Document:

EXHIBIT 10.7

         THIS LEASE,  Made this 22nd day of December,  1999,  by and between MIE
Properties,   Inc.,  as  agent  for  owner,   herein  called   "Landlord",   and
International Dispensing Corporation, herein called "Tenant".

         WITNESSETH,  That in  consideration  of the rental  hereinafter  agreed
upon, and the performance of the conditions and covenants  hereinafter set forth
on the part of Landlord and Tenant to be  performed,  Landlord does hereby lease
unto said Tenant, and the latter does lease from the former  approximately 3,825
square feet at the  following  premises:  1111  Benfield  Boulevard,  Suite 230,
Millersville,  Maryland  21108 for the term of five (5) years and six (6) months
and two (2) weeks  beginning  on the 16th day of March,  2000 and  ending on the
30th day of  September,  2005 at and for the annual rental of (see rent schedule
below),  payable in advance on the first day of each and every month  during the
term of this Lease in equal monthly  installments of (see rent schedule  below).
Said  rental  shall  be paid to MIE  Properties,  Inc.,  5720  Executive  Drive,
Baltimore,  Maryland 21228-1757,  or at such other place or to such appointee of
Landlord as Landlord may from time to time designate in writing.

         TENANT COVENANTS AND AGREES WITH LANDLORD AS FOLLOWS:
         1.   To pay said  rent and each  installment  thereof  as and when due,
without setoff or deduction.

         RENTAL - ESCALATION

         2.   Beginning with the first  anniversary of the commencement  date of
the lease term and each annual anniversary  thereafter  throughout the remainder
of the Lease and  renewal  term if any,  the annual rent shall be  increased  by
three percent (3%) of the previous year's rent, which

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sum shall be payable in equal monthly advance as hereinabove  set forth,  and as
set forth in the rent schedule below.

         USE

         3.   To use and  occupy the leased  premises  solely for the  following
purposes:

              General offices for packaging company and related entities.

                                  RENT SCHEDULE

         TERM                                     ANNUAL RENT     MONTHLY RENT
         ----                                     -----------     ------------
         March 16, 2000 - September 30, 2000               -      $3,612.50
         October 1, 2000 - September 30, 2001     $65,025.00      $ 5,418.75
         October 1, 2001 - September 30, 2002     $66,975.75      $ 5,581.31
         October 1, 2002 - September 30, 2003     $68,985.02      $5,748.75
         October 1, 2003 - September 30, 2004     $71,054.57      $5,921.21
         October 1, 2004 - September 30, 2005     $73,186.21      $6,098.85

         ADDITIONAL RENT

         4.   A.   UTILITIES

              Tenant  shall  apply for and pay,  directly to the  provider,  all
costs of electricity,  gas telephone and other utilities used or consumed on the
premises  together with all taxes,  levies or other  charges on such  utilities.
Tenant  agrees to pay as additional  rent,  Tenant's Pro Rata Share of the water
and sewer service charges,  or when  applicable,  Tenant's pro rata share of the
cost of maintaining and operating the well water and/or septic system chargeable
to the  total  building  in which  the  premises  are  located.  However,  if in
Landlord's  reasonable  judgement,  the water and sewer charges for the premises
are  substantially  higher than normal due to Tenant's water usage,  then Tenant
agrees that it will, upon written notice from Landlord, install a water

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meter at Tenant's  expense and thereafter pay all water charges for the premises
based on such meter readings.

              B.   TAXES

              Tenant  shall  pay  to  Landlord,  as  additional  rent,  Tenant's
pro-rata  share of the taxes in excess of those  assessed  against the  property
during the fiscal year  commencing July 1, 1999 and ending June 30, 2000 whether
the taxes are payable to the State of Maryland  and/or Anne Arundel  County.  If
this Lease shall be in effect for less than a full fiscal year, Tenant shall pay
a pro-rata  share of the  increased  taxes  based upon the number of months that
this Lease is in effect. Said taxes shall include Metropolitan District Charges,
sewer  service  charges and CPRA  charges,  if any,  and any and all benefits or
assessments  which may be levied on the  premises  hereby  Leased  but shall not
include the United  States Income Tax, or any State or other income tax upon the
income or rent payable hereunder.

              C.   COMMON AREA

              Tenant shall pay to Landlord as additional rent, Tenant's Pro Rata
Share of the following Common Area Expenses:

              -    Snow Removal
              -    Grounds Maintenance

              -    Security (when Landlord,  in  its reasonable  judgement deems
                   necessary).
              -    Trash Removal (when supplied by Landlord).

              "Tenant's Pro Rata Share" shall mean the same  percentage that the
gross square foot area of' Tenant's  leased  premises  bears to the gross square
foot area of all leaseable floor area within the property. Landlord shall notify
Tenant or any change in "Tenant's  Pro Rata  Share".  Tenant's Pro Rata Share is
equal to 9.4 percent. If the actual leaseable area of the

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property is or becomes  more than as set forth in this Lease,  Tenant's Pro Rata
Share shall be proportionately adjusted.

                  Landlord  shall notify Tenant from time to time of the amounts
which  Landlord  estimates will be payable by Tenant for Tenant's Pro Rata Share
of  Utilities,  Taxes and Common Area expenses and Tenant shall pay such amounts
to Landlord in equal monthly  installments in advance on or before the first day
of each month.  Within a  reasonable  period of time  following  the end of each
calendar  year, or fiscal year (with regard to taxes)  Landlord  shall submit to
Tenant a statement  showing the  Utilities  Taxes and Common Area expenses to be
paid by Tenant with  respect to such year,  the amount  paid by Tenant,  and the
amount of the resulting balance due or overpayment. Each such statement shall be
final and  conclusive if no objection is raised within one hundred  eighty (180)
days after  submission  of each such  statement.  Notwithstanding  the  forgoing
provisions of the above paragraph, Landlord may require Tenant to pay in arrears
Tenant's  Pro Rata  Share of  Utilities,  Taxes  and  Common  Area  expenses  in
quarterly or  semi-annual  payments  rather than on a monthly  basis as provided
above.

              Landlord  shall  keep for at  least  three  (3)  years  after  the
expiration of each calendar year, true and accurate books of account and records
proving  payment  of  Utilities,  Taxes and  Common  Area  expenses  ("Operating
Expenses")  which records conform to generally  accepted  accounting  principles
show the Operating Expenses incurred at the building for such calendar year.

              Tenant's employees, accountants, or representatives shall have the
right to  audit  Operating  Expenses  and in  connection  therewith  to  examine
Landlord's  books  of  accounts  and  operating  Expenses  and  supporting  data
maintained by Landlord and related to Operating

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Expenses.  If any such audit discloses that the Operating Expenses are less than
those  reported,  Landlord shall  forthwith pay to Tenant,  or credit Tenant the
difference as may be shown to be paid or payable for actual Operating Expenses.

              If Tenant  disagrees on the accuracy of Operating  Expenses as set
forth in Landlord's  statement,  Tenant shall give written notice to Landlord to
that effect, but shall nevertheless make payment in accordance with the terms of
this Lease.

         MUNICIPAL REGULATING

         5.   To  observe, comply with and  execute  at its  expense,  all laws,
orders, rules,  requirements,  and regulations of the United States, State, City
or County of the said State,  in which the leased  premises are located,  and of
any and all  governmental  authorities  or  agencies  and of any  board  of fire
underwriters  or other  similar  organization,  respecting  the premises  hereby
leased and the manner in which said premises are or should be used by Tenant.

         ASSIGNMENT AND SUBLET

         6.   Not to assign  this  Lease,  in whole or in part,  or  sublet  the
leased  premises,  or any part or  portion  thereof,  or grant  any  license  or
concession for any part of the premises,  without the prior written  consent of'
Landlord,  said permission  shall not be unreasonably  withheld,  conditioned or
delayed.  If such  assignment or  subletting  is permitted,  Tenant shall not be
relieved  from any  liability  whatsoever  under this Lease.  Landlord  shall be
entitled to all  additional  considerations  over and above those stated in this
Lease,  which are obtained in or for the sublease and/or  assignment.  Except in
the case of a "Permitted  Assignment"  as  hereinafter  defined no option rights
call be assigned or transferred by Tenant to an assignee or subtenant.

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Any sublet or assignment of' this Lease will be assessed with processing fees to
be paid for by Tenant as additional rent. Such fees shall not exceed $500.00.

         Notwithstanding  anything  to the  contrary  contained  in this  Lease,
Tenant shall have the right,  without the prior  consent of Landlord,  to assign
this  lease  or  sublet  the  whole  or any  part of the  leased  premises  to a
corporation or entity which: (i) is Tenant's parent organization;  or, (ii) is a
wholly-owned subsidiary of Tenant or Tenant's parent corporation; or, (iii) is a
corporation of which Tenant or Tenant's  parent owns in excess of fifty (50%) of
the outstanding capital stock; or, (iv) as a result of a consolidation or merger
with Tenant and/or Tenant's parent corporation,  shall own all the capital stock
of Tenant or Tenant's parent corporation;  or, (v) substantially all of Tenant's
assets may be transferred.  Any transfer pursuant to (i), (ii), (iii),  (iv), or
(v) above shall be subject to the following conditions:  (a) Tenant shall remain
fully liable during the unexpired term of this lease;  (b) any such  assignment,
sublease,  or  transfer  shall be subject to all of the  terms,  covenants,  and
conditions  of this lease and such  assignee,  subtenant,  or  transferee  shall
expressly  assume  the  obligations  of Tenant  under  the  Lease by a  document
reasonably  satisfactory  to Landlord;  and (c) shall be considered a "Permitted
Assignment".

         INSURANCE

         7.   Tenant will not do anything  in or about said  premises  that will
contravene  or affect  any  policy of  insurance  against  loss by fire or other
hazards,  including,  but not limited to, public liability now existing or which
Landlord  may  hereafter  place  thereon,  or that will  prevent  Landlord  from
procuring  such  policies in companies  acceptable  to Landlord.  Tenant will do
everything  reasonably  possible,  and  consistent  with the conduct of Tenant's
business,  to obtain the greatest  possible  reduction in the insurance rates on
the Property, including the building in

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which the  premises is situated.  Tenant  further  agrees to pay, as  additional
rent, any increase in the premium of any insurance carried by Landlord caused by
Tenant's occupancy, the nature of its business, any alterations or installations
made by  Tenant,  or  otherwise  resulting  from any act of Tenant  its  agents,
employees or customers.

         ALTERATIONS

         8.   (a)  Tenant will not make any alterations in  addition to original
improvements to the premises without the prior written consent of Landlord which
consent shall not be unreasonably  withheld,  conditioned or delayed.  If Tenant
shall  desire to make any such  alterations,  plans for the same shall  first be
submitted to Landlord for approval, and the same shall be performed by Tenant at
its own  expense,  Tenant  agrees that all such work shall be done in a good and
workmanlike manner,  that the structural  integrity of the building shall not be
impaired, that no liens shall attach to the building by reason thereof, and that
all alterations shall be in accordance with all applicable building codes.

              (b)  Tenant  agrees to  obtain at  Tenant's  expense  all  permits
pertaining to the alterations. Tenant also agrees to obtain, prior to commencing
to make such alterations and to keep in full force and effect at all times while
such  alterations  are being made,  all at Tenant's sole cost and expense,  such
policies  of  insurance  pertaining  to such  alterations  and/or to the  making
thereof as Landlord reasonably may require Tenant to obtain,  including, but not
limited to,  public  liability  and property  damage  insurance,  and to furnish
Landlord  evidence  satisfactory  to Landlord of the existence of such insurance
prior to Tenant's beginning to make such alterations.

