Document:

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Exhibit 10.24

                          SALE PARTICIPATION AGREEMENT

June 21, 2000

Mr. G. Wade Lewis
Domaine de la Valette
St. John, Jersey JE34AA
Channel Islands

Dear Wade:

         You have entered into a Restricted Stock Award Agreement, dated as of
June 21, 2000 (the "Restricted Stock Agreement"), between Spalding Holdings
Corporation, a Delaware corporation ("the Company"), and you relating to the
grant by the Company to you of shares of the common stock, par value $.01 per
share, of the Company ("Common Stock"). The undersigned, KKR Partners II, L.P.,
a Delaware limited partnership ("KKR Partners"), and Strata Associates, L.P., a
Delaware limited partnership ("Strata Associates"), also have purchased shares
of Common Stock and hereby agree with you as follows, effective upon such
purchase of Common Stock by you:

         1. In the event that at any time KKR Partners or Strata Associates, as
the case may be, (each a "Selling Partnership") and collectively, the "Selling
Partnerships"), proposes to sell for cash or any other consideration any shares
of Common Stock owned by it, in any transaction other than a Public Offering (as
defined in the Restricted Stock Agreement) or a sale to an affiliate of KKR
Partners or Strata Associates, as the case may be, the Selling Partnership will
notify you or your Restricted Stock Estate or Participant's Trust (as such terms
are defined in Section 5 of the Restricted Stock Agreement), as the case may be,
in writing (a "Notice") of such proposed sale (a "Proposed Sale") and the
material terms of the Proposed Sale as of the date of the Notice (the "Material
Terms") promptly, and in any event not less than 15 days prior to the
consummation of the Proposed Sale and not more than 5 days after the execution
of the definitive agreement relating to the Proposed Sale, if any (the "Sale
Agreement"). If within 10 days of your or your Participant's Estate's or
Participant's Trust's, as the case may be, receipt of such Notice the Selling
Partnership receives from you or your Purchaser's Estate or Purchaser's Trust,
as the case may be, a written request (a "Request") to include Common Stock held
by you or your Participant's Estate or Participant's Trust, as the case may be,
in the Proposed Sale (which Request shall be irrevocable unless (a) there shall
be a material adverse change in the Material Terms or (b) if otherwise mutually
agreed to in writing by you or your Participant's Estate or Participant's Trust,
as the case may be, and the Selling Partnership), the Common Stock held by you
will be so included as provided herein; provided that only one Request, which
shall be executed by you or your Participant's Estate or Participant's Trust, as
the case may be, may be delivered with respect to any Proposed Sale for all
Common Stock held by you or your Participant's Estate or Participant's Trust.
Promptly after the consummation of the transactions contemplated thereby, the
Selling Partnership will furnish you, your Participant's Trust or your
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Participant's Estate with a copy of the Sale Agreement, if any. In the event
that both KKR Partners and Strata Associates propose to sell shares of Common
Stock in the Proposed Sale, the term "Selling Partnership" shall refer only to
Strata Associates and not to KKR Partners.

         2. The number of shares of Common Stock which you or your Participant's
Estate or Participant's Trust, as the case may be, will be permitted to include
in a Proposed Sale pursuant to a Request will be the lesser of (a) the sum of
the number of shares of Common Stock then owned by you or your Purchaser's
Estate or Participant's Trust, as the case may be, plus all shares of Common
Stock which you are then entitled to acquire under an unexercised option to
purchase shares of Common Stock, to the extent such option is then vested or
would become vested as a result of the consummation of the Proposed Sale and (b)
the sum of the shares of Common Stock then owned by you or your Participant's
Estate or Participant's Trust, as the case may be, plus all shares of Common
Stock which you are entitled to acquire under an unexercised option to purchase
shares of Common Stock, whether or not fully vested, multiplied by a percentage
calculated by dividing the aggregate number of shares of Common Stock which KKR
Partners and Strata Associates propose to sell in the Proposed Sale by the total
number of shares of Common Stock owned by the Selling Partnership or, in the
case both KKR Partners and Strata Associates propose to sell in the Proposed
Sale, KKR Partners and Strata Associates. If one or more holders of shares of
Common Stock who have been granted the same rights granted to you or your
Purchaser's Estate or Purchaser's Trust, as the case may be, hereunder elect not
to include the maximum number of shares of Common Stock which such holders would
have been permitted to include in a Proposed Sale (the "Eligible Shares"), KKR
Partners or Strata Associates, or such remaining holders of shares of Common
Stock, or any of them, may sell in the Proposed Sale a number of additional
shares of Common Stock owned by any of them equal to their pro rata portion of
the number of Eligible Shares not included in the Proposed Sale, based on the
relative number of shares of Common Stock then held by each such holder, and
such additional shares of Common Stock which any such holder or holders propose
to sell shall not be included in any calculation made pursuant to the first
sentence of this Paragraph 2 for the purpose of determining the number of shares
of Common Stock which you or your Participant's Estate or Participant's Trust,
as the case may be, will be permitted to include in a Proposed Sale. KKR
Partners and Strata Associates, or any of them, may sell in the Proposed Sale
additional shares of Common Stock owned by any of them equal to any remaining
Eligible Shares which will not be included in the Proposed Sale pursuant to the
foregoing.

         3. Except as may otherwise be provided herein, shares of Common Stock
subject to a Request will be included in a Proposed Sale pursuant hereto and in
any agreements with purchasers relating thereto on the same terms and subject to
the same conditions applicable to the shares of Common Stock which the Selling
Partnership proposes to sell in the Proposed Sale. Such terms and conditions
shall include, without limitation: the sales price; the payment of fees,
commissions and expenses; the provision of, and representation and warranty as
to, information requested by Strata Associates; and the provision of requisite
indemnifications; provided that any indemnification provided by you, your
Participant's Estate or your Participant's Trust shall be pro rata in proportion
with the number of shares of Common Stock to be sold.

         4. Upon delivering a Request, you or your Participant's Estate or
Participant's Trust, as the case may be, will, if requested by the Selling
Partnership, execute and deliver a custody agreement and power of attorney in
form and substance satisfactory to the Selling
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Partnership with respect to the shares of Common Stock which are to be sold by
you or your Participant's Estate or Participant's Trust, as the case may be,
pursuant hereto (a "Custody Agreement and Power of Attorney"). The Custody
Agreement and Power of Attorney will provide, among other things, that you or
your Participant's Estate or Participant's Trust, as the case may be, will
deliver to and deposit in custody with the custodian and attorney-in-fact named
therein a certificate or certificates representing such shares of Common Stock
(duly endorsed in blank by the registered owner or owners thereof) and
irrevocably appoint said custodian and attorney-in-fact as your or your
Participant's Estate's or Participant's Trust's, as the case may be, agent and
attorney-in-fact with full power and authority to act under the Custody
Agreement and Power of Attorney on your or your Participant's Estate's or
Participant's Trust's, as the case may be, behalf with respect to the matters
specified therein.

         5. Your or your Participant's Estate's or Participant's Trust's, as the
case may be, right pursuant hereto to participate in a Proposed Sale shall be
contingent on your or your Participant's Estate's or Participant's Trust's, as
the case may be, strict compliance with each of the provisions hereof and your
or your Participant's Estate's or Participant's Trust's, as the case may be,
willingness to execute such documents in connection therewith as may be
reasonably requested by the Selling Partnership.

         6. The obligations of KKR Partners and Strata Associates hereunder
shall extend only to you or your Participant's Estate or Participant's Trust, as
the case may be, and no other of your or your Participant's Estate's or
Participant's Trust's, as the case may be, successors or assigns shall have any
rights pursuant hereto.

         7. This Agreement shall terminate and be of no further force and effect
on the fifth anniversary of the first occurrence of a Public Offering.

         8. All notices and other communications provided for herein shall be in
writing and shall be deemed to have been duly given when delivered to the party
to whom it is directed:

         (a)      If to KKR Partners or Strata Associates, to it at the
                  following address:

                  c/o Kohlberg Kravis Roberts & Co.
                  9 West 57th Street
                  New York, New York 10019

                  Attn:  Michael T. Tokarz

                  with a copy to:

                  Simpson Thacher & Bartlett
                  425 Lexington Avenue
                  New York, New York  10017

                  Attn:  Arthur D. Robinson, Esq.

         (b)      If to you, to you at the address first set forth above herein;
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         (c)      If to your Participant's Estate or Participant's Trust, at the
                  address provided to such partnerships by such entity;

or at such other address as any of the above shall have specified by notice in
writing delivered to the others by certified mail.

         9. The laws of the State of Delaware (or if the Company reincorporates
in another state, of that state) shall govern the interpretation, validity and
performance of the terms of this Agreement. No suit, action or proceeding with
respect to this Agreement may be brought in any court or before any similar
authority other than in a court of competent jurisdiction in the State of
Delaware (or if the Company reincorporates in another state, of that state) or
New York, as the Selling Partnerships may elect in their sole discretion, and
you hereby submit to the non-exclusive jurisdiction of such courts for the
purpose of such suit, proceeding or judgment. You hereby irrevocably waive any
right which you may have had to bring such an action in any other court,
domestic or foreign, or before any similar domestic or foreign authority.

         10. If KKR Partners or Strata Associates transfers its interest in the
Company to an affiliate of KKR Partners or Strata Associates, as the case may
be, such affiliate shall assume the obligations hereunder of KKR Partners or
Strata Associates, as the case may be.

         It is the understanding of the undersigned that you are aware that no
Proposed Sale presently is contemplated and that such a sale may never occur.

         This Agreement may be signed in counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument.
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                  If the foregoing accurately sets forth our agreement, please
acknowledge your acceptance thereof in the space provided below for that
purpose.

                                    Very truly yours,

                                    STRATA ASSOCIATES, L.P.

                                    By:  KKR ASSOCIATES (STRATA), L.P.

