Document:

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                                                                  Exhibit 10.5

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

                                                                      $4,000,000

                                  ROWECOM INC.
                            7% CONVERTIBLE DEBENTURE
                   DUE SIX MONTHS FROM THE DATE OF ISSUANCE

      THIS Debenture is one of a series of duly authorized and issued debentures
of RoweCom Inc., a Delaware corporation, having a principal place of business at
60 Aberdeen Avenue, Cambridge, MA 02138 (the "COMPANY"), designated as its 7%
Convertible Debentures, due six months from the date of issuance, in the
aggregate principal amount of Four Million Dollars ($4,000,000) (the
"DEBENTURES").

      FOR VALUE RECEIVED, the Company promises to pay to Montrose Investments
Ltd., or its registered assigns (the "HOLDER"), the principal sum of Four
Million Dollars ($4,000,000), on March 12, 2001 or such earlier date as the
Debentures are required to be repaid as provided hereunder (the "MATURITY Date")
and to pay simple interest to the Holder on the aggregate unconverted and then
outstanding principal amount of this Debenture at the rate of 7% per annum,
payable on a quarterly basis on March 31, June 30, September 30 and December 31
of each year while such Debentures are outstanding commencing on September 30,
2000 and on each Conversion Date (as defined herein) (each an "INTEREST PAYMENT
DATE") for such principal amount, commencing on the earlier to occur of a
Conversion Date for such principal amount and September 30, 2000, in cash or
shares of Common Stock (as defined in Section 6). Subject to the terms and
conditions herein, the decision whether to pay interest hereunder in shares of
Common Stock or cash shall be at the discretion of the Company. Not less than
ten Trading Days (as defined in Section 6) prior to each Interest Payment Date,
the Company shall provide the Holder with written notice of its election to pay
interest hereunder either in cash or shares of Common Stock pursuant to the
terms of Section 4(a)(i) (the Company may indicate in such notice that the
election contained in such notice shall continue for later periods until
revised). Failure to timely provide such written notice shall be deemed an
election by the Company to pay the interest on such Interest Payment Date in
shares of Common Stock pursuant to the terms of Section 4(a)(i). If interest is
paid by the Company in shares of its Common Stock, then the number of shares of
Common Stock issuable on account of such interest shall equal the cash
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amount of such interest on such Interest Payment Date divided by the Conversion
Price (as defined below). Interest shall be calculated on the basis of a 365-day
year and shall accrue daily commencing on the Original Issue Date (as defined in
Section 6) until payment in full of the principal sum, together with all accrued
and unpaid interest and other amounts which may become due hereunder, has been
made. Interest hereunder will be paid to the Person (as defined in Section 6) in
whose name this Debenture is registered on the records of the Company regarding
registration and transfers of Debentures (the "DEBENTURE REGISTER"). All overdue
accrued and unpaid interest to be paid in cash hereunder shall entail a late fee
at the rate of 18% per annum (or such lower maximum amount of interest permitted
to be charged under applicable law) ("LATE FEE") (to accrue daily, from the date
such interest is due hereunder through and including the date of payment),
payable in cash or if such Late Fee is paid by the Company in shares of its
Common Stock, in which case the number of shares of Common Stock issuable on
account of such Late Fee shall equal the cash amount of such Late Fee on such
Late Fee payment date divided by the Conversion Price.

      This Debenture is subject to the following additional provisions:

      SECTION This Debenture is exchangeable for an equal aggregate principal
amount of Debentures of different authorized denominations, as requested by the
Holder surrendering the same. No service charge will be made for such
registration of transfer or exchange.

      SECTION This Debenture has been issued subject to certain investment
representations of the original Holder set forth in the Purchase Agreement (as
defined in Section 6) and may be transferred or exchanged only in compliance
with the Purchase Agreement. Prior to due presentment to the Company for
transfer of this Debenture, the Company and any agent of the Company may treat
the Person (as defined in Section 6) in whose name this Debenture is duly
registered on the Debenture Register as the owner hereof for the purpose of
receiving payment as herein provided and for all other purposes, whether or not
this Debenture is overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary.

      SECTION        EVENTS OF DEFAULT.

               "EVENT OF DEFAULT", wherever used herein, means any one of the
following events (whatever the reason and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):

         any default in the payment of the principal of, interest
         on or liquidated damages in respect of, any Debentures, free of any
         claim of subordination, as and when the same shall become due and
         payable (whether on a Conversion Date or the Maturity Date or by
         acceleration or otherwise);

         the Company shall fail to observe or perform any other
         covenant, agreement or warranty contained in, or otherwise commit any
         breach of any of the

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         Transaction Documents (as defined in Section 6), and such failure or
         breach shall not have been remedied within five Business Days after the
         date on which written notice of such failure or breach shall have been
         given;

         the Company or any of its Significant Subsidiaries (as defined in
         Section 6) shall commence, or there shall be commenced against the
         Company or any such Significant Subsidiary a case under any applicable
         bankruptcy or insolvency laws as now or hereafter in effect or any
         successor thereto, or the Company or any of its Significant
         Subsidiaries commences any other proceeding under any reorganization,
         arrangement, adjustment of debt, relief of debtors, dissolution,
         insolvency or liquidation or similar law of any jurisdiction whether
         now or hereafter in effect relating to the Company or any of its
         Significant Subsidiaries or there is commenced against the Company or
         any Significant Subsidiary thereof any such bankruptcy, insolvency or
         other proceeding which remains undismissed for a period of 60 days; or
         the Company or any Significant Subsidiary thereof is adjudicated
         insolvent or bankrupt; or any order of relief or other order approving
         any such case or proceeding is entered; or the Company or any
         Significant Subsidiary thereof suffers any appointment of any custodian
         or the like for it or any substantial part of its property which
         continues undischarged or unstayed for a period of 60 days; or the
         Company or any Significant Subsidiary thereof makes a general
         assignment for the benefit of creditors; or the Company shall fail to
         pay, or shall state that it is unable to pay, or shall be unable to
         pay, its debts generally as they become due; or the Company or any
         Significant Subsidiary thereof shall call a meeting of its creditors
         with a view to arranging a composition, adjustment or restructuring of
         its debts; or the Company or any Significant Subsidiary thereof shall
         by any act or failure to act expressly indicate its consent to,
         approval of or acquiescence in any of the foregoing; or any corporate
         or other action is taken by the Company or any Significant Subsidiary
         thereof for the purpose of effecting any of the foregoing;

         the Company shall default in any of its obligations under
         any other Debenture or any mortgage, credit agreement or other
         facility, indenture agreement, factoring agreement or other instrument
         under which there may be issued, or by which there may be secured or
         evidenced any indebtedness for borrowed money or money due under any
         long term leasing or factoring arrangement of the Company in an amount
         exceeding five hundred thousand dollars ($500,000), whether such
         indebtedness now exists or shall hereafter be created and such default
         shall result in such indebtedness becoming or being declared due and
         payable prior to the date on which it would otherwise become due and
         payable;

         the Common Stock shall either be delisted from the Nasdaq
         National Market ("NASDAQ") or suspended from trading on the NASDAQ
         without resuming trading and/or being relisted or thereon or listed on
         the New York Stock Exchange, American Stock Exchange or Nasdaq SmallCap
         Market (each, a "SUBSEQUENT MARKET") or having such suspension lifted,
         in either case, for more than the lesser of five consecutive

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         Trading Days or an aggregate of eight Trading Days (which need not be
         consecutive Trading Days);

         the Company shall be a party to any Change of Control Transaction
         (as defined in Section 6), shall agree to sell or dispose all or in
         excess of 33% of its assets in one or more transactions (whether or
         not such sale would constitute a Change of Control Transaction), or
         shall redeem or repurchase more than a de minimis number of shares of
         Common Stock or other equity securities of the Company (other than
         redemptions of Underlying Shares (as defined in Section 6)) and other
         than the repurchase of shares from officers, employees, directors
         and consultants of the Company upon termination of their relationship
         with the Company;

         an Underlying Shares Registration Statement (as defined in Section 6)
         shall not have been declared effective by the Commission (as defined
         in Section 6) on or prior to the 120th day after the Original Issue
         Date;

         if, during the Effectiveness Period (as defined in the
         Registration Rights Agreement (as defined in Section 8)), the
         effectiveness of the Underlying Shares Registration Statement lapses
         for any reason or the Holder shall not be permitted to resell
         Registrable Securities (as defined in the Registration Rights
         Agreement) under the Underlying Shares Registration Statement, in
         either case, for more than five consecutive Trading Days or an
         aggregate of eight Trading Days (which need not be consecutive Trading
         Days);

         an Event (as defined in the Registration Rights Agreement) shall not
         have been cured to the satisfaction of the Holder prior to the
         expiration of thirty days from the Event Date (as defined in the
         Registration Rights Agreement) relating thereto (other than an Event
         resulting from a failure of an Underlying Shares Registration Statement
         to be declared effective by the Commission on or prior to the 120th day
         after the Original Issue Date, which shall be covered by Section
         3(a)(vii));

         the Company shall fail for any reason to deliver certificates to a
         Holder prior to the third Trading Day after a Conversion Date
         pursuant to and in accordance with Section 4(b) or the Company
         shall provide notice to the Holder, including by way of public
         announcement, at any time, of its intention not to comply with requests
         for conversions of any Debentures in accordance with the terms hereof;

         the Company shall fail for any reason to deliver the payment in cash
         pursuant to a Buy-In (as defined herein) within five (5) days after
         written notice thereof is delivered to the Company hereunder.