              (c)  Any such alterations shall become the property of Landlord as
soon as they are  affixed  to the  premises  and all right,  title and  interest
therein of Tenant shall immediately

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cease,  unless otherwise  agreed to by Landlord in writing.  Landlord shall have
the sole right to collect any insurance for any damage of any kind caused by any
alterations or  improvements  placed upon the premises by Tenant.  If the making
of' any such  alterations,  or the  obtaining  of any  permits  therefore  shall
directly or indirectly  result in a franchise,  minor privilege or any other tax
or increase in tax, assessment or increase in assessment, such tax or assessment
shall be paid, immediately upon its levy and subsequent levy, by Tenant.

              (d)  Unless  Landlord  shall elect in writing  that all or part of
any  alterations,  except the  original  improvement  as indicated in Exhibit A,
installed  by Tenant  shall  remain,  the  premises  shall be  restored to their
original  condition by Tenant, at its own expense,  before the expiration of its
tenancy.

              (e)  Any  alterations  or   modifications   (in  addition  to  the
improvements as described herein in Section 34) Tenant requests Landlord to make
on  Tenant's  behalf  during the term of this lease  shall be due and payable as
additional rent.

              (f)  Notwithstanding  anything to the  contrary  contained in this
Lease,  Tenant shall be permitted to make any  non-structural  and  non-material
alteration,  and  improvements,  less than  $5,000,  without  the prior  written
consent  of the  Landlord.  Tenant  shall have the right at all times to install
furniture, equipment, and trade fixtures, provided that Tenant complies with all
applicable  governmental rules,  regulations,  laws,  statutes,  and ordinances.
Tenant shall have the right, and the obligation, to remove, at the expiration or
sooner  termination of this Lease,  trade  fixtures,  furniture,  and equipment;
however, Tenant shall, prior to the termination of this Lease, repair any damage
caused by such removal. Tenant shall not be required to make any

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structural  alterations to the demised premises,  including  without  limitation
installing sprinkler systems, fire doors or ADA complaint improvements.

         MAINTENANCE

         9.   (a)  Tenant will, during the term of this Lease, keep said demised
premises and appurtenance (including,  but not limited to, interior and exterior
windows,  interior and exterior doors,  interior  plumbing,  all heating and air
conditioning.  and interior and exterior electrical works thereof) in good order
and condition and will make all necessary repairs or replacement  thereof at its
own expense. Tenant will be responsible for all exterminating  services,  except
termites,  required in said demised  premises.  Landlord does,  however,  give a
ninety (90) day warranty on all of the above mentioned items. This warranty does
not include the  required  annual  maintenance  contract on the HVAC  unit(s) as
described  below.  Any  repair  made by  Landlord  at the  request  of Tenant to
Tenant's  demised  premises shall be invoiced to Tenant and shall become due and
payable as  additional  rent.  If Tenant does not make  necessary  repair within
thirty (30) days after  receiving  written  notice from  Landlord of the need to
make a repair,  Landlord  will  proceed to make said repair and the cost of said
repair will become part of and in addition to the next due monthly rental.

              (b)  Tenant  agrees to  furnish  to  Landlord,  at the  expense of
Tenant,  prior  to  occupancy,  a copy  of all  executed  and  paid  for  annual
maintenance  contract  on all  heating  and  air  conditioning  equipment  which
furnishes HVAC for said Tenant premises only with a reputable company acceptable
to  Landlord  and said  contract  will be kept in effect  during the term of the
Lease at the expense of Tenant.  Should Tenant not provide a  satisfactory  HVAC
Maintenance contract to Landlord prior to occupancy,  Tenant shall be provided a
contract through MIE

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Properties,  Inc.  Billings for this contract  shall become due and payable upon
receipt of invoice and shall be considered additional rent.

              (c)  Landlord  will make all necessary  structural  repairs to the
exterior  masonry walls  including the  foundation,  glass in exterior walls and
doors, structural floors, ceilings,  roof, exterior of the building,  equipment,
and all other structural elements,  common areas and facilities of the building,
and any of the foregoing which shall be located in the demised premises,  unless
the  repair  is due to  misuse or  neglect  by  Tenant or any of its  employees,
agents,  or  contractors.  Landlord  agrees to commence  repairs  promptly after
demand from Tenant and shall thereafter be diligently prosecuted to completion.

              (d)  Tenant will,  at the  expiration of the term or at the sooner
termination thereof by forfeiture or otherwise,  deliver up the demised premises
in the same  good  order and  condition  as they  were at the  beginning  of the
tenancy, reasonable wear and tear excepted.

         DEFAULT

         10.  If Tenant shall fail to pay said rental or any other sum  required
by this Lease to be paid by Tenant and such failure shall  continue for ten (10)
days after written notice thereof to Tenant, Landlord shall have, along with any
and all other legal remedies,  the immediate  right to make distress  therefore,
and upon such distress, in Landlord's discretion,  this tenancy shall terminate.
In case Tenant shall fail to comply with any of the other provisions, covenants,
or  conditions  of this Lease,  on its part to be kept and  performed,  and such
default  shall  continue for a period of twenty (20) days after  written  notice
thereof shall have been given to Tenant by Landlord, and/or if Tenant shall fail
to pay said  rental or any other sum  required  by the terms of this Lease to be
paid by Tenant. However, if a default shall be of a nature that it cannot

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reasonably  be cured  within such twenty  (20) day period,  Tenant  shall have a
reasonable  period of time in which to cure such default,  provided Tenant shall
commence  to cure such  default  within  such  twenty  (20) day period and shall
diligently  prosecute such cure to completion.  Then,  upon the happening of any
such  event,  and in  addition  to any and all other  remedies  that may thereby
accrue to Landlord, Landlord may do the following:

         1.   LANDLORD'S ELECTION TO RETAKE  POSSESSION  WITHOUT  TERMINATION OF
LEASE.  Landlord may retake possession of the leased premises and shall have the
light, but not the obligation, without being deemed to have accepted a surrender
thereof, and without terminating this Lease, to relet the same for the remainder
of the Lease term upon terms and conditions  satisfactory to Landlord and if the
rent  received  from such  reletting  does not at least equal the rent and other
sums payable by Tenant  hereunder,  Tenant shall pay and satisfy the  deficiency
between the amount of rent and other sums so provided in this Lease and the rent
received through reletting the Leased premises;  and, in addition,  Tenant shall
pay reasonable  expenses in connection with any such reletting,  including,  but
not  limited  to,  the  cost of  renovating,  altering  and  decorating  for any
occupant.  leasing  commissions  paid to any real  estate  broker or agent,  and
attorney's fees incurred.  Notwithstanding  the above Landlord agrees to use its
best efforts to relet the leased premises and mitigate Landlord's damages.

         2.   LANDLORD'S ELECTION TO TERMINATE LEASE. Landlord may terminate the
Lease and forthwith  repossess the leased premises and be entitled to recover as
damages a sum of money equal to the total of the following amounts:

              (a)  any unpaid rent or any other outstanding  monetary obligation
of Tenant to Landlord under the Lease;

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              (b)  the balance of the rent and other sums  payable by Tenant for
the  remainder of the lease term into be determined as of the date of Landlord's
re-entry;

              (c)  reasonable damages for the wrongful withholding of the leased
premises by Tenant;

              (d)  all reasonable  legal expenses,  including  attorney's  fees,
expert and witness fees,  court costs and other costs incurred in exercising its
rights under the Lease;

              (e)  all  reasonable  costs  incurred  in  recovering  the  leased
premises,  restoring the Leased  premises to good older and  condition,  and all
commissions incurred by Landlord in reletting the leased premises; and

              (f)  any other reasonable amount necessary to compensate  Landlord
for all detriment caused by Tenant's default.

         DAMAGE

         11.  In the case of the total destruction  of said  leased  premises by
fire, other casualties,  the elements or other cause, or of such damage thereto,
Landlord shall within thirty (30) days after such fire or other casualty  notify
Tenant of the length of time required to complete the  restoration  thereof.  If
the leased premises shall be rendered  totally unfit for occupancy by Tenant for
more than forty five (45) days,  this  Lease,  upon  surrender  and  delivery to
Landlord of the said leased premises by Tenant, together with the payment of the
rent to the date of such  occurrence  shall  terminate  and be at an end. If the
leased premises are tendered  partly  untenantable by any cause mentioned in the
preceding  sentence,  Landlord  shall at its own  expense,  restore  said leased
premises  with  all  reasonable   diligence,   and  the  rent  shall  be  abated
proportionately for the period

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of said partial  untenantability  and until the leased  premises shall have been
fully restored by Landlord.

         Notwithstanding  to the contrary in this Lease, if the demised premises
are substantially  damaged or destroyed so that Tenant cannot conduct its normal
business  operations and if such damage has not been repaired within ninety (90)
days thereafter, Tenant shall have the right to terminate this Lease.

         BANKRUPTCY

         12.  In the event of the  appointment  of a  receiver  or  trustee  for
Tenant by any  court,  Federal  or State,  in any  legal  proceedings  under any
provisions of the  Bankruptcy  Act, if the  appointment of such receiver or such
trustee is not vacated  within sixty (60) days, or if said Tenant be adjudicated
bankrupt  or  insolvent,  or shall make all  assignment  for the  benefit of its
creditors,  then  and  in any of  said  events,  Landlord  may,  at its  option,
terminate this tenancy, and re-enter upon said premises.

         POSSESSION/BENEFICIAL OCCUPANCY

         13.  Landlord  covenants  and agrees that  possession  of said premises
shall be given to Tenant as soon as said  premises are ready for  occupancy.  In
case possession, in whole or in part, cannot be given to Tenant on or before the
commencement   date  of  this   Lease,   Landlord   agrees  to  abate  the  rent
proportionately  until possession is given to said Tenant,  and Tenant agrees to
accept such prorated  abatement as liquidated  damages for the failure to obtain
possession.  Landlord shall use its best efforts to deliver the leased  premises
to Tenant by March 16, 2000.

         If Tenant  occupies  any  portion of' the  premises  prior to tender of
possession  thereof by Landlord,  such partial  occupancy  shall be deemed to be
beneficial occupancy and a proportionate

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share of the rent shall be due and payable as to that portion of the premises so
occupied, immediately upon Tenant's occupancy. Such occupancy by Tenant and rent
thereby  due  shall  not  depend  on  official  governmental  approval  of  such
occupancy,  state of  completion  of  building  availability  or  connection  of
utilities  and services  such as but not limited to sewer,  water,  gas, oil, or
electric. No rent credit shall be given because of lack of utilities or services
unless caused by the gross negligence of Landlord.

         SIGNS, ETC.

         14.  Tenant covenants and agrees that:
              (a)  It will not place or permit  any  signs,  lights,  awnings or
poles on or about the exterior of said premises  without file prior  permission,
in writing, of Landlord and in the event such consent is given, Tenant agrees to
pay any minor privileges or other tax.

              (b)  Landlord is to  immediately  remove and dispose of any of the
unauthorized  aforementioned  items at the expense of Tenant and said reasonable
cost shall  become part of and in addition  to the next due monthly  rental,  as
additional rent.  Tenant further  covenants and agrees that it will not paint or
make any  changes in or on the  outside of said  premises  without  the  written
permission  of  Landlord.  Tenant  agrees  that it will not do  anything  on the
outside  of  said  premises  to  change  file  uniform  architecture,  paint  or
appearance of said building, without the written consent of Landlord.

              (c)  Landlord  shall  have the right to place a "For Rent" sign on
any portion of said premises for ninety (90) days prior to  termination  of this
Lease and to place a "For Sale" sign thereon at any time.

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         EXTERIOR OF PREMISES

         15.  Tenant  further  covenants  and agrees not to put any items on the
sidewalk or parking lot in the front,  rear,  or sides of said building or block
said sidewalk, and not to do anything that directly or indirectly will take away
any of the  rights of  ingress  or egress or of light  from any other  tenant of
Landlord or do anything  which will, in any way,  change the uniform and general
design of any property of Landlord of which the leased  premises  hereby  leased
shall constitute a part.

