out of or is based upon (a) any misrepresentation by the Purchaser or
breach of warranty by the Purchaser in this Agreement or in any exhibits or
schedules attached hereto or any Related Agreement; or (b) any breach or default
in performance by the Purchaser of any covenant or undertaking to be performed
by the Purchaser hereunder, or any other agreement entered into by the Company
and the Purchaser relating hereto.

         7.3 Limitations. The Purchaser and the Company shall not make any claim
for indemnification until the aggregate amount of such indemnifiable expenses
exceeds $25,000, in which case such party may claim indemnification for the full
amount. In no event shall the Company have liability under this Section 7 to any
party in excess of the aggregate purchase price of the outstanding principal due
under the Notes.

         7.4 Procedures. The procedures and limitations set forth in Section 9.6
shall apply to the indemnifications set forth in Sections 7.1 and 7.2 above.

                                      -13-

<PAGE>

     8. CONVERSION OF CONVERTIBLE NOTES.

         8.1 Mechanics of Conversion.

             (a) Upon the conversion of the Notes or part thereof, the Company
shall, at its own cost and expense, take all necessary action (including the
issuance of an opinion of counsel) to assure that the Company's transfer agent
shall issue stock certificates in the name of the Purchaser (or its nominee) or
such other persons as designated by the Purchaser and in such denominations to
be specified representing the number of Conversion Shares issuable upon such
conversion. The Company warrants that no instructions other than these
instructions have been or will be given to the transfer agent of the Company's
Common Stock and that the Conversion Shares issued will be unlegended,
free-trading, and freely transferable, and will not contain a legend restricting
the resale or transferability of the Conversion Shares, provided the Purchaser
has notified the Company of the Purchaser's intention to sell the Conversion
Shares and the Conversion Shares are included in an effective registration
statement or are otherwise exempt from registration when sold.

             (b) Purchaser will give notice of its decision to exercise its
right to convert the Notes or part thereof by telecopying or otherwise
delivering an executed and completed notice of the number of shares to be
converted to the Company (the "Notice of Conversion"). The Purchaser will not be
required to surrender the Notes until the Purchaser receives a certificate or
certificates, as the case may be, representing the Conversion Shares or until
the Note has been fully satisfied. Each date on which a Notice of Conversion is
telecopied or delivered to the Company in accordance with the provisions hereof
shall be deemed a "Conversion Date." The Company will or will cause the transfer
agent to transmit the Company's Common Stock certificates representing the
shares issuable upon conversion of the Notes (and a certificate representing the
balance of the Notes not so converted, if requested by Purchaser) to the
Purchaser via express courier for receipt by such Purchaser within four business
days after receipt by the Company of the Notice of Conversion (the "Delivery
Date").

             (c) The Company understands that a delay in the delivery of the
Conversion Shares in the form required pursuant to Section 8 hereof, or the
Mandatory Redemption Payment described in Section 8.2 hereof, beyond the
Delivery Date or Mandatory Redemption Payment Date (as defined in Section 8.2)
could result in economic loss to the Purchaser. As compensation to the Purchaser
for such loss, the Company agrees to pay late payments to the Purchaser for late
issuance of the Conversion Shares in the form required pursuant to Section 8
hereof upon conversion of the Notes or late payment of the Mandatory Redemption
Payment, in the amount of $100 per business day after the Delivery Date or
Mandatory Redemption Payment Date, as the case may be, for each $10,000 Note
principal being converted or redeemed. The Company shall pay any payments
incurred under this Section in immediately available funds upon demand.
Furthermore, in addition to any other remedies which may be available to the
Purchaser, in the event that the Company fails for any reason to effect delivery
of the Conversion Shares by the Delivery Date or make payment by the Mandatory
Redemption Payment Date, the Purchaser will be entitled to revoke all or part of
the relevant Notice of Conversion or rescind all or part of the notice of
Mandatory Redemption by delivery of a notice to such effect to the Company
whereupon the Company and the Purchaser shall each be restored to their
respective positions immediately prior to the delivery of such notice, except
that late payment charges described above shall be payable through the date
notice of revocation or rescission is given to the Company.

             (d) Nothing contained herein or in any document referred to herein
or delivered in connection herewith shall be deemed to establish or require the
payment of a rate of interest or other charges in excess of the maximum
permitted by applicable law. In the event that the rate of interest or dividends
required to be paid or other charges hereunder exceed the maximum amount
permitted by such law, any payments in excess of such maximum shall be credited
against amounts owed by the Company to a Purchaser and thus refunded to the
Company.

         8.2 Mandatory Redemption. In the event the Company is unable to issue
Conversion Shares on a Delivery Date or at any time when a Note is convertible,
for any reason, then at the Purchaser's election, the Company must pay to the
Purchaser five (5) business days after request by the Purchaser or on the
Delivery Date (if requested by the Purchaser) a sum of money determined by
multiplying the principal of the Note required to be converted and not so
converted (or otherwise not convertible, as applicable) by 130%, together with
accrued but unpaid interest thereon

                                      -14-

<PAGE>

("Mandatory Redemption Payment"). The Mandatory Redemption Payment must be
received by the Purchaser on the same date as the Conversion Shares are
otherwise deliverable or within five (5) business days after request, whichever
is sooner ("Mandatory Redemption Payment Date"). Upon receipt of the Mandatory
Redemption Payment, the corresponding Note principal and interest will be deemed
paid and no longer outstanding.

         8.3 Maximum Conversion. The Purchaser shall not be entitled to convert
on a Conversion Date that amount of a Note or Notes in connection with that
number of shares of Common Stock which would be in excess of the sum of (i) the
number of shares of Common Stock beneficially owned by the Purchaser on a
Conversion Date, and (ii) the number of shares of Common Stock issuable upon the
conversion of the Notes with respect to which the determination of this proviso
is being made on a Conversion Date, which would result in beneficial ownership
by the Purchaser of more than 4.99% of the outstanding shares of Common Stock of
the Company on such Conversion Date. The Purchaser shall have the authority and
obligation to determine whether the restriction contained in this Section 8.3
will limit any conversion hereunder and to the extent that the Purchaser
determines that the limitation contained in this Section applies, the
determination of which portion of the Notes are convertible shall be the
responsibility and obligation of the Purchaser. For the purposes of the proviso
to the immediately preceding sentence, beneficial ownership shall be determined
in accordance with Section 13(d) of the Exchange Act and Regulation 13d-3
thereunder. Subject to the foregoing, a Purchaser shall not be limited to
aggregate conversions of only 4.99%. A Purchaser may void the conversion
limitation described in this Section 8.3 upon 75 days prior notice to the
Company or upon an Event of Default under the Note. A Purchaser may allocate
which of the equity of the Company deemed beneficially owned by such Purchaser
shall be included in the 4.99% amount described above and which shall be
allocated to the excess above 4.99%.

         8.4 Injunction - Posting of Bond. In the event a Purchaser shall elect
to convert a Note or part thereof, the Company may not refuse conversion for any
reason, unless an injunction from a court, on notice, restraining and or
enjoining conversion of all or part of said Note shall have been sought and
obtained and the Company posts a surety bond for the benefit of such Purchaser
in the amount of 130% of the amount of the Note, which is subject to the
injunction, which bond shall remain in effect until the completion of
arbitration/litigation of the dispute and the proceeds of which shall be payable
to such Purchaser to the extent it obtains judgment.

         8.5 Buy-In. In addition to any other rights available to the Purchaser,
if the Company fails to deliver to the Purchaser Conversion Shares by the
Delivery Date and if after the Delivery Date the Purchaser purchases (in an open
market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by such Purchaser of the Common Stock which the Purchaser
anticipated receiving upon such conversion (a "Buy-In"), then the Company shall
pay in cash to the Purchaser (in addition to any remedies available to or
elected by such Purchaser) the amount by which (A) the Purchaser's total
purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (B) the aggregate principal and/or interest
amount of the Note, for which such conversion was not timely honored, together
with interest thereon at a rate of 15% per annum, accruing until such amount and
any accrued interest thereon is paid in full (which amount shall be paid as
liquidated damages and not as a penalty). For example, if the Purchaser
purchases shares of Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted conversion of $10,000 of Note
principal and/or interest, the Company shall be required to pay the Purchaser
$1,000, plus interest. The Purchaser shall provide the Company written notice
indicating the amounts payable to the Purchaser in respect of the Buy-In.