                                    By:  STRATA L.L.C.,
                                               as General Partner

                                         By:  /s/ Michael T. Tokarz
                                             --------------------------

                                    KKR PARTNERS II, L.P.

                                    By:  KKR ASSOCIATES (STRATA), L.P.

                                    By:  STRATA L.L.C.,
                                               as General Partner

                                    By:  /s/ Michael T. Tokarz
                                        -------------------------------

    Accepted and agreed to:

    By: /s/ G. Wade Lewis
       ----------------------
          G. Wade LewisExhibit 10.1

                          SECURITIES PURCHASE AGREEMENT

         This SECURITIES PURCHASE AGREEMENT  ("Agreement") is entered into as of
August  1,  2000,  by and  between  THCG,  Inc.,  a  Delaware  corporation  (the
"Company"),  with principal executive office located at 650 Madison Avenue, 21st
Floor, New York City, New York 10022, and Castle Creek Technology  Partners LLC,
an Illinois limited liability company ("Purchaser").

                                    RECITALS

         A.  The  Company  and  Purchaser  are  executing  and  delivering  this
Agreement in reliance upon the exemption from securities  registration  afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the United
States  Securities and Exchange  Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act").

         B. Purchaser desires to purchase,  and the Company desires to issue and
sell, upon the terms and conditions  stated in this Agreement,  (i) an amount of
the  Company's  Series A  Preferred  Stock as set  forth in the  Certificate  of
Designations  (the  "Certificate of  Designation")  attached hereto as Exhibit A
(the "Preferred Stock") which is convertible into shares of the Company's common
stock,  $0.01 per share par value (the "Common Stock") and (ii) a warrant in the
form of Exhibit B (the  "Warrant"  and,  when taken  together with the Preferred
Stock, the "Purchased  Securities") entitling the holder thereof to purchase the
number of shares (the "Warrant  Shares") of Common Stock as set forth below. The
shares of Common Stock issuable upon conversion of or otherwise  pursuant to the
Preferred Stock are referred to herein as the "Conversion Shares." The Preferred
Stock,  the  Warrant,   the  Conversion   Shares  and  the  Warrant  Shares  are
collectively referred to herein as the "Securities".

         C. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration  Rights Agreement
in the form attached hereto as Exhibit C (the "Registration  Rights Agreement"),
pursuant to which the Company has agreed to provide certain  registration rights
under the Securities Act, the rules and regulations  promulgated  thereunder and
applicable state securities laws.

                                   AGREEMENTS

         NOW, THEREFORE, in consideration of their respective promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are  hereby  acknowledged,  the  Company  and  Purchaser  hereby  agree as
follows:

<PAGE>

                                    ARTICLE I
                    PURCHASE AND SALE OF SECURITIES; SECURITY

         1.1 Purchase of Preferred  Stock and Warrant.  The  aggregate  purchase
price (the "Purchase Price") to be paid by Purchaser for the Preferred Stock and
Warrants being  purchased by Purchaser  hereunder  shall be Five Million Dollars
($5,000,000).  On the Closing Date (as defined herein), subject to the terms and
the  satisfaction (or waiver) of the conditions set forth in Articles VI and VII
of this Agreement,  the Company shall issue and sell to Purchaser, and Purchaser
shall  purchase from the Company (i) 5,000 shares of Preferred  Stock and (ii) a
Warrant  entitling  Purchaser to purchase  396,899 shares of Common Stock of the
Company pursuant to the terms thereof.

         1.2 Form of Payment.  At the Closing,  Purchaser shall pay the Purchase
Price for the Preferred  Stock and the Warrant by wire  transfer of  immediately
available funds to the Company,  in accordance with the Company's written wiring
instructions,  against delivery of a duly executed certificate for the Preferred
Stock and the duly executed Warrant and Registration  Rights Agreement,  and the
Company shall deliver to Purchaser such executed  certificate  for the Preferred
Stock and Warrant and executed Registration Rights Agreement against delivery of
such Purchase Price from Purchaser.

         1.3  Closing  Date.  Subject  to the  satisfaction  (or  waiver) of the
conditions  set forth in  Articles  VI and VII  below,  the date and time of the
issuance,  sale and purchase of the Preferred Stock and the Warrant  pursuant to
this Agreement (the "Closing")  shall be August 2, 2000. The Closing shall occur
at 11:00 a.m.  Chicago  time,  at the offices of Altheimer & Gray,  10 S. Wacker
Drive,  Chicago, IL 60606. The date of the Closing is hereinafter referred to as
the "Closing Date."

                                   ARTICLE II
                   PURCHASER'S REPRESENTATIONS AND WARRANTIES

         Purchaser  represents  and warrants to the Company as set forth in this
Article II. Purchaser makes no other  representations or warranties,  express or
implied, to the Company in connection with the transactions  contemplated hereby
and any and all prior  representations  and  warranties,  if any, which may have
been made by  Purchaser  to the  Company  in  connection  with the  transactions
contemplated  hereby shall be deemed to have been merged in this  Agreement  and
any such prior  representations  and  warranties,  if any, shall not survive the
execution and delivery of this Agreement.

         2.1 Purchase for Own Account.  Purchaser is  purchasing  the  Preferred
Stock and the  Warrant,  and will  purchase  the Warrant  Shares and acquire the
Conversion  Shares, for Purchaser's own account and not with a view toward or in
connection  with a public resale or  distribution  thereof,  except  pursuant to
sales that are exempt from the  registration  requirements of the Securities Act
and/or sales registered under the Securities Act.  Purchaser will not resell any
of the Purchased Securities or any securities which may be issued upon exercise,
exchange

<PAGE>

or  conversion  thereof  except  pursuant  to  sales  that are  exempt  from the
registration  requirements of the Securities Act and/or sales  registered  under
the  Securities  Act. The Purchaser  understands  that  Purchaser  must bear the
economic  risk  of this  investment  indefinitely,  unless  the  Securities  are
registered  pursuant to the Securities Act and any applicable  state  securities
laws or an exemption from such  registration is available,  and that the Company
has no  present  intention  of  registering  any such  Securities  other than as
contemplated by the Registration Rights Agreement. By making the representations
in this Section 2.1,  Purchaser  does not agree to hold any  Securities  for any
minimum or other  specific  term and reserves the right to dispose of any or all
of the  Securities at any time in accordance  with or pursuant to a registration
statement or an exemption from  registration  under the Securities Act and other
applicable state securities laws.

         2.2 Accredited Investor Status.  Purchaser is an "accredited  investor"
as that term is defined in Rule 501(a) of Regulation D.

         2.3 Reliance on Exemptions.  Purchaser  understands that the Securities
are being  offered and sold to Purchaser in reliance  upon  specific  exemptions
from the  registration  requirements  of the  United  States  federal  and state
securities  laws and that the Company is relying  upon the truth and accuracy of
the  representations  and  warranties  of Purchaser set forth herein in order to
determine the  availability  of such exemptions and the eligibility of Purchaser
to acquire the Securities.

         2.4  Information.  Purchaser  and its counsel have been  furnished  all
materials  relating to the business,  finances and operations of the Company and
materials relating to the offer and sale of the Purchased  Securities which have
been  specifically  requested  by  Purchaser.  Purchaser  has been  afforded the
opportunity  to ask  questions  of the Company and has received  what  Purchaser
believes to be complete and satisfactory answers to any such inquiries.  Neither
such materials or inquiries nor any other due diligence  investigation conducted
by Purchaser nor any of its representations, warranties, covenants or agreements
shall  modify,  amend  or  affect  Purchaser's  right  to rely on the  Company's
representations and warranties  contained in Article III. Purchaser  understands
that  Purchaser's  investment in the Securities  involves a high degree of risk,
and Purchaser represents that it can afford to lose its entire investment in the
Securities.

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

         2.6  Transfer  or  Resale.  Purchaser  understands  that (i)  except as
provided in the Registration Rights Agreement,  the Securities have not been and
are not being  registered under the Securities Act or any state securities laws,
and may not be  transferred  unless  subsequently  registered  thereunder  or an
exemption  from such  registration  is available  (which  exemption  the Company
expressly  agrees may be established as  contemplated  in clauses (b) and (c) of
Section 5.1 hereof or as otherwise may be permissible under the Securities Act);
(ii)  any  sale of such  Securities  made in  reliance  on Rule  144  under  the
Securities Act (or a successor rule) ("Rule 144") may be made only in accordance
with the terms of said Rule and  further,  if said Rule is not

<PAGE>

applicable,  any  resale  of such  Securities  without  registration  under  the
Securities  Act may  require  compliance  with some  other  exemption  under the
Securities  Act or the rules and  regulations of the SEC  thereunder;  and (iii)
neither  the Company nor any other  person is under any  obligation  to register
such  Securities  under the  Securities Act or any state  securities  laws or to
comply with the terms and conditions of any exemption  thereunder (in each case,
other than pursuant to this Agreement or the Registration Rights Agreement).

         2.7 Legends.  Purchaser  understands that, subject to Article V hereof,
the  certificates  for the Preferred  Stock, the Warrant and, until such time as
the sale by  Purchaser  of the  Conversion  Shares and Warrant  Shares have been
registered under the Securities Act as contemplated by the  Registration  Rights
Agreement  or  otherwise  may be sold by  Purchaser  pursuant  to Rule 144(k) or
otherwise without  registration,  the certificates for the Conversion Shares and
the  Warrant  Shares  will  bear a  restrictive  legend  (the  "Legend")  in the
following form:

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

Except  for the Legend in  accordance  with this  Section  2.7 and  Section  5.1
hereof, the Securities shall bear no other legend.

         2.8  Authorization;  Enforcement.  This Agreement and the  Registration
Rights Agreement have been duly and validly  authorized,  executed and delivered
on  behalf  of  Purchaser  and are valid and  binding  agreements  of  Purchaser
enforceable against Purchaser in accordance with their terms.