         WATER DAMAGE

         16.  Tenant  covenants  and  agrees  that  Landlord  shall  not be held
responsible  for and Landlord is hereby released and relieved from any liability
by reason of or resulting  from damage or injury to person or property of Tenant
or of anyone else, directly or indirectly caused by (a) dampness or water in any
part of said  premises  or in any part of any other  property  of Landlord or of
others  and/or (b) any leak or break in any part of said premises or in any part
of any other  property of Landlord or of' others or in the pipes of the plumbing
or heating works  thereof,  unless the damage is due to Landlord's or Landlord's
employees, agents, or contractor's negligence or willful misconduct.

         LIABILITY

         17.  Landlord  shall not be liable to Tenant  for any loss or damage to
Tenant  or to any  other  person  or to the  property  of Tenant or of any other
person  unless such loss or damage shall be caused by or result from a negligent
act of emission or commission or the willful  misconduct on the part of Landlord
or any of its agents,  servants,  or employees.  Tenant shall indemnify and save
harmless  Landlord,  its  successors or assigns,  from all claims and demands of
every kind,

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that may be  brought  against  it,  them or any of them for or on account or any
damage,  loss or injury to persons or property  in or about the leased  premises
during the continuance of this tenancy,  or during the time of any  alterations,
repairs,  improvements or restorations to said property by Tenant and arising in
connection  therewith,  and from any and all costs,  expenses and other charges,
including  reasonable  attorney's fees, which may be imposed upon Landlord,  its
successors  or  assigns,  or  which  it or they  may be  obligated  to  incur in
consequence  thereof'.  Tenant shall also carry and pay for a general  liability
policy including fire damage liability naming Landlord as an additional insured,
with  combined  single limits of not less than  $2,000,000.00,  and will furnish
Landlord  with  certificate  of  same  showing  a  thirty  (30)  day  notice  of
cancellation clause.

         RIGHT OF ENTRY

         18.  It is  understood  and  agreed  that  Landlord,  and  its  agents,
servants,  and  employees,  including  any  builder or  contractor  employed  by
Landlord,  shall  have,  and  Tenant  hereby  gives  them and each of them,  the
absolute,  and  unconditional  right,  license  and  permission,  at any and all
reasonable times, and for any reasonable purpose  whatsoever,  to enter through,
across or upon the leased  premises or any part  thereof,  and, at the option of
Landlord,  to make such  reasonable  repairs to or changes in said  premises  as
Landlord may deem necessary or proper.  Notwithstanding anything to the contrary
in this  lease,  except in the case of  emergency,  Landlord  shall use its best
efforts to give  reasonable  advance notice to Tenant before  Landlord,  and its
agents, servants, and employees, including any builder or contractor employed by
Landlord, enters the demised premises.

                                       16

<PAGE>

         EXPIRATION

         19. It is agreed that the term of this Lease  expires on September  30,
2005 without the necessity of any notice by or to any of the parties hereto.  If
Tenant shall occupy the leased premises after such expiration,  it is understood
that, in the absence of any written  agreement to the contrary said Tenant shall
hold said premises as a "Tenant from  month-to-month",  subject to all the other
terms and conditions of this Lease,  at one and one half times (1 1/2) times the
highest  monthly  rental  installment  reserved  in this  Lease;  provided  that
Landlord shall,  upon such expiration,  be entitled to the benefit of all public
general or public local laws relating to the speedy  recovery of the  possession
of' lands  and  tenements  held  over by Tenant  that may be now in force or may
hereafter be enacted.

         Prior to Lease  expiration,  Tenant  agrees to schedule all  inspection
with  Landlord to confirm  that the leased  premises  will be in proper order at
expiration,  including, but not limited to, lighting, mechanical, electrical and
plumbing systems.

         CONDEMNATION

         20.  It is  agreed  that  in the  event  condemnation  proceedings  are
instituted  against the leased  premises and possession  taken by the condemning
authority,  then this Lease shall  terminate at the date possession is taken and
Tenant shall not be entitled to recover any part of the award.

         SUBORDINATION

         21.  It is  agreed  that  Landlord  shall  have  the  right  to place a
mortgage or deed of trust on the premises and this Lease will be  subordinate to
any such  mortgage or deed of trust  whether  presently  existing  or  hereafter
placed on the premises. Tenant agrees to execute any and all

                                       17

<PAGE>

reasonable   documents   assisting  the  effectuating  of  said   subordination.
Furthermore,  if any person or entity shall succeed to all or part of Landlord's
interest in the leased premises, whether by purchase,  foreclosure, deed in lieu
of foreclosure,  power of sale, or otherwise,  Tenant shall automatically attorn
to such  successor in interest,  which  attornment  shall be self  operative and
effective  upon the signing of this Lease,  and Tenant shall  execute such other
agreement in confirmation of such attornment as such successor in interest shall
reasonably request.

         NOTICES

         22.  Any  written  notice  required  by  this  Lease  shall  be  deemed
sufficiently given, if hand delivered,  or sent via first class mail,  certified
mail or by overnight courier service. Any notice required by this Lease is to be
sent to Landlord at:

                  5720 Executive Drive
                  Baltimore, Maryland 21228-1757

         Any notice required by this Lease is to be sent to Tenant at:

                  1111 Benfield Boulevard, Suite 230
                  Millersville, Maryland 21108

         REMEDIES NOT EXCLUSIVE

         23.  No remedy conferred upon Landlord shall be considered exclusive of
any other  remedy,  but shall be in addition to every other remedy  available to
Landlord  under  this Lease or as a matter of law.  Every  remedy  available  to
Landlord may be  exercised  concurrently  or from time to time,  as often as the
occasion may arise. Tenant hereby waives any and all rights which it may have to
request  a jury  trial in any  proceeding  at law or in  equity  in any court of
competent jurisdiction.

                                       18

<PAGE>

         NON-WAIVER

         24.  It is agreed that the  failure of Landlord to insist in any one or
more  instances  upon a strict  performance  of any covenant of this Lease or to
exercise  any  right  herein  contained  shall not be  construed  as a waiver or
relinquishment  for the  future of such  covenant  or right,  but the same shall
remain in full force and effect,  unless the contrary is expressed in writing by
Landlord. The receipt of rent by Landlord,  with knowledge of any breach of this
Lease by Tenant or of any default on the part of Tenant hereunder,  shall not be
deemed to be a waiver of any provisions of this Lease. Neither acceptance of the
keys nor any other act or thing done by  Landlord  or any agent or  employee  of
Landlord  shall be deemed to be an  acceptance  of a surrender of the  premises,
excepting  only an  agreement  in writing by Landlord  accepting  or agreeing to
accept such surrender.

         SECURITY DEPOSIT AND FINANCIAL STATEMENTS

         25. A security  deposit of  $3,612.50  is  required to  accompany  this
Lease, when submitted for approval by Landlord, subject to all the conditions of
the  Security  Deposit  Agreement  attached.  If this Lease is not  approved  by
Landlord  within thirty (30) days of its  submission  to Landlord,  the security
deposit  will be  refunded  in full.  Landlord  shall  have the right to require
annual  financial  statements  for Tenant  and/or any  Guarantor  of this Lease.
Tenant or Guarantor shall provide written answers to any questions from Landlord
which  are  related  to  Tenant's   financial   statements  or  provide  written
projections  on  Tenant's  business,  if  the  financials  are  unacceptable  to
Landlord.

                                       19

<PAGE>

         FINAL AGREEMENT

         26.  This Lease  contains  the final and entire  agreement  between the
parties  hereto,  and neither they nor their agents shall be bound by any terms,
conditions or representations not herein written.

         LEGAL EXPENSE

         27.  In the event, to enforce  the terms of this  Lease,  either  party
files legal action  against the other,  and is  successful  in said action,  the
losing  party agrees to pay all  reasonable  expenses to the  prevailing  party,
including the reasonable  attorney's  fee incident to said legal action.  In the
event that  Landlord is  successful  in any legal action filed  against  Tenant,
Landlord's reasonable attorney's fees incident to said legal action shall be due
as additional rent.

         LAND

         28.  It is  agreed  that  the  leased  premises  is the  building  area
occupied by Tenant and only the land under that area.

         RELOCATION

         29.  Landlord  shall have the right at any time  during the lease term,
upon not less than sixty (60) days written notice to Tenant,  to relocate Tenant
to another  location  within the  Property,  provided:  (a) the new  location is
similar or better in size, utility and appearance to the premises hereby demised
and (b) Landlord pays all reasonable moving costs,  including but not limited to
telephone and computer  wiring and new stationery and other expenses  associated
with relocating an office,  incurred by Tenant in connection with such move. The
parties shall, upon Landlord's request, execute an amendment to this Lease which
will  specify  the change in leased  premises,  but this Lease shall in no other
respect be amended. Notwithstanding anything to the

                                       20

<PAGE>

contrary in this Lease,  Landlord may only exercise the right to relocate Tenant
once during the original lease term.

         ENVIRONMENTAL REQUIREMENTS

         30.  Tenant  hereby  covenants  and  agrees  that if at any  time it is
determined  that there are  materials  placed on the  premises  by Tenant or its
agents,   servants,   employees  or  invitees  which,  under  any  environmental
requirements,  require  special  handling in collection,  storage,  treatment or
disposal,  Tenant shall,  within thirty (30) days after written notice  thereof,
take or cause to be taken, at its sole expense, such actions as may be necessary
to comply with all environmental requirements. If Tenant shall fail to take such
action,   Landlord  may  make  advances  or  payments  towards   performance  or
satisfaction of the same but shall be under no obligation to do so, and all sums
so advanced or paid,  including all sums advanced or paid in connection with any
judicial  or  administrative   investigation  or  proceeding  relating  thereto,
including,  without  limitation,  reasonable  attorney's  fees,  fines, or other
penalty  payments,  shall be at once repayable by Tenant as additional  rent and
shall bear  interest at the rate of two (2%) per annum above the Prime Rate from
time to time as  published  by the Wall Street  Journal,  from the date the same
shall  become due and payable  until the date paid.  Failure of Tenant to comply
with all environmental requirements shall constitute and be a default under this
Lease.

         Tenant will remain  totally  liable  hereunder  regardless of any other
provisions which may limit recourse.

         SEVERABILITY

         31.  In case any one or more of the provisions contained in this  Lease
shall for any  reason be held to be  invalid,  illegal or  unenforceable  in any
respect, such invalidity, illegality or

                                       21

<PAGE>

unenforceability  shall not affect any other  provisions of this Lease, but this
Lease shall be construed as if such invalid,  illegal or unenforceable provision
had never been contained herein.

         LATE CHARGE

         32.  If Tenant shall fail to pay when due, after applicable  notice and
grace  periods,  the said rental or any other sum  required by the terms of this
lease to be paid by Tenant.  then, upon the happening of any such event,  and in
addition  to any and all other  remedies  that may thereby  accrue to  Landlord,
Tenant  agrees to pay to  Landlord  a late  charge of five  percent  (5%) of the
monthly account balance. The late charge on the base rent accrues after ten (10)
days of the due date and said late charge  shall be  collectible  as  additional
rent.

         In the event  Tenant's  rent is  received  fifteen  (15) days after due
date,  Landlord  has the  option to require  the  rental  payment be made with a
certified or cashier's check.

         QUIET ENJOYMENT

         33.  Tenant,  upon paying the rent,  additional  rent and other charges
herein  provided for and observing and keeping all of its covenants,  agreements
and conditions in this Lease,  shall quietly have and enjoy the premises  during
the term of this Lease without hindrance or molestation by anyone claiming by or
through  Landlord;  subject,  however,  to  all  exceptions,   reservations  and
conditions of this Lease.