         8.6 Optional Redemption. The Company will have the option of redeeming
any outstanding Notes ("Optional Redemption") by paying to the Purchaser a sum
of money as follows:

             from the Closing Date through 30 days after the Closing Date - 120%
             from 31 days through 90 days after the Closing Date - 135%
             from 91 days through 180 days after the Closing Date - 150%
             after 180 days following the Closing Date - 200%

                                      -15-

<PAGE>

of the principal amount of the Note together with accrued but unpaid interest
thereon and any and all other sums due, accrued or payable to the Purchaser
arising under this Agreement, Note or any other document delivered herewith
("Redemption Amount") outstanding on the day notice of redemption ("Notice of
Redemption) is given to a Purchaser ("Redemption Date"). A Notice of Redemption
may not be given in connection with any portion of Note for which notice of
conversion has been given by the Purchaser at any time before receipt of a
Notice of Redemption. The Purchaser may elect within five (5) business days
after receipt of a Notice of Redemption to give the Company Notice of Conversion
in connection with some or all of the Note principal and interest which was the
subject of the Notice of Redemption. A Notice of Redemption must be accompanied
by a certificate signed by the chief executive officer or chief financial
officer of the Company stating that the Company has on deposit and segregated
ready funds equal to the Redemption Amount. The Redemption Amount must be paid
in good funds to the Purchaser no later than the seventh (7th) business day
after the Redemption Date ("Optional Redemption Payment Date"). In the event the
Company fails to pay the Redemption Amount by the Optional Redemption Payment
Date, then the Redemption Notice will be null and void and the Company will
thereafter have no further right to effect an Optional Redemption, and at the
Purchaser's election, the Redemption Amount will be deemed a Mandatory
Redemption Payment and the Optional Redemption Payment Date will be deemed a
Mandatory Redemption Payment Date. Such failure will also be deemed an Event of
Default under the Note. Any Notice of Redemption must be given to all holders of
Notes issued in connection with the Offering, in proportion to their holdings of
Note principal on a Redemption Date. A Notice of Redemption may be given by the
Company, provided (i) no Event of Default, as described in the Note shall have
occurred or be continuing; and (ii) the Conversion Shares issuable upon
conversion of the full outstanding Note principal are included for unrestricted
resale in a registration statement effective as of the Redemption Date. Note
proceeds may not be used to effect an Optional Redemption.

         8.7 NASDAQ Approval. The Company and the Purchaser agree that until the
Company either obtains shareholder approval of the issuance of the Securities,
or an exemption from NASDAQ's corporate governance rules as they may apply to
the Securities, and an opinion of counsel reasonably acceptable to the Purchaser
that NASDAQ's corporate governance rules do not conflict with nor may result in
a delisting of the Company's common stock from the SmallCap Market (the
"Approval") upon the conversion of the Notes, the Purchaser may not receive upon
conversion of the Notes more than the number of common shares greater than 19.9%
of the shares of Company's common stock outstanding on the Closing Date.
Provided the closing price of the Common Stock on a Principal Market is less
than $.25 per share for three consecutive trading days (such third day being the
"Trigger Date"), the Company covenants to obtain the Approval required pursuant
to the NASDAQ's corporate governance rules to allow conversion of all the Notes
and interest thereon. The Company further covenants to file the preliminary
proxy statement relating to the Approval with the Commission on or before thirty
days after the Trigger Date ("Proxy Filing Date"). The Company further covenants
to obtain the Approval no later than ninety days after the Trigger Date
("Approval Date"). The Company's failure to (i) file the proxy on or before the
Proxy Filing Date; or (ii) the Company's failure to obtain the Approval on or
before the Approval Date (each being an "Approval Default") shall be deemed an
Event of Default under the Note, but only to the extent the Notes and interest
thereon that may not be converted due to the Company's failure to obtain such
Approval.

     9. REGISTRATION RIGHTS.

         9.1 Registration Rights Granted. The Company hereby grants the
following registration rights to holders of the securities purchased hereby.

             (a) On two occasions, for a period commencing 90 days after the
Closing Date, but not later than two (2) years after the Closing Date (the
"Request Date"), the Company, upon a written request therefor from holders of
more than 50% of the aggregate of the Company's Securities then outstanding, on
an as converted basis (the Conversion Shares and Warrant Shares issued or
issuable with respect to all Notes or Warrants issued or to be issued hereunder,
being, the "Registrable Securities"), shall prepare and file with the SEC a
registration statement under the Securities Act covering the Registrable
Securities which are the subject of such request, unless such Registrable
Securities are the subject of an effective registration statement. In addition,
upon the receipt of such request, the Company shall promptly give written notice
to all other record holders of the Registrable Securities that such registration
statement is to be filed and shall include in such registration statement
Registrable Securities for which it has received written requests within 10 days
after the Company gives such written notice. Such other requesting record
holders shall

                                      -16-

<PAGE>

be deemed to have exercised their demand registration right under this Section
9.1. As a condition precedent to the inclusion of Registrable Securities, the
holder thereof shall provide the Company with such information as the Company
reasonably requests. The obligation of the Company under this Section 9.1 shall
be limited to two registration statements.

             (b) If the Company at any time proposes to register any of its
securities under the Act for sale to the public, whether for its own account or
for the account of other security holders or both, except with respect to
registration statements on Forms S-4, S-8 or another form not available for
registering the Registrable Securities for sale to the public, provided the
Registrable Securities are not otherwise registered for resale by the Purchaser
or subsequent holder pursuant to an effective registration statement, each such
time it will give at least 30 days' prior written notice to the record holder of
any Securities of its intention so to do. Upon the written request of the
holder, received by the Company within 30 days after the giving of any such
notice by the Company, to register any of the Registrable Securities, the
Company will cause such Registrable Securities as to which registration shall
have been so requested to be included with the securities to be covered by the
registration statement proposed to be filed by the Company, all to the extent
required to permit the sale or other disposition of the Registrable Securities
so registered by the holder of such Registrable Securities (the "Seller"). In
the event that any registration pursuant to this Section 9.1(b) shall be, in
whole or in part, an underwritten public offering of Common Stock of the
Company, the number of shares of Registrable Securities to be included in such
an underwriting may be reduced by the managing underwriter if and to the extent
that the Company and the underwriter shall reasonably be of the opinion that
such inclusion would adversely affect the marketing of the securities to be sold
by the Company therein; provided, however, that the Company shall notify the
Seller in writing of any such reduction. Notwithstanding the forgoing
provisions, or Section 9.1(a) hereof, the Company may withdraw or delay or
suffer a delay of any registration statement referred to in this Section 9.1(b)
without thereby incurring any liability to the Seller.

             (c) If, at the time any written request for registration is
received by the Company pursuant to Section 9.1(a), the Company has determined
to proceed with the actual preparation and filing of a registration statement
under the Securities Act in connection with the proposed offer and sale for cash
of any of its securities for the Company's own account, such written request
shall be deemed to have been given pursuant to Section 9.1(b) rather than
Section 9.1(a), and the rights of the holders of Registrable Securities covered
by such written request shall be governed by Section 9.1(b) except that the
Company or underwriter, if any, may not withdraw such registration or limit the
amount of Registrable Securities included in such registration.