         2.9. No Conflicts.  The execution,  delivery and performance of each of
the Investment  Agreements (as defined herein) by Purchaser and the consummation
by Purchaser of the  transactions  contemplated  thereby do not and will not (a)
result in a violation of the certificate of formation or operating  agreement of
Purchaser,  (b) conflict  with,  or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of  termination,  amendment,  acceleration  or  cancellation  of, any
agreement,  indenture or  instrument  to which  Purchaser is a party (except for
such  conflicts,  defaults,   terminations,   amendments,   accelerations,   and
cancellations  as would not,  individually or in the aggregate,  have a material
adverse effect on the business and operation of  Purchaser),  or (c) result in a
violation of any law, rule,  regulation,  order,  judgment or decree (including,
without  limitation,  U.S.  federal

<PAGE>

and state securities laws and regulations)  applicable to Purchaser, or by which
any property or asset of Purchaser,  is bound, except for possible violations as
would not,  individually or in the aggregate,  be reasonably  expected to have a
material adverse effect on the business and operation of Purchaser .

         2.10     Residency. Purchaser is a resident of the State of Illinois.

                                   ARTICLE III
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         The Company represents and warrants to Purchaser that:

         3.1  Organization  and  Qualification.  The  Company  and  each  of its
subsidiaries is duly organized, validity existing and in good standing under the
laws of the  jurisdiction in which it is organized,  and has the requisite power
and  authority to own its  properties  and to carry on its business as now being
conducted.  The Company and each of its  subsidiaries  is duly  qualified  to do
business and is in good standing in every  jurisdiction  where the failure to so
qualify would have a Material  Adverse Effect.  "Material  Adverse Effect" means
any  material  adverse  effect  on (i)  the  business,  operations,  properties,
financial  condition,  or operating results of the Company and its subsidiaries,
taken as a whole on a consolidated  basis,  (ii) the  transactions  contemplated
hereby,  or (iii) the ability of the Company to perform  its  obligations  under
this Agreement,  the Preferred  Stock,  the Warrant or the  Registration  Rights
Agreement  (collectively,  the "Investment  Agreements");  provided,  however, a
"Material  Adverse Effect" as used herein shall not include such adverse effects
caused  primarily by (w)  fluctuations in the market value of securities held by
the Company or any of its subsidiaries, (x) adverse general economic conditions,
(y) adverse general industry conditions,  or (z) the sale of the Preferred Stock
and the Warrant pursuant hereto.

         3.2  Authorization;  Enforcement  . (a) The Company  has the  requisite
corporate power and authority  (including,  without limitation,  approval of the
Company's  Board of  Directors) to (i) enter into,  and perform its  obligations
under each of the  Investment  Agreements,  (ii)  issue,  sell and  perform  its
obligations  with respect to the  Preferred  Stock and the Warrant in accordance
with the terms  hereof and  thereof,  and (iii) issue the  Conversion  Shares in
accordance  with the terms and conditions of the Preferred Stock and the Warrant
Shares in  accordance  with the terms and  conditions  of the  Warrant;  (b) the
execution,  delivery and performance of this Agreement,  the Registration Rights
Agreement and the Warrant by the Company and the  consummation  by it of each of
the transactions  contemplated  hereby and thereby (including without limitation
the  issuance of the  Preferred  Stock and the Warrant and the  reservation  for
issuance and issuance of the Conversion Shares and the Warrant Shares) have been
duly  authorized by all  necessary  corporate  action and no further  consent or
authorization of the Company, its board of directors, or its stockholders or any
other person, body or agency is required with respect to any of the transactions
contemplated  hereby or thereby  (whether  under  rules of the  Nasdaq  National
Market ("Nasdaq"), the National Association of Securities Dealers or otherwise);
(c) this Agreement,  the

<PAGE>

Warrant  and the  Registration  Rights  Agreement  have been duly  executed  and
delivered by the Company; and (d) each of the Investment Agreements  constitutes
a legal,  valid and binding  obligation of the Company  enforceable  against the
Company in  accordance  with its terms,  except as  enforcement  thereof  may be
limited by (i) laws of general application  relating to bankruptcy,  insolvency,
moratorium,  reorganization or other similar laws of general  application,  both
state and federal,  affecting the  enforcement  of creditors'  rights,  and (ii)
principles of equity governing specific performance, injunctive relief and other
equitable remedies.

         3.3 Capitalization. The capitalization of the Company as of the date of
this  Agreement,  including the authorized  capital stock,  the number of shares
issued and outstanding,  the number of shares reserved for issuance  pursuant to
the  Company's  stock option plans,  the number of shares  reserved for issuance
pursuant  to  securities  (other  than the  Preferred  Stock  and the  Warrant),
directly or indirectly, exercisable for, or convertible into or exchangeable for
any shares of Common Stock and the number of shares to be initially reserved for
issuance  upon the  conversion  of the  Preferred  Stock and the exercise of the
Warrant, is set forth on Schedule 3.3. All of such outstanding shares of capital
stock  have been,  or upon  issuance  will be,  validly  issued,  fully paid and
non-assessable. No shares of capital stock of the Company (including the Warrant
Shares and the Conversion  Shares) are subject to preemptive rights or any other
similar rights of the  stockholders of the Company or any liens or encumbrances.
Except as disclosed in Schedule 3.3, as of the date of this Agreement, (i) there
are no outstanding options,  warrants,  scrip, rights to subscribe for, calls or
commitments  of any  character  whatsoever  relating to, or securities or rights
convertible into or exercisable or exchangeable for, directly or indirectly, any
shares of capital stock of the Company or any of its subsidiaries, or contracts,
commitments,  understandings  or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional  shares of capital stock
of the Company or any of its  subsidiaries,  and (ii) there are no agreements or
arrangements  under which the Company or any of its subsidiaries is obligated to
register the sale of any of its or their  securities  under the  Securities  Act
(except the Registration  Rights  Agreement).  The Company has furnished or made
available to Purchaser true and correct  copies of the Company's  Certificate of
Incorporation as currently in effect  ("Certificate of Incorporation"),  and the
Company's  By-laws as currently in effect (the  "By-laws").  The Company has set
forth on Schedule 3.3 all instruments and agreements (other than the Certificate
of  Incorporation  and  By-laws)  governing   securities   convertible  into  or
exercisable  or  exchangeable  for Common  Stock of the Company (and the Company
shall provide to Purchaser copies thereof upon the request of Purchaser). Except
as set forth on Schedule 3.3, the Company has no indebtedness for borrowed money
and no agreement  providing for indebtedness  for borrowed money.  Except as set
forth on Schedule  3.3,  the Company has no share  purchase  agreements,  rights
plans, agreements or instruments containing similar provisions and no agreements
containing anti-dilution provisions.  The Company shall provide Purchaser with a
written update of this  representation  signed by the Company's  Chief Executive
Officer or Chief  Financial  Officer on behalf of the  Company as of the Closing
Date and it shall be a condition  to  Purchaser's  obligations  at Closing  that
there are no material  changes  (other than changes in the number of outstanding
employee  options issued in the ordinary course under the Company's stock option
plans) in such  capitalization  since the Company's  representation  on the date
hereof, it being understood that the exercise, conversion or exchange

<PAGE>

of options or other  convertible  securities  listed on  Schedule  3.3 shall not
constitute a material  change.  The Company has no  subsidiaries,  except as set
forth on Schedule  3.3. All such  subsidiaries  included on Schedule 3.3 are one
hundred  percent  (100%) owned by the  Company.  Except as set forth on Schedule
3.3, the Company has no investments, either debt or equity, in any other entity.

         3.4 Issuance of Shares.  The  Conversion  Shares and Warrant Shares are
duly authorized and reserved for issuance, and, upon conversion of the Preferred
Stock or exercise of the Warrant in accordance with their respective terms, each
in accordance  with the terms thereof,  will be validly  issued,  fully paid and
non-assessable,  and free from all taxes,  liens, claims and encumbrances (other
than liens,  claims and  encumbrances  placed thereon by Purchaser or by persons
claiming by,  through or under  Purchaser) and will not be subject to preemptive
rights or other similar  rights of  stockholders  of the Company.  The Preferred
Stock and the Warrant are duly  authorized  and reserved for  issuance,  and the
Preferred Stock is validly issued,  fully paid and  non-assessable and free from
all  taxes,  liens  claims  and  encumbrances  (other  than  liens,  claims  and
encumbrances  placed thereon, by Purchaser or by persons claiming by, through or
under  Purchaser)  and are not and will not be subject to  preemptive  rights or
other  similar  rights of  stockholders  of the  Company.  No further  corporate
authorization or approval is required under the rules of the Nasdaq with respect
to  the  transactions  contemplated  by  this  Agreement,   including,   without
limitation, the issuance of the Conversion Shares and the Warrant Shares and the
inclusion thereof for trading on the Nasdaq.