         LANDLORD'S WORK

         34.  The Leased  premises shall contain only the following items at the
expense of Landlord:

                                       22

<PAGE>

         35.  As per Exhibit "A", using building  standard  materials.  Landlord
has  allocated  a  $20.00  per  square  foot  allowance  for  Tenant's  interior
improvements.  Should Tenant exceed this  allowance,  Tenant will be responsible
for the extra costs.

         WINDOW COVERINGS

         36.  Tenant  covenants  and agrees not to install any window  covering,
other  than a one-inch  horizontal  mini-blind  of an  off-white  color,  unless
approved in writing by Landlord.

         RULES AND REGULATIONS

         37.  Tenant  shall at all times  comply with the Rules and  Regulations
attached  hereto.  Landlord  shall use its best efforts to enforce the Rules and
Regulations equitably against all tenants of the property.

         ESTOPPEL CERTIFICATE

         38.  Tenant and/or  Landlord shall, at any time during the term of this
Lease  or any  renewal  thereof,  upon  request  of the  other  party,  execute,
acknowledge,  and deliver to such party or its designee, a statement in writing,
certifying that this Lease is unmodified and in full force and effect if such is
the fact.

         ADDITIONAL RENT

         39.  All  sums of  money  required  to be paid by  Tenant  to  Landlord
pursuant to the terms of this Lease, unless otherwise specified herein, shall be
considered  additional  rent and shall be  collectible by Landlord as additional
rent, in accordance with the terms of this Lease.

                                       23

<PAGE>

         EXCULPATION CLAUSE

         40.  Neither  Landlord nor any  principal,  partner.  member,  officer,
director,   trustee  or   affiliate   of'  Landlord   (collectively,   "Landlord
Affiliates")  shall have any  personal  liability  under any  provision  of this
Lease.

         OPTIONS

         41.  Provided  Tenant  is  not  then  in  default   thereunder,   after
applicable  notice and grace  periods,  Tenant may extend the term of this Lease
and as it may be  amended  from  time to time,  for one (i)  further  successive
period of five (5) years each, by notifying Landlord in writing of its intention
to do so at least one hundred  twenty (120) days prior to the  expiration of the
then current term.  The annual  rental for each  succeeding  extension  shall be
adjusted as follows:

              (a)  If at the end of the  original  term of this  Lease or at the
end of any  renewal  term,  the  official  Consumers'  Price Index for All Urban
Consumers  (CPIU),  U.S.  Average,  All Items,  published by the Bureau of Labor
Statistics,  U.S. Department of Labor (1982 - 1984=100) (the "CPI") is in excess
of the CPI at the date of the  commencement  of the original term of this Lease,
the  annual  rental  for the  succeeding  Lease  term  shall  be  determined  by
multiplying said $65,025.00 by a fraction, the numerator of which is the CPI six
months prior to the end of the current Lease term, and the  denominator of which
is the CPI six months prior to the date of the commencement of the original term
of this Lease. The monthly  installments of rent shall be adjusted  accordingly,
provided,  however,  that the annual  rental  payable by Tenant under this Lease
never be less than $73, 186.21, during the extension term.

              (b)  In the event the Bureau of Labor  Statistics  shall  cease to
publish the  aforesaid  Index in its present form and  calculated on the present
basis,  a similar index or an index  reflecting  similar  changes in the cost of
living shall be chosen by agreement of the parties. In the

                                       24

<PAGE>

event the parties are unable to agree upon the selection of such an index,  such
dispute shall be submitted to  arbitration  in accordance  with the rules of the
American Arbitration Association.

              (c)  If the  option to extend the term of this Lease is not timely
exercised,  the unexercised option to extend shall automatically become null and
void.

              (d)  The right to extend the term of this  Lease may be  exercised
only by the undersigned Tenant or a "Permitted Assignment" for its continued use
and  occupancy  of the Leased  premises and only if it is in  possession  of the
Leased premises and operating a permitted use when it exercises the right.

approved an assignment  of this Lease.  However,  if Tenant  assigns this Lease,
with  Landlord's  consent to any  corporation  into  which or with which  Tenant
merges  or  consolidates  and/or  to  any  parent,   subsidiary,  or  affiliated
corporation, the assignee may exercise such right to renew.

              (e)  If Tenant  shall not cure a default  under the  Lease,  after
applicable notice and grace periods,  all unexercised  rights to extend the term
of the Lease shall automatically be extinguished and become null and void.

AS  WITNESS  THE HANDS AND SEALS OF THE  PARTIES  HERETO  THE DAY AND YEAR FIRST
ABOVE WRITTEN:

WITNESS:                          TENANT: International Dispensing Corporation

       /s/ Lynn Chan              By: /s/ Jeffrey D. Lewenthal
---------------------------           ---------------------------

                                  Printed Name: Jeffrey D. Lewenthal
                                  Title: Executive Vice President/CFO

                                       25

<PAGE>

WITNESS:                          LANDLORD: MIE Properties, Inc., as agent for
                                            owner

                                  By: /s/ Robert C. Becker
-------------------------             -----------------------

                                  Printed Name: Robert C. Becker
                                  Title: Vice President

                                       26

<PAGE>

                           SECURITY DEPOSIT AGREEMENT

This is NOT a rent receipt.

                             Date November 30, 1999
                                  -----------------

         Received  from  International  Dispensing  Corporation,  the  amount of
$3,612.50, as security deposit for premises 1111 Benfield Boulevard,  Suite 230,
Millersville, Maryland 21108.

         Landlord  agrees that,  subject to the  conditions  listed below,  this
security deposit will be returned in full within thirty (30) days of vacancy.

         Tenant agrees that this  security  deposit may not be applied by Tenant
as rent and that the full  monthly  rent will be paid on or before the first day
of every month,  including the last month of occupancy,  Tenant  further  agrees
that a mortgagee  of' the property  demised by the Lease to which this  Security
Deposit  Agreement is appended and/or a mortgagee thereof in possession of 'said
property  and/or a purchaser of said  property at a  foreclosure  sale shall not
have any liability to Tenant for this security deposit.

         SECURITY DEPOSIT RELEASE PREREQUISITES:
         ----------------------------------------
         1.   Full term of Lease has expired.
         2.   No damage to property beyond fair wear and tear.
         3.   Entire Leased premises clean and in order.
         4.   No unpaid late charges  or  delinquent  rents, or other delinquent
              sums payable by Tenant.
         5.   All keys returned.
         6.   All debris  and  rubbish  and  discards  placed  in proper rubbish
              containers.
         7.   Forwarding address left with Landlord.

                                       27

<PAGE>

AS  WITNESS  THE HANDS AND SEALS OF THE  PARTIES  HERETO  THE DAY AND YEAR FIRST
ABOVE WRITTEN:

WITNESS:                          TENANT: International Dispensing Corporation

    /s/ Lynn Chan                 By: /s/ Jeffrey D. Lewenthal
------------------------              ---------------------------

WITNESS:                          LANDLORD: MIE Properties, Inc., as agent for
                                            owner

                                  By: /s/ Robert C. Becker
------------------------              -----------------------

                                       28

<PAGE>

                              RULES AND REGULATIONS

1111 Benfield Boulevard, Suite 230, Millersville, Maryland 21108

1.       The Common Facilities,  and the sidewalks,  driveways, and other public
         portion of the Property (herein "Public Areas") shall not be obstructed
         or  encumbered  by Tenant or used for any purpose other than ingress or
         egress to and from its  premises,  and Tenant  shall not permit any of'
         its employees, agents. licensees or invitees to congregate or loiter in
         any of the Public Areas. Tenant shall not invite to, or permit to visit
         its premises,  persons in such numbers or under such  conditions as may
         interfere  with the use and  enjoyment  by others of the Public  Areas.
         Landlord reserves the right to control and operate, and to restrict and
         regulate  the use of, the Public  Areas and the public  facilities,  as
         well as  facilities  furnished  for the common use of Tenants,  in such
         manner as it deems best for the benefit of Tenants generally.

2.       No bicycles, animals (except seeing eye dogs) fish or birds of any kind
         shall be  brought  into,  or kept in or about any  premises  within the
         Building.

3.       No noise, including, but not limited to, music, the playing of' musical
         instruments,  recordings, radio or television,  which, in the judgement
         of Landlord, might disturb other tenants in the Building, shall be made
         or permitted by any tenant.

4.       Tenant's  premises shall not be used for lodging or sleeping or for any
         immoral or illegal purpose.

5.       Tenant  shall  not  cause  or  permit  any  odors of  cooking  or other
         processes,  or any unusual or objectionable  odors, to emanate from its
         premises  which would annoy other tenants or create a public or private
         nuisance.

6.       Plumbing  facilities shall not be used for any purpose other than those
         for which they were  constructed,  and no  sweepings,  rubbish,  ashes,
         newspapers or other substances or any kind shall be thrown into them.

7.       Tenant agrees to keep the Leased  Premises in a neat, good and sanitary
         condition  and  to  place  garbage,   trash,   rubbish  and  all  other
         disposables only where Landlord directs.

                                       29

<PAGE>

8.       Landlord reserves the right to rescind,  alter,  waive or add, any Rule
         or  Regulation  at any time  prescribed  for the Building  when, in the
         reasonable  judgment  of  Landlord,  Landlord  deems  it  necessary  or
         desirable  for  the  reputation,  safety,  character,  security,  care,
         appearance or interests of the Building,  or the  preservation of' good
         order therein, or the operation or maintenance of the Building,  or the
         equipment thereof, or the comfort of tenants or others in the Building.
         No rescission, alteration, waiver or addition of any Rule or Regulation
         in respect of' one tenant shall operate as a rescission,  alteration or
         waiver in respect of any other tenant.

9.       Tenant shall have the non-exclusive  right to park in parking spaces in
         front of and behind tenant's Leased  Premises.  Landlord  warrants that
         the  parking  space  ratio  shall never be less than four (4) spaces to
         every 1,000 square feet of rentable building area.

10.      Tenant shall not place any storage trailers or other storage containers
         of any type outside Tenant's premises.

11.      Tenant shall not park,  on a permanent  or semi  permanent  basis,  any
         trailers  behind  any  dock  doors  or in any  other  location  outside
         Tenant's premises for the purpose of storage.

12.      Non-compliance  with any of the above  rules and  regulations  may,  in
         Landlord's  reasonable  judgement,  result  in a  monetary  fine not to
         exceed $25.00 per day,  Landlord will notify Tenant of such  violations
         and Tenant will have ten (10) days to rectify,  after which, daily fine
         will be applied.

                                       30EXHIBIT 10.10

                     ======================================

                     PREFERRED STOCK SUBSCRIPTION AGREEMENT
                         Dated as of September 23, 1999

                                  By and Among

                    THE INVESTORS LISTED ON EXHIBIT A HERETO

                                       and

                      INTERNATIONAL DISPENSING CORPORATION

                     ======================================

<PAGE>

                     PREFERRED STOCK SUBSCRIPTION AGREEMENT

         PREFERRED STOCK  SUBSCRIPTION  AGREEMENT (this "Agreement") dated as of
September 23, 1999, by and among the Investors  listed on Exhibit A hereto (each
a "Investor," and collectively the "Investors"),  and  INTERNATIONAL  DISPENSING
CORPORATION, a Delaware corporation (the "Company").

                              W I T N E S S E T H :

         WHEREAS, the Investors desire to subscribe for, and the Company desires
to issue up to an aggregate of 1,000 shares of the Company's Series A Redeemable
Convertible  Preferred Stock, par value $.001 per share (the "Preferred  Stock")
for the per share  purchase  price of $2,000  on the  terms and  subject  to the
conditions set forth herein.