             (d) The Company shall file with the SEC within 30 days of the
Closing Date (the "Filing Date"), and use its reasonable commercial efforts to
cause to be declared effective a Form SB-2 registration statement (or such other
form that it is eligible to use) within 90 days of the Closing Date in order to
register the Registrable Securities for resale and distribution under the
Securities Act. The registration statement described in this paragraph must be
declared effective by the SEC within 90 days of the Closing Date (as defined
herein) ("Effective Date"). The Company will register not less than a number of
shares of Common Stock in the aforedescribed registration statement that is
equal to 300% of the Warrant Shares and Conversion Shares issuable at the
Conversion Prices set forth in the Warrants and Notes, respectively, that would
be in effect on the Closing Date or the date of filing of such registration
statement (employing the conversion price which would result in the greater
number of Shares), assuming the conversion of 100% of the Notes which are then
outstanding or issuable hereunder, and at least one share of common stock for
each common share issuable upon exercise of the Warrants which are then
outstanding or issuable hereunder (employing the Conversion Price that would
result in the greater number of shares). The Registrable Securities shall be
reserved and set aside exclusively for the benefit of the Purchaser and the
holders of the Warrants, as the case may be, and not issued, employed or
reserved for anyone other than the Purchaser and the holders of the Warrants.
Such registration statement will be promptly amended or additional registration
statements will be promptly filed by the Company as necessary to register
additional Company Shares to allow the public resale of all Common Stock
included in and issuable by virtue of the Registrable Securities. No securities
of the Company other than the Registrable Securities will be included in the
registration statement described in this Section 9.1(d).

         9.2 Registration Procedures. If and whenever the Company is required by
the provisions hereof to effect the registration of any shares of Registrable
Securities under the Act, the Company will, as expeditiously as possible:

                                      -17-

<PAGE>

             (a) prepare and file with the SEC a registration statement with
respect to such securities and use its best efforts to cause such registration
statement to become and remain effective for the period of the distribution
contemplated thereby (determined as herein provided), and promptly provide to
the holders of Registrable Securities copies of all filings and SEC letters of
comment;

             (b) prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective until the
later of: (i) six months after the latest exercise period of the Warrants; (ii)
twelve months after the Maturity Date of the last maturing Notes or (iii) four
years after the Closing Date, and comply with the provisions of the Securities
Act with respect to the disposition of all of the Registrable Securities covered
by such registration statement in accordance with the Seller's intended method
of disposition set forth in such registration statement for such period;

             (c) furnish to the Seller, and to each underwriter if any, such
number of copies of the registration statement and the prospectus included
therein (including each preliminary prospectus) as such persons reasonably may
request to facilitate the public sale or their disposition of the securities
covered by such registration statement;

             (d) use its best efforts to register or qualify the Seller's
Registrable Securities covered by such registration statement under the
securities or "blue sky" laws of such jurisdictions as the Seller and in the
case of an underwritten public offering, the managing underwriter shall
reasonably request, provided, however, that the Company shall not for any such
purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to consent to
general service of process in any such jurisdiction;

             (e) list the Registrable Securities covered by such registration
statement with any securities exchange on which the Common Stock of the Company
is then listed;

             (f) immediately notify the Seller and each underwriter under such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
of which the Company has knowledge as a result of which the prospectus contained
in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing; and

             (g) make available for inspection by the Seller, any underwriter
participating in any distribution pursuant to such registration statement, and
any attorney, accountant or other agent retained by the Seller or underwriter,
all publicly available, non-confidential financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all publicly available,
non-confidential information reasonably requested by the seller, underwriter,
attorney, accountant or agent in connection with such registration statement.

         9.3 Provision of Documents.

             (a) At the request of the Seller, provided a demand for
registration has been made pursuant to Section 9.1(a) or a request for
registration has been made pursuant to Section 9.1(b), the Registrable
Securities will be included in a registration statement filed pursuant to this
Section 9.

             (b) In connection with each registration hereunder, the Seller will
furnish to the Company in writing such information and representation letters
with respect to itself and the proposed distribution by it as reasonably shall
be necessary in order to assure compliance with federal and applicable state
securities laws. In connection with each registration pursuant to Section 9
covering an underwritten public offering, the Company and the Seller agree to
enter into a written agreement with the managing underwriter in such form and
containing such provisions as are customary in the securities business for such
an arrangement between such underwriter and companies of the Company's size and
investment stature.

                                      -18-

<PAGE>

         9.4 Non-Registration Events. The Company and the Purchaser agree that
the Seller will suffer damages if any registration statement required under
Section 9.1(a) above is not filed within 30 days after written request by the
holder and not declared effective by the SEC within 90 days after such request,
and maintained in the manner and within the time periods contemplated by Section
9 hereof, and it would not be feasible to ascertain the extent of such damages
with precision. Accordingly, if (i) the Registration Statement described in
Section 9.1(a) is not filed within 30 days of such written request, or is not
declared effective by the SEC on or prior to the date that is 90 days after such
request, or (ii) the registration statement on Form SB-2 or such other form as
described in Section 9.1(d) is not filed on or before the Filing Date or not
declared effective on or before the sooner of the Effective Date, or within five
days of receipt by the Company of a communication from the SEC that the
registration statement described in Section 9.1(d) will not be reviewed, or
(iii) any registration statement described in Section 9.1(a) or (d) is filed and
declared effective but shall thereafter cease to be effective (without being
succeeded immediately by an additional registration statement filed and declared
effective) for a period of time which shall exceed 30 days in the aggregate per
year but not more than 20 consecutive calendar days (defined as a period of 365
days commencing on the date the Registration Statement is declared effective)
(each such event referred to in this Section 9.4 is referred to herein as a
"Non-Registration Event"), then, for so long as such Non-Registration Event
shall continue, (i) the Company shall pay in cash as Liquidated Damages to each
holder of any Registrable Securities an amount equal to two percent (2%) per
month or part thereof during the pendency of such Non-Registration Event of the
principal of the Notes issued in connection with the Offering, whether or not
converted, then owned of record by such holder or issuable as of or subsequent
to the occurrence of such Non-Registration Event and (ii) the Conversion Price
as defined in Section 2.1 of the Notes shall be reduced by 10% for each 30-day
period following the Effective Date that the Registration Statement is not
declared effective by the SEC. Payments to be made pursuant to this Section
shall be due and payable immediately upon demand in immediately available funds.
In the event a Mandatory Redemption Payment is demanded from the Company by the
holder pursuant to Section 8.2 of this Agreement, then the Liquidated Damages
described in this Section 9.4 shall no longer accrue on the portion of the
purchase price underlying the Mandatory Redemption Payment, from and after the
date the holder receives the Mandatory Redemption Payment. It shall be deemed a
Non-Registration Event to the extent that all the Common Stock included in the
Registrable Securities and underlying the Securities is not included in an
effective registration statement as of and after the Effective Date at the
conversion prices in effect from and after the Effective Date.

         9.5 Expenses. All expenses incurred by the Company in complying with
Section 9, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel and independent public
accountants for the Company, fees and expenses (including reasonable counsel
fees) incurred in connection with complying with state securities or "blue sky"
laws, fees of the NASD, transfer taxes, fees of transfer agents and registrars,
fees of, and disbursements incurred by, one counsel for the Seller, and costs of
insurance are called "Registration Expenses". All underwriting discounts and
selling commissions applicable to the sale of Registrable Securities, including
any fees and disbursements of any special counsel to the Seller beyond those
included in Registration Expenses, are called "Selling Expenses."

             The Company will pay all Registration Expenses in connection with
the registration statement under Section 9. All Selling Expenses in connection
with each registration statement under Section 9 shall be borne by the Seller
and may be apportioned among the Sellers in proportion to the number of shares
sold by the Seller relative to the number of shares sold under such registration
statement or as all Sellers thereunder may agree.

         9.6 Indemnification and Contribution.

             (a) In the event of a registration of any Registrable Securities
under the Securities Act pursuant to Section 9, the Company will indemnify and
hold harmless each Seller, each officer of each Seller, each director of each
Seller, each underwriter of such Registrable Securities thereunder and each
other person, if any, who controls any such Seller or underwriter within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which the Seller, or such underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration statement under
which such Registrable Securities was registered under the Act pursuant to
Section 9, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make

                                      -19-

<PAGE>

the statements therein not misleading, and will reimburse the Seller, each such
underwriter and each such controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case if and to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by any such Seller, the underwriter or any
such controlling person in writing specifically for use in such registration
statement or prospectus.