               If any Event of Default occurs and is continuing, the full
principal amount of this Debenture (and, at the Holder's option, all other
Debentures then held by such Holder), together with interest and other amounts
owing in respect thereof, to the date of acceleration shall become

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at the Holder's election, immediately due and payable in cash. The aggregate
amount payable upon an Event of Default shall be equal to the sum of (i) the
Mandatory Prepayment Amount (as defined in Section 6) plus (ii) the product of
(A) the number of Underlying Shares issued in respect of conversions hereunder
within thirty (30) days of the date of a declaration of an Event of Default and
then held by the Holder and (B) the Closing Price (as defined in Section 6) on
the date prepayment is due or the date the full prepayment price is paid,
whichever is greater. Interest shall accrue on the prepayment amount hereunder
from the seventh day after such amount is due (being the date of an Event of
Default) through the date of prepayment in full thereof at the rate of 18% per
annum (or such lesser maximum amount that is permitted to be paid by applicable
law), to accrue daily from the date such payment is due hereunder through and
including the date of payment. All Debentures and Underlying Shares for which
the full prepayment price hereunder shall have been paid in accordance herewith
shall promptly be surrendered to or as directed by the Company. The Holder need
not provide and the Company hereby waives any presentment, demand, protest or
other notice of any kind, and the Holder may immediately and without expiration
of any grace period enforce any and all of its rights and remedies hereunder and
all other remedies available to it under applicable law. Such declaration may be
rescinded and annulled by Holder at any time prior to payment hereunder. No such
rescission or annulment shall affect any subsequent Event of Default or impair
any right consequent thereon.

      SECTION CONVERSION.

               CONVERSION AT OPTION OF HOLDER. (A) This Debenture shall be
convertible into shares of Common Stock at the option of the Holder, in whole or
in part at any time and from time to time, after the Original Issue Date
(subject to the limitations on conversion set forth in Section 4(a)(iv) hereof)
and until this Debenture shall have been repaid in full. The Holder shall effect
conversions at its option by delivering to the Company of the form of conversion
notice attached hereto as EXHIBIT A (a "HOLDER CONVERSION NOTICE"), specifying
therein the principal amount of Debentures to be converted and the date on which
such conversion is to be effected, which date may not be prior to or more than
five Trading Days after the date such Holder Conversion Notice is deemed to have
been delivered hereunder (a "HOLDER CONVERSION DATE") and shall contain a
schedule in the form of SCHEDULE 1 to the Holder Conversion Notice (as amended
on each Holder Conversion Date, the "CONVERSION SCHEDULE") reflecting the
remaining principal amount of this Debenture and all accrued and unpaid interest
thereon subsequent to the conversion at issue. If no Holder Conversion Date is
specified in a Holder Conversion Notice, the Holder Conversion Date shall be the
date that such Holder Conversion Notice is deemed delivered hereunder. Subject
to Section 4(b), each Holder Conversion Notice, once given, shall be
irrevocable. To effect conversions hereunder (including conversion pursuant to a
Company Conversion Notice), the Holder shall not be required to physically
surrender this Debenture to the Company unless the aggregate principal amount of
this Debenture is so converted in which event such Holder shall promptly
thereafter deliver such Debenture to or as directed by the Company. Conversions
hereunder shall have the effect of lowering the outstanding principal amount of
this Debenture plus all accrued and unpaid interest thereon in an amount equal
to the applicable conversion, which shall be evidenced by entries set forth in
the Conversion Schedule.

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The Holder and the Company shall maintain records showing the principal amount
converted and the date of such conversions. In the event of any dispute or
discrepancy, the records of the Holder shall be controlling and determinative in
the absence of manifest error. The Holder and any assignee, by acceptance of
this Debenture, acknowledge and agree that, by reason of the provisions of this
paragraph, following conversion of a portion of this Debenture, the unpaid and
unconverted principal amount of this Debenture may be less than the amount
stated on the face hereof.

              (ii) CONVERSION AT OPTION OF THE COMPANY. If at any time after
the Effective Date (as defined in the Purchase Agreement) the Per Share Market
Values for each of 20 consecutive Trading Days exceeds 150% of the Conversion
Price, all or any portion of the outstanding Debentures shall be convertible
into Common Stock subject to the limitations set forth in Section 4(a)(iv)) at
the Conversion Ratio at the option of the Company, PROVIDED, that the Company
shall not be permitted to deliver a Company Conversion Notice (as defined below)
at any time when (1) the Underlying Shares Registration Statement is not then
effective, (2) the Holders are unable to utilize the prospectus thereunder to
resell Underlying Shares or (3) the Common Stock is not listed or quoted on the
NASDAQ or a Subsequent Market. The Company shall effect such conversions by
delivering to the Holder a written notice in the form attached hereto as EXHIBIT
B (the "COMPANY CONVERSION NOTICE"). Each of a Company Conversion Notice and a
Holder Conversion Notice are sometimes referred to herein as a Conversion
Notice. Each Company Conversion Notice shall specify the principal amount of
Debentures to be converted. The "COMPANY CONVERSION DATE" shall be the date that
a Company Conversion Notice is deemed to have been delivered hereunder. Each of
a Company Conversion Date and a Holder Conversion Date are referred to herein as
a "CONVERSION DATE." Subject to the Holder's rights under Section 4(b), the
conversion subject to each Company Conversion Notice, once given, shall be
irrevocable. Conversions at the request of the Company shall be reflected in the
Conversion Schedule.

               (iii) NUMBER OF UNDERLYING SHARES ISSUABLE UPON CONVERSION. (A)
The number of shares of Common Stock issuable upon a conversion hereunder shall
be determined by adding the sum of (i) the quotient obtained by dividing (x) the
outstanding principal amount of this Debenture to be converted by (y) the
Conversion Price, and (ii) the amount equal to (I) the product of (x) the
outstanding principal amount of this Debenture to be converted and (y) the
product of (1) the quotient obtained by dividing .07 by 365 and (2) the number
of days for which such principal amount was outstanding, divided by (II) the
Conversion Price, PROVIDED, that if such interest has been paid prior to such
Conversion Date or if the Company shall have timely elected to pay the interest
due on a Conversion Date in cash pursuant to the terms hereof, subsection (ii)
shall not be used in the calculation of the number of shares of Common Stock
issuable upon a conversion hereunder.

              (B) Notwithstanding anything to the contrary contained herein, if
on any Conversion Date:

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                  (1) the number of shares of Common Stock at the time
      authorized, unissued and unreserved for all purposes, or held as
      treasury stock, is insufficient to pay interest hereunder in shares of
      Common Stock;

                  (2) after the Interest Effectiveness Date (as defined in
      Section 6) such shares of Common Stock (x) are not registered for resale
      pursuant to an effective Underlying Shares Registration Statement and (y)
      may not be sold without volume restrictions pursuant to Rule 144(k)
      promulgated under the Securities Act (as defined in Section 6);

                  (3) the Common Stock is not listed or quoted on the NASDAQ or
      on a Subsequent Market;

                  (4) the Company has failed to timely satisfy its conversion
      obligations hereunder; or

                  (5) the issuance of such shares of Common Stock would result
      in a violation of Section 4(a)(ii),

                  then, at the option of the Holder, the Company, in lieu of
delivering shares of Common Stock pursuant to Section 4(a)(i)(A)(iii), shall
deliver, within three Trading Days of each applicable Conversion Date, an amount
in cash equal to the sum of (a) the outstanding principal amount of the
Debentures to be converted on such Conversion Date and (b) the product of (x)
the quotient obtained by dividing .07 by 365 and (y) the number of days for
which such principal amount was outstanding.
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                           CERTAIN CONVERSION RESTRICTIONS.

               A Holder may not convert Debentures or receive shares of Common
Stock as payment of interest hereunder to the extent such conversion or receipt
of such interest payment would result in the Holder, together with any affiliate
thereof, beneficially owning (as determined in accordance with Section 13(d) of
the Exchange Act and the rules promulgated thereunder) in excess of 9.999% of
the then issued and outstanding shares of Common Stock, including shares
issuable upon conversion of, and payment of interest on, the Debentures held by
such Holder after application of this Section. Since the Holder will not be
obligated to report to the Company the number of shares of Common Stock it may
hold at the time of a conversion hereunder, unless the conversion at issue would
result in the issuance of shares of Common Stock in excess of 9.999% of the then
outstanding shares of Common Stock without regard to any other shares which may
be beneficially owned by the Holder or an affiliate thereof, the Holder shall
have the authority and obligation to determine whether the restriction contained
in this Section will limit any particular conversion hereunder and to the extent
that the Holder determines that the limitation contained in this Section
applies, the determination of which portion of the principal amount of
Debentures are convertible shall be the responsibility and obligation of the
Holder. If the Holder has delivered a Conversion Notice for a principal amount
of Debentures that, without regard to any other shares that the Holder or its
affiliates may beneficially own, would result in the issuance in excess of the
permitted amount hereunder, the Company shall notify the Holder of this fact and
shall honor the conversion for the maximum principal amount permitted to be
converted on such Conversion Date in accordance with the periods described in
Section 4(b) and, at the option of the Holder, either retain any principal
amount tendered for conversion in excess of the permitted amount hereunder for
future conversions or return such excess principal amount to the Holder. The
provisions of this Section may be waived by a Holder (but only as to itself and
not to any other Holder) upon not less than 61 days prior notice to the Company.
Other Holders shall be unaffected by any such waiver.