         3.5 No Conflicts.  The execution,  delivery and  performance of each of
the Investment  Agreements by the Company and the consummation by the Company of
the transactions  contemplated  thereby  (including the issuance and reservation
for issuance, as applicable, of the Warrant Shares and the Conversion Shares) do
not and will not (a) result in a violation of the  Certificate of  Incorporation
or By-laws of the Company or any of its  subsidiaries,  (b)  conflict  with,  or
constitute  a default  (or an event  which with  notice or lapse of time or both
would  become a default)  under,  or give to others  any rights of  termination,
amendment,   acceleration  or  cancellation  of,  any  agreement,  indenture  or
instrument  to which the Company or any of its  subsidiaries  is a party (except
for  such  conflicts,  defaults,  terminations,  amendments,  accelerations  and
cancellations  as would not,  individually  or in the  aggregate,  reasonably be
expected to have a Material Adverse Effect), or (c) result in a violation of any
law, rule, regulation, order, judgment or decree (including, without limitation,
U.S.  federal  and state  securities  laws and  regulations)  applicable  to the
Company or any of its  subsidiaries,  or by which any  property  or asset of the
Company or any of its subsidiaries,  is bound, except for possible violations as
would not,  individually or in the aggregate,  be reasonably  expected to have a
Material  Adverse Effect.  Neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation,  by-laws or other  organizational
documents. Neither the Company nor any of its subsidiaries is in default (and no
event has occurred  which,  with notice or lapse of time or both,  would put the
Company or any of its subsidiaries in default) under, nor has there occurred any
event  giving  others  (with  notice  or lapse of time or both)  any  rights  of
termination,   amendment,   acceleration  or  cancellation  of,  any  agreement,
indenture or  instrument  to which the Company or any of its  subsidiaries  is a
party,  except for possible defaults or rights as would not,

<PAGE>

individually or in the aggregate,  have a Material Adverse Effect.  The business
of the Company and its  subsidiaries  is not being conducted in violation of any
law, order,  judgment or decree of any governmental entity, court or arbitration
tribunal except for possible violations the sanctions for which either singly or
in the aggregate  would not  reasonably  be expected to have a Material  Adverse
Effect.  The Company is not  required to obtain any  consent,  authorization  or
order of, or make any filing or  registration  with,  any court or  governmental
agency or any  regulatory  or  self-regulatory  agency or entity or authority in
order for it to execute,  deliver or perform any of its obligations under any of
the Investment  Agreements or to perform its  obligations in accordance with the
terms  hereof or  thereof.  Subject  to the  completeness  and  accuracy  of the
representations  and  warranties  made by  Purchaser in Article II and except as
contemplated by the Registration Rights Agreement, the sale of the Securities by
the Company to  Purchaser  does not violate any law,  rule,  regulation,  order,
judgment or decree  applicable to the Company,  or require further filing by the
Company or  Purchaser  under such law,  rule,  regulation,  order,  judgment  or
decree,  by virtue of the Company's  business or assets,  other than  immaterial
notice filings.  The Company has obtained the listing of the Common Stock on the
Nasdaq  (that is, for  clarification,  the Nasdaq  National  Market),  is not in
violation  of the  listing  requirements  of  Nasdaq  and has not  received  any
comments,  inquiries or notifications from Nasdaq alleging non-compliance of the
listing  rules by the  Company or  relating to any  proposed  de-listing  of the
Common  Stock by Nasdaq,  and the  Company  has made all  necessary  filings and
notifications  with,  and obtained all  necessary  approvals  from,  Nasdaq with
respect to the transactions contemplated hereby, including,  without limitation,
the issuance of the Securities and the listing of the Conversion  Shares and the
Warrant Shares on the Nasdaq.

         3.6  Registration  and SEC  Documents.  The Common Stock is  registered
under  Section  12 of the  Securities  Exchange  Act of 1934,  as  amended  (the
"Exchange Act"). The Common Stock has been so registered since May ___, 2000 and
predecessor  securities of the  predecessors  of the Company have been so listed
for more than one year.  Except as set forth in Schedule  3.6,  since January 1,
1999, the Company and its predecessors have timely filed all reports, schedules,
forms,  statements and other  documents  required to be filed by it with the SEC
pursuant to the reporting requirements of the Exchange Act (all of the foregoing
filed after  January 1, 2000 and all  exhibits  included  therein and  financial
statements  and  schedules  thereto  and  documents  incorporated  by  reference
therein,  being  referred  to herein as the "SEC  Documents").  The  Company has
delivered or made  available to  Purchaser  true and complete  copies of the SEC
Documents  (the SEC  documents  filed prior to the date  hereof,  the "Filed SEC
Documents"). As of their respective dates, the SEC Documents complied as to form
in all material respects with the requirements of the Exchange Act and the rules
and  regulations  of the  SEC  promulgated  thereunder  applicable  to  the  SEC
Documents,  and none of the SEC Documents,  at the time they were filed with the
SEC,  contained  any untrue  statement of a material  fact or omitted to state a
material  fact  required to be stated  therein or necessary in order to make the
statements  therein,  in light of the circumstances  under which they were made,
not misleading.  None of the statements made in any such SEC Document is, or has
been,  required  to be  updated  or  amended  under  applicable  law,  except as
disclosed in the Filed SEC  Documents.  The financial  statements of the Company
included in the SEC Documents  were prepared in accordance  with U.S.  generally
accepted  accounting  principles,   consistently  applied,  and  the

<PAGE>

rules and regulations of the SEC during the periods  involved (except (i) as may
be otherwise  indicated in such financial  statements or the notes  thereto,  or
(ii) in the case of  unaudited  interim  statements,  to the extent  they do not
include footnotes or are condensed or summary  statements) and fairly present in
all material aspects the consolidated  financial position of the Company and its
consolidated  subsidiaries as of the dates thereof and the consolidated  results
of their  operations and cash flows for the periods then ended (subject,  in the
case of unaudited statements, to normal, year-end audit adjustments).  Except as
set forth in the financial  statements of the Company  included in the Filed SEC
Documents,  or as  set  forth  on  Schedule  3.6  hereto,  the  Company  has  no
liabilities,  contingent  or  otherwise  of a type  required  to be  included in
financial  statements  in  accordance  with  GAAP,  other  than (i)  liabilities
incurred  subsequent  to the date of such  financial  statements in the ordinary
course of business  consistent  with past  practice and (ii)  obligations  under
contracts and  commitments  incurred in the ordinary  course of business and not
required under generally accepted accounting  principles to be reflected in such
financial  statements,  in each case of clause  (i) and (ii) next  above  which,
individually  and in the  aggregate,  are  not  reasonably  expected  to  have a
Material  Adverse Effect.  The Filed SEC Documents,  as supplemented by Schedule
3.6 hereto,  contain a complete and accurate  list of all material  undischarged
written or oral contracts,  agreements, leases or other instruments to which the
Company or any  subsidiary is a party or by which the Company or any  subsidiary
is bound or to which  any of the  properties  or assets  of the  Company  or any
subsidiary  is subject  and which is  required  to be filed as an exhibit to the
Filed SEC  Documents,  or which will be  required to be filed as an exhibit to a
Quarterly  Report on Form 10-Q of the Company which has not yet been filed (each
a  "Contract").  Except as listed on  Schedule  3.6,  none of the  Company,  its
subsidiaries  or, to the  knowledge  of the  Company,  any of the other  parties
thereto,  is in breach or violation of any  Contract,  which breach or violation
relates to indebtedness  for borrowed money, is with respect to an obligation in
excess of One Hundred Thousand Dollars  ($100,000) or is reasonably  expected to
have a Material  Adverse  Effect.  To the  knowledge of the  Company,  no event,
occurrence  or condition  exists  which,  with the lapse of time,  the giving of
notice,  or both,  or the  happening of any further  event or  condition,  would
become a breach or default by the Company or its subsidiaries under any Contract
which breach or default would have a Material Adverse Effect.

         3.7 Absence of Certain  Changes . Since  December 31,  1999,  there has
been no material adverse change and no development in the business,  properties,
operations,  financial condition or results of operations of the Company that is
reasonably likely to have a Material Adverse Effect.

         3.8 Absence of  Litigation.  Except as disclosed in Schedule 3.8 or the
Filed SEC  Documents,  there is no action,  suit or proceeding  before or by any
court,  public  board,  governmental  agency or  authority,  or  self-regulatory
organization  or body pending or, to the  knowledge of the Company or any of its
subsidiaries,   threatened  against  or  affecting  the  Company,   any  of  its
subsidiaries,  or any  of  their  respective  directors  or  officers  in  their
capacities  as such,  which is  reasonably  expected to have a Material  Adverse
Effect.  To the actual  knowledge of the Company,  there are no facts which,  if
known by a  potential  claimant  or  governmental  agency  or  authority,  would
reasonably  be  expected  to give rise to a claim or

<PAGE>

proceeding which would be reasonably likely to have a Material Adverse Effect.

         3.9  Disclosure.  No information  relating to or concerning the Company
set forth in this  Agreement  or provided to Purchaser  in  connection  with the
transactions  contemplated hereby,  taking such information as a whole, contains
an  untrue  statement  of a  material  fact or omits to  state a  material  fact
necessary in order to make the  statements  made herein or therein,  in light of
the circumstances  under which they were made, not misleading.  To the knowledge
of the Company,  except for the execution and performance of this Agreement,  no
material  fact (with  materiality  determined  by the  Company in its good faith
judgment) has been  disclosed to Purchaser with respect to the Company or any of
its subsidiaries  which has not been publicly  disclosed,  which fact has had or
could reasonably be expected to have a Material Adverse Effect.

         3.10 Acknowledgment  Regarding  Purchaser's Purchase of the Securities.
The Company  acknowledges and agrees that Purchaser is acting  independently and
is not acting as a  financial  advisor or  fiduciary  of the  Company (or in any
similar   capacity)  with  respect  to  this   Agreement  or  the   transactions
contemplated  hereby,  that this  Agreement  and the  transactions  contemplated
hereby, and the relationship between Purchaser and the Company is "arms-length",
and that any  statement  made by  Purchaser,  or any of its  representatives  or
agents,  in  connection  with this  Agreement or the  transactions  contemplated
hereby is not advice or a  recommendation,  is merely  incidental to Purchaser's
purchase  of the  Securities  and has  not  been  relied  upon in any way by the
Company, its officers,  directors or other representatives.  The Company further
represents to Purchaser that the Company's decision to enter into this Agreement
and the transactions contemplated hereby has been based solely on an independent
evaluation by the Company and its representatives.

         3.11 Current Public  Information.  The Company is currently eligible to
register the resale of the Conversion  Shares and Warrant Shares by Purchaser on
a registration statement on Form S-3 under the Securities Act for the account of
Purchaser (and not for or on behalf of Company).