         NOW, THEREFORE, IT IS AGREED:

                                    ARTICLE I
          ISSUANCE OF STOCK AND PAYMENT OF SUBSCRIPTION PRICE; CLOSING

     1.1   ISSUANCE OF STOCK.  Subject  to the terms and conditions set forth in
this Agreement,  the Company agrees to sell to the Investors,  and the Investors
severally  irrevocably subscribe for and agree to purchase for $2,000 per Share,
1,000 shares of Preferred Stock (the "Shares").

     1.2   CLOSING DATES.

           (a)  The  purchase  and sale of the Shares shall occur at one or more
closings  (each,  a  "Closing")  at such  times as shall  be  determined  by the
Company,  subject to the  conditions  set forth in this  Agreement.  The initial
Closing  shall occur  within  three  business  days after the  execution of this
Agreement by the Company and the Investors . The date of the initial  Closing is
hereinafter  referred to as the "Initial  Closing Date." On the Initial  Closing
Date  GREGORY B.  ABBOTT,  GEORGE V.  KRISTE,  LOUIS  SIMPSON and GARY  ALLANSON
(collectively,  the "Investors") shall purchase THREE HUNDRED FIFTY (350) Shares
and shall pay to the Company by certified  check or wire transfer of immediately
available funds, SEVEN HUNDRED THOUSAND DOLLARS ($700,000).

<PAGE>

           (b)  Subsequent  Closings shall occur not less than  forty-five  (45)
days after written NOTICE BY THE COMPANY TO THE INVESTORS (THE "CALL NOTICE") IN
THE FORM  ATTACHED  HERETO AS  EXHIBIT  B. The Call  Notice  shall set forth the
number of Shares to be issued and sold to the Investors at such Closing.  Within
forty-five  (45) days after the giving of the Call Notice to the Investors,  the
Investors  shall give written notice to the Company  setting forth the amount of
Shares to be purchased BY EACH  INVESTOR AT THE CLOSING TO WHICH THE CALL NOTICE
RELATES;  PROVIDED, that if the Investors cannot agree upon the number of Shares
to be purchased by them, each Investor shall be severally  obligated to purchase
the entire  number of Shares as set forth in the Call  Notice.  The  Company may
schedule as many Closings as it desires, subject to the following conditions:

                     (i)     The Company  shall  not issue and sell more than an
                aggregate  of 350 Shares  (including  Shares sold on the Initial
                Closing Date) prior to November 1, 1999.

                     (ii)    The Company  shall  not issue and sell more than an
                aggregate  of 560  Shares on a  cumulative  basis from and after
                (and  including)  the Initial  Closing Date through  February 1,
                2000.

                     (iii)   The Company shall not issue and sell  more  than an
                aggregate  of 860  shares on a  cumulative  basis from and after
                (and including) the Initial Closing Date through May 1, 2000.

                     (iv)    The Company  shall  not issue and sell more than an
                aggregate of 1,000  Shares on a cumulative  basis from and after
                (and  including) the Initial  Closing Date and no Investor shall
                have the  obligation  to purchase  any Shares  after  August 31,
                2000.

                     (v)     Any  Investor,  at any time,  in  his  or  its sole
                direction, upon written notice to the Company, may terminate his
                commitment to purchase Shares.

                     (vi)    The   commitment   of  each  Investor  to  purchase
                additional  Shares shall also terminate upon written notice from
                the Company  that the Company  has  determined  not to issue and
                sell additional  Shares pursuant to this Agreement.  The Company
                may make such  determination  in its sole discretion and without
                incurring  any  penalty  or  incurring  any  obligation  to  any
                Investor.

                     (vii)   No Investor shall have the obligation  to  purchase
                any Shares at any time during which the Company does not have at
                least $100,000 in cash or immediately available funds in bank or
                investment accounts, which have not been pledged or hypothecated
                or subject to any lien.

<PAGE>

     1.3   LEGENDS.  From and  after  the date hereof,  all  share  certificates
representing  Shares,  or shares of the  Common  Stock into which the Shares are
convertible  ("Conversion  Shares"),  shall bear a legend  which  shall state as
follows:

                "THE SECURITIES REPRESENTED BY THIS  CERTIFICATE HAVE
           NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS
           AMENDED,  AND HAVE BEEN  ACQUIRED FOR  INVESTMENT  AND NOT
           WITH A  VIEW  TO,  OR IN  CONNECTION  WITH,  THE  SALE  OR
           DISTRIBUTION  THEREOF.  NO SUCH SALE OR DISPOSITION MAY BE
           EFFECTED  WITHOUT  AN  EFFECTIVE   REGISTRATION  STATEMENT
           RELATED  THERETO OR AN OPINION OF COUNSEL  FOR THE COMPANY
           THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT."

                              ARTICLE II
             REPRESENTATIONS AND COVENANTS OF THE COMPANY

2.   REPRESENTATIONS  AND  COVENANTS  OF  THE  COMPANY.   The   Company   hereby
represents, warrants and agrees as follows:

     2.1   EXISTENCE  AND  GOOD  STANDING.  The  Company  is  a corporation duly
organized,  validly existing and in good standing under the laws of the State of
Delaware.  The Company has the requisite  corporate  power and authority to own,
lease and  operate  its  properties  and to carry on its  business  as now being
conducted.  The Company is duly  qualified  or licensed to do business and is in
good  standing in each  jurisdiction  in which the  character or location of the
properties  owned,  leased  or  operated  by the  Company  or the  nature of the
business conducted by the Company makes such qualification or license necessary,
except where the failure to be so duly  qualified  or licensed  would not have a
material  adverse  effect on the business,  operations,  financial  condition or
results of operations of the Company (a "Material Adverse Effect").

     2.2   CAPITAL  STOCK.   The   Company   has  an  authorized  capitalization
consisting of 40,000,000  shares of common stock, par value $.001 per share (the
"Common  Stock") and 2,000,000  shares of Preferred  Stock,  par value $.001 per
share. Of the Common Stock,  9,566,668  shares are issued and outstanding and no
shares of Preferred  Stock are issued and  outstanding.  Options and warrants to
purchase an aggregate of 2,327,776  shares of Common Stock are  outstanding.  On
the Initial Closing Date and on each  subsequent  date of Closing,  after giving
effect to the  transactions  contemplated by this Agreement,  each Investor will
receive good and  marketable  title to the Shares he acquires  from the Company,
free and clear of all liens,  claims  and other  encumbrances.  All  outstanding
shares of  capital  stock of the  Company  have  been,  and will on the  Initial
Closing  Date  be,  duly  authorized  and  validly  issued  and  fully  paid and
nonassessable.  Other than as set forth on SCHEDULE 2.2 and as set forth in this
Agreement, there will be on the Initial Closing Date no

<PAGE>

outstanding  subscriptions,  options,  registration  rights,  warrants,  rights,
calls,  commitments,  conversion rights, rights of exchange,  preemptive rights,
rights of first refusal, rights of first offer, plans or other agreements of any
character  providing  for the  purchase,  registration,  issuance or sale of any
shares of the capital stock of the Company.

     2.3   AUTHORIZATION AND VALIDITY OF THIS AGREEMENT.  The  Company  has  the
requisite  corporate  power and authority to execute and deliver this  Agreement
and  to  perform  its  obligations  hereunder.   The  execution,   delivery  and
performance  of  this  Agreement  by the  Company  and  the  performance  of its
obligations  hereunder  have been duly  authorized  and approved by its Board of
Directors and no other corporate  action on the part of the Company is necessary
to authorize the  execution,  delivery and  performance of this Agreement by the
Company. This Agreement has been duly executed and delivered by the Company and,
assuming  due  execution  of this  Agreement  by the  Investors,  is a valid and
binding obligation of the Company  enforceable against the Company in accordance
with its terms,  except to the extent that its  enforceability may be subject to
applicable bankruptcy, insolvency,  reorganization,  moratorium and similar laws
affecting  the  enforcement  of  creditors'  rights  generally  and  by  general
equitable principles.

     2.4   SEC DOCUMENTS; NO MATERIAL CHANGES.  (a) The Company has furnished to
the  Investors  true,  correct and complete  copies of its Annual Report on Form
10-KSB for the fiscal year ended December 31, 1998 and its Quarterly  Reports on
Form  10-QSB for the  quarters  ended  March 31,  1999 and June 30,  1999.  Such
periodic  reports  constitute all the documents that the Company was required to
file with the  Securities  and Exchange  Commission  (the "SEC") from January 1,
1999 to the Initial  Closing  Date.  Each of the periodic  reports  filed by the
Company with the SEC since June 30, 1998 ("SEC  Documents")  has been timely and
duly filed and when filed was in  compliance  in all material  respects with the
requirements  of the Securities  Exchange Act of 1934, as amended (the "Exchange
Act") and the rules and regulations of the SEC thereunder applicable to such SEC
Document. Each of the SEC Documents (including the financial statements included
therein) was  complete and correct in all material  respects as of its date and,
as of its date, did not contain any untrue statement of material fact or omit to
state a material  fact  required to be stated  therein or  necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not  misleading.  The financial  statements  included  within the SEC
Documents  have been  prepared in  accordance  with GAAP applied on a consistent
basis  during the  periods  involved  (except as may be  indicated  in the notes
thereto) and present fairly or will present fairly (subject,  in the case of the
unaudited  statements,  to normal year-end audit  adjustments)  the consolidated
financial  position of the Company as at the dates thereof and the  consolidated
results of their operations and cash flows for the periods then ended.

           (b)  Since  June  30,  1999,  there has  been no (i) material adverse
change in the business,  operations,  financial condition, results of operations
or prospects of the Company or (ii) material damage,  destruction or loss to any
asset or  property,  tangible or  intangible,  of the Company  which  materially
affects the ability of the Company to conduct its business.  Notwithstanding the
foregoing,  the  Investors  acknowledge  that the Company is in the  development
stage,  has incurred  significant  losses since  inception  and will continue to
incur significant losses.

<PAGE>

     2.5   CONSENTS AND APPROVALS: NO VIOLATIONS.  The execution and delivery of
this  Agreement  by  the  Company  and  the  consummation  of  the  transactions
contemplated hereby and thereby (a) will not violate or contravene any provision
of the Certificate of Incorporation  or By-laws of the Company,  or any statute,
rule,  regulation,  order or decree of any public body or authority by which the
Company is or any of its properties  are bound,  (b) will not require any filing
with,  or  consent  of, or the giving of any  notice  to,  any  governmental  or
regulatory  body,  agency or  authority,  or any other  person  and (c) will not
result in a violation or breach of, conflict with, constitute a default (or give
rise to any right of termination,  cancellation, payment or acceleration) under,
or result in the  creation  of any  encumbrance  upon any of the  properties  or
assets of the Company under,  any of the terms,  conditions or provisions of any
agreement, instrument or obligation to which the Company is a party, or by which
any of its  properties  or  assets  may be bound or under  which it may have any
rights,  excluding  from the  foregoing  clauses (b) and (c)  filings,  notices,
permits, consents and approvals, the absence of which, and violations, breaches,
defaults,  conflicts and encumbrances of which, in the aggregate, would not have
a Material Adverse Effect.

     2.6   BROKER'S OR FINDER'S FEES. No agent, broker, person or firm acting on
behalf of the Company, is, or will be, entitled to any commission or broker's or
finder's  fees from the  Company,  or from any  person  or  entity  controlling,
controlled by or under common control with the Company,  in connection  with any
of the transactions contemplated by this Agreement;  PROVIDED, HOWEVER, that the
independent  committee of the Board of Directors of the Company retained Brooks,
Houghton & Company, Inc. ("BHC") to render an opinion concerning the fairness of
the  transactions  contemplated by this Agreement to the holders of Common Stock
of the  Company  and  BHC  will  be  paid a fee by  the  Company  in  connection
therewith.