                      If the Common Stock is then listed for trading on the
NASDAQ or the Nasdaq SmallCap Market and the Company has not obtained the
Shareholder Approval (as defined below), then the Company may not issue in
excess of 19.999% of the number of shares of Common Stock (less the number of
shares of Common Stock issued upon exercise of the Warrants at a price per share
below the market price of the Common Stock)outstanding on the Trading Day
immediately preceding the Original Closing Date upon conversions of the
Debentures at a price per share that is less than the Closing Price on the
Trading Day immediately preceding the Original Issue Date (such number of
shares, the "ISSUABLE MAXIMUM"). Each Holder shall be entitled to a portion of
the Issuable Maximum equal to the quotient obtained by dividing (x) the
aggregate principal amount of the Debentures issued and sold to such Holder on
the Original Issue Date by (y) the number of the Debenture issued and sold by
the Company on the Original Issue Date. If any Holder shall no longer hold the
Debenture, then such Holder's remaining portion of the Issuable Maximum shall be
allocated pro-rata among the remaining Holders. If on any Conversion Date (A)
the shares of Common Stock are listed for trading on the NASDAQ or Nasdaq
SmallCap Market, (B) the Conversion Price then in effect is such that the
aggregate number of shares of Common Stock that would

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then be issuable upon conversion in full of all then outstanding Debentures,
together with any shares of Common Stock previously issued upon conversion of
the Debenture would exceed the Issuable Maximum, and (C) the Company shall not
have previously obtained the vote of shareholders (the "SHAREHOLDER Approval"),
if any, as may be required by the applicable rules and regulations of the NASDAQ
(or any successor entity) applicable to approve the issuance of shares of Common
Stock in excess of the Issuable Maximum pursuant to the terms hereof, then the
Company shall issue to the Holder requesting a conversion a number of shares of
Common Stock equal to such Holder's pro-rata portion (which shall be calculated
pursuant to the terms hereof) of the Issuable Maximum and, with respect to the
remainder of the aggregate principal amount of the Debentures then held by such
Holder for which a conversion in accordance with the Conversion Price would
result in an issuance of shares of Common Stock in excess of such Holder's
pro-rata portion (which shall be calculated pursuant to the terms hereof) of the
Issuable Maximum (the "EXCESS PRINCIPAL"), the converting Holder shall have the
option to require the Company to either: (1) use its best efforts to obtain the
Shareholder Approval applicable to such issuance as soon as is possible, but in
any event not later than the 60th day after such request, or (2) pay cash to the
converting Holder in an amount equal to the Excess Principal as liquidated
damages and not as penalty. If the converting Holder shall have elected the
first option pursuant to the immediately preceding sentence and the Company
shall have failed to obtain the Shareholder Approval on or prior to the 60th day
after such request, then within three Trading Days following the request
therefor by the converting Holder, the Company shall pay cash to the such in an
amount equal to the Excess Principal in full satisfaction of its remaining
conversion obligations. If the Company fails to pay the Excess Principal in full
pursuant to this Section within seven days after the date payable, the Company
will pay interest thereon at a rate of 18% per annum or such lesser maximum
amount that is permitted to be paid by applicable law, to the converting Holder,
accruing daily from the Conversion Date until such amount, plus all such
interest thereon, is paid in full. The Company and the Holder understand and
agree that shares of Common Stock issued to and then held by the Holder as a
result of conversions of Debentures shall not be entitled to cast votes on any
resolution to obtain Shareholder Approval pursuant hereto.

          Not later than three Trading Days after any Conversion Date, the
Company will deliver to the Holder (i) a certificate or certificates which shall
be free of restrictive legends and trading restrictions (other than those
required by the Purchase Agreement) representing the number of shares of Common
Stock being acquired upon the conversion of Debentures (ii) and a bank check in
the amount of accrued and unpaid interest (if the Company has timely elected or
is required to pay accrued interest in cash). The Company shall, upon request of
the Holder, if available, use its best efforts to deliver any certificate or
certificates required to be delivered by the Company under this Section
electronically through the Depository Trust Corporation or another established
clearing corporation performing similar functions. If in the case of any
Conversion Notice such certificate or certificates are not delivered to or as
directed by the applicable Holder by the third Trading Day after a Conversion
Date, the Holder shall be entitled by written notice to the Company at any time
on or before its receipt of such certificate or certificates thereafter, to
rescind such conversion, in which event the Company shall immediately return the
certificates representing the principal amount of Debentures tendered for
conversion.

               If the Company fails to deliver to the Holder such certificate or
certificates pursuant to Section 4(b)(i) by the third Trading Day after the
Conversion Date (except under circumstances described in Section 4(a)(iv)(B),
the Company shall pay to such Holder, in cash, as liquidated damages and not as
a penalty, $5,000 for each Trading Day after such third Trading Day until such
certificates are delivered. Nothing herein shall limit a Holder's right to
declare an Event of Default pursuant to Section 3 herein for the Company's
failure to deliver certificates representing shares of Common Stock upon
conversion within the period specified herein and such Holder shall have the
right to pursue all remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief.
The exercise of any such rights shall not prohibit the Holders from seeking to
enforce damages pursuant to any other Section hereof or under applicable law.
Further, if the Company shall not have delivered any cash due in respect of
conversions of Debentures or as payment of interest thereon by the third Trading
Day after the Conversion Date, the Holder may, by notice to the Company, require
the Company to issue shares of Common Stock pursuant to Section 4(c).

               In addition to any other rights available to the Holder, if the
Company fails to deliver to the Holder such certificate or certificates pursuant
to Section 4(b)(i) by the third Trading Day after the Conversion Date, and if
after such third Trading Day the Holder purchases (in an open market transaction
or otherwise) Common Stock to deliver in satisfaction of a sale by such Holder
of the Underlying Shares which the Holder anticipated receiving upon such
conversion (a "BUY-IN"), then the Company shall (A) pay in cash to the Holder
(in addition to any remedies available to or elected by the Holder) the amount
by which (x) the Holder's total purchase price (including brokerage commissions,
if any) for the Common Stock so purchased exceeds (y) the product of (1) the
aggregate number of shares of Common Stock that such Holder anticipated
receiving from the conversion at issue multiplied by (2) the market price of the
Common Stock at the time of the sale giving rise to such purchase obligation and
(B) at the option of the Holder, either reissue Debentures in principal amount
equal to the principal amount of the attempted conversion or deliver to the
Holder the number of shares of Common Stock that would have been issued had the
Company timely complied with its delivery requirements under Section 4(b)(i).
For example, if the Holder purchases Common Stock having a total purchase price
of $11,000 to cover a Buy-In with respect to an attempted conversion of
Debentures with respect to which the market price of the Underlying Shares on
the date of conversion was a total of $10,000 under clause (A) of the
immediately preceding sentence, the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In. Notwithstanding anything
contained herein to the contrary, if a Holder requires the Company to make
payment in respect of a Buy-In for the failure to timely deliver certificates
hereunder and the Company timely pays in full such payment, the Company shall
not be required to pay such Holder liquidated damages under Section 4(b)(ii) in
respect of the certificates resulting in such Buy-In.

               The conversion price (the "CONVERSION PRICE") in effect on any
Conversion Date shall be $5.884 (subject to adjustment as provided herein).

<PAGE>

               If the Company, at any time while any Debentures are outstanding,
(a) shall pay a stock dividend or otherwise make a distribution or distributions
payable in and in respect of shares of its Common Stock, or in respect of any
other equity or equity equivalent securities and payable in shares of Common
Stock, (b) subdivide outstanding shares of Common Stock into a larger number of
shares, (c) combine (including by way of reverse stock split) outstanding shares
of Common Stock into a smaller number of shares, or (d) issue by
reclassification of shares of the Common Stock any shares of capital stock of
the Company, then the Conversion Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and of which the
denominator shall be the number of shares of Common Stock outstanding after such
event. Any adjustment made pursuant to this Section shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or
re-classification.

               If the Company, at any time while any Debentures are outstanding,
shall issue rights, options or warrants to all holders of Common Stock (and not
to Holders) entitling them to subscribe for or purchase shares of Common Stock
at a price per share less than the Per Share Market Value at the record date
mentioned below, then the Conversion Price shall be multiplied by a fraction, of
which the denominator shall be the number of shares of the Common Stock
(excluding treasury shares, if any) outstanding on the date of issuance of such
rights or warrants plus the number of additional shares of Common Stock offered
for subscription or purchase, and of which the numerator shall be the number of
shares of the Common Stock (excluding treasury shares, if any) outstanding on
the date of issuance of such rights or warrants plus the number of shares which
the aggregate offering price of the total number of shares so offered would
purchase at such Per Share Market Value. Such adjustment shall be made whenever
such rights or warrants are issued, and shall become effective immediately after
the record date for the determination of stockholders entitled to receive such
rights, options or warrants. However, upon the expiration of any such right,
option or warrant to purchase shares of the Common Stock the issuance of which
resulted in an adjustment in the Conversion Price pursuant to this Section, if
any such right, option or warrant shall expire and shall not have been
exercised, the Conversion Price shall immediately upon such expiration be
recomputed and effective immediately upon such expiration be increased to the
price which it would have been (but reflecting any other adjustments in the
Conversion Price made pursuant to the provisions of this Section after the
issuance of such rights or warrants) had the adjustment of the Conversion Price
made upon the issuance of such rights, options or warrants been made on the
basis of offering for subscription or purchase only that number of shares of the
Common Stock actually purchased upon the exercise of such rights, options or
warrants actually exercised.