             (b) In the event of a registration of any of the Registrable
Securities under the Act pursuant to Section 9, the Seller will indemnify and
hold harmless the Company, and each person, if any, who controls the Company
within the meaning of the Securities Act, each officer of the Company who signs
the registration statement and each director of the Company, against all losses,
claims, damages or liabilities, joint or several, to which the Company or such
officer or director may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement under
which such Registrable Securities were registered under the Securities Act
pursuant to Section 9, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Company and each such officer or director for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action, provided,
however, that the Seller will be liable hereunder in any such case if and only
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with information
pertaining to such Seller, as such, furnished in writing to the Company by such
Seller specifically for use in such registration statement or prospectus, and
provided, further, however, that the liability of the Seller hereunder shall be
limited to the proportion of any such loss, claim, damage, liability or expense
which is equal to the proportion that the public offering price of the
Registrable Securities sold by the Seller under such registration statement
bears to the total public offering price of all securities sold thereunder, but
not in any event to exceed the net proceeds received by the Seller from the sale
of Registrable Securities covered by such registration statement.

             (c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to such indemnified party other than under this Section 9.6(c) and shall only
relieve it from any liability which it may have to such indemnified party under
this Section 9.6(c) if and to the extent the indemnifying party is prejudiced by
such omission. In case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 9.6(c) for any legal expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation and of liaison with counsel so selected,
provided, however, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be reasonable defenses available to it
which are different from or additional to those available to the indemnifying
party or if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, the indemnified parties
shall have the right to select one separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with the
reasonable expenses and fees of such separate counsel and other expenses related
to such participation to be reimbursed by the indemnifying party as incurred.

             (d) In order to provide for just and equitable contribution in the
event of joint liability under the Act in any case in which either (i) the
Seller, or any controlling person of the Seller, makes a claim for
indemnification pursuant to this Section 9.6 but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such

                                      -20-

<PAGE>

indemnification may not be enforced in such case notwithstanding the fact that
this Section 9.6 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of the Seller or
controlling person of the Seller in circumstances for which indemnification is
provided under this Section 9.6; then, and in each such case, the Company and
the Seller will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion so that the Seller is responsible only for the portion
represented by the percentage that the public offering price of its securities
offered by the registration statement bears to the public offering price of all
securities offered by such registration statement, provided, however, that, in
any such case, (A) the Seller will not be required to contribute any amount in
excess of the public offering price of all such securities offered by it
pursuant to such registration statement; and (B) no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 10(f) of the Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.

         10. OFFERING RESTRICTIONS. Except as previously disclosed in the SEC
Reports or stock or stock options granted to employees or directors of the
Company; or equity or debt issued in connection with an acquisition of a
business or assets by the Company; or the issuance by the Company of stock in
connection with the establishment of a joint venture or strategic partnership or
licensing arrangement; or securities issued in connection with equipment leasing
financings or other related transactions; or common stock issued upon conversion
of outstanding warrants or debentures (these exceptions hereinafter referred to
as the "Excepted Issuances"), the Company will not issue any equity, convertible
debt or other securities which are or could be (by conversion or registration)
free-trading securities prior to the expiration of 12 months from the actual
effective date of the registration statement described in Section 9.1(d) above
(the "Exclusion Period"). This restriction shall not prohibit the Company from
issuing any equity, convertible debt or other securities prior to the expiration
of the Exclusion Period, provided that such equity, convertible debt or other
securities are restricted securities when issued and remain restricted until the
expiration of the Exclusion Period. Notwithstanding the above, if the Purchaser
elects not to further fund the Company following the Closing Date, the
provisions of this Section 10 shall be terminated.

         11. SECURITY INTEREST. As a condition of Closing, the Company will
deliver to the Purchaser Common Shares of the Company owned by certain
shareholders of the Company, together with signature guaranteed stock powers and
stock options. Collectively, the foregoing stock is referred to as "Security
Shares." The Security Shares will be held by the Purchaser pursuant to a
Security Agreement. The Company will also execute all such documents reasonably
necessary to memorialize and further protect the security interest described
above.

     12. MISCELLANEOUS.

         12.1 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to
principles of conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Agreement shall be
brought only in the state courts of New York or in the federal courts located in
the state of New York. Both parties and the individuals executing this Agreement
and other agreements on behalf of the Company agree to submit to the
jurisdiction of such courts and waive trial by jury. The prevailing party shall
be entitled to recover from the other party its reasonable attorney's fees and
costs. In the event that any provision of this Agreement or any other agreement
delivered in connection herewith is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of any agreement.

         12.2 Survival. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by the Purchaser and
the closing of the transactions contemplated hereby for a period of 24 months
from the date hereof. All statements as to factual matters contained in any
certificate or other instrument delivered by or on behalf of the Company
pursuant hereto in connection with the transactions contemplated hereby shall be
deemed to be representations and warranties by the Company hereunder solely as
of the date of such certificate or instrument.

                                      -21-

<PAGE>

         12.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Securities from time to time.

         12.4 Entire Agreement. This Agreement, the exhibits and schedules
hereto, the Related Agreements and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and no party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.

         12.5 Severability. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

         12.6 Amendment and Waiver.

             (a) This Agreement may be amended or modified only upon the written
consent of the Company and the Purchaser.

             (b) The obligations of the Company and the rights of the holders of
the Securities under the Agreement may be waived only with the written consent
of such holders of Securities. The rights of the holder of a Note may be waived
only with the written consent of the holder of such Note.

         12.7 Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement or the Related
Agreements, shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter toccurring. It is further agreed that any waiver, permit, consent or
approval of any kind or character on the Purchaser's part of any breach, default
or noncompliance under this Agreement, the Notes or the Related Agreements or
any waiver on such party's part of any provisions or conditions of the
Agreement, a Note or the Related Agreements must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, the Notes or the Related Agreements, by
law or otherwise afforded to any party, shall be cumulative and not alternative.

         12.8 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, (c) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the Company
at the address as set forth on the signature page hereof and to the Purchaser at
the address set forth on the signature page hereto for such Purchaser, with a
copy in the case of the Purchaser to Daniel M. Laifer, Esq., 135 West 50th
Street, Suite 1700, New York, NY 10020, facsimile number (212) 541-4434, or at
such other address as the Company or the Purchaser may designate by ten days
advance written notice to the other parties hereto.

         12.9 Attorneys' Fees. In the event that any suit or action is
instituted to enforce any provision in this Agreement, the prevailing party in
such dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including, without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.

         12.10 Titles and Subtitles. The titles of the sections and subsections
of the Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

                                      -22-

<PAGE>

         12.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

         12.12 Broker's Fees. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein, except as specified herein with respect to
the Purchaser. Each party hereto further agrees to indemnify each other party
for any claims, losses or expenses incurred by such other party as a result of
the representation in this Section 12.12 being untrue.

         12.13 Construction. Each party acknowledges that its legal counsel
participated in the preparation of this Agreement and, therefore, stipulates
that the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Agreement to
favor any party against the other.

                                      -23-

<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed the SECURITIES PURCHASE
AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                    PURCHASER:

ONE VOICE TECHNOLOGIES, INC.                LAURUS MASTER FUND, LTD.

By:________________________________         By:
                                            Name:
Name:
Title:                                      Address:  LAURUS MASTER FUND, LTD.
Address: 6333 Greenwich Drive,              c/o Onshore Corporate Services Ltd.
         Suite 240                          P.O.  Box  1234  G.T.,
         San Diego, California 92122        Queensgate  House,
                                            South Church Street
                                            Grand Cayman, Cayman Islands

                 [Securities Purchase Agreement Signature Page]

<PAGE>

                                LIST OF EXHIBITS

Schedule of Purchasers                                        Exhibit A

Form of Offering Convertible Note                             Exhibit B

Form of Warrant                                               Exhibit C

Form of Opinion                                               Exhibit D

<PAGE>

                                    EXHIBIT A

                             SCHEDULE OF PURCHASERS

--------------------------------------------------------------------------------
Purchaser                                     Closing Date Notes
--------------------------------------------------------------------------------
Laurus Master Fund, Ltd.                         $600,000

TOTAL                                            $600,000
--------------------------------------------------------------------------------

                           SCHEDULE OF WARRANT HOLDERS

--------------------------------------------------------------------------------
Name of Warrant Holder                        Number of Warrant Shares
--------------------------------------------------------------------------------
Laurus Master Fund, Ltd.                      100,000
--------------------------------------------------------------------------------

                    SCHEDULE OF FUND MANAGER'S FEE RECIPIENTS

--------------------------------------------------------------------------------
Fund Manager                                  Closing Date Finder's Fees
--------------------------------------------------------------------------------
Laurus Capital Management, L.L.C.             $60,000
--------------------------------------------------------------------------------
TOTAL                                         $60,000      (10% of Closing)
--------------------------------------------------------------------------------

                                       A-1

<PAGE>

                                    EXHIBIT B

                            FORM OF CONVERTIBLE NOTE

                                       B-1

<PAGE>

                                    EXHIBIT C

                                 FORM OF WARRANT

                                       C-1

<PAGE>

                                    EXHIBIT D

                                 FORM OF OPINIoN

         1. The Company is a corporation validly existing and in good standing
under the laws of the State of Nevada and has all requisite corporate power and
authority to own, operate and lease its properties and to carry on its business
as it is now being conducted.