         3.12 No General Solicitation. Neither the Company nor any person acting
on behalf of the Company has conducted any "general  solicitation," as described
in Rule 502(c) under  Regulation D, with respect to any of the Securities  being
offered hereby.

         3.13  No  Integrated  Offering.  Neither  the  Company,  nor any of its
affiliates,  nor any  person  acting on its or their  behalf,  has  directly  or
indirectly  made any offers or sales of any security or solicited  any offers to
buy any security under  circumstances that would prevent the parties hereto from
consummating the transactions  contemplated hereby pursuant to an exemption from
registration  under the  Securities Act pursuant to the provisions of Regulation
D. The  transactions  contemplated  hereby  are  exempt  from  the  registration
requirements of the Securities Act, assuming the accuracy of the representations
and  warranties  herein  contained of Purchaser to the extent  relevant for such
determination.

         3.14 No Brokers.  The Company has taken no action which would give rise
to any claim

<PAGE>

by any person for brokerage  commissions,  finder's fees or similar  payments by
Purchaser  relating to this Agreement or the transactions  contemplated  hereby,
except for dealings with Ladenburg Thalmann & Co., Inc. (the fees of which shall
be paid in full by the Company).

         3.15  Acknowledgment  of  Dilution.  The  number of  Conversion  Shares
issuable upon  conversion of the Preferred  Stock and/or Warrant Shares issuable
upon   exercise   of  the  Warrant  may   increase   substantially   in  certain
circumstances,  including  the  circumstance  wherein the  trading  price of the
Common Stock  declines.  The Company  acknowledges  that its obligation to issue
Conversion  Shares upon conversion of the Preferred Stock and the Warrant Shares
upon  exercise  of the  Warrant is binding  upon it and  enforceable  against it
regardless  of the  dilution  that  such  issuance  may  have  on the  ownership
interests of other stockholders.

         3.16 Intellectual  Property.  To the knowledge of the Company,  each of
the Company and its  subsidiaries  owns or possesses  adequate  and  enforceable
rights  to  use  all  patents,   patent  applications,   trademarks,   trademark
applications,  trade names, service marks,  copyrights,  copyright applications,
licenses,   know-how  (including  trade  secrets  and  other  unpatented  and/or
unpatentable proprietary or confidential information, systems or procedures) and
other similar rights and  proprietary  knowledge  (collectively,  "Intangibles")
used or  reasonably  necessary  for the  conduct  of its  business  as now being
conducted.  To the  knowledge  of the  Company,  neither  the  Company  nor  any
subsidiary  of the Company  infringes on or is in conflict with any right of any
other  person  with  respect  to any  Intangibles  nor is  there  any  claim  of
infringement  made by a third party  against or involving  the Company or any of
its subsidiaries, which infringement,  conflict or claim, individually or in the
aggregate, is reasonably expected to have a Material Adverse Effect.

         3.17 Foreign Corrupt  Practices.  To its actual knowledge,  neither the
Company, nor any of its subsidiaries, nor any director, officer, agent, employee
or other person  acting on behalf of the Company or any  subsidiary  has, in the
course of his/its actions for, or on behalf of, the Company,  used any corporate
funds for any  unlawful  contribution,  gift,  entertainment  or other  unlawful
expenses  relating to political  activity;  made any direct or indirect unlawful
payment  to any  foreign  or  domestic  government  official  or  employee  from
corporate  funds;  violated  or is in  violation  of any  provision  of the U.S.
Foreign Corrupt  Practices Act of 1977, as amended;  or made any bribe,  rebate,
payoff, influence payment,  kickback or other unlawful payment to any foreign or
domestic government official or employee.

         3.18 Key  Employees.  Each Key Employee (as defined below) is currently
serving the Company in the capacity disclosed in Schedule 3.18. No Key Employee,
to the actual  knowledge  of the  Company  and its  subsidiaries,  is, or is now
expected to be, in violation of any material  term of any  employment  contract,
confidentiality,    disclosure    or    proprietary    information    agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each Key Employee does not subject the
Company or any of its  subsidiaries  to any liability with respect to any of the
foregoing  matters.  No Key Employee has, to the actual knowledge of the Company
and its  subsidiaries,  any intention to terminate or limit his employment with,
or services to, the Company or any of its  subsidiaries,

<PAGE>

nor, to the Company's actual knowledge,  is any such Key Employee subject to any
constraints  (e.g.,  litigation) which would cause such employee to be unable to
devote his full time and attention to such employment or service. "Key Employee"
means the persons  listed on  Schedule  3.18 and any  individual  who assumes or
performs any of the duties of a Key Employee.

                                   ARTICLE IV
                                    COVENANTS

         4.1 Efforts.  The Company  shall use  commercially  reasonable  efforts
timely to satisfy  each of the  conditions  described  in Articles VI and VII of
this Agreement that are within its control.

         4.2  Securities  Laws. The Company agrees to file a Form D with respect
to the Securities with the SEC under  Regulation D and to provide a copy thereof
to Purchaser within fifteen (15) days of the Closing. The Company agrees to file
a Form 8-K disclosing this Agreement and the  transactions  contemplated  hereby
with the SEC as soon as practical  following the Closing  Date,  but in no event
more than three (3) business  days  following  the Closing  Date.  Such Form 8-K
shall  contain  as  exhibits  this   Agreement,   the  form  of  Certificate  of
Designation,  the form of Warrant and the  Registration  Rights  Agreement.  The
Company shall, on or prior to the Closing Date, take such action as is necessary
to sell the  Securities to Purchaser in accordance  with  applicable  securities
laws of the states of the United States,  and shall provide evidence of any such
action so taken to Purchaser on or prior to the Closing Date.  Without  limiting
any of the Company's obligations under any of the Investment Agreements from and
after the Closing Date,  neither the Company nor any person acting on its behalf
shall  take  any  action  which  would  adversely  affect  any  exemptions  from
registration   under  the  Securities  Act  with  respect  to  the  transactions
contemplated hereby.

         4.3 Reporting Status. So long as Purchaser  beneficially own any of the
Securities,  the Company shall timely file all reports required to be filed with
the SEC pursuant to the Exchange  Act, and the Company  shall not  terminate its
status as an issuer  required to file reports under the Exchange Act even if the
Exchange  Act  or  the  rules  and  regulations  thereunder  would  permit  such
termination.

         4.4 Use of Proceeds.  The Company  shall use the proceeds from the sale
of the Securities for general corporate purposes only, in the ordinary course of
its business,  and, without limiting the generality of the foregoing,  shall not
use  such  proceeds  to  make  a loan  to any  employee,  officer,  director  or
stockholder of the Company (other than travel advances in the ordinary course of
the Company's business), to repay any loan or other obligation of the Company to
any such person or to  repurchase or pay a dividend on shares of Common Stock or
other securities of the Company, other than any such payment explicitly required
or permitted by the terms of this  Agreement,  the Certificate of Designation or
the other Investment Agreements.

         4.5  Financing  Restrictions.  (a) During the period  beginning  on the
Closing  Date and  ending  on the date  which is six (6)  months  following  the
effective date of the registration

<PAGE>

statement  contemplated by Section 2.1 of the Registration Rights Agreement (the
"Effective Date") (provided,  however, that such period shall be extended to the
extent of any  Registration  Suspension (as defined in the  Registration  Rights
Agreement)  that may occur  during  such  period)  and during  any  Registration
Suspension (each such period, the "Financing  Restriction Period "), the Company
shall not, and shall cause each of its direct and indirect  subsidiaries not to,
issue or agree to issue  (except (i) to  Purchaser  pursuant to this  Agreement,
(ii) pursuant to any stock option,  stock  purchase or restricted  stock plan of
the Company covering employees,  consultants and/or non-employee  directors (and
any amendment thereof or any award thereunder,  provided any such amendment does
not reduce any exercise  price to an amount  below $5.00 per share),  so long as
the issuance of such stock or option (other than to  non-employee  directors) is
approved by a committee of independent directors of the Company,  (iii) pursuant
to strategic investments from industry participants, the primary purpose of each
of which is not to raise  equity  capital,  (iv) in a private  placement  led by
Salomon Smith Barney or a comparable  nationally  recognized  investment banking
firm with net  proceeds  to the Company  exceeding  $10  million,  (v) in a firm
commitment  underwritten public offering,  where the net proceeds to the Company
exceed  $25  million,  (vi)  upon the  exercise  of  options  and  warrants  (x)
outstanding as of the date hereof and disclosed on Schedule 3.3 or (y) issued in
a  transaction  contemplated  by  clauses  (iii),  (iv) and (v) of this  Section
4.5(a),  (vii) as consideration in connection with an acquisition by the Company
of any business or assets,  regarding  which the Company has obtained a fairness
opinion from a nationally  recognized investment banking firm or regarding which
an appropriate  officer of the Company has certified to Purchaser that the board
of directors of the Company has determined in its reasonable  business  judgment
that the Company has received in such  transaction the fair value for the shares
issued therefor,  (viii) as consideration  for services provided to the Company,
(I) the  issuances  of which have been  committed  by the  Company  prior to the
Closing  Date and such  commitments  have been  disclosed  to  Purchaser  in the
schedules delivered pursuant to the Securities  Purchase Agreement,  or (II) the
issuances  of which  are  committed  by the  Company  after  the  Closing  Date;
provided, however, that services provided pursuant to this clause (II) shall not
exceed  $200,000 in value and services  provided under this clause (viii) in the
aggregate shall not exceed $500,000 in value,  (ix) under the terms of the April
11, 2000  acquisition by the Company of Giza Group,  or (x) upon the issuance or
exercise  of the  warrant to be issued to  Ladenburg  Thalmann & Co.,  Inc.) any
equity,  equity-like or equity-linked  securities of the Company or any security
convertible  into or exercisable or  exchangeable,  directly or indirectly,  for
equity,  equity-like  or  equity-linked  securities  of the  Company  (any  such
securities, "Restricted Securities").