      If the Company or any subsidiary thereof at any time while this Warrant is
outstanding, shall issue shares of Common Stock or rights, warrants, options or
other securities or debt that are convertible into or exchangeable for shares of
Common Stock ("COMMON STOCK EQUIVALENTS"), at or entitling any Person to acquire
shares of Common Stock at a price per share less than the Conversion Price (if
the holder of the Common Stock or Common Stock Equivalent so issued shall at any
time, whether by operation of purchase price adjustments, reset provisions,

<PAGE>

floating conversion, exercise or exchange prices or otherwise, or due to
warrants, options or rights issued in connection with such issuance, be entitled
to receive shares of Common Stock at a price less than the Conversion Price,
such issuance shall be deemed to have occurred for less than the Conversion
Price), then, at the sole option of the Holder, the Conversion Price shall be
adjusted to mirror the conversion, exchange or purchase price for such Common
Stock or Common Stock Equivalents (including any reset provisions thereof) for
such exercises as shall be indicated by the Holder, PROVIDED, that for purposes
hereof, all shares of Common Stock that are issuable upon conversion, exercise
or exchange of Common Stock Equivalents shall be deemed outstanding immediately
after the issuance of such Common Stock Equivalents. Such adjustment shall be
made whenever such shares of Common Stock or Common Stock Equivalents are
issued. Notwithstanding the foregoing, if the aggregate number of all shares of
Common Stock and shares of Common Stock issuable in respect of issuances of
Common Stock Equivalents (not including any issuances referenced in the
penultimate sentence of this sub-section) is less than 100,000 shares, then the
Conversion Price shall not be adjusted as otherwise contemplated by this Section
4(c)(iv), but shall be reduced to the price (calculated to the nearest cent)
determined by multiplying the Conversion Price in effect immediately prior to
each such issuance of Common Stock or Common Stock Equivalents by a fraction,
the numerator of which shall be the sum of (i) the number of shares of Common
Stock outstanding immediately prior to such issuance, and (ii) the number of
shares of Common Stock which the aggregate consideration received (or to be
received, assuming exercise, conversion or resets in full of such Common Stock
Equivalents on the date of such adjustment) for the issuance of such additional
shares of Common Stock would purchase at the Conversion Price, and the
denominator of which shall be the sum of the number of shares of Common Stock
outstanding immediately after the issuance of such additional shares. No
adjustment under this Section shall be made as a result of (i) issuances of
Common Stock or Common Stock Equivalents to the extent disclosed in Schedule
2.1(c) to the Purchase Agreement, (ii) issuances and exercises of options to
purchase shares of Common Stock issued for compensatory purposes pursuant to any
of the Company's stock option or stock purchase plans, or (iii) exercises under
the Warrants (as defined in the Purchase Agreement). The mere creation of rights
pursuant to a shareholder rights plan or any similar plan or arrangement which
will attach to each share of Common Stock (including shares of Common Stock
issuable to the Holder upon conversion of this Debenture) will not result in an
adjustment under this Section 4(c)(iv), unless the Holder is not entitled to
receive such rights or such rights detach from the shares of Common Stock to
which they originally attached, then the Holder shall be entitled to
anti-dilution adjustments under this provision.

               If the Company, at any time while Debentures are outstanding,
shall distribute to all holders of Common Stock (and not to Holders) evidences
of its indebtedness or assets or rights or warrants to subscribe for or purchase
any security, then in each such case the Conversion Price at which Debentures
shall thereafter be convertible shall be determined by multiplying the
Conversion Price in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution by a
fraction of which the denominator shall be the Per Share Market Value determined
as of the record date mentioned above, and of which the numerator shall be such
Per Share Market Value on such record date less the then fair market value at
such record date of the portion of such assets or evidence of

<PAGE>

indebtedness so distributed applicable to one outstanding share of the Common
Stock as determined by the Board of Directors in good faith. In either case the
adjustments shall be described in a statement provided to the Holders of the
portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.

               In case of any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, the Holders shall have the right thereafter
to, at their option, (A) convert the then outstanding principal amount, together
with all accrued but unpaid interest and any other amounts then owing hereunder
in respect of this Debenture only into the shares of stock and other securities,
cash and property receivable upon or deemed to be held by holders of the Common
Stock following such reclassification or share exchange, and the Holders of the
Debentures shall be entitled upon such event to receive such amount of
securities, cash or property as the shares of the Common Stock of the Company
into which the then outstanding principal amount, together with all accrued but
unpaid interest and any other amounts then owing hereunder in respect of this
Debenture could have been converted immediately prior to such reclassification
or share exchange would have been entitled or (B) require the Company to prepay
the aggregate of its outstanding principal amount of Debentures, plus all
interest and other amounts due and payable thereon, at a price determined in
accordance with Section 3(b). The entire prepayment price shall be paid in cash.
This provision shall similarly apply to successive reclassifications or share
exchanges.

               All calculations under this Section 4 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. No
adjustments in the Conversion Price shall be required if such adjustment is less
than $0.01, PROVIDED, however, that any adjustments which by reason of this
Section are not required to be made shall be carried forward and taken into
account in any subsequent adjustment.

               Whenever the Conversion Price is adjusted pursuant to any of
Section 4(c)(ii) - (v), the Company shall promptly mail to each Holder a notice
setting forth the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment.

               If (A) the Company shall declare a dividend (or any other
distribution) on the Common Stock; (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock; (C) the
Company shall authorize the granting to all holders of the Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights; (D) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock,
any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; (E) the Company shall authorize the voluntary or
involuntary

<PAGE>

dissolution, liquidation or winding up of the affairs of the Company; then, in
each case, the Company shall cause to be filed at each office or agency
maintained for the purpose of conversion of the Debentures, and shall cause to
be mailed to the Holders at their last addresses as they shall appear upon the
stock books of the Company, at least 20 calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as
of which the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and the
date as of which it is expected that holders of the Common Stock of record shall
be entitled to exchange their shares of the Common Stock for securities, cash or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange, PROVIDED, that the failure to mail such notice
or any defect therein or in the mailing thereof shall not affect the validity of
the corporate action required to be specified in such notice. Holders are
entitled to convert Debentures during the 20-day period commencing the date of
such notice to the effective date of the event triggering such notice.

               In case of any (1) merger or consolidation of the Company with or
into another Person, or (2) sale by the Company of more than one-half of the
assets of the Company (on an as valued basis) in one or a series of related
transactions, a Holder shall have the right, to (A) if permitted under Section
3(b) hereof, exercise its rights of prepayment under Section 3(b) with respect
to such event, (B) convert its aggregate principal amount of Debentures then
outstanding into the shares of stock and other securities, cash and property
receivable upon or deemed to be held by holders of Common Stock following such
merger, consolidation or sale, and such Holder shall be entitled upon such event
or series of related events to receive such amount of securities, cash and
property as the shares of Common Stock into which such aggregate principal
amount of Debentures could have been converted immediately prior to such merger,
consolidation or sales would have been entitled, or (C) in the case of a merger
or consolidation, (x) require the surviving entity to issue shares of
convertible preferred stock or convertible debentures with such aggregate stated
value or in such face amount, as the case may be, equal to the aggregate
principal amount of Debentures then held by such Holder, plus all accrued and
unpaid interest and other amounts owing thereon, which newly issued shares of
preferred stock or debentures shall have terms identical (including with respect
to conversion) to the terms of this Debenture (except, in the case of preferred
stock, as may be required to reflect the differences between equity and debt)
and the holder of such security shall be entitled to all of the rights and
privileges of a Holder of Debentures set forth herein and the agreements
pursuant to which the Debentures were issued (including, without limitation, as
such rights relate to the acquisition, transferability, registration and listing
of such shares of stock other securities issuable upon conversion thereof), and
(y) simultaneously with the issuance of such convertible preferred stock or
convertible debentures, shall have the right to convert such instrument only
into shares of stock and other securities, cash and property receivable upon or
deemed to be held by holders of Common Stock following such merger or
consolidation. In the case of clause (C), the conversion price applicable for
the newly issued shares of convertible preferred stock or

<PAGE>

convertible debentures shall be based upon the amount of securities, cash and
property that each share of Common Stock would receive in such transaction and
the Conversion Price in effect immediately prior to the effectiveness or closing
date for such transaction. The terms of any such merger, sale or consolidation
shall include such terms so as to continue to give the Holders the right to
receive the securities, cash and property set forth in this Section upon any
conversion or redemption following such event. This provision shall similarly
apply to successive such events.

               The Company covenants that it will at all times reserve and keep
available out of its authorized and unissued shares of Common Stock solely for
the purpose of issuance upon conversion of the Debentures and payment of
interest on the Debentures, each as herein provided, free from preemptive rights
or any other actual contingent purchase rights of persons other than the
Holders, not less than such number of shares of the Common Stock as shall
(subject to any additional requirements of the Company as to reservation of such
shares set forth in the Purchase Agreement) be issuable (taking into account the
adjustments and restrictions of Section 4(b)) upon the conversion of the
outstanding principal amount of the Debentures and payment of interest
hereunder. The Company covenants that all shares of Common Stock that shall be
so issuable shall, upon issue, be duly and validly authorized, issued and fully
paid, nonassessable and, if the Underlying Shares Registration Statement has
been declared effective under the Securities Act, registered for public sale in
accordance with such Underlying Shares Registration Statement.

               Upon a conversion hereunder the Company shall not be required to
issue stock certificates representing fractions of shares of the Common Stock,
but may if otherwise permitted, make a cash payment in respect of any final
fraction of a share based on the Per Share Market Value at such time. If the
Company elects not, or is unable, to make such a cash payment, the Holder shall
be entitled to receive, in lieu of the final fraction of a share, one whole
share of Common Stock.

    The issuance of certificates for shares of the Common Stock on conversion of
the Debentures shall be made without charge to the Holders thereof for any
documentary stamp or similar taxes that may be payable in respect of the issue
or delivery of such certificate, provided that the Company shall not be required
to pay any tax that may be payable in respect of any transfer involved in the
issuance and delivery of any such certificate upon conversion in a name other
than that of the Holder of such Debentures so converted and the Company shall
not be required to issue or deliver such certificates unless or until the person
or persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.

    Any and all notices or other communications or deliveries to be provided by
the Holders hereunder, including, without limitation, any Conversion Notice,
shall be in writing and delivered personally, by facsimile, sent by a nationally
recognized overnight courier service or sent by certified or registered mail,
postage prepaid, addressed to the 60 Aberdeen Avenue, Cambridge, MA 02138,
facsimile No.: (617) 497-6825 attention Chief Financial Officer, or such

<PAGE>

other address or facsimile number as the Company may specify for such purposes
by notice to the Holders delivered in accordance with this Section, with a copy
(other than for Conversion Notices) to Bingham Dana LLP(facsimile number (617)
951-8736), attention: Brian Keeler, Esq. Any and all notices or other
communications or deliveries to be provided by the Company hereunder shall be in
writing and delivered personally, by facsimile, sent by a nationally recognized
overnight courier service or sent by certified or registered mail, postage
prepaid, addressed to each Holder at the facsimile telephone number or address
of such Holder appearing on the books of the Company, or if no such facsimile
telephone number or address appears, at the principal place of business of the
Holder. Any notice or other communication or deliveries hereunder shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 6:30 p.m. (New York City
time), (ii) the date after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section later than 6:30 p.m. (New York City time) on any date
and earlier than 11:59 p.m. (New York City time) on such date, (iii) four days
after deposit in the United States mail, (iv) the Business Day following the
date of mailing, if sent by nationally recognized overnight courier service, or
(v) upon actual receipt by the party to whom such notice is required to be
given.