         2. The Company has the requisite corporate power and authority to
execute, deliver and perform its obligations under the Agreement and Related
Agreements. All corporate action on the part of the Company, its officers,
directors and stockholders necessary for (i) the authorization of the Agreement
and Related Agreements, and the performance of all obligations of the Company
thereunder at each Closing, and (ii) the authorization, sale, issuance and
delivery of the Securities pursuant to the Agreement and the Related Agreements
has been taken. The Conversion Shares and the Warrant Shares, when issued
pursuant to and in accordance with the terms of the Agreement and upon delivery,
shall be validly issued and outstanding, fully paid and non assessable.

         3. The execution, delivery and performance of the Agreement, the Notes
or the Related Agreements by the Company and the consummation of the
transactions contemplated by any thereof, will not, with or without the giving
of notice or the passage of time or both:

             (a) Violate the provisions of the Charter or bylaws of the Company;
         or

             (b) To the best of such counsel's knowledge, violate any judgment,
         decree, order or award of any court binding upon the Company.

         4. The Agreement and Related Agreements constitute and the Notes, upon
their issuance will constitute, valid and legally binding obligations of the
Company, and are enforceable against the Company in accordance with their
respective terms.

         5. The sale of the Notes and the subsequent conversion of the Notes
into Conversion Shares are not and will not be subject to any preemptive rights
or, to such counsel's knowledge, rights of first refusal that have not been
properly waived or complied with. The sale of the Warrants and the subsequent
exercise of the Warrants for Warrant Shares are not and will not be subject to
any preemptive rights or, to such counsel's knowledge, rights of first refusal
that have not been properly waived or complied with.

     6. There is no action, suit, proceeding or investigation pending or, to the
best of such counsel's knowledge, currently threatened against the Company that
questions the validity of the Agreement or the Related Agreements or the right
of the Company to enter into any of such agreements, or to consummate the
transactions contemplated thereby, or which might result, either individually or
in the aggregate, in any material adverse change in the assets, condition,
affairs or prospects of the Company, financially or otherwise, or any change in
the current equity ownership of the Company. To the best of such counsel's
knowledge, the Company is not a party

                                       D-1

<PAGE>

or subject to the provisions of any order, writ, injunction, judgment or decree
of any court or government agency or instrumentality; nor is there any action,
suit, proceeding or investigation by the Company currently pending or which the
Company intends to initiate.Exhibit 10.36

                          LINEAR TECHNOLOGY CORPORATION

                            INDEMNIFICATION AGREEMENT

         This Indemnification  Agreement ("Agreement") is entered into as of the
_____ day of _______________, 2000 by and between Linear Technology Corporation,
a   Delaware   corporation   (the   "Company")   and   _________________________
("Indemnitee").

                                    RECITALS

         A. The Company and  Indemnitee  recognize the  continued  difficulty in
obtaining liability insurance for its directors, officers, employees, agents and
fiduciaries,  the  significant  increases in the cost of such  insurance and the
general reductions in the coverage of such insurance.

         B.  The  Company  and  Indemnitee  further  recognize  the  substantial
increase in corporate  litigation in general,  subjecting  directors,  officers,
employees, agents and fiduciaries to expensive litigation risks at the same time
as the  availability  and  coverage of  liability  insurance  has been  severely
limited.

         C.  Indemnitee  does not regard the  current  protection  available  as
adequate under the present  circumstances,  and Indemnitee and other  directors,
officers, employees, agents and fiduciaries of the Company may not be willing to
continue to serve in such capacities without additional protection.

         D. The  Company  desires to attract  and retain the  services of highly
qualified individuals, such as Indemnitee, to serve the Company and, in part, in
order to induce  Indemnitee  to  continue to provide  services  to the  Company,
wishes  to  provide  for  the  indemnification  and  advancing  of  expenses  to
Indemnitees to the maximum extent permitted by law.

         E. In view of the  considerations  set forth above, the Company desires
that Indemnitee be indemnified by the Company as set forth herein.

         NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:

         1.       Indemnification.

                  (a)  Indemnification of Expenses.  The Company shall indemnify
to the fullest  extent  permitted  by law if  Indemnitee  was or is or becomes a
party to or  witness or other  participant  in, or are  threatened  to be made a
party  to or  witness  or other  participant  in,  any  threatened,  pending  or
completed action, suit,  proceeding or alternative dispute resolution mechanism,
or any hearing,  inquiry or investigation  that Indemnitee in good faith believe
might  lead  to  the  institution  of  any  such  action,  suit,  proceeding  or
alternative   dispute   resolution

<PAGE>

mechanism,  whether  civil,  criminal,  administrative,  investigative  or other
(hereinafter  a "Claim")  by reason of (or  arising in part out of) any event or
occurrence  related to the fact that  Indemnitee is or was a director,  officer,
employee,  agent or fiduciary of the Company,  or any subsidiary of the Company,
or is or was  serving at the  request of the  Company  as a  director,  officer,
employee, agent or fiduciary of another corporation, partnership, joint venture,
trust or other enterprise, or by reason of any action or inaction on the part of
Indemnitee while serving in such capacity (hereinafter an "Indemnifiable Event")
against any and all  expenses  (including  attorneys'  fees and all other costs,
expenses and obligations  incurred in connection with investigating,  defending,
being a witness in or  participating  in (including on appeal),  or preparing to
defend,  be a witness in or participate in, any such action,  suit,  proceeding,
alternative dispute resolution  mechanism,  hearing,  inquiry or investigation),
judgments,  fines,  penalties and amounts paid in settlement (if such settlement
is approved in advance by the Company,  which approval shall not be unreasonably
withheld) of such Claim and any federal,  state,  local or foreign taxes imposed
on Indemnitees as a result of the actual or deemed receipt of any payments under
this Agreement (collectively,  hereinafter "Expenses"),  including all interest,
assessments  and other charges paid or payable in connection  with or in respect
of such Expenses.  Such payment of Expenses shall be made by the Company as soon
as  practicable  but in any event no later than twenty days after written demand
by Indemnitees therefor is presented to the Company.