     2.7   REVERSE STOCK SPLIT. The Board of Directors of the Company shall meet
at an appropriate  time to consider the terms of a possible  reverse stock split
of the Company's Common Stock, and if that occurs,  the numbers set forth herein
will be adjusted in an equitable manner.

                                   ARTICLE III
                        REPRESENTATIONS OF THE INVESTORS

3.   REPRESENTATIONS OF THE INVESTORS.  Each Investor, represents,  warrants and
agrees, for itself or himself only, as follows:

     3.1   EXISTENCE AND GOOD STANDING; POWER AND AUTHORITY.  Such Investor,  if
it  is a  corporation,  a  limited  liability  company  or a  limited  liability
partnership, is duly organized,  validly existing and in good standing under the
laws of the jurisdiction of its organization.  Such Investor has the legal power
and authority to enter into,  execute and deliver this Agreement and perform its
obligations  hereunder and  thereunder.  This Agreement has been duly authorized
and  approved by such  Investor  and is a valid and binding  obligation  of such
Investor  enforceable against such Investor in accordance with its terms, except
to the extent that its enforceability may be subject to applicable

<PAGE>

bankruptcy,  insolvency,  reorganization,  moratorium  and  other  similar  laws
effecting  the  enforcement  of  creditors'  rights  generally  and  by  general
equitable principles.

     3.2   RESTRICTIVE DOCUMENTS.  Such Investor is not subject to any mortgage,
lien, lease, agreement,  instrument,  order, law, rule, regulation,  judgment or
decree, or any other  restriction of any kind or character,  which would prevent
consummation  by  such  Investor  of  the  transactions   contemplated  by  this
Agreement.

     3.3   PURCHASE FOR  INVESTMENT.  Such  Investor will acquire the Shares for
its own  account  for  investment  and not  with a view  toward  any  resale  or
distribution  thereof;  provided,  however,  that the  disposition  of each such
Investor's  property  shall at all times  remain  within the sole control of the
Investor.

     3.4   BROKER'S OR FINDER'S  FEES.  No agent, broker,  person or firm acting
on behalf  of such  Investor  is,  or will be,  entitled  to any  commission  or
broker's or finder's  fees from any of the  parties  hereto,  or from any person
controlling,  controlled  by or under  common  control  with any of the  parties
hereto,  in  connection  with  any  of the  transactions  contemplated  by  this
Agreement.

     3.5   EXEMPTION FROM  REGISTRATION.  Such Investor  acknowledges  that  the
offering and sale of the Shares is intended to be exempt from registration under
the  Securities  Act of 1933, as amended (the  "Securities  Act"),  by virtue of
Section 4(2) of the Securities Act and Regulation D promulgated thereunder.

     3.6   ABILITY TO BEAR ECONOMIC RISK.  Such Investor has determined that the
Shares are a suitable  investment  for the  Investor,  that the Investor has the
financial  ability to bear the economic  risk of its  investment in the Company,
has adequate means of providing for its current needs and personal contingencies
and has no need for liquidity with respect to investment in the Company.

     3.7   NO  LIQUIDITY.  Such Investor will not sell or otherwise transfer the
Shares without registration under the Act or an exemption  therefrom,  and fully
understands  and agrees that the  Investor  must bear the  economic  risk of its
investment for an indefinite  period of time because,  among other reasons,  the
Shares have not been  registered  under the Act or under the securities  laws of
any state and,  therefore,  cannot be resold,  pledged,  assigned  or  otherwise
disposed  of unless  they are  subsequently  registered  under the Act and under
applicable  state  securities  laws or an exemption  from such  registration  is
available.  Such Investor also understands that sales or transfers of the Shares
are further restricted by the provisions of state securities laws.

     3.8   SUITABILITY  AND  ACCREDITED  STATUS.  Such  Investor  represents and
warrants that such Investor is an accredited  investor and that all  information
provided by such Investor in the Purchaser  Questionnaire  executed simultaneous
herewith is true and correct as of the Initial Closing Date.

<PAGE>

     3.9   ACCESS  TO  INFORMATION.  Such Investor acknowledges that the Company
has made  available  to him the  opportunity  to ask  questions  of, and receive
answers from, the management of the Company  concerning the terms and conditions
of this  Agreement  and the business,  financial  condition and prospects of the
Company and to obtain additional information to the extent the Company possesses
such  information  or can  acquire it without  unreasonable  effort or  expense,
necessary to verify the accuracy of the information given to the Investor in the
SEC  Documents  or  otherwise  to  make  an  informed  investment  decision  and
acknowledges  that all material  documents,  records and books pertaining to the
investment have, on request,  been made available to any advisors  designated by
the Investor to receive such information.

                                   ARTICLE IV
                                    COVENANTS

     4.1    APPOINTMENT   OF   DIRECTORS;   DIRECTORS  AND  OFFICERS  INSURANCE.
The holders of the Shares  shall be entitled to appoint one (1)  Director to the
Company's  Board of Directors until such time as a majority of the issued Shares
have been converted  into Common Stock.  The Company shall maintain at all times
from the date hereof and during the period which any person designated solely by
the  holders  of Shares to act as a  director  of the  Company  pursuant  to the
provisions of the Certificate of Designation of the Preferred  Stock, so acts as
a director,  an insurance policy or policies providing  liability  insurance for
directors,  officers,  employees,  agents or  fiduciaries  of the  Company of an
amount not less than FIVE MILLION DOLLARS  ($5,000,000),  which is now currently
in effect.  The designee of the holders of the Preferred  Stock shall be covered
by such policy or policies in accordance  with its or their terms to the maximum
extent of the coverage available for any such director, officer, employee, agent
or fiduciary under such policy or policies.  In addition,  such designee will be
entitled to the full and complete indemnification by the Company as permitted by
applicable law.

     4.2   SEC REPORTS. So long as any Shares are outstanding  the Company shall
(a) within 15 days of each  required  filing date  (i.e.,  the date on which the
reports or other  documents  are  required to be filed with the SEC  pursuant to
Sections  13(a) and 15(d),  (b)  transmit by mail to all  holders of Shares,  as
their names and addresses  appear in the corporate books and records  maintained
by the Company,  without  cost to such  holders,  copies of the annual  reports,
quarterly reports and other documents which the Company is required to file with
the SEC  pursuant  to  Sections  13(a) and 15(d) of the  Exchange  Act,  and (c)
transmit to all holders any and all documents or materials distributed to all of
the holders of the Common  Stock  simultaneously  with the  distribution  to the
holders of Common Stock.

                                    ARTICLE V
                               REGISTRATION RIGHTS

     5.1   CERTAIN  DEFINITIONS.  As  used   in this  Article  V,  the following
terms shall have the following respective meanings:

<PAGE>

           "Holders" shall mean the holders of Registrable Securities.

           "Initiating  Holders" shall mean any persons who in the aggregate are
Holders of at least a  majority  of the  voting  power  held by all  outstanding
Registrable Securities.

           "Registrable  Securities"  shall mean (i) the  Conversion  Shares and
(ii) any Common  Stock issued in respect  thereof  upon any stock  split,  stock
dividend, recapitalization or similar event.

           "Requesting  Stockholders"  shall mean holders of  securities  of the
Company  entitled to have securities  included in any  registration  pursuant to
Section 5.2 and who shall request such inclusion.

           The terms "register,"  "registered" and "registration" shall refer to
a  registration  effected by preparing  and filing a  registration  statement in
compliance  with  the  Securities  Act  and  applicable  rules  and  regulations
thereunder,  and  the  declaration  or  ordering  of the  effectiveness  of such
registration statement.

           "Registration  Expenses"  shall  mean all  expenses  incurred  by the
Company in  compliance  with  Sections  5.2 and 5.3 hereof,  including,  without
limitation,  all  registration  and filing  fees,  printing  expenses,  fees and
disbursements of counsel for the Company, blue sky fees and expenses, reasonable
fees and  disbursements  of one counsel  for all the selling  Holders for a "due
diligence"  examination  of the Company,  and the expense of any special  audits
incident to or required by any such registration (but excluding the compensation
of regular  employees  of the  Company,  which shall be paid in any event by the
Company).

           "Selling Expenses" shall mean all underwriting  discounts and selling
commissions  applicable to the sale of  Registrable  Securities and all fees and
disbursements of counsel for any Holder, except as otherwise provided herein.

           "Underwritten   Offering"   shall  mean  the  offering  and  sale  of
Registrable   Securities  in  a  registration  pursuant  to  a  firm  commitment
underwriting  to an  underwriter  at a fixed price for reoffering or pursuant to
agency or best efforts arrangements with a placement agent or underwriter.

     5.2   DEMAND REGISTRATION

     (a)   REQUESTS  FOR  REGISTRATION.  At any time after thirty (30) days from
the date of this Agreement the Initiating Holders may request registration under
the Securities Act of all or part of their  Registrable  Securities.  Within ten
(10) days after  receipt of any such  request,  the  Company  will give  written
notice of such  requested  registration  to all  other  Holders  of  Registrable
Securities and any other stockholder having registration rights which entitle it
to  participate  in  such  registration.   The  Company  will  include  in  such
registration  all  Registrable  Securities with respect to which it has received
written requests for inclusion therein within fifteen (15) days after receipt

<PAGE>

of the Company's  notice.  The Company  shall cause its  management to cooperate
fully and to use its best efforts to support the registration of the Registrable
Securities  and  the  sale  of  the  Registrable  Securities  pursuant  to  such
registration as promptly as is practicable.  Such cooperation shall include, but
not be limited to,  management's  attendance  and  reasonable  presentations  in
respect of the Company at road shows with respect to the offering of Registrable
Securities.  All registrations  requested under this Section 5.2(a) are referred
to herein as "Demand  Registrations." The Holders of Registrable Securities will
be entitled to request one Demand  Registration  hereunder.  A registration will
not count as a Demand  Registration  until it has become  effective.  Should the
Demand  Registration  not be filed by the Company  within sixty (60) days of the
date of the Company's  written notice to the Holders of Registrable  Securities,
then the Company shall pay to all the Holders of  Registrable  Securities,  on a
pro rata basis, as liquidated damages, the sum of FIVE THOUSAND DOLLARS ($5,000)
per day for  each  day  beyond  the  sixty  (60)  day  period  that  the  Demand
Registration has not become effective.

     (b)   DEMAND REGISTRATION EXPENSES. The Company will pay up to an aggregate
of TWENTY THOUSAND DOLLARS ($20,000) of Registration Expenses in connection with
a Demand Registration hereunder.  The Requesting Stockholders shall be obligated
to pay their pro rata share (based on the number of their Registrable Securities
included  in  the  registration  statement)  of  any  Registration  Expenses  in
connection  with a Demand  Registration  which exceed  TWENTY  THOUSAND  DOLLARS
($20,000)  in the  aggregate.  The  Requesting  Stockholders  shall also pay all
Selling Expenses  attributable to the sale of their  securities  pursuant to any
Demand   Registration,   including   their  pro  rata  share  of  all  fees  and
disbursements  of  counsel  for the  Holders  in  connection  with  such  Demand
Registration.

     (c)   PRIORITY  ON DEMAND  REGISTRATIONS.  If a Demand  Registration  is an
Underwritten  Offering,  and the  managing  underwriters  advise the  Company in
writing that in their opinion the number of Registrable  Securities requested to
be included  exceeds the number which can be sold in such offering,  the Company
will include in such registration such number of shares, which in the opinion of
such  underwriters,  may be  sold,  allocated  among  the  Holders  electing  to
participate  and all other persons  entitled to and electing to participate  pro
rata in accordance with the amounts of securities requested to be so included by
the respective Holders and other persons.