               SECTION DEFINITIONS. For the purposes hereof, the following terms
shall have the following meanings:

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

               "CHANGE OF CONTROL TRANSACTION" means the occurrence of any of
(i) an acquisition after the date hereof by an individual or legal entity or
"group" (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
effective control (whether through legal or beneficial ownership of capital
stock of the Company, by contract or otherwise) of in excess of 33% of the
voting securities of the Company, (ii) a replacement at one time or over time of
more than one-half of the members of the Company's board of directors which is
not approved by a majority of those individuals who are members of the board of
directors on the date hereof (or by those individuals who are serving as members
of the board of directors on any date whose nomination to the board of directors
was approved by a majority of the members of the board of directors who are
members on the date hereof), (iii) the merger of the Company with or into
another entity that is not wholly-owned by the Company, consolidation or sale of
50% or more of the assets of the Company in one or a series of related
transactions, or (iv) the execution by the Company of an agreement to which the
Company is a party or by which it is bound, providing for any of the events set
forth above in (i), (ii) or (iii).

               "CLOSING PRICE" means on any particular date (a) the closing
sales price per share of Common Stock on such date on the Subsequent Market on
which the shares of Common

<PAGE>

Stock are then listed or quoted, or if there is no such price on such date, then
the closing sales price on the Subsequent Market on the date nearest preceding
such date, or (b) if the shares of Common Stock are not then listed or quoted on
a Subsequent Market, the closing sales price for a share of Common Stock in the
NASDAQ, as reported by the National Quotation Bureau Incorporated or similar
organization or agency succeeding to its functions of reporting prices) at the
close of business on such date, or (c) if the shares of Common Stock are not
then reported by the National Quotation Bureau Incorporated (or similar
organization or agency succeeding to its functions of reporting prices), then
the average of the "Pink Sheet" quotes for the relevant conversion period, as
determined in good faith by the Holder, or (d) if the shares of Common Stock are
not then publicly traded the fair market value of a share of Common Stock as
determined by an Appraiser selected in good faith by the Holders of a majority
in interest of the principal amount of Debentures then outstanding. 9.
"COMMISSION" means the Securities and Exchange Commission.

            "COMMON STOCK" means the common stock, $.01 par value per share, of
the Company and stock of any other class into which such shares may hereafter
have been reclassified or changed.

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

            "INTEREST EFFECTIVENESS DATE" means the earlier to occur of (x) the
Effectiveness Date and (y) the date that an Underlying Shares Registration
Statement is declared effective by the Commission.

            "MANDATORY PREPAYMENT AMOUNT" for any Debentures shall equal the sum
of (i) the greater of (A) 110% of the principal amount of Debentures to be
prepaid, plus all accrued and unpaid interest thereon, and (B) the principal
amount of Debentures to be prepaid, plus all accrued and unpaid interest
thereon, divided by the Conversion Price multiplied by the Closing Price on (x)
the date the Mandatory Prepayment Amount is demanded or otherwise due or (y) the
date the Mandatory Prepayment Amount is paid in full, whichever is greater, and
(ii) all other amounts, costs, expenses and liquidated damages due in respect of
such Debentures.

            "SIGNIFICANT SUBSIDIARY" shall have the meaning set forth in Rule
1-02 of Regulation S-X.

            "ORIGINAL ISSUE DATE" shall mean the date of the first issuance of
the Debentures regardless of the number of transfers of any Debenture and
regardless of the number of instruments which may be issued to evidence such
Debenture.

            "PER SHARE MARKET VALUE" means on any particular date (a) the
closing bid price per share of Common Stock on such date on the NASDAQ or on
such Subsequent Market on which the shares of Common Stock are then listed or
quoted, or if there is no such price on such date, then the closing bid price on
the NASDAQ or on such Subsequent Market on the date

<PAGE>

nearest preceding such date, or (b) if the shares of Common Stock are not then
listed or quoted on the NASDAQ or a Subsequent Market, the closing bid price for
a share of Common Stock in the over-the-counter market, as reported by the
National Quotation Bureau Incorporated or similar organization or agency
succeeding to its functions of reporting prices) at the close of business on
such date, or (c) if the shares of Common Stock are not then reported by the
National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of the "Pink
Sheet" quotes for the relevant conversion period, as determined in good faith by
the Holder, or (d) if the shares of Common Stock are not then publicly traded
the fair market value of a share of Common Stock as determined by an Appraiser
selected in good faith by the Holders of a majority in interest of the principal
amount of Debentures then outstanding.

            "PERSON" means a corporation, an association, a partnership,
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.

            "PURCHASE AGREEMENT" means the Convertible Debenture Purchase
Agreement, dated as of the Original Issue Date, to which the Company and the
original Holder are parties, as amended, modified or supplemented from time to
time in accordance with its terms.

            "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the Original Issue Date, to which the Company and the
original Holder are parties, as amended, modified or supplemented from time to
time in accordance with its terms.

            "SECURITIES ACT" means the Securities Act of 1933, as amended.

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

            "TRANSACTION  DOCUMENTS"  shall have the  meaning set forth in the
Purchase Agreement.

            "UNDERLYING SHARES" means the shares of Common Stock issuable upon
conversion of Debentures or as payment of interest in accordance with the terms
hereof.

            "UNDERLYING SHARES REGISTRATION STATEMENT" means a registration
statement meeting the requirements set forth in the Registration Rights
Agreement, covering among other
<PAGE>

things the resale of the Underlying Shares and naming the Holder as a "selling
stockholder" thereunder.

               SECTION Except as expressly provided herein, no provision of this
Debenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of, interest and liquidated damages (if
any) on, this Debenture at the time, place, and rate, and in the coin or
currency, herein prescribed. This Debenture is a direct obligation of the
Company. This Debenture ranks PARI PASSU with all other Debentures now or
hereafter issued under the terms set forth herein. As long as there are
Debentures outstanding, the Company shall not and shall cause it subsidiaries
not to, without the consent of the Holders, (i) amend its certificate of
incorporation, bylaws or other charter documents so as to adversely affect any
rights of the Holders; (ii) repay, repurchase or offer to repay, repurchase or
otherwise acquire shares of its Common Stock or other equity securities other
than as to the Underlying Shares to the extent permitted or required under the
Transaction Documents; or (iii) enter into any agreement with respect to any of
the foregoing. The Company may not voluntarily prepay the outstanding principal
amount on the Debentures without consent of the Holder.

               SECTION This Debenture shall not entitle the Holder to any of the
rights of a stockholder of the Company, including without limitation, the right
to vote, to receive dividends and other distributions, or to receive any notice
of, or to attend, meetings of stockholders or any other proceedings of the
Company, unless and to the extent converted into shares of Common Stock in
accordance with the terms hereof.

               SECTION If this Debenture shall be mutilated, lost, stolen or
destroyed, the Company shall execute and deliver, in exchange and substitution
for and upon cancellation of a mutilated Debenture, or in lieu of or in
substitution for a lost, stolen or destroyed Debenture, a new Debenture for the
principal amount of this Debenture so mutilated, lost, stolen or destroyed but
only upon receipt of evidence of such loss, theft or destruction of such
Debenture, and of the ownership hereof, and indemnity, if requested, all
reasonably satisfactory to the Company.

               SECTION Except as disclosed in Schedule 2.1(c) to the Purchase
Agreement, no indebtedness of the Company is senior to this Debenture in right
of payment, whether with respect to interest, damages or upon liquidation or
dissolution or otherwise. The Company will not and will not permit any of its
subsidiaries to, directly or indirectly, enter into, create, incur, assume or
suffer to exist any indebtedness of any kind (other than any indebtedness of the
Company arising pursuant to a line of credit with a nationally recognized bank,
which debt is secured by the receivables of the Company), on or with respect to
any of its property or assets now owned or hereafter acquired or any interest
therein or any income or profits therefrom that is senior in any respect to the
Company's obligations under the Debentures.

               SECTION This Debenture shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
conflicts of laws thereof. The Company and the Holder hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in the
City of New York, Borough of Manhattan, for the adjudication of any

<PAGE>

dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, or that such suit, action or
proceeding is improper. Each of the Company and the Holder hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by receiving a copy thereof sent to the Company
at the address in effect for notices to it under this instrument and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.

               SECTION Any waiver by the Company or the Holder of a breach of
any provision of this Debenture shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other
provision of this Debenture. The failure of the Company or the Holder to insist
upon strict adherence to any term of this Debenture on one or more occasions
shall not be considered a waiver or deprive that party of the right thereafter
to insist upon strict adherence to that term or any other term of this
Debenture. Any waiver must be in writing.

               SECTION If any provision of this Debenture is invalid, illegal or
unenforceable, the balance of this Debenture shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. If it shall be found
that any interest or other amount deemed interest due hereunder shall violate
applicable laws governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum permitted rate of interest.
The Company covenants (to the extent that it may lawfully do so) that it shall
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on the Debentures as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this indenture, and the Company (to the extent
it may lawfully do so) hereby expressly waives all benefits or advantage of any
such law, and covenants that it will not, by resort to any such law, hinder,
delay or impede the execution of any power herein granted to the Holder, but
will suffer and permit the execution of every such as though no such law has
been enacted.

               SECTION Whenever any payment or other obligation hereunder shall
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day.

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                            SIGNATURE PAGE FOLLOWS]

<PAGE>

            IN WITNESS WHEREOF, the Company has caused this Convertible
Debenture to be duly executed by a duly authorized officer as of the date first
above indicated.

                                    ROWECOM INC.