                  (b) Reviewing Party.  Notwithstanding  the foregoing,  (i) the
obligations  of the Company under Section 1(a) shall be subject to the condition
that the  Reviewing  Party (as described in Section 10(e) hereof) shall not have
determined (in a written  opinion,  in any case in which the  Independent  Legal
Counsel  referred to in Section 1(c) hereof is involved) that  Indemnitee  would
not be permitted to be indemnified under applicable law, and (ii) the obligation
of the Company to make an advance payment of Expenses to Indemnitee  pursuant to
Section 2(a) (an "Expense  Advance") shall be subject to the condition that, if,
when and to the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under applicable law, the Company shall be
entitled to be  reimbursed  by  Indemnitee  (who hereby agree to  reimburse  the
Company) for all such  amounts  theretofore  paid;  provided,  however,  that if
Indemnitee has commenced or thereafter  commence legal proceedings in a court of
competent  jurisdiction  to secure a  determination  that  Indemnitee  should be
indemnified under applicable law, any determination  made by the Reviewing Party
that Indemnitee  would not be permitted to be indemnified  under  applicable law
shall not be binding  and  Indemnitee  shall not be required  to  reimburse  the
Company for any Expense  Advance until a final  judicial  determination  is made
with  respect  thereto  (as to which all  rights of appeal  therefrom  have been
exhausted or lapsed).  The Indemnitee's  obligation to reimburse the Company for
any Expense Advance shall be unsecured and no interest shall be charged thereon.
If there has not been a Change in Control (as defined in Section 10(c)  hereof),
the Reviewing  Party shall be selected by the Board of  Directors,  and if there
has been such a Change in Control (other than a Change in Control which has been
approved by a majority of the Company's  Board of Directors  who were  directors
immediately  prior to such Change in Control),  the Reviewing Party shall be the
Independent  Legal Counsel referred to in Section 1(c) hereof. If there has been
no  determination  by the Reviewing Party or if the Reviewing  Party  determines
that Indemnitee  substantively would not be permitted to be indemnified in whole
or in part under  applicable  law,  Indemnitee  shall have the right to commence
litigation seeking an initial determination by the court or challenging

                                      -2-

<PAGE>

any such  determination by the Reviewing Party or any aspect thereof,  including
the legal or factual bases therefor,  and the Company hereby consents to service
of  process  and to  appear in any such  proceeding.  Any  determination  by the
Reviewing  Party  otherwise  shall be conclusive  and binding on the Company and
Indemnitee.

                  (c) Change in Control.  The Company  agrees that if there is a
Change in Control of the Company  (other than a Change in Control which has been
approved by a majority of the Company's  Board of Directors  who were  directors
immediately  prior to such Change in Control) then,  with respect to all matters
thereafter  arising concerning the rights of Indemnitees to payments of Expenses
and Expense  Advances under this  Agreement or any other  agreement or under the
Company's  Certificate of Incorporation or Bylaws as now or hereafter in effect,
Independent Legal Counsel (as defined in Section 10(d) hereof) shall be selected
by  Indemnitees  and  approved  by the  Company  (which  approval  shall  not be
unreasonably  withheld).  Such  counsel,  among other  things,  shall render its
written  opinion to the Company and  Indemnitee as to whether and to what extent
Indemnitee  would be permitted to be  indemnified  under  applicable law and the
Company  agrees  to  abide  by  such  opinion.  The  Company  agrees  to pay the
reasonable fees of the Independent  Legal Counsel referred to above and to fully
indemnify such counsel against any and all expenses (including attorneys' fees),
claims,  liabilities and damages arising out of or relating to this Agreement or
its engagement pursuant hereto.

                  (d) Mandatory Payment of Expenses.  Notwithstanding  any other
provision  of this  Agreement  other than  Section 8 hereof,  to the extent that
Indemnitee has been  successful on the merits or otherwise,  including,  without
limitation,  the  dismissal of an action  without  prejudice,  in defense of any
action, suit,  proceeding,  inquiry or investigation referred to in Section 1(a)
hereof or in the defense of any claim, issue or matter therein, Indemnitee shall
be  indemnified  against all  Expenses  incurred  by  Indemnitee  in  connection
therewith.

         2.       Expenses; Indemnification Procedure.

                  (a)  Advancement  of Expenses.  The Company  shall advance all
Expenses incurred by Indemnitee. The advances to be made hereunder shall be paid
by the Company to  Indemnitee as soon as  practicable  but in any event no later
than twenty days after written demand by Indemnitee therefor to the Company.

                  (b)  Notice/Cooperation by Indemnitee.  Indemnitee shall, as a
condition   precedent  to  Indemnitee's  right  to  be  indemnified  under  this
Agreement,  give the  Company  notice in writing as soon as  practicable  of any
Claim made against Indemnitee for which  indemnification will or could be sought
under this  Agreement.  Notice to the  Company  shall be  directed  to the Chief
Executive  Officer of the Company at the address shown on the signature  page of
this Agreement (or such other address as the Company shall  designate in writing
to Indemnitee). In addition,  Indemnitee shall give the Company such information
and cooperation as it may reasonably require and as shall be within Indemnitee's
power.

                  (c) No  Presumptions;  Burden of Proof.  For  purposes of this
Agreement, the termination of any Claim by judgment,  order, settlement (whether
with  or  without  court

                                      -3-

<PAGE>

approval) or conviction,  or upon a plea of nolo contendere,  or its equivalent,
shall not  create a  presumption  that  Indemnitee  did not meet any  particular
standard of conduct or have any particular belief or that a court has determined
that  indemnification  is not permitted by applicable law. In addition,  neither
the failure of the Reviewing  Party to have made a  determination  as to whether
Indemnitee  has met any  particular  standard  of conduct or had any  particular
belief,  nor an actual  determination by the Reviewing Party that Indemnitee has
not met such  standard  of  conduct  or did not have such  belief,  prior to the
commencement   of  legal   proceedings   by  Indemnitee  to  secure  a  judicial
determination  that Indemnitee should be indemnified under applicable law, shall
be a defense to Indemnitee's  claim or create a presumption  that Indemnitee has
not met any  particular  standard  of  conduct  or did not have  any  particular
belief. In connection with any determination by the Reviewing Party or otherwise
as to whether Indemnitee is entitled to be indemnified hereunder,  the burden of
proof shall be on the Company to establish that Indemnitee is not so entitled.

                  (d) Notice to Insurers.  If, at the time of the receipt by the
Company of a notice of a Claim pursuant to Section 2(b) hereof,  the Company has
liability insurance in effect which may cover such Claim, the Company shall give
prompt  notice of the  commencement  of such Claim to the insurers in accordance
with the  procedures  set forth in the  respective  policies.  The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of Indemnitee,  all amounts payable as a result of such action,  suit,
proceeding,  inquiry  or  investigation  in  accordance  with the  terms of such
policies.

                  (e)  Selection of Counsel.  In the event the Company  shall be
obligated  hereunder  to pay the  Expenses of any Claim,  the  Company  shall be
entitled  to  assume  the  defense  of  such  Claim  with  counsel  approved  by
Indemnitee, which approval shall not be unreasonably withheld, upon the delivery
to Indemnitee of written notice of its election so to do. After delivery of such
notice, approval of such counsel by Indemnitee and the retention of such counsel
by the  Company,  the  Company  will not be  liable  to  Indemnitee  under  this
Agreement  for any fees of counsel  subsequently  incurred  by  Indemnitee  with
respect to the same Claim; provided that, (i) Indemnitee shall have the right to
employ Indemnitee's  counsel in any such Claim at Indemnitee's  expense and (ii)
if (A) the employment of counsel by Indemnitee has been previously authorized by
the Company,  (B)  Indemnitee  shall have  reasonably  concluded that there is a
conflict of interest  between the Company and  Indemnitee  in the conduct of any
such  defense,  or (C) the Company  shall not continue to retain such counsel to
defend such Claim,  then the fees and expenses of Indemnitee's  counsel shall be
at the expense of the Company.  The Company shall have the right to conduct such
defense as it sees fit in its sole discretion, including the right to settle any
claim against Indemnitee without the consent of the Indemnitee.

         3.       Additional Indemnification Rights; Nonexclusivity.

                  (a) Scope.  The Company hereby agrees to indemnify  Indemnitee
to  the   fullest   extent   permitted   by  law,   notwithstanding   that  such
indemnification  is not specifically  authorized by the other provisions of this
Agreement,  the Company's Certificate of Incorporation,  the Company's Bylaws or
by statute.  In the event of any change after the date of this  Agreement in any
applicable  law,  statute  or  rule  which  expands  the  right  of  a  Delaware
corporation  to

                                      -4-

<PAGE>

indemnify a member of its Board of Directors or an officer,  employee,  agent or
fiduciary, it is the intent of the parties hereto that Indemnitee shall enjoy by
this Agreement the greater benefits afforded by such change. In the event of any
change in any  applicable  law,  statute  or rule which  narrows  the right of a
Delaware  corporation  to  indemnify  a member of its Board of  Directors  or an
officer,  employee, agent or fiduciary, such change, to the extent not otherwise
required  by such law,  statute or rule to be applied to this  Agreement,  shall
have  no  effect  on this  Agreement  or the  parties'  rights  and  obligations
hereunder except as set forth in Section 8(a) hereof.