     (d)   RESTRICTIONS  ON  DEMAND  REGISTRATION.   The  Company  will  not  be
obligated  to effect any  Demand  Registration  within six (6) months  after the
effective  date of a previous  registration  in which the Holders of Registrable
Securities  were given  piggyback  rights  pursuant  to Section 5.3 other than a
registration of Registrable Securities intended to be offered on a continuous or
delayed basis under Rule 415 or any successor rule under the Securities Act.

     5.3   PIGGYBACK REGISTRATIONS

     (a)   RIGHT TO PIGGYBACK.  Whenever the Company proposes to register any of
its  securities  under the  Securities  Act  (other  than  pursuant  to a Demand
Registration)  and  the  registration  form  to be  used  may be  used  for  the
registration and contemplated disposition of

<PAGE>

Registrable  Securities  (a  "Piggyback  Registration"),  the Company  will give
prompt written notice to all Holders of Registrable  Securities of its intention
to effect such a registration  so that such notice is received by each Holder at
least  twenty (20) days before the  anticipated  filing  date.  The Company will
include in such  registration  all Registrable  Securities with respect to which
the Company has received written requests for inclusion  therein within ten (10)
days after the receipt of the Company's notice.

     (b)   PIGGYBACK EXPENSES.  In connection with each Piggyback  Registration,
all of the Registration  Expenses of the Holders of Registrable  Securities will
be paid by the Company and such  Holders  shall pay all of the Selling  Expenses
attributable  to  the  sale  of  their  securities  pursuant  to  the  Piggyback
Registration,  including their pro rata share of all fees and  disbursements  of
counsel for the Holders in connection with such Piggyback Registration.

     (c)   PRIORITY ON PRIMARY REGISTRATIONS.  If a Piggyback Registration is an
underwritten  primary  registration  on behalf of the Company,  and the managing
underwriters   advise  the  Company  in  writing  that  in  their   opinion  the
distribution of the Registrable  Securities to be included concurrently with the
securities being registered on behalf of the Company would materially  adversely
affect the  distribution  of such  securities  by the Company,  the Company will
include in such  registration  (i) first, the securities the Company proposes to
sell, (ii) second, the Registrable Securities and securities of the Company with
respect to which similar  registration  rights have  heretofore been granted and
requested to be included in such  registration,  pro rata in accordance with the
amounts  of  Registrable  Securities  and  such  securities  requested  to be so
included  by the  respective  Holders  and  holders  of such  securities  of the
Company;  and (iii) third, any other securities requested to be included in such
registration.

     (d)   PRIORITY ON SECONDARY  REGISTRATIONS.  If a Piggyback Registration is
an  underwritten  secondary  registration  on behalf of holders of the Company's
securities,  and the managing underwriters advise the Company in writing that in
their  opinion the  distribution  of the  Registrable  Securities to be included
concurrently with the securities being registered on behalf of the Company would
materially  adversely affect the distribution of such securities by the Company,
the  Company  will  include  in such  registration  (i)  first,  the  securities
requested to be included  therein by the holders  requesting such  registration,
(ii) second,  the  Registrable  Securities  and  securities  of the Company with
respect to which similar  registration  rights have  heretofore been granted and
requested to be included in such  registration,  pro rata in accordance with the
amounts  of  Registrable  Securities  and  such  securities  requested  to be so
included  by the  respective  Holders  and  holders  of such  securities  of the
Company,  and (iii)  third,  other  securities  requested to be included in such
registration.

     5.4   HOLDBACK AGREEMENTS.

     (a)   Each  Holder  of  Registrable  Securities  which  is a party  to this
Agreement  agrees  not to  effect  any  public  sale or  distribution  of equity
securities of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven (7)

<PAGE>

days prior to and the  90-day  period  beginning  on the  effective  date of any
underwritten  Demand  Registration  in  which  the  Holder  participates  or any
underwritten  Piggyback Registration in which the Holder participates (except as
part of such  underwritten  registration  or with the  consent  of the  managing
underwriter).

     (b)   The Company agrees (i) not to effect any public sale or  distribution
of its equity securities,  or any securities convertible into or exchangeable or
exercisable  for such  securities,  during  the seven (7) days  prior to and the
90-day  period  beginning  on the  effective  date  of any  underwritten  Demand
Registration or any underwritten  Piggyback  Registration (except (A) as part of
such underwritten registration, (B) with the consent of the managing underwriter
or (C)  pursuant  to  registrations  on Form S-8 or any other  similar  form for
employee  benefit  plans),  and (ii) to use its reasonable best efforts to cause
each holder of its equity  securities,  or any  securities  convertible  into or
exchangeable or exercisable for such  securities,  purchased from the Company at
any time after the date of this  Agreement  (other than in a  registered  public
offering)  to agree not to effect any public  sale or  distribution  of any such
securities during such period (except as part of such underwritten registration,
if otherwise permitted or with the consent of the managing underwriter).

     5.5   REGISTRATION   PROCEDURES.   Whenever  the  Holders  of   Registrable
Securities have requested that any Registrable Securities be registered pursuant
to this  Article  V, the  Company  will  use its  best  efforts  to  effect  the
registration and the sale of such Registrable  Securities in accordance with the
intended method of disposition thereof, and pursuant thereto the Company will as
expeditiously as possible:

     (a)   prepare and file with the  Commission a  registration  statement with
respect to such Registrable Securities,  which registration statement will state
that the  Holders  of  Registrable  Securities  covered  thereby  may sell  such
Registrable  Securities  either  under such  registration  statement  or, at any
Holder's  proper  request,  pursuant  to Rule 144 (or any  similar  rule then in
effect), and use its best efforts to cause such registration statement to become
effective (provided that before filing a registration statement or prospectus or
any amendments or supplements  thereto,  the Company will furnish to the counsel
selected by the Holders of a majority of the Registrable  Securities  covered by
such registration  statement copies of all such documents  proposed to be filed,
which documents will be subject to the review and approval of such counsel);

     (b)   prepare and file with the Commission  such amendments and supplements
to such registration  statement and the prospectus used in connection  therewith
as may be necessary to keep such registration statement effective for the period
set forth in  Section  5.5(k)  hereof  and  comply  with the  provisions  of the
Securities Act with respect to the disposition of all securities covered by such
registration  statement  during  such  period in  accordance  with the  intended
methods of  disposition  by the sellers  thereof set forth in such  registration
statement;

     (c)   furnish  to each  Holder of  Registrable  Securities  covered by such
registration  such  number  of  copies  of  such  registration  statement,  each
amendment and supplement  thereto,  the prospectus included in such registration
statement (including each preliminary prospectus) and such

<PAGE>

other documents as such Holder may reasonably request in order to facilitate the
disposition of the Registrable Securities;

     (d)   use  its  best  efforts  to  register  or  qualify  such  Registrable
Securities  covered by such registration under such other securities or blue sky
laws of such jurisdictions as any Holder reasonably  requests and do any and all
other acts and things which may be  reasonably  necessary or advisable to enable
the Holders thereof to consummate the disposition in such  jurisdictions  of the
Registrable  Securities as requested by such Holders  (provided that the Company
will not be required  to qualify  generally  to do business in any  jurisdiction
where it would not  otherwise  be required  to qualify but for this  subsection,
subject  itself to  taxation  in any such  jurisdiction,  or  consent to general
service of process in any such jurisdiction);

     (e)   notify  each  Holder  of  Registrable   Securities  covered  by  such
registration,  at any time when a prospectus  relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a result of
which the prospectus included in such registration  statement contains an untrue
statement  of a material  fact or omits to state any fact  necessary to make the
statements therein not misleading, and, the Company will prepare a supplement or
amendment  to  such  prospectus  so  that,  such  prospectus  (or  any  document
incorporated  therein by  reference)  will not contain an untrue  statement of a
material fact or omit to state any fact necessary to make the statements therein
not misleading;

     (f)   cause all such Registrable Securities to be listed on each securities
exchange or automated quotation system on which similar securities issued by the
Company are then listed or quoted;

     (g)   provide a  transfer  agent  and  registrar  for all such  Registrable
Securities not later than the effective date of such registration statement;

     (h)   enter  into such  customary  agreements  (including  an  underwriting
agreement in customary form) and take all such other actions as the Holders of a
majority of the Registrable  Securities being sold or the underwriters,  if any,
reasonably  request in order to expedite or facilitate  the  disposition of such
Registrable Securities (including, without limitation, using its best efforts to
effect a stock split or a combination of shares);

     (i)   make available for inspection by any Holder of Registrable Securities
covered by such registration,  any underwriter  participating in any disposition
pursuant to such registration statement,  and any attorney,  accountant or other
agent  retained  by any such  seller or  underwriter,  all  financial  and other
records,  pertinent corporate documents and properties of the Company, and cause
the  Company's  officers,  directors  and  employees  to supply all  information
reasonably requested by any such seller,  underwriter,  attorney,  accountant or
agent in connection with such registration statement;

<PAGE>

     (j)   otherwise  use its best efforts to comply with all  applicable  rules
and  regulations  of the  SEC,  and make  generally  available  to its  security
holders,  earnings statements  satisfying the provisions of Section 11(a) of the
Securities  Act, no later than 45 days after the end of any 12-month  period (i)
commencing at the end of any fiscal quarter in which Registrable  Securities are
sold and (ii)  beginning  with the first  month of the  Company's  first  fiscal
quarter commencing after the effective date of the registration statement, which
statements shall cover said 12-month periods; and

     (k)   keep each registration  statement  effective for a period of one year
after the effective date of such registration statement, except in the case of a
Form S-3 Registration Statement which shall continue to remain effective.

     5.6   INDEMNIFICATION.   In  the  event  of  any  registration   under  the
provisions of this Article V, the Company,  to the extent permitted by law, will
indemnify any Holder participating in such registration, its respective officers
and directors,  if any, and each person, if any, who controls such Holder within
the meaning of Section 15 of the  Securities  Act,  against all losses,  claims,
damages  and  liabilities  caused by any untrue  statement  of a  material  fact
contained  in the  registration  statement  or  prospectus  (and as  amended  or
supplemented  if the Company shall have  furnished any amendments or supplements
thereto), or caused by any omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading and
will  reimburse  such Holder its officers and directors and any person,  if any,
who controls such Holder within the meaning of Section 15 of the Securities Act,
against any legal or other expenses reasonably incurred by such Holder, officer,
director  or person in  connection  with  investigating  or  defending  any such
losses, claims, damages and liabilities,  except insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or omission  contained
in information  furnished in writing to the Company by such Holder participating
in  such  registration  or  by  underwriters  expressly  for  use  therein.  The
obligation of the Company under this Article V to register securities for any of
the  Holders  shall be subject to the  condition  that each such  Holder and the
underwriters  involved in the offering  shall  furnish to the Company in writing
such  information  as shall be  reasonably  requested  by the Company for use in
connection with the preparation of any such registration statement or prospectus
and, to the extent permitted by law, shall indemnify the Company,  its directors
and officers,  any other  underwriter,  the other Holders  participating in such
registration  and each person,  if any,  who  controls  the  Company,  any other
underwriter  or such  other  Holders,  within  the  meaning of Section 15 of the
Securities Act, against all losses,  claims,  damages and liabilities  caused by
any untrue  statement  or omission  contained  in  information  so  furnished in
writing to the  Company by such  Holder or such  underwriter  expressly  for use
therein.