                                    By:
                                      Name:
                                      Title:

<PAGE>

                                    EXHIBIT A

                   NOTICE OF CONVERSION AT OPTION OF HOLDER

(To be Executed by the Registered Holder in order to Convert the Debenture)

The undersigned hereby elects to convert the attached Debenture into shares of
common stock, $.01 par value per share (the "Common Stock"), of RoweCom Inc.
(the "Company") according to the conditions hereof, as of the date written
below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates and opinions as reasonably
requested by the Company in accordance therewith. No fee will be charged to the
holder for any conversion, except for such transfer taxes, if any.

Conversion calculations:

                             ---------------------------------------------------
                             Date to Effect Conversion

                             ---------------------------------------------------
                             Principal Amount of Debentures to be Converted

                             ---------------------------------------------------
                             Number of shares of Common Stock to be Issued

                             ---------------------------------------------------
                             Conversion Price

                             ---------------------------------------------------
                             Signature

                             ---------------------------------------------------
                             Name

                             ---------------------------------------------------
                             Address
ACCEPTED AND AGREED:

ROWECOM INC.

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

<PAGE>

                                   SCHEDULE 1

                               CONVERSION SCHEDULE

7% Convertible Debentures, due in the aggregate principal amount of $4,000,000
issued by RoweCom Inc.

Dated:

===============================================================================
                                            AGGREGATE
                                         PRINCIPAL AMOUNT
                         AMOUNT OF          REMAINING
 DATE OF CONVERSION      CONVERSION       SUBSEQUENT TO       COMPANY ATTEST
                                            CONVERSION
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<PAGE>

                                    EXHIBIT B

                NOTICE OF CONVERSION AT OPTION OF THE COMPANY

(TO BE EXECUTED BY THE COMPANY IN ORDER TO CONVERT THE DEBENTURE)

THE UNDERSIGNED HEREBY ELECTS TO CONVERT THE ATTACHED DEBENTURE INTO SHARES OF
COMMON STOCK, $.01 PAR VALUE PER SHARE (THE "COMMON STOCK"), OF ROWECOM INC.
(THE "COMPANY") ACCORDING TO THE CONDITIONS HEREOF, AS OF THE DATE WRITTEN
BELOW. IF SHARES ARE TO BE ISSUED IN THE NAME OF A PERSON OTHER THAN THE
UNDERSIGNED, THE UNDERSIGNED WILL PAY ALL TRANSFER TAXES PAYABLE WITH RESPECT
THERETO AND IS DELIVERING HEREWITH SUCH CERTIFICATES AND OPINIONS AS REASONABLY
REQUESTED BY THE COMPANY IN ACCORDANCE THEREWITH. NO FEE WILL BE CHARGED TO THE
HOLDER FOR ANY CONVERSION, EXCEPT FOR SUCH TRANSFER TAXES, IF ANY.

CONVERSION CALCULATIONS:

                             ---------------------------------------------------
                              Date to Effect Conversion

                             ---------------------------------------------------
                              Principal Amount of Debentures to be Converted

                             ---------------------------------------------------
                              Number of shares of Common Stock to be Issued

                             ---------------------------------------------------
                              Conversion Price

                             ---------------------------------------------------
                              Signature

                             ---------------------------------------------------
                              Name

                             ---------------------------------------------------
                              Address
ACCEPTED AND AGREED:

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

<PAGE>

                                   SCHEDULE 2

                               CONVERSION SCHEDULE

7% Convertible Debentures, due in the aggregate principal amount of $4,000,000
issued by RoweCom Inc.

Dated:

===============================================================================
                                            AGGREGATE
                                         PRINCIPAL AMOUNT
                         AMOUNT OF          REMAINING
 DATE OF CONVERSION      CONVERSION       SUBSEQUENT TO       COMPANY ATTEST
                                            CONVERSION

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

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===============================================================================<PAGE>

                                                                    Exhibit 10.1

                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT

      THIS EMPLOYMENT AGREEMENT is effective as of the 26th day of June, 2000,
by and between TERRENCE S. CASSIDY, an individual (hereinafter "Executive"), and
NATIONAL WIRELESS HOLDINGS INC., a Delaware corporation (hereinafter "Company").

                              W I T N E S S E T H:

      WHEREAS,  Company is a Delaware  corporation  organized  pursuant to the
Delaware General Corporation Law;

      WHEREAS, the Company and the Executive are parties to an Employment
Agreement dated as of September 27, 1993, as amended by Amendment No. 1 to
Employment Agreement dated as of December 12, 1996 (the "Old Employment
Agreement");

      WHEREAS, Company desires to continue having the Executive render services
to the Company and to serve as President and Chief Executive Officer of Company;

      WHEREAS, the Executive desires to serve the Company in such capacities;

      WHEREAS, the Company and the Executive desire to amend and restate the
terms of the Executive's employment agreement as set forth below;

      NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties hereto agree as follows:

      1. EMPLOYMENT PERIOD. This Agreement shall be effective for a minimum term
(as it may be extended hereunder, the "Term") from the date hereof until the day
which is three years from the date hereof. The Term shall automatically be
extended by an additional one-year period on each anniversary of the date hereof
unless a party hereto notifies the other party hereto, in writing, of his or its
intention to terminate this Agreement at the end of the Term, at least sixty
(60) days prior to such anniversary. During the Term, the Executive shall
faithfully serve and be employed by the Company on a full-time basis as the
President and Chief Executive Officer of Company. The Executive shall devote the
majority of his professional time and effort to the duties of such position. The
parties agree that the term "full-time" does not require that the Executive work
exclusively for the Company. Executive may devote a reasonable percentage of his
time, consistent with his current practices on the date of this Agreement, to
other commitments.

      2. DUTIES. The Executive shall render those services customarily rendered
by an executive in such position in accordance with the budgets and decisions of
the Board of Directors of Company and as otherwise may be provided for in the
Bylaws of Company. The Executive shall perform such duties as are designated to
him by the Board of Directors faithfully, diligently, and to the best of his
ability consistent with the highest and best standards of the industry of
Company. Executive shall have such authority as is delegated to Executive from
time to time by the Board of Directors and as provided for in the Bylaws of
Company.

<PAGE>

      3. COMPENSATION. The Executive shall receive and the Company shall pay
throughout the Term hereof a salary of $260,000 per year (less all applicable
withholding and deductions therefrom), to be paid in regular semi-monthly
installments. Executive's salary shall increase by 15% beginning on the second
anniversary of the date hereof. In addition, Executive shall be eligible for
such additional bonuses or incentives as may be approved by the Board of
Directors of Company from time to time.

      4. EXPENSES. The Company recognizes that the Executive will incur, from
time to time, for the Company's benefit and in furtherance of the Company's
business, various expenses. Accordingly, the Company agrees to pay the following
expenses either directly on behalf of the Executive or to reimburse the
Executive for such expenses, provided, however, that such payment or
reimbursement is contingent upon the Executive supplying such documentary and
other evidence required to support the deduction of such expenses on Company's
federal income tax return:

         a. entertainment, travel (including meals while traveling) and
      promotion relating to and benefiting the Company;

         b. conventions and meetings expenses approved by the Board of
      Directors;

         c. fees for membership in professional organizations; and

         d. office expenses and supplies.

In addition, the Executive shall be entitled to participate with other employees
of Company in all fringe benefits or incentive compensation plans authorized and
adopted from time to time by the Company, including, without limitation, health,
dental and life insurance, to the extent allowed under such plans.

      5. EMPLOYMENT CONDUCT. At all times during the Term of this Agreement, the
Executive shall:

         a. devote such time to the business of Company as is necessary to
      perform his duties hereunder;

         b. observe and conform to all the laws applicable to the Company; and

         c. be aware that his conduct and actions, whether in public or private,
      reflect upon the goodwill of the Company and not partake in any conduct
      that is detrimental to himself or the Company.

      6.    TERMINATION.

         a. TERMINATION FOR CAUSE: The Company may terminate this Agreement at
      any time, without further obligation or liability to the Executive, in the
      event the Company determines in good faith by majority vote of the entire
      Board of Directors then in office that (each a termination for "cause"):

                                      -2-
<PAGE>

            (1) The Executive is permanently disabled. For purposes of this
         Agreement, Executive may be deemed permanently disabled when so
         conceded by Executive or so certified by a physician selected by
         Executive or his legal representative, on the one hand, or by the
         Company, on the other, and such certificate is delivered to the other
         party. In the event that within 10 days after delivery of such
         certificate the other party should, by written notice to the other
         party, contest the finding of disability, the parties agree to submit
         the determination of permanent disability to another physician
         acceptable to both parties, or if a physician cannot be agreed upon, a
         physician designated by the Dean of Mount Sinai Medical School;

            (2) The Executive is grossly negligent in the performance of his
         duties;

            (3) The Executive is convicted of a violation of any State or
         Federal law and is fined Ten Thousand Dollars ($10,000) or more or
         sentenced to prison or jail for a term of one year or more; or

            (4) The Executive commits any material violation of this Agreement
         which violation is not cured within 30 days after notice of such
         violation is given to the Executive by the Board of Directors of
         Company.

         b. OTHER EVENTS OF TERMINATION.

            (1) This Agreement shall terminate at the expiration of the Term.

            (2) This Agreement shall terminate at any time by agreement in
         writing by the Company and the Executive.