                  (b)  Nonexclusivity.  The  indemnification  provided  by  this
Agreement shall be in addition to any rights to which Indemnitee may be entitled
under the Company's Certificate of Incorporation, its Bylaws, any agreement, any
vote of stockholders or disinterested  directors, the General Corporation Law of
the State of Delaware,  or otherwise.  The  indemnification  provided under this
Agreement shall continue as to Indemnitee for any action  Indemnitee took or did
not take while serving in an  indemnified  capacity even though  Indemnitee  may
have ceased to serve in such capacity.

         4. No  Duplication  of Payments.  The Company shall not be liable under
this  Agreement  to make any payment in  connection  with any Claim made against
Indemnitee to the extent  Indemnitee  has otherwise  actually  received  payment
(under any insurance policy,  Certificate of Incorporation,  Bylaw or otherwise)
of the amounts otherwise indemnifiable hereunder.

         5.  Partial  Indemnification.  If  Indemnitee  is  entitled  under  any
provision  of this  Agreement  to  indemnification  by the Company for some or a
portion of Expenses incurred in connection with any Claim, but not, however, for
all of the total  amount  thereof,  the  Company  shall  nevertheless  indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.

         6. Mutual  Acknowledgment.  Both the Company and Indemnitee acknowledge
that in certain instances,  Federal law or applicable public policy may prohibit
the Company from  indemnifying  its directors,  officers,  employees,  agents or
fiduciaries  under this  Agreement  or  otherwise.  Indemnitee  understands  and
acknowledges that the Company has undertaken or may be required in the future to
undertake with the Securities and Exchange  Commission to submit the question of
indemnification  to a court in certain  circumstances for a determination of the
Company's right under public policy to indemnify Indemnitee.

         7. Liability Insurance.  The Company shall, from time to time, make the
good faith  determination  whether or not it is  practicable  for the Company to
obtain and maintain a policy or policies of insurance with  reputable  insurance
companies  providing the officers and directors of the Company with coverage for
losses  from  wrongful  acts,  or to ensure  the  Company's  performance  of its
indemnification  obligations under this Agreement.  Among other  considerations,
the Company will weigh the costs of obtaining  such insurance  coverage  against
the  protection  afforded by such  coverage.  In all policies of directors'  and
officers' liability insurance, Indemnitee shall be named as an insured in such a
manner as to provide  Indemnitee the same rights and benefits as are accorded to
the most  favorably  insured of the  Company's

                                      -5-

<PAGE>

directors,  if  Indemnitee  is a  director;  or of the  Company's  officers,  if
Indemnitee  is not a  director  of the  Company  but  is an  officer;  or of the
Company's  key  employees,  if Indemnitee is not an officer or director but is a
key  employee.   Notwithstanding  the  foregoing,  the  Company  shall  have  no
obligation  to obtain or maintain  such  insurance if the Company  determines in
good faith that such insurance is not reasonably available, if the premium costs
for such insurance are  disproportionate to the amount of coverage provided,  if
the  coverage  provided  by such  insurance  is limited by  exclusions  so as to
provide  an  insufficient  benefit,  or if  Indemnitee  is  covered  by  similar
insurance maintained by a subsidiary or parent of the Company.

         8.   Exceptions.   Any  other   provision   herein   to  the   contrary
notwithstanding,  the Company  shall not be  obligated  pursuant to the terms of
this Agreement:

                  (a) Excluded Action or Omissions.  To indemnify Indemnitee for
Expenses resulting from acts,  omissions or transactions for which Indemnitee is
prohibited  from  receiving  indemnification  under this Agreement or applicable
law;

                  (b) Claims  Initiated by  Indemnitee.  To indemnify or advance
expenses to Indemnitee with respect to Claims  initiated or brought  voluntarily
by Indemnitee  and not by way of defense,  except (i) with respect to actions or
proceedings  brought to  establish or enforce a right to  indemnification  under
this Agreement or any other agreement or insurance policy or under the Company's
Certificate of  Incorporation  or Bylaws now or hereafter in effect  relating to
Claims  for  Indemnifiable  Events,  (ii) in  specific  cases  if the  Board  of
Directors  has approved the  initiation  or bringing of such Claim,  or (iii) as
otherwise  required under Section 145 of the Delaware  General  Corporation Law,
regardless of whether Indemnitee ultimately is determined to be entitled to such
indemnification,  advance expense payment or insurance recovery, as the case may
be;

                  (c)  Lack of  Good  Faith.  To  indemnify  Indemnitee  for any
expenses  incurred by Indemnitee  with respect to any  proceeding  instituted by
Indemnitee  to enforce or  interpret  this  Agreement,  if a court of  competent
jurisdiction  determines that each of the material assertions made by Indemnitee
in such proceeding was not made in good faith or was frivolous; or

                  (d) Claims Under Section  16(b).  To indemnify  Indemnitee for
expenses  and the  payment  of profits  arising  from the  purchase  and sale by
Indemnitee  of  securities  in  violation  of  Section  16(b) of the  Securities
Exchange Act of 1934, as amended, or any similar successor statute.

         9. Period of Limitations. No legal action shall be brought and no cause
of  action  shall  be  asserted  by or in  the  right  of  the  Company  against
Indemnitee,  Indemnitee's estate,  spouse, heirs, executors or personal or legal
representatives  after the  expiration  of two years from the date of accrual of
such cause of action,  and any claim or cause of action of the Company  shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action  within such  two-year  period;  provided,  however,  that if any shorter
period of limitations is otherwise  applicable to any such cause of action, such
shorter period shall govern.

                                      -6-

<PAGE>

         10. Construction of Certain Phrases.

                  (a)  For  purposes  of  this  Agreement,   references  to  the
"Company"  shall  include,  in  addition  to  the  resulting  corporation,   any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued,  would
have had power and authority to indemnify its  directors,  officers,  employees,
agents or  fiduciaries,  so that if  Indemnitee  is or was a director,  officer,
employee,  agent or  fiduciary  of such  constituent  corporation,  or is or was
serving at the request of such constituent  corporation as a director,  officer,
employee, agent or fiduciary of another corporation, partnership, joint venture,
employee benefit plan, trust or other enterprise,  Indemnitee shall stand in the
same  position  under the  provisions  of this  Agreement  with  respect  to the
resulting or surviving corporation as Indemnitee would have with respect to such
constituent corporation if its separate existence had continued.

                  (b) For  purposes  of this  Agreement,  references  to  "other
enterprises"  shall include employee benefit plans;  references to "fines" shall
include any excise  taxes  assessed on  Indemnitee  with  respect to an employee
benefit plan;  and  references to "serving at the request of the Company"  shall
include any service as a director,  officer, employee, agent or fiduciary of the
Company  which  imposes  duties on, or  involves  services  by,  such  director,
officer,  employee, agent or fiduciary with respect to an employee benefit plan,
its participants or its beneficiaries; and if Indemnitee acted in good faith and
in a  manner  Indemnitee  reasonably  believed  to be in  the  interest  of  the
participants and beneficiaries of an employee benefit plan,  Indemnitee shall be
deemed to have  acted in a manner  "not  opposed  to the best  interests  of the
Company" as referred to in this Agreement.