         (b) During the six (6) month period  beginning on the date  immediately
following the final day of the initial Financing  Restriction Period, other than
to a seller or sellers  of a  business  being  acquired  by the  Company in such
transaction,  the  Company  shall  not,  and shall  cause each of its direct and
indirect  subsidiaries  not to,  issue  or  agree  to issue or offer to issue or
solicit any offer or inquiry with regard to any Restricted Securities unless the
Company  has  satisfied  or has caused  its  subsidiary  to  satisfy  all of the
following requirements with respect to such issuance:

                  (I) The  Company  or the  subsidiary  shall have  delivered  a
         notice to Purchaser (the "Transfer Notice"), which notice shall include
         (A) the terms and number of units

<PAGE>

         of the security and the consideration per unit which the Company or the
         subsidiary  desires to receive for the securities  (which,  in the case
         where the  Company or the  subsidiary  shall have  received an offer to
         purchase  such  securities  other than from  Purchaser  (a "Third Party
         Offer"),  shall be the  consideration  set forth in such offer) and (B)
         all of the  material  terms  and  conditions,  including  the terms and
         conditions  of  payment,  upon  which  the  Company  or the  subsidiary
         proposes to issue said securities  (which, in the case of a Third Party
         Offer,  shall be the terms and  conditions set forth in the Third Party
         Offer).

                  (II) Upon the delivery of the Transfer Notice, Purchaser shall
         have an option to  purchase  the  securities  described  therein on the
         terms  and  conditions   described   therein.   Such  option  shall  be
         exercisable  by Purchaser by service of written notice upon the Company
         or the  subsidiary  within  five (5)  business  days of  receipt of the
         Transfer Notice.

                  (III) If the  option  created  in  clause  (II)  hereof is not
         exercised by Purchaser  within five (5) business days of service of the
         Transfer Notice, then, within a period of thirty (30) days beginning on
         the day  following the date of  expiration  of the option  period,  the
         Company or the subsidiary may issue the securities  sought to be issued
         at a price  which is not less than one  hundred  percent  (100%) of the
         price  specified  in the Transfer  Notice and on terms and  conditions,
         taken as a whole, that are not materially less favorable to the Company
         or the subsidiary than those specified in the Transfer Notice.

         (c) While Purchaser holds any Preferred  Stock,  the Company shall not,
and shall  cause each of its direct and  indirect  subsidiaries  not to,  issue,
agree to issue or authorize  for issuance,  or otherwise  transfer or enter into
any commitment to issue or otherwise transfer,  or offer to issue or transfer or
solicit  any  issuance or proposal  with regard to, any equity,  equity-like  or
equity-linked securities of any of the Company's direct or indirect subsidiaries
(including,  without  limitation,  any such subsidiaries as listed in the latest
Form 10-Q or Schedule 3.3) or any security  convertible  into or  exercisable or
exchangeable,  directly or indirectly,  for equity, equity-like or equity-linked
securities  of such  subsidiaries,  if so doing  would have a  Material  Adverse
Effect.

         4.6  Expenses.  Upon  presentation  of  documentary  evidence  of  such
expenses,  the Company shall pay to Purchaser at the Closing,  reimbursement for
the expenses  incurred by it and its affiliates and advisors in connection  with
the negotiation,  preparation, execution, and delivery of this Agreement and the
other agreements and documents to be executed in connection herewith, including,
without limitation,  Purchaser's and its affiliates' and advisors' due diligence
and attorneys' fees and expenses (the "Expenses");  provided, however, that such
reimbursement of Expenses shall not exceed Forty Thousand Dollars  ($40,000.00).
In addition,  from time to time thereafter,  upon  Purchaser's  written request,
subject to such $40,000.00  limit,  the Company shall pay to Purchaser an amount
equal to such  Expenses,  if any, not so paid at the Closing  and/or  covered by
such payment, in each case to the extent incurred by Purchaser.

         4.7      Intentionally omitted.

         4.8      Intentionally omitted.

<PAGE>

         4.9  Listing  Requirement.  The  Company  shall  use its  best  efforts
(subject to good faith business judgment) to continue the trading and listing of
its Common Stock on the Nasdaq  National Market and shall include from and after
the Closing all  Conversion  Shares and Warrant Shares in such listing and shall
comply in all material  respects with the Company's filing and other obligations
under the rules of Nasdaq.

         4.10 Prospectus Delivery  Requirement.  Purchaser  understands that the
Securities Act may require delivery of a prospectus relating to the Common Stock
in connection with any sale thereof  pursuant to a registration  statement under
the  Securities  Act  covering the resale by Purchaser of the Common Stock being
sold and covenants to comply with any such delivery requirement.

         4.11     Intentionally Omitted.

         4.12 Corporate  Existence.  So long as Purchaser  beneficially owns any
Preferred  Stock or the  Warrant  or any  portion  thereof,  the  Company  shall
maintain its corporate existence, except in the event of a merger, consolidation
or sale of all or  substantially  all of the  Company's  assets,  as long as the
surviving  or  successor  entity  in  such  transaction  assumes  the  Company's
obligations,  if any, hereunder and under the agreements and instruments entered
into  in  connection  herewith  (taking  into  account  the  provisions  of  the
Certificate  of  Designation  and the Warrant)  regardless of whether or not the
Company would have had a sufficient  number of shares of Common Stock authorized
and  available  for issuance in order to effect the  conversion of all Preferred
Stock  and  the  exercise  of the  Warrant  outstanding  as of the  date of such
transaction.

         4.13     Intentionally omitted.

         4.14     Intentionally omitted.

         4.15 Reserved Amount.  On the Closing Date and thereafter,  the Company
shall have authorized and reserved and keep available for issuance not less than
2,529,568  (subject  to  equitable   adjustment  for  any  stock  splits,  stock
dividends,  reclassification  or similar events and subject to reduction for the
number of any shares of Common Stock  issued upon  conversion  of the  Preferred
Stock and upon the  exercise  of the  Warrants))  shares of  Common  Stock  (the
"Reserved  Amount")  solely for the purpose of effecting  the  conversion of the
Preferred Stock and the exercise of the Warrant.

         4.16     Intentionally omitted.

         4.17  Transactions  with  Affiliates.  The  Company  and  each  of  its
subsidiaries will not enter into any agreement or arrangement,  written or oral,
directly or indirectly, with an Affiliate, or provide services or sell goods to,
or for the benefit of, or pay or  otherwise  distribute  monies,  goods or other
valuable  consideration to, an Affiliate,  except upon fair and reasonable terms

<PAGE>

under the circumstances as determined by the Company in good faith,  taking into
account all of the facts and circumstances of such agreement or arrangement, and
except for  existing  intercompany  debt or  transactions  with or  between  the
Company and any of its wholly-owned subsidiaries.

         4.18  Limitation  of  Agreements.  The Company  will not,  and will not
permit  any  Subsidiary   to,  enter  into  any  Contract,   or  any  amendment,
modification,   extension  or  supplement  to  any  existing   Contract,   which
contractually prohibits the Company from performing its obligations under any of
the Investment Documents.

                                    ARTICLE V
                   LEGEND REMOVAL, TRANSFER, AND CERTAIN SALES

         5.1  Removal of Legend.  The Legend  shall be removed  and the  Company
shall issue a certificate  without any legend to the holder of any Security upon
which  such  Legend  is  stamped,  and a  certificate  for a  Security  shall be
originally  issued  without  the  Legend  if (a) the  sale of such  Security  is
registered  under the Securities  Act, (b) such holder provides the Company with
an opinion of counsel, in form,  substance and scope reasonably  satisfactory to
the Company (the  reasonable cost of which shall be borne by the Company) to the
effect  that a public  sale or transfer  of such  Security  may be made  without
registration  under the Securities Act or (c) such Security may be sold pursuant
to Rule  144(k).  Purchaser  agrees  to sell  all  Securities,  including  those
represented by a certificate(s) from which the Legend has been removed, or which
were originally issued without the Legend, pursuant to an effective registration
statement  and to  deliver  a  prospectus  in  connection  with  such sale or in
compliance  with  an  exemption  from  the  registration   requirements  of  the
Securities  Act.  In the event the Legend is removed  from any  Security  or any
Security is issued  without the Legend and  thereafter  the  effectiveness  of a
registration  statement  covering the resale of such  Security is suspended or a
supplement or amendment thereto is required by applicable  securities laws, then
upon  reasonable  advance notice to Purchaser,  the Company may require that the
Legend be placed on any such  Security  that cannot then be sold  pursuant to an
effective  registration  statement  or Rule 144(k) or with  respect to which the
opinion referred to in clause (b) next above has not been rendered, which Legend
shall be  removed  when  such  Security  may be sold  pursuant  to an  effective
registration  statement or Rule 144(k) or such holder  provides the opinion with
respect thereto described in clause (b) next above.

