Document:

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                                                                  EXHIBIT 10.10

                                 April 24, 2000

PERSONAL AND CONFIDENTIAL

Mr. Rodney L. Usher
2 Neuchatel Lane
Fairport, New York  14450

Dear Rod:

         Re:      Severance Agreement

         This is to confirm that in the event of your Termination from Service,
as hereafter defined, with IDEX Corporation or its successors ("IDEX"), within
twenty-four (24) months following, or, directly or indirectly, in connection
with, or in anticipation of, a Change of Control, as hereinafter defined, you
will be entitled to the following benefits as a severance payment (hereinafter
referred to individually as a "Severance Benefit" and collectively as "Severance
Benefits"):

         1)       Payment of your base salary and vacation pay (for vacation not
                  taken, including vacation carryover from the prior year plus a
                  pro rata accrual for the current year) accrued but unpaid
                  through the date of termination of employment payable in a
                  single lump sum payment on the last day employed or as soon
                  thereafter as practicable.

         2)       Any amount earned under the Management Incentive Compensation
                  Plan ("MICP") for the calendar year preceding the year in
                  which the termination of employment occurs which has not been
                  paid will be paid in a single lump sum payment on the last day
                  employed or as soon thereafter as practicable.

         3)       An amount equal to three times the sum of (a) your annual base
                  salary, at the rate in effect on the Determination Date, as
                  hereinafter defined, and (b) your full year's bonus under the
                  MICP at your Target Incentive Amount in effect on the
                  Determination Date, calculated in accordance with the practice
                  in effect on the Determination Date. This amount will be paid
                  in a single lump sum payment on the last day employed or as
                  soon thereafter as practicable.

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         4)       A proportionate bonus, as described in this subparagraph,
                  under the MICP. The portion of the bonus payable will be the
                  amount determined by multiplying a full year's MICP bonus, at
                  your Target Incentive Amount in effect on the Determination
                  Date, calculated in accordance with the practice in effect on
                  the Determination Date, by a fraction the numerator of which
                  is the number of full and partial calendar months in the
                  calendar year which precede the date of the termination of
                  employment and the denominator of which is 12. This amount
                  will be paid in a single lump sum payment on the last day
                  employed or as soon thereafter as practicable.

         5)       Fringe benefits for a continuing period of twenty-four (24)
                  months following the date of termination of employment.
                  Covered fringe benefits for purposes of this agreement
                  include: (a) term life insurance in an amount in effect on the
                  Determination Date, (b) medical benefits at the level in
                  effect on the Determination Date, (c) to the extent coverage
                  is available under the insurance policy in effect, the
                  personal accident plan at the level in effect on the
                  Determination Date, (d) the use of an IDEX-provided
                  automobile, plus related expenses, comparable to that provided
                  to you on the Determination Date, and (e) other miscellaneous
                  fringe benefits in effect on the Determination Date. Medical
                  benefits will be reduced to the extent of coverage provided by
                  subsequent employers. For purposes of COBRA health care
                  continuation coverage, the "qualifying event" will be deemed
                  to have occurred at the end of the twenty-four (24) month
                  period following termination of employment.

         6)       For a twenty-four (24) month period following the date of your
                  termination of employment, IDEX will promptly pay or reimburse
                  you for expenses, in an aggregate amount not to exceed 10% of
                  your annual base salary, at the rate in effect on the
                  Determination Date, incurred by you for outplacement services,
                  which may include consultants, reasonable travel, rental of an
                  office off IDEX's premises, secretarial support, and
                  photocopying, telephone, and other miscellaneous office
                  expenses.

         7)       For a sixty (60) month period following the date of the
                  Executive's termination of employment, the Corporation will
                  continue any indemnification agreement with the Executive and
                  will provide directors' and officers' liability insurance
                  insuring the Executive.

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Mr. Rodney L. Usher
April 24, 2000
Page 3

                  That coverage will have limits and scope of coverage not
                  less than that in effect immediately prior to the change in
                  control. At your request, IDEX will cause a certificate of
                  insurance, in a form satisfactory to you, verifying this
                  coverage to be provided to you on an annual basis.

         8)       You shall be fully vested in your accrued benefit under any
                  qualified or non-qualified pension or profit sharing plan
                  maintained by IDEX, provided, however, if the terms of such
                  plan do not permit acceleration of full vesting, you will
                  receive a lump sum payment on the last day employed, or as
                  soon thereafter as practicable, in an amount equal to the
                  value of your accrued benefit which was not vested.

         9)       Vesting and the ability to exercise stock options granted to
                  you will be governed by the terms of the stock option plan
                  under which the options were granted and the terms of the
                  option agreement.

         Notwithstanding anything in this letter agreement or any other
agreement to the contrary, in the event it is determined that any payments or
distributions by IDEX or any affiliate (as defined under the Securities Act of
1933, as amended, and the regulations thereunder) thereof or any other person to
or for the benefit of you, whether paid or payable pursuant to the terms of this
letter agreement, or pursuant to any other agreement or arrangement with IDEX or
any such affiliate ("Payments"), would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended, or any successor
provision, or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then you will be entitled to
receive an additional payment from IDEX (a "Gross-Up Payment") in an amount such
that after payment by you of all taxes (including, without limitation, any
interest or penalties imposed with respect to such taxes and any Excise Tax)
imposed upon the Gross-Up Payment, you retain an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments. The amount of the Gross-Up
Payment will be calculated by the Corporation's independent accounting firm,
engaged immediately prior to the event that triggered the payment, in
consultation with the Corporation's outside legal counsel. For purposes of
making the calculations required by this Section, the

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Mr. Rodney L. Usher
April 24, 2000
Page 4

accounting firm may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the Code, provided that
the accounting firm's determinations must be made with substantial authority
(within the meaning of Section 6662 of the Code). The Gross-Up Payment will be
paid on your last day employed or on the occurrence of the event that results in
the imposition of the Excise Tax, if later. If the precise amount of the
Gross-Up Payment cannot be determined on the date it is to be paid, an amount
equal to the best estimate of the Gross-Up Payment will be made on that date
and, within ten (10) days after the precise calculation is obtained, either IDEX
will pay any additional amount to you or you will pay any excess amount to IDEX,
as the case may be. If subsequently the Internal Revenue Service (IRS) claims
that any additional Excise Tax is owing, an additional Gross-Up Payment will be
paid to you within thirty (30) days of your providing substantiation of the
claim made by the IRS. After payment to you of the Gross-Up Payment, you will
provide to IDEX any information reasonably requested by IDEX relating to the
Excise Tax, you will take such actions as IDEX reasonable requests to contest
such Excise Tax, cooperate in good faith with IDEX to effectively contest the
Excise Tax and permit IDEX to participate in any proceedings contesting the
Excise Tax. IDEX will bear and pay directly all costs and expenses (including
any interest or penalties on the Excise Tax), and indemnify and hold you
harmless, on an after-tax basis, from all such costs and expenses related to
such contest. Should it ultimately be determined that any amount of an Excise
Tax is not properly owed, you will refund to IDEX the related amount of the