                  (c) For purposes of this Agreement a "Change in Control" shall
be deemed to have occurred if, on or after the date of this  Agreement,  (i) any
"person"  (as such term is used in  Sections  13(d) and 14(d) of the  Securities
Exchange  Act of 1934,  as  amended),  other than a trustee  or other  fiduciary
holding  securities under an employee benefit plan of the Company acting in such
capacity or a corporation  owned directly or indirectly by the  stockholders  of
the Company in substantially the same proportions as their ownership of stock of
the Company, becomes the "beneficial owner" (as defined in Rule 13d-3 under said
Act),  directly or indirectly,  of securities of the Company  representing  more
than 50% of the total voting power represented by the Company's then outstanding
Voting Securities,  (ii) during any period of two consecutive years, individuals
who at the  beginning  of such period  constitute  the Board of Directors of the
Company  and any new  director  whose  election  by the  Board of  Directors  or
nomination for election by the Company's  stockholders was approved by a vote of
at least two thirds (2/3) of the directors  then still in office who either were
directors at the  beginning of the period or whose  election or  nomination  for
election  was  previously  so  approved,  cease for any reason to  constitute  a
majority  thereof,  or (iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other  corporation  other than a merger or
consolidation  which  would  result  in the  Voting  Securities  of the  Company
outstanding  immediately  prior  thereto  continuing  to  represent  (either  by
remaining  outstanding  or by being  converted  into  Voting  Securities  of the
surviving  entity) at least 80% of the total  voting  power  represented  by the
Voting   Securities  of  the  Company  or  such  surviving  entity   outstanding
immediately  after such  merger or

                                      -7-

<PAGE>

consolidation,  or the  stockholders  of the Company  approve a plan of complete
liquidation  of the Company or an agreement for the sale or  disposition  by the
Company  of (in one  transaction  or a series of  related  transactions)  all or
substantially all of the Company's assets.

                  (d)  For  purposes  of  this  Agreement,   "Independent  Legal
Counsel"  shall mean an attorney or firm of  attorneys,  selected in  accordance
with the  provisions  of  Section  1(c)  hereof,  who shall  not have  otherwise
performed  services for the Company or  Indemnitees  within the last three years
(other than with respect to matters  concerning the rights of Indemnitees  under
this Agreement, or of other indemnitees under similar indemnity agreements).

                  (e) For purposes of this Agreement,  a "Reviewing Party" shall
mean any  appropriate  person or body  consisting  of a member or members of the
Company's  Board of Directors or any other person or body appointed by the Board
of Directors who is not a party to the particular Claim for which Indemnitee are
seeking indemnification, or Independent Legal Counsel.

                  (f) For purposes of this Agreement,  "Voting Securities" shall
mean any  securities  of the  Company  that vote  generally  in the  election of
directors.

         11.  Counterparts.  This  Agreement  may be  executed  in  one or  more
counterparts, each of which shall constitute an original.

         12. Binding  Effect;  Successors and Assigns.  This Agreement  shall be
binding  upon and inure to the  benefit  of and be  enforceable  by the  parties
hereto  and  their  respective  successors,  assigns,  including  any  direct or
indirect  successor by purchase,  merger,  consolidation  or otherwise to all or
substantially all of the business and/or assets of the Company,  spouses, heirs,
and personal and legal representatives.  The Company shall require and cause any
successor  (whether  direct or indirect by purchase,  merger,  consolidation  or
otherwise) to all,  substantially  all, or a  substantial  part, of the business
and/or  assets  of the  Company,  by  written  agreement  in form and  substance
satisfactory  to  Indemnitee,  expressly  to assume  and agree to  perform  this
Agreement  in the same manner and to the same  extent that the Company  would be
required to perform if no such succession had taken place.  This Agreement shall
continue  in effect with  respect to Claims  relating  to  Indemnifiable  Events
regardless  of whether  Indemnitee  continues  to serve as a director,  officer,
employee,  agent or fiduciary of the Company or of any other  enterprise  at the
Company's request.

         13.  Attorneys'  Fees.  In the event that any action is  instituted  by
Indemnitee  under  this  Agreement  or under any  liability  insurance  policies
maintained  by the Company to enforce or  interpret  any of the terms  hereof or
thereof,  Indemnitee  shall be  entitled  to be paid all  Expenses  incurred  by
Indemnitee  with respect to such action,  regardless  of whether  Indemnitee  is
ultimately  successful in such action,  and shall be entitled to the advancement
of Expenses  with respect to such action,  unless,  as a part of such action,  a
court of competent  jurisdiction  over such action  determines  that each of the
material  assertions  made by Indemnitee as a basis for such action was not made
in good faith or was  frivolous.  In the event of an action  instituted by or in
the name of the Company under this  Agreement to enforce or interpret any of the
terms of this

                                      -8-

<PAGE>

Agreement,  Indemnitee  shall be  entitled to be paid all  Expenses  incurred by
Indemnitee in defense of such action (including costs and expenses incurred with
respect to Indemnitee's counterclaims and cross-claims made in such action), and
shall be entitled to the  advancement  of Expenses  with respect to such action,
unless,  as a part of such action, a court having  jurisdiction over such action
determines that each of Indemnitee's  material  defenses to such action was made
in bad faith or was frivolous.

         14. Notice. All notices and other communications  required or permitted
hereunder shall be in writing,  shall be effective when given,  and shall in any
event be deemed to be given (a) five (5) days after deposit with the U.S. Postal
Service or other  applicable  postal service,  if delivered by first class mail,
postage prepaid,  (b) upon delivery,  if delivered by hand, (c) one business day
after the  business day of deposit  with  Federal  Express or similar  overnight
courier,  freight prepaid,  or (d) one day after the business day of delivery by
facsimile  transmission,  if delivered by facsimile  transmission,  with copy by
first class mail, postage prepaid,  and shall be addressed if to Indemnitee,  at
the  Indemnitee's  address as set forth beneath  Indemnitee's  signature to this
Agreement  and if to the  Company  at the  address  of its  principal  corporate
offices  (attention:  Secretary)  or at such  other  address  as such  party may
designate by ten days' advance written notice to the other party hereto.

         15. Consent to  Jurisdiction.  The Company and  Indemnitee  each hereby
irrevocably  consent to the  jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this  Agreement  and agree that any action  instituted  under this
Agreement  shall be commenced,  prosecuted  and  continued  only in the Court of
Chancery  of the State of Delaware  in and for Kent  County,  which shall be the
exclusive and only proper forum for adjudicating such a claim.

         16.  Severability.  The provisions of this Agreement shall be severable
in the event that any of the provisions hereof (including any provision within a
single  section,  paragraph  or  sentence)  are  held  by a court  of  competent
jurisdiction to be invalid, void or otherwise  unenforceable,  and the remaining
provisions  shall remain  enforceable  to the fullest  extent  permitted by law.
Furthermore,  to the fullest extent  possible,  the provisions of this Agreement
(including,  without limitations,  each portion of this Agreement containing any
provision  held to be  invalid,  void or  otherwise  unenforceable,  that is not
itself invalid,  void or unenforceable)  shall be construed so as to give effect
to  the  intent   manifested   by  the  provision   held  invalid,   illegal  or
unenforceable.

         17.  Choice  of  Law.  This  Agreement  shall  be  governed  by and its
provisions  construed and enforced in  accordance  with the laws of the State of
Delaware,  as applied to contracts between Delaware residents,  entered into and
to be performed  entirely  within the State of Delaware,  without  regard to the
conflict of laws principles thereof.

         18.  Subrogation.  In the event of payment  under this  Agreement,  the
Company  shall be  subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee who shall execute all documents  required and shall do
all acts that may be  necessary  to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.

                                      -9-

<PAGE>

         19. Amendment and Termination. No amendment, modification,  termination
or  cancellation  of this Agreement  shall be effective  unless it is in writing
signed by both the parties  hereto.  No waiver of any of the  provisions of this
Agreement shall be deemed or shall  constitute a waiver of any other  provisions
hereof  (whether or not similar)  nor shall such waiver  constitute a continuing
waiver.

         20.  Integration  and Entire  Agreement.  This Agreement sets forth the
entire  understanding  between the parties  hereto and supersedes and merges all
previous  written  and  oral  negotiations,   commitments,   understandings  and
agreements relating to the subject matter hereof between the parties hereto.

         21. No Construction as Employment Agreement.  Nothing contained in this
Agreement  shall be construed as giving  Indemnitee  any right to be retained in
the employ of the Company or any of its subsidiaries.

                                      -10-

<PAGE>

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

                                      LINEAR TECHNOLOGY CORPORATION
                                      a Delaware corporation

                                      By:
                                          --------------------------------------

                                      Title:
                                             -----------------------------------

                                      AGREED TO AND ACCEPTED BY:

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

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

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

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

                                      -11-

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