         5.2  Transfer  Agent  Instructions  . The Company  shall  instruct  its
transfer agent to issue certificates, registered in the name of Purchaser or its
nominee,  for the  Conversion  Shares  or  Warrant  Shares  in such  amounts  as
specified  from time to time by Purchaser to the Company upon, and in accordance
with,  the  conversion of the  Preferred  Stock and the exercise of the Warrant.
Such certificates shall bear a legend only in the form of the Legend and only to
the  extent  permitted  by Section  5.1  above.  The  Company  warrants  that no
instruction other than such  instructions  referred to in this Article V, and no
stop transfer  instructions other than stop transfer instructions to give effect
to Section 2.6 hereof,  will be given by the Company to its  transfer  agent and
that the  Securities  shall  otherwise be freely  transferable  on the books and

<PAGE>

records  of the  Company.  Nothing  in  this  Section  shall  affect  in any way
Purchaser's  obligations and agreement set forth in Section 5.1 hereof to resell
the Securities pursuant to an effective  registration statement and to deliver a
prospectus in connection  with such sale or in compliance with an exemption from
the registration  requirements of applicable  securities laws.  Without limiting
any other rights of Purchaser or  obligations  of the Company,  if (a) Purchaser
provides the Company with an opinion of counsel,  which opinion of counsel shall
be in form,  substance  and scope  reasonably  satisfactory  to the Company (the
reasonable cost of which shall be borne by the Company),  to the effect that the
Securities to be sold or transferred  may be sold or transferred  pursuant to an
exemption from  registration or (b) Purchaser sells Securities  pursuant to Rule
144, the Company shall permit the transfer,  and, in the case of the  Conversion
Shares and Warrant Shares,  promptly instruct its transfer agent to issue one or
more  certificates  in  such  name  and in such  denomination  as  specified  by
Purchaser in order to effect such a transfer or sale.  The Company  acknowledges
that a breach by it of its obligations  hereunder will cause irreparable harm to
Purchaser by vitiating  the intent and purpose of the  transaction  contemplated
hereby.  Accordingly,  the  Company  acknowledges  that the  remedy at law for a
breach of its obligations under this Article V will be inadequate and agrees, in
the event of a breach or threatened  breach by the Company of the  provisions of
this  Article V, that  Purchaser  shall be  entitled,  in  addition to all other
available  remedies,  to an  injunction  restraining  any breach  and  requiring
immediate issuance and transfer,  without the necessity of showing economic loss
and without any bond or other security being required.

                                   ARTICLE VI
                 CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL

         6.1  Conditions to the Company's  Obligation to Sell. The obligation of
the Company hereunder to issue and sell the Purchased Securities to Purchaser at
the Closing is subject to the satisfaction,  as of the date of such Closing,  of
each of the following conditions thereto, provided that these conditions are for
the  Company's  sole benefit and may be waived by the Company at any time in its
sole discretion:

                  (i) Purchaser  shall have executed the signature  page to this
         Agreement and the Registration  Rights Agreement and delivered the same
         to the Company.

                  (ii) Purchaser shall deliver the Purchase Price in immediately
         available  funds for the Preferred  Stock and the Warrant  purchased at
         Closing.

                  (iii) The representations and warranties of Purchaser shall be
         true and  correct  as of the date  when made and as of the  Closing  as
         though made at that time, and Purchaser shall have performed, satisfied
         and complied in all material respects with the covenants and agreements
         required  by  this  Agreement  to be  performed  or  complied  with  by
         Purchaser at or prior to the Closing and Purchaser  shall have executed
         and delivered to the Company a certificate to such effect.

                  (iv) No statute,  rule,  regulation,  executive order, decree,
         ruling or injunction

<PAGE>

         shall have been enacted, entered,  promulgated or endorsed by any court
         or   governmental   authority   of   competent   jurisdiction   or  any
         self-regulatory   organization   having   authority  over  the  matters
         contemplated  hereby which  restricts or prohibits the  consummation of
         any of the transactions contemplated by this Agreement.

                                   ARTICLE VII
                CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE

         7.1 Conditions to the Closing. The obligation of Purchaser hereunder to
purchase the Purchased  Securities at Closing is subject to the  satisfaction of
each  of the  following  conditions,  provided  that  these  conditions  are for
Purchaser's  sole  benefit  and  may be  waived  by  Purchaser  at any  time  in
Purchaser's sole discretion:

                  (i) The Company shall have executed the signature page to this
         Agreement,  the  Warrant  and the  Registration  Rights  Agreement  and
         delivered the same to Purchaser.

                  (ii)  The  Company  shall  have   delivered  a  duly  executed
         certificate  representing the Preferred Stock (in such denominations as
         Purchaser shall reasonably  request) being so purchased by Purchaser at
         the Closing.

                  (iii) The Common Stock,  including all  Conversion  Shares and
         Warrant Shares,  shall be listed on The Nasdaq National Market from and
         after the date  hereof and  trading in the Common  Stock shall not have
         been  suspended  from and after the date hereof by The Nasdaq  National
         Market.

                  (iv) The  representations  and warranties of the Company shall
         be true and  correct  as of the date  when  made and as of the  Closing
         (except for those that address matters as of a particular  date,  which
         need only be true as of such date) as though  made at that time and the
         Company shall have performed, satisfied and complied with the covenants
         and  agreements  required by this Agreement to be performed or complied
         with by the Company at or prior to the Closing, except where the breach
         of such representation,  warranty or covenant would not have a Material
         Adverse Effect.  Purchaser shall have received a certificate,  executed
         on  behalf  of the  Company  by the Chief  Executive  Officer  or Chief
         Financial  Officer of the Company,  dated as of the Closing Date to the
         foregoing effect.

                  (v) No statute,  rule,  regulation,  executive order,  decree,
         ruling or injunction shall have been enacted,  entered,  promulgated or
         endorsed  by  any  court  or   governmental   authority   of  competent
         jurisdiction or any self-regulatory  organization having authority over
         the matters contemplated hereby which prohibits the consummation of any
         of the transactions contemplated by this Agreement.

                  (vi) Purchaser  shall have received the officer's  certificate
         described in Section 3.3 hereof, dated as of the Closing Date.

<PAGE>

                  (vii)   Purchaser  shall  have  received  an  opinion  of  the
         Company's counsel,  dated as of the Closing Date,  substantially in the
         form attached hereto as Exhibit D.

                  (viii) The Certificate of Designation shall have been accepted
         for filing with the  Secretary  of State of the State of Delaware and a
         copy thereof certified by the Secretary of State of Delaware shall have
         been delivered to Purchaser and the  Certificate  of Designation  shall
         not have been amended, modified or rescinded.

                  (ix)  Intentionally Omitted.

                  (x)   Intentionally Omitted.

                  (xi)  The  Company   shall  have  timely  filed  all  notices,
         including,   without   limitation,   the  application  for  listing  of
         additional  shares,  as  required  under  the  rules of  Nasdaq  or has
         obtained an effective waiver of such requirements.

                                  ARTICLE VIII
                          GOVERNING LAW; MISCELLANEOUS

         8.1 Governing Law;  Jurisdiction.  This Agreement  shall be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts  made and to be  performed  entirely  in the  State of New  York.  The
parties  hereto  irrevocably  consent to the  jurisdiction  of the United States
federal  courts located in the State of New York and the state courts located in
the County of New York in the State of New York in any suit or proceeding  based
on or arising under this Agreement or the transactions  contemplated  hereby and
irrevocably  agree that all claims in respect of such suit or proceeding  may be
determined  in such  courts.  The Company and  Purchaser  irrevocably  waive the
defense of an inconvenient  forum to the maintenance of such suit or proceeding.
The Company and Purchaser further agree that service of process upon the Company
or  Purchaser  mailed by the first  class mail shall be deemed in every  respect
effective  service  of  process  in any suit or  proceeding  arising  hereunder.
Nothing  herein shall  affect  Purchaser's  right to serve  process in any other
manner  permitted by law. The parties  hereto agree that a final  non-appealable
judgment in any such suit or proceeding  shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful manner.

         8.2 Officer and Director  Transactions.  If any Key Officer (as defined
below) or Insider  Director (as defined  below) (in each case,  or any member of
his/her  family or any trust or other  entity  for the  benefit of any member of
his/her family,  or any of his affiliates under federal  securities law), during
the period  beginning on the Closing Date and ending on the date that is six (6)
months after the Effective Date  (provided,  however,  that such period shall be
extended  to the  extent  of any  Registration  Suspension  (as  defined  in the
Registration Rights Agreement)) (the "Transfer  Period"),  and while such person
is a Key Officer or Insider  Director,  directly or

<PAGE>

indirectly, offers, sells, transfers, assigns, pledges, or otherwise disposes of
any shares of Common Stock, or any securities directly or indirectly convertible
into or  exercisable  or  exchangeable  for, or  warrants,  options or rights to
purchase or acquire shares of Common Stock (all such  securities,  "Options") or
enters into any agreement,  contract,  arrangement or understanding with respect
to any such offer, sale,  transfer,  assignment,  pledge or other disposition of
any Common  Stock or Options or provides or files any public  notice,  including
pursuant to Rule 144 of the Securities  Act, of a bona fide intent to dispose of
a specified  amount of Common Stock or Options (an  "Executive  Transfer"),  the
Company  shall pay to Purchaser an amount equal to (x) the number of  Conversion
Shares and Warrant Shares  (without  giving effect to any exercise or limitation
on  exercise  thereof)  then held by such  Purchaser  times  (y) the  difference
between (m) the Closing Bid Price (as defined in the Certificate of Designation)
of the Common  Stock on the trading day (the  "Announcement  Date")  immediately
preceding  the day on which such  disposal  was publicly  announced  and (n) the
lowest  Closing Bid Price of the Common Stock during the thirty (30) trading day
period beginning on the Announcement Date; provided, however, that a Key Officer
or Insider  Director  (and all such  entities  for the  benefit of any member of
his/her family, and all such affiliates, collectively) may in the aggregate sell
during the six (6) month period  following the Effective  Date up to ten percent
(10%) of his/her  total  holdings of Common Stock on a fully diluted basis as of
July 31, 2000  without  triggering  any payment  pursuant to this  section.  Any
inadvertent Executive Transfer in excess of such 10% limit shall not trigger the
adjustments described in this Section 8.2 if such Transfer is reversed or offset
by another purchase promptly after the discovery  thereof.  For purposes of this
Section,  Key Officer shall mean the  individuals  listed on Schedule 8.2(a) and
any person who assumes or performs  the duties of any Key  Officer,  and Insider
Director shall mean the individuals  listed on Schedule 8.2(b).  For purposes of
clarification,  and without  implication  that the contrary  would  otherwise be
true, each such Executive  Transfer during the Transfer Period shall result in a
payment by the Company to Purchaser as determined in accordance  with provisions
of this  Section  and such  payments,  in  addition  to any other  payments  and
adjustments   under   the   Investment   Agreements,    shall   be   cumulative.
Notwithstanding  the  foregoing,  any Key Officer or Insider  Director  shall be
entitled to make Permitted  Transfers (as defined below) without  limitation and
any  Permitted  Transfer  shall not be  included in any  computation  of the 10%
limitation set forth in the preceding  paragraph.  The term "Permitted Transfer"
shall mean (i) any  assignment,  gift or other transfer to any child,  spouse or
other family member or trust for the benefit of any family member, provided that
further  transfers by any such transferees  shall continue to be subject to this
Section 8.2; or (ii) any bona fide gift to any charitable organization.

         8.3  Counterparts.  This  Agreement  may be  executed  in  two or  more
counterparts,  including, without limitation, by facsimile transmission,  all of
which  counterparts  shall be  considered  one and the same  agreement and shall
become effective when  counterparts have been signed by each party and delivered
to the other party.  In the event any  signature  page is delivered by facsimile
transmission,  the party  using such means of delivery  shall  cause  additional
original executed signature pages to be promptly delivered to the other parties.

         8.4 Headings.  The headings of this  Agreement are for  convenience  of
reference  and shall not form part of, or affect  the  interpretation  of,  this
Agreement.

<PAGE>

         8.5  Severability.  If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction,  such invalidity or unenforceability shall
not affect the validity or  enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.

         8.6 Scope of Agreement;  Amendments.  This  Agreement and the documents
and  instruments  referenced  herein  contain  the entire  understanding  of the
parties with respect to the matters covered herein and therein and supersede all
prior or  contemporaneous  agreements  or  understandings  between the  parties,
written or oral.  Except as set forth in this Agreement or any schedules hereto,
the Company has made no representations or warranties to Purchaser. No provision
of this Agreement may be waived other than by an instrument in writing signed by
the party to be charged with  enforcement and no provision of this Agreement may
be amended  other than by an  instrument  in writing  signed by the  Company and
Purchaser.

         8.7 Notice.  Any notice herein  required or permitted to be given shall
be in  writing  and may be  personally  served or  delivered  by  courier  or by
facsimile-machine  confirmed telecopy, and shall be deemed delivered at the time
and date of receipt (which shall include telephone line facsimile transmission).
The addresses for such communications shall be:

                           If to the Company:

                           THCG, INC.
                           650 Madison Avenue, 21st Floor
                           New York, NY 10022
                           Telecopy: (212)223-0161
                           Attention: Adi Raviv

                           with a copy to:

                           KRAMER LEVIN  NAFTALIS & FRANKEL LLP
                           919 Third Avenue New York NY 10022
                           Telecopy: (212)715-8000
                           Attention: Peter S. Kolevzon, Esq.

                           If to Purchaser:

                           CASTLE CREEK TECHNOLOGY PARTNERS LLC
                           77 W. Wacker Drive, Suite 4040
                           Chicago, Illinois 60601
                           Telecopy: (312)499-6999
                           Attention: Tom Frei

<PAGE>

                           with a copy to:
                           ALTHEIMER & GRAY
                           10 S. Wacker Drive Ste. 4000
                           Chicago, Illinois 60606
                           Telecopy: (312)715-4800
                           Attention: Peter H. Lieberman, Esq.

Each party shall provide notice to the other party of any change in address.

         8.8  Successors and Assigns.  This Agreement  shall be binding upon and
inure to the benefit of the parties and their  successors  and assigns.  Neither
the  Company  nor  Purchaser  shall  assign  this  Agreement  or any  rights  or
obligations   hereunder   without  the  prior  written  consent  of  the  other.
Notwithstanding  the foregoing,  Purchaser may assign its rights and obligations
hereunder  and  may  transfer  any or all  of its  Securities  (x) to any of its
"affiliates",  as that term is defined  under the Exchange Act, or (y) after the
date which is five (5) months after the Closing Date, to any person who receives
at least one-eighth of the Securities purchased by Purchaser hereunder,  without
the consent of the Company so long as such transferee is an accredited  investor
and  such  permitted  transferee  shall  be  subject  to the  provisions  of the
Investment  Agreements,  including,  without  limitation,  this  Section 8.8. In
addition,  the Securities may be pledged, and all rights of Purchaser under this
Agreement  or any  other  agreement  or  document  related  to  the  transaction
contemplated hereby may be assigned,  without further consent of the Company, to
a bona fide pledgee,  subject to the  provisions of the  Investment  Agreements,
including, without limitation, this Section 8.8.

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

         8.10 Survival. The representations, warranties, agreements are intended
for the benefit of the parties hereto and their respective  permitted successors
and  assigns and are not for the  benefit  of, nor may any  provision  hereof be
enforced  by, any other person and  covenants  of the Company in this  Agreement
shall   survive   the  Closing   hereunder   for  a  period  of  two  (2)  years
notwithstanding  any due  diligence  investigation  conducted by or on behalf of
Purchaser.  The Company agrees to indemnify and hold harmless Purchaser and each
of Purchaser's officers, directors, shareholders,  members, employees, partners,
agents  and  affiliates  and any  direct or  indirect  investors,  shareholders,
officers,  directors, agents, partners, employees, members, or affiliates of any
of the foregoing for loss or damage arising as a result of (a) any breach by the
Company  of any of its  representations  or  covenants  set forth  herein or the
unenforceability  or  invalidity  of any  provision  of  any  of the  Investment
Agreements,  or (b) any cause of action,  suit or claim  brought or made against
such  indemnitee,  other than  directly  by the  Company or by  governmental  or
regulatory  authorities,  and arising out of or resulting from (whether in whole
or in  part)  the  execution,  delivery,  performance  or  enforcement  of  this
Agreement or any other

<PAGE>

Investment  Agreements or any other instrument,  document or agreement  executed
pursuant hereto or thereto or contemplated  hereby or thereby (including without
limitation the acquisition of the Preferred Stock, the Warrants,  the Conversion
Shares,  and/or the Warrant Shares),  except to the extent that such actual loss
or damage  directly  results from a breach by such indemnitee of this Agreement,
the Warrant,  the Preferred Stock or the Registration Rights Agreement or from a
violation  of law.  The  right to  indemnification  shall  include  the right to
advancement of reasonable legal fees as they are incurred.

         8.11  Public  Filings;  Publicity  . On or prior to the day the Company
files the Form 8-K required  pursuant to Section 4.2 hereof,  the Company  shall
issue a press release with respect to the transactions  contemplated hereby. The
Company and Purchaser  shall have the right to approve before issuance any press
releases  (including the foregoing press release),  SEC or other filings, or any
other public statements,  with respect to the transactions  contemplated hereby,
which approval shall not be unreasonably withheld or delayed; provided, however,
that the Company shall be entitled,  without the prior approval of Purchaser, to
make any press release or SEC, Nasdaq,  NASD or exchange filings with respect to
such  transactions  as is required by applicable law and  regulations  (although
Purchaser  shall (to the extent  time  permits) be  consulted  by the Company in
connection  with any  such  press  release  prior to its  release  and  shall be
provided with a copy thereof).

         8.12 Further  Assurances.  Each party shall do and perform, or cause to
be done and performed,  all such further acts and things,  and shall execute and
deliver all such other agreements,  certificates,  instruments and documents, as
the other  party may  reasonably  request  in order to carry out the  intent and
accomplish  the  purposes  of  this  Agreement  and  the   consummation  of  the
transactions contemplated hereby.

         8.13  Remedies,  Characterizations,  Other  Obligations,  Breaches  and
Injunctive  Relief.  The remedies provided in this Agreement shall be cumulative
and in addition to all other remedies available under this Agreement,  at law or
in equity  (including a decree of specific  performance  and/or other injunctive
relief),  no remedy contained herein shall be deemed a waiver of compliance with
the  provisions  giving  rise to such remedy and  nothing  herein  shall limit a
party's  right to actual  damages  for any  failure by the other party to comply
with the terms of this Agreement.  The Company  acknowledges that a breach by it
of its obligations  hereunder will cause  irreparable harm to Purchaser and that
the remedy at law for any such breach may be inadequate.  The Company  therefore
agrees that,  in the event of any such breach or  threatened  breach,  Purchaser
shall be entitled, in addition to all other available remedies, to an injunction
restraining  any breach,  without the  necessity  of showing  economic  loss and
without any bond or other security being required.

         8.14  Directly or  Indirectly.  Where any  provision in this  Agreement
refers to action to be taken by any person,  or which such person is  prohibited
from taking,  such provision shall be applicable  whether the action in question
is taken directly or indirectly by such person.

         8.15  Payment of Cash;  Defaults.  Whenever  the Company is required to
make any cash

<PAGE>

payment to Purchaser under this Agreement, such cash payment shall be due on the
date (the "Cash Due Date") that such  Purchaser  delivers  written notice to the
Company.  Such  cash  payment  shall  be made to  Purchaser  by the  method  (by
certified or cashier's  check or wire transfer of immediately  available  funds)
elected by Purchaser. 8.16 Failure or Indulgence Not Waiver. No failure or delay
on the  part of a  party  in the  exercise  of any  power,  right  or  privilege
hereunder  shall  operate as a waiver  thereof,  nor shall any single or partial
exercise  of any  such  power,  right or  privilege  preclude  other or  further
exercise thereof or of any other right, power or privilege.

         8.17 Termination. In the event that the Closing shall not have occurred
on or before two (2) business days after the date of this Agreement,  unless the
parties agree otherwise, this Agreement shall terminate at the close of business
on such date.

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

                                      # # #

<PAGE>

COMPANY:

THCG, INC.

By:

Name:

Title:

<PAGE>

PURCHASER:

CASTLE CREEK TECHNOLOGY PARTNERS LLC

By: Castle Creek Partners, L.L.C.
Its: Investment Manager

By:
Name: Michael L. Spolan
Title:

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