     5.7   CONTRIBUTION.  If the indemnification  provided for in this Article V
from the  indemnifying  party is unavailable as a matter of law or public policy
to any indemnified party hereunder in respect of any losses,  claims, damages or
liabilities  referred  to  herein,  then  the  indemnifying  party,  in  lieu of
indemnifying  such  indemnified  party,  shall  contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities  in such  proportion as is appropriate to reflect the relative fault
of the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages

<PAGE>

or  liabilities,  as well as any other relevant  equitable  considerations.  The
relative  fault of such  indemnifying  party and  indemnified  parties  shall be
determined by reference to, among other things,  whether any action in question,
including any untrue or alleged untrue  statement of a material fact or omission
or alleged  omission to state a material  fact,  has been made by, or relates to
information supplied by, such indemnifying party or indemnified parties, and the
parties'  relative intent,  knowledge,  access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party under this
Article V as a result of the losses, claims, damages and liabilities referred to
above shall be deemed to include any legal or other fees or expenses  reasonably
incurred by such party in connection with any  investigation or proceeding.  The
parties  hereto agree that it would not be just and  equitable  if  contribution
pursuant to this Section 5.7 were  determined  by pro rata  allocation or by any
other  method  of  allocation  which  does not  take  account  of the  equitable
considerations referred to herein.

     5.8   TERMINATION. The registration rights provided in this Article V shall
terminate as to any  Investor  which can  immediately  sell all of the shares of
Common Stock issued or issuable to such Investor  upon  conversion of the Shares
in a single sale pursuant to Rule 144 under the Securities Act.

                                   ARTICLE VI
                                   INDEMNITIES

     6.1   INDEMNITY OF INVESTORS. Each Investor, severally, agrees to indemnify
and hold  harmless the Company and each other  person,  if any, who controls the
Company  within the meaning of Section 15 of the Act,  against any and all loss,
liability,  claim, damage and expense whatsoever (including, but not limited to,
any  and  all  expenses  reasonably  incurred  in  investigating,  preparing  or
defending   against  any  litigation   commenced  or  threatened  or  any  claim
whatsoever) arising out of or based upon any false representation or warranty or
breach or failure by such Investor to comply with any covenant or agreement made
by such Investor  herein or in any other  document  furnished by the Investor to
any of the foregoing in connection  with this  transaction.  The Company  hereby
acknowledges that no Investor shall have any liability for a breach by any other
Investor of any representation, warranty or agreement hereunder.

     6.2   INDEMNITY  OF  COMPANY.  The  Company  agrees to  indemnify  and hold
harmless the Investors,  against any and all loss, liability,  claim, damage and
expense  whatsoever  (including,  but not  limited  to,  any  and  all  expenses
reasonably  incurred  in  investigating,  preparing  or  defending  against  any
litigation  commenced or threatened or any claim  whatsoever)  arising out of or
based  upon any false  representation  or  warranty  or breach or failure by the
Company to comply with any covenant or agreement  made by the Company  herein or
in any other  document  furnished  by the  Company  to any of the  foregoing  in
connection with this transaction.

     6.3   NOTICE TO INDEMNIFYING  PARTY. Each party entitled to indemnification
under this Article VI (the  "Indemnified  Party") shall give notice to the party
required to provide  indemnification  (the "Indemnifying  Party") promptly after
such Indemnified Party has actual

<PAGE>

knowledge of any claim as to which indemnity may be sought, and shall permit the
Indemnifying  Party to assume the  defense  of any such claim or any  litigation
resulting  therefrom,  PROVIDED,  that counsel for the  Indemnifying  Party, who
shall conduct the defense of such claim or any litigation  resulting  therefrom,
shall  be  approved  by the  Indemnified  Party  (whose  approval  shall  not be
unreasonably  withheld),  and the  Indemnified  Party  may  participate  in such
defense at such party's expense, and PROVIDED,  FURTHER, that the failure of any
Indemnified  Party to give  notice as  provided  herein  shall not  relieve  the
Indemnifying  Party of its obligations under this Article VI unless such failure
has had a material adverse effect on the defense against such claim. The parties
to this  Agreement  reserve any rights to claim under this Agreement for damages
actually  incurred  by reason of any  failure of the  Indemnified  Party to give
prompt notice of a claim. To the extent counsel for the Indemnifying Party shall
in such  counsel's  reasonable  judgment,  have a conflict  in  representing  an
Indemnified   Party  in  conjunction  with  the  Indemnifying   Party  or  other
Indemnified  Parties,  such  Indemnified  Party  shall be  entitled  to separate
counsel at the expense of the Indemnifying Party subject to the approval of such
counsel by the  Indemnified  Party  (whose  approval  shall not be  unreasonably
withheld).  No  Indemnifying  Party,  in  the  defense  of  any  such  claim  or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement  which does not include as an
unconditional  term  thereof  the giving by the  claimant or  plaintiff  to such
Indemnified  Party of a release  from all  liability in respect of such claim or
litigation.  Each  Indemnified  Party shall furnish such  information  regarding
itself or the claim in question as an Indemnifying  Party may reasonably request
in writing and as shall be reasonably required in connection with the defense of
such claim and any litigation resulting therefrom.

                                   ARTICLE VII
                           SURVIVAL OF REPRESENTATIONS

     7.    SURVIVAL OF  REPRESENTATIONS.  The  respective   representations  and
warranties of the Company and the Investors  contained in this  Agreement  shall
survive the Closing for a period of two years.

                                  ARTICLE VIII
                                  MISCELLANEOUS

     8.1   KNOWLEDGE OF THE COMPANY.  Where any  representation or warranty made
by the Company  contained in this Agreement is expressly  qualified by reference
to its  knowledge,  such  knowledge  shall be deemed  to exist if the  matter is
within the knowledge of the executive officers of the Company.

     8.2   EXPENSES The parties hereto shall pay their own expenses  relating to
the transactions contemplated by this Agreement,  including, without limitation,
the fees and expenses of their respective counsel and financial advisers.

<PAGE>

     8.3   GOVERNING LAW. The interpretation and construction of this Agreement,
and all matters relating  hereto,  shall be governed by the laws of the State of
New York  applicable  to agreements  executed and to be performed  solely within
such State.

     8.4   CAPTIONS.  The  Article  and  Section  captions  used  herein are for
reference  purposes  only,  and  shall  not in any way  affect  the  meaning  or
interpretation of this Agreement.

     8.5   NOTICES.  Any notice or other  communication  required  or  permitted
under this Agreement shall be sufficiently  given if delivered in person or sent
by telecopy or by registered or certified mail,  postage  prepaid,  addressed as
follows:  if to any  Investor,  to the  address  set forth on Exhibit A attached
hereto set forth below such  Investor's  name;  and if to the Company,  to it at
2500  Westchester  Avenue,  Suite 304,  Purchase,  New York 10577 (Facsimile No.
914-251-0335) Attention:  Gary Allanson,  President and Chief Executive Officer,
with a copy to its counsel,  Wolf,  Block,  Schorr and Solis-Cohen LLP, 250 Park
Avenue,  New York, New York 10177  (Facsimile  Number  212-986-0604)  Attention:
Martin R. Bring,  , Esq.,  or such other address or number as shall be furnished
in writing by any such party, and such notice or  communication  shall be deemed
to have been  given upon  automatic  confirmation  of  receipt by the  receiving
machine if sent by  telecopier,  upon delivery if delivered in person,  and upon
mailing if mailed.

     8.6   PARTIES  IN  INTEREST  .  This  Agreement  may  not  be  transferred,
assigned,  pledged or hypothecated by any party hereto,  other than by operation
of law. This  Agreement  shall be binding upon and shall inure to the benefit of
the  parties  hereto  and their  respective  heirs,  executors,  administrators,
successors and permitted assigns.

     8.7   COUNTERPARTS.   This  Agreement  may  be  executed  in  two  or  more
counterparts, all of which taken together shall constitute one instrument.

     8.8   ENTIRE AGREEMENT. This Agreement,  including the exhibits, schedules,
and other documents  referred to herein and therein which form a part hereof and
thereof,  contain the entire understanding of the parties hereto with respect to
the subject matter contained herein and therein.  This Agreement  supersedes all
prior  agreements  and  understandings  between the parties with respect to such
subject matter.

     8.9   AMENDMENTS.  This Agreement may not be changed orally, but only by an
agreement in writing signed by the Investors and the Company.

     8.10  SEVERABILITY.  In case any provision in this Agreement  shall be held
invalid, illegal or unenforceable,  the validity, legality and enforceability of
the  remaining  provisions  hereof  will not in any way be  affected or impaired
thereby.

     8.11  THIRD  PARTY  BENEFICIARIES.  Each  party  hereto  intends  that this
Agreement  shall not  benefit  or  create  any right or cause of action in or on
behalf of any person other than the parties hereto.

<PAGE>

     8.12  JURISDICTION.  Any  judicial  proceeding  brought  against any of the
parties to this  Agreement or any dispute  arising out of this  Agreement or any
matter  related  hereto shall be brought in the courts of the State of New York,
or in the United States  District  Court for the Southern  District of New York,
and, by execution  and delivery of this  Agreement,  each of the parties to this
Agreement  accepts the  jurisdiction  of such courts.  The foregoing  consent to
jurisdiction  shall not be deemed to confer  rights on any Person other than the
respective parties to this Agreement.

     8.13  AVAILABILITY OF EQUITABLE REMEDIES.  Since a breach of the provisions
of this Agreement  could not  adequately be  compensated  by money damages,  any
party shall be entitled,  either before or after any Closing, in addition to any
other right or remedy available to it, to an injunction  restraining such breach
or a threatened breach and to specific performance of any such provision of this
Agreement,  and in either  case no bond or other  security  shall be required in
connection  therewith,  and the parties  hereby  consent to the issuance of such
injunction and to the ordering of specific performance.

     IN WITNESS  WHEREOF,  the  Investors  have  signed this  Agreement  and the
Company has caused its corporate name to be hereunto  subscribed by its officers
thereunto duly authorized, all as of the day and year first above written.

                                            INTERNATIONAL DISPENSING CORPORATION

                                            BY: /s/Gary Allanson
                                                --------------------
                                                Name: Gary Allanson
                                                Title:   President

                                            INVESTORS:

                                            /s/ Gregory B. Abbott
                                            ------------------------
                                            GREGORY B. ABBOTT

                                            /s/ George V. Kriste
                                            ------------------------
                                            GEORGE V. KRISTE

                                            /s/ Louis Simpson
                                            ------------------------
                                            LOUIS SIMPSON

                                            /s/ Gary Allanson
                                            ------------------------
                                            GARY ALLANSON

<PAGE>

                                                                       EXHIBIT A

                                    INVESTORS

                                                            Percentage of Shares
Name                        Address                            to be Purchased

Gregory B. Abbott           120 Kessler Drive                       31.43 %
                            Aspen, Colorado 81611

George V. Kriste            20643 Seabord Road                      31.43%
                            Malibu, California 90265

Louis Simpson               c/o Plaza Investment Managers, Inc.     31.43%
                            5951 La Sendita, Building A
                            Rancho Santa Fe, California 92067

Gary Allanson               275 Long Point Road                     5.71%
                            Crownsville, Maryland 21032

<PAGE>

                                                                       EXHIBIT B

                                   CALL NOTICE

                      INTERNATIONAL DISPENSING CORPORATION
                       2500 Westchester Avenue, Suite 304

                            Purchase, New York 10574

         Reference is made to the Preferred stock Purchase Agreement dated as of
September  23,  1999 by and  among  International  Dispensing  Corporation  (the
"Company")  and  certain  investors  (the   "Investors"),   including  you  (the
"Agreement").  Unless otherwise  defined herein,  capitalized  terms used herein
have the same meanings herein as in the Agreement.

         In  accordance  with  Section  1.2(a) of the  Agreement  you are hereby
notified  that the Company will sell to the Investors at a closing to be held on
[not less than 45 days after the date of this Call Notice] ____ Shares.

         In accordance  with Section 1.2(a) of the Agreement you are required to
notify the Company  within 45 days after the giving of this Call Notice how many
of such ________ Shares you shall purchase.

                                            Very truly yours,

                                            INTERNATIONAL DISPENSING CORPORATION

                                            BY:
                                               ---------------------------------

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