            (3) This Agreement shall terminate upon the death of the Executive,
         in which case his heirs and beneficiaries shall be entitled to all
         accrued but unpaid compensation hereunder.

         c. TERMINATION FOLLOWING CHANGE IN CONTROL. If a Change in Control of
      the Company as defined in Section 21 shall have occurred while the
      Executive is still an employee of the Company, the Executive shall be
      entitled to the compensation provided in Section 7 upon the subsequent
      termination of the Executive's employment with the Company by the Company
      or by the Executive, unless such termination is a result of (i) the
      Executive's death; (ii) the Executive's termination by the Company for
      cause (as more fully described in Section 6(a)(1)); or (iii) the
      Executive's decision to terminate his employment with the Company other
      than for Good Reason as defined below.

         d. DATE OF TERMINATION. "Date of Termination" shall mean (i) if this
      Agreement is terminated by the Company pursuant to Section 6 (c)(ii)
      above, thirty (30) days after Notice of Termination is given to the
      Executive (provided that the Executive shall not have returned to the
      performance of the Executive's duties on a full-time basis during such
      thirty (30) day period), (ii) if the Executive's employment is terminated
      by the Company for any other reason, the date on which a Notice of
      Termination is given, provided that if within thirty (30) days after any
      Notice of Termination is given to the Executive by the Company, the
      Executive notifies the Company that a dispute exists concerning the
      termination, the

                                      -3-
<PAGE>

      Date of Termination shall be the date on which the dispute is finally
      determined, either by mutual written agreement of the parties, by a final
      judgment, order or decree of a court of competent jurisdiction (the time
      for appeal therefrom having expired and no appeal having been perfected),
      or (iii) if the Agreement is terminated by the Executive, the date on
      which the Executive delivers Notice of Termination to the Company.

      7. COMPENSATION IN THE EVENT OF TERMINATION. (a) In the event Executive is
terminated for cause or (b) the Executive terminates this Agreement, other than
in the event of a Change of Control, Executive shall be entitled to, and shall
receive, no compensation excepting only such of the base compensation set forth
in Section 3 above as shall be accrued to the date of termination. In the event
that the Executive's employment with the Company is terminated as provided in
Section 6(c), then the Company shall:

               i. subject to Sections 8 and 9 below, pay to the Executive as
         severance payment in a lump sum in cash, on the fifth day following the
         Date of Termination, an amount equal to three times (the "multiple")
         the Executive's Cash Compensation (the "Executive's Severance Cash
         Benefit").

               ii. arrange to provide the Executive for two years (or such
         shorter period as Executive may elect) with disability, life, accident
         and health insurance substantially similar to those insurance benefits
         which Executive is receiving immediately prior to the Notice of
         Termination (including coverage for dependents at the same per person
         cost as the Executive is then paying). Benefits otherwise receivable by
         Executive pursuant to this Section 7(b) shall be reduced to the extent
         comparable benefits are actually received by the Executive during such
         two (2) year period following his termination (or such shorter period
         elected by the Executive), and any such benefits actually received by
         Executive shall be reported by him to the Company.

      8. REDUCTION IN BENEFITS FOR "PARACHUTE PAYMENT". Notwithstanding anything
contained in this Agreement to the contrary, in the event that the payments
under Section 7 of this Agreement to the Executive, either alone or together
with other payments the Executive has a right to receive from the Company, would
not be deductible (in whole or in part) by the Company as a result of such
payments constituting a "parachute payment" (as defined in Section 280G of the
Internal Revenue Code, as amended (the "Code")), such payments shall be reduced
to the largest amount as will result in no portion of the payments under Section
7 not being fully deductible by the Company as the result of Section 280G of the
Code. The determination of any reduction in the payments under Section 7
pursuant to the foregoing sentence shall be made exclusively by
PricewaterhouseCoopers, LLP, or such other firm of certified independent public
accountants as may be serving as the Company's principal auditors immediately
prior to the Effective Date (the "Auditors") (whose fees and expenses shall be
borne by the Company), and such determination shall be conclusive and binding on
the Company and the Executive.

      9. REDUCTION OF SEVERANCE CASH BENEFIT IN CERTAIN OTHER CIRCUMSTANCES.
Notwithstanding anything contained in this Agreement to the contrary, in the
event that on the Effective Date the Company's Aggregate Severance Liability (as
defined below) exceeds 5% of the Company's Market Capitalization (as defined
below), the Executive's Severance Cash Benefit shall be reduced to the product
of (a) 5% of the Company's Market Capitalization and (b) a fraction (x)

                                      -4-
<PAGE>

the numerator of which shall be the Executive's Severance Cash Benefit as of the
Effective Date and (y) the denominator of which shall be the Company's Aggregate
Severance Liability. The determination of any reduction in the Executive's
Severance Cash Benefits pursuant to this Section 9 shall be made exclusively by
the Auditors (whose fees and expenses shall be borne by the Company), and such
determination shall be conclusive and binding on the Company and the Executive.

      10. RETURN OF MATERIALS. Executive agrees to return promptly to Company
upon termination of this Agreement, whether or not for cause and whatever the
reason, all documents, data, records, and other information pertaining to his
services provided hereunder, and Executive shall not take any documents or data,
in any form or medium, or any reproduction or excerpt of any such documents or
data, containing or pertaining to any proprietary information of Company. The
provision shall not apply to personal effects and personal records of Executive
which may be located on the premises of Company.

      11. DUTY OF LOYALTY. The Executive covenants and agrees that during the
Term of this Agreement and for a period of one (1) year thereafter, he shall not
participate as an officer, director, partner, employee, agent, consultant,
owner, stockholder, representative, or in any other capacity with any other
company or business entity of any nature whatsoever which is directly or
indirectly in competition with Company; provided, however, that ownership of 5%
or less of any class of outstanding securities of a company whose securities are
listed on a national securities exchange, or which has not fewer than 1,000
shareholders, shall not be deemed to constitute owner participation in any other
company or business entity which is directly or indirectly in competition with
Company.

      12. INDEMNIFICATION. Company shall, to the maximum extent permitted by
Company's Bylaws, indemnify and hold the Executive harmless against expenses,
including reasonable attorneys' fees, judgments, fines, settlements, and other
amounts actually and reasonably incurred in connection with any proceeding
arising by reason of the Executive's employment by the Company.

      13. AMENDMENT. No modification of this Agreement, or waiver of any of its
provisions, shall be valid or enforceable unless in writing and signed by each
of the parties.

      14. BINDING AGREEMENT. Except as otherwise specifically provided herein,
this Agreement shall be binding on the parties and their heirs, executors,
distributees, legal representatives, successors and assigns.

      15. NOTICES. All notices under this Agreement shall be in writing and
shall be delivered by personal service to the parties at their respective
addresses as each party shall inform the other. Any purported termination by the
Company or the Executive of the Executive's employment hereunder shall be
communicated by a Notice of Termination to the other party as set forth herein.
For purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate those specific termination provisions in this
Agreement relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. The effective date of any such
notice shall be the date of delivery.

                                      -5-
<PAGE>

      16. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Delaware applicable to contracts made and performed entirely therein.

      17. ENTIRE AGREEMENT. This Agreement contains the entire agreement between
the parties hereto with respect to the subjects and matters addressed. Except as
provided herein, each party to this Agreement acknowledges that no
representations, inducements, promises or agreements, oral or otherwise, have
been made by any party or anyone acting on behalf of any party which are not set
forth herein and that no other agreement shall be valid or binding.

      18. ASSIGNMENT BY EXECUTIVE. The Executive shall not assign this Agreement
or any rights contained hereunder and any such attempted assignment is void.

      19. AGREEMENT TO PERFORM NECESSARY ACTS. The parties shall execute and
deliver all documents and perform all further acts that may be reasonably
necessary to effect this Agreement.

      20. HEADINGS. The headings of the several sections of this Agreement are
inserted for convenience of reference only and are not intended to be a part of
or affect the meaning or interpretation of this Agreement.

      21. DEFINITIONS. As used herein, the terms below shall have the following
meanings:

          a. Cash Compensation. "Cash Compensation" shall mean the sum of (x)
      the higher of the Executive's annual base salary at (i) the time the
      Notice of Termination provided for in Section 15 of this Agreement is
      given or (ii) immediately prior to a Change in Control, and (y) an amount
      equal to the highest aggregate Cash Bonus Earned by the Executive under
      all cash bonus plans of the Company for any of the three fiscal years
      immediately preceding the year in which the Date of Termination occurs.
      "Cash Bonus Earned" shall mean all amounts actually earned for performance
      in a specific fiscal year without regard to voluntary or mandatory payment
      deferrals if so specified in the applicable bonus plan.

          b. Change in Control. A "Change in Control" of the Company shall mean
      the occurrence during the term of the Employment Agreement of any one of
      the following events:

             i. An acquisition (other than directly from the Company) of any
      voting securities of the Company (the "Voting Securities") by any person
      (as the term person is used for purposes of Section 13(d) or 14(d) of the
      Securities Exchange Act of 1934, as amended (the "Exchange Act")), but not
      including Terrence S. Cassidy (each such person, a "Person"), immediately
      after which such Person has "Beneficial Ownership" (within the meaning of
      Rule 13d-3 promulgated under the Exchange Act) of fifteen percent (15%) or
      more of the combined voting power of the Company's then outstanding Voting
      Securities; provided, however, in determining whether a Change in Control
      has occurred, Voting Securities which are acquired in a "Non-Control
      Acquisition" (as hereinafter defined) shall not constitute an acquisition
      which would cause a Change in Control. A "Non-Control Acquisition" shall
      mean an acquisition by (A) an employee benefit plan (or a trust forming a
      part thereof) maintained by (1) the Company or (2) any corporation or
      other Person of which a majority of its voting power or its voting equity
      securities or equity interest is owned, directly or indirectly, by the
      Company (for purposes of this definition, a

                                      -6-
<PAGE>

      "Subsidiary"), (B) the Company or its Subsidiaries, or (C) any Person in
      connection with a "Non-Control Transaction" (as hereinafter defined);

             ii. The individuals who, as of the date this Agreement is approved
      by the Board of Directors, are members of the Board (the "Incumbent
      Board"), cease for any reason to constitute at least two-thirds of the
      members of the Board; provided, however, that if the election, or
      nomination for election by the Company's common stockholders, of any new
      director was approved by a vote of at least two-thirds of the Incumbent
      Board, such new director shall, for purposes of this Agreement, be
      considered as a member of the Incumbent Board; provided further, however,
      that no individual shall be considered a member of the Incumbent Board if
      such individual initially assumed office as a result of either an actual
      or threatened "Election Contest" (as described in Rule 14a-11 promulgated
      under the Exchange Act) or other actual or threatened solicitation of
      proxies or consents by or on behalf of a Person other than the Board (a
      "Proxy Contest") including by reason of any agreement intended to avoid or
      settle any Election Contest or Proxy Contest; or

             iii. Approval by stockholders of the Company of:

                  A. A merger, consolidation or reorganization involving the
      Company, unless such merger, consolidation or reorganization is a
      "Non-Control Transaction". A "Non-Control Transaction" shall mean a
      merger, consolidation or reorganization of the Company where:

                     1. the stockholders of the Company, immediately before such
            merger, consolidation or reorganization, own directly or indirectly
            immediately following such merger, consolidation or reorganization,
            at least seventy percent (70%) of the combined voting power of the
            outstanding voting securities of the corporation resulting from such
            merger, consolidation or reorganization (the "Surviving
            Corporation") in substantially the same proportion as their
            ownership of the Voting Securities immediately before such merger,
            consolidation or reorganization,

                     2. the individuals who were members of the Incumbent Board
            immediately prior to the execution of the agreement providing for
            such merger, consolidation or reorganization constitute at least
            two-thirds of the members of the board of directors of the Surviving
            Corporation, or a corporation beneficially directly or indirectly
            owning a majority of the Voting Securities of the Surviving
            Corporation, and

                     3. no Person other than (a) the Company, (b) any
            Subsidiary, (c) any employee benefit plan (or any trust forming a
            part thereof) maintained by the Company, the Surviving Corporation,
            or any Subsidiary, or (d) any Person who, immediately prior to such
            merger, consolidation or reorganization had Beneficial Ownership of
            fifteen percent (15%) or more of the then outstanding Voting
            Securities), has Beneficial Ownership of fifteen percent (15%) or
            more of the combined voting power of the Surviving Corporation's
            then outstanding voting securities.

                                      -7-
<PAGE>

                  B. A complete liquidation or dissolution of the Company; or

                  C. An agreement for the sale or other disposition of all or
      substantially all of the assets of the Company to any Person (other than a
      transfer to a Subsidiary).

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the "Subject Person") acquired Beneficial Ownership
of more than the permitted amount of the then outstanding Voting Securities as a
result of the acquisition of Voting Securities by the Company which, by reducing
the number of Voting Securities then outstanding, increases the proportional
number of shares Beneficially Owned by the Subject Person, provided that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and after such
acquisition by the Company, the Subject Person becomes the Beneficial Owner of
any additional Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.

          c. Effective Date. "Effective Date" shall mean the date on which a
      Change in Control is effectuated.

          d. Good Reason. The Executive's termination of employment with the
      Company shall be deemed for "Good Reason" if it occurs within six (6)
      months of any of the following without the Executive's express written
      consent:

             i. the assignment to the Executive by the Company of duties
      inconsistent with, or a substantial alteration in the nature or status of,
      Executive's responsibilities immediately prior to a Change in Control of
      the Company other than any such alteration primarily attributable to the
      fact that the Company's securities are no longer publicly traded;

             ii. a reduction by the Company in the Executive's Cash Compensation
      (as defined in Section 21(a) above) as in effect on the date of a Change
      in Control of the Company or as in effect thereafter if such Cash
      Compensation has been increased during the Term of this Agreement;

             iii. any failure by the Company to continue in effect without
      substantial change any compensation, incentive, welfare or benefit plan or
      arrangement, as well as any plan or arrangement whereby the Executive may
      acquire securities of the Company, in which the Executive is participating
      at the time of a Change in Control of the Company (or any other plans,
      currently in effect or hereafter adopted by the Company, providing the
      Executive with substantially similar benefits) (hereinafter referred to as
      "Benefit Plans"), or the taking of any action by the Company which would
      adversely affect the Executive's participation in or materially reduce the
      Executive's benefits under any such Benefit Plan or deprive the Executive
      of any material fringe benefit enjoyed by the Executive at the time of a
      Change in Control of the Company unless an equitable substitute
      arrangement (embodied in an ongoing substitute or alternative Benefit
      Plan) has been made for the benefit of the Executive with respect to the
      Benefit Plan in question. For purposes of the foregoing, Benefit Plans
      shall include, but not be limited to, the 1993 Stock Option Plan, the 1997

                                      -8-
<PAGE>

      Equity Incentive Plan, as amended, or any other plan or arrangement to
      receive and exercise stock options or stock appreciation rights,
      supplemental pension plan, insured medical reimbursement plan, automobile
      benefits, executive financial planning, group life insurance plan,
      personal catastrophe liability insurance, medical, dental, accident and
      disability plans;

             iv. relocation to any place more than 100 miles from the office
      regularly occupied by the Executive, except for required travel by the
      Executive on the Company's business to an extent substantially consistent
      with the Executive's business travel obligations at the time of a Change
      in Control;

             v. any material breach by the Company of any provision of this
      Agreement;

             vi. any failure by the Company to obtain the assumption of this
      Agreement by any successor or assign of the Company; or

             vii. any purported termination of the Executive's employment by the
      Company which is not effected pursuant to a Notice of Termination
      satisfying the requirements of Section 15 below, and for purposes of this
      Agreement, no such purported termination shall be effective.

          e. "The Company's Aggregate Severance Liability," as used herein,
      shall mean an amount (determined by the Auditors) equal to the aggregate
      of the Severance Cash Benefits payable to all employees of the Company
      party to written severance benefit agreements on the Effective Date,
      calculated as of the Effective Date instead of as of the dates of
      termination of such employees and in each case reduced by the applicable
      "parachute payment" reduction, if any, described in Section 8 hereof.

          f. "The Company's Market Capitalization," as used herein, shall mean
      the sum of: (i) the product of (a) the total number of shares of common
      stock of the Company (the "Common Stock") outstanding as of the Effective
      Date and (b) the last reported sale price on the Nasdaq Stock Market (or
      other market or exchange where the Common Stock is principally traded) of
      one share of Common Stock on the Effective Date; plus (ii) the products of
      (a) the total number of shares of each class of preferred stock of the
      Company (the "Preferred Stock") outstanding on the Effective Date and (b)
      the liquidation value of one share of such class of Preferred Stock; plus
      (iii) the aggregate amount of outstanding indebtedness for borrowed money
      of the Company on the Effective Date; plus (iv) the aggregate amount of
      short and long-term liabilities of the discontinued operations of the
      Company as reflected on the Company's most recently prepared quarterly
      balance sheet.

          g. "The Executive's Severance Cash Benefit as of the Effective Date,"
      as used herein, shall mean an amount (determined by the Auditors) equal to
      the Executive's Severance Cash Benefit calculated as of the Effective Date
      rather than as of the Date of Termination, which calculation shall include
      the "parachute payment" reduction, if any, which would be made pursuant to
      Section 8 hereof.

      22. MITIGATION OF DAMAGES. The Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or

                                      -9-
<PAGE>

otherwise, nor shall the amount of any payment provided for under this Agreement
be reduced by any compensation earned by the Executive as a result of employment
by another Company after the Date of Termination, or otherwise, except to the
extent provided in Section 7 above.

      23. EFFECT OF AGREEMENT ON OTHER CONTRACTUAL RIGHTS. The provisions of
this Agreement, and any payment provided for hereunder, shall not reduce any
amounts otherwise payable, or in any way diminish the Executive's existing
rights, or rights which would accrue solely as a result of the passage of time,
under the Old Employment Agreement, any Benefit Plan or other contract, plan or
arrangement.

      24. TERM. This Agreement shall terminate, except to the extent that any
obligation of the Company hereunder remains unpaid, upon the earliest of (i)
expiration of the Term, if a Change of Contract has not occurred during the
Term, (ii) the termination of the Executive's employment with the Company based
on death, retirement, disability (as described in Section 6(a)) or cause, or by
the Executive other than for Good Reason; or (iii) three years from the
Effective Date of a Change in Control which was not approved by the Board of
Directors or two years from the Effective Date of a Change in Control which was
approved by the Board of Directors.

      25. SUCCESSOR TO THE COMPANY.

          a. Assumption of Agreement. The Company will require any successor or
      assign (whether direct or indirect, by purchase, merger, consolidation or
      otherwise) to all or substantially all of the business and/or assets of
      the Company, expressly, absolutely and unconditionally to assume and agree
      to perform this Agreement in the same manner and to the same extent that
      the Company would be required to perform it if no such succession or
      assignment had taken place. Failure of the Company to obtain such
      agreement prior to the effectiveness of any such succession shall be a
      breach of this Agreement and shall entitle the Executive to compensation
      from the Company in the same amount and on the same terms as the Executive
      would be entitled hereunder if such succession had not occurred, except
      that for purposes of implementing the foregoing, the date of which any
      such succession becomes effective shall be deemed the Date of Termination.
      For purposes of this Section 25, "Company" shall mean the Company as
      defined above and any successor or assign to its business and/or assets as
      aforesaid which executes and delivers the agreement provided for herein or
      which otherwise becomes bound by all the terms and provisions of this
      Agreement by operation of law.

          b. Heirs of the Executive. This Agreement shall inure to the benefit
      of and be enforceable by the Executive's personal and legal
      representatives, executors, administrators, successors, heirs,
      distributees, devises and legatees. If the Executive should die while any
      amounts are still payable to him hereunder, all such amounts, unless
      otherwise provided herein, shall be paid in accordance with the terms of
      this Agreement to the Executive's devisee, legatee, or other designee or,
      if there be no such designee, to the Executive's estate.

      26. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.

                                      -10-
<PAGE>

      27. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

      28. GENDER. In this Agreement (unless the context requires otherwise), the
use of any masculine term shall include the feminine.

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

                                    NATIONAL WIRELESS HOLDINGS INC.

                                    By:  /s/ James Kardon
                                        ------------------------------
                                        Name:  James Kardon
                                        Title: Secretary

                                     /s/ Terrence S. Cassidy
                                    ---------------------------------
                                    Terrence S. Cassidy

                                        -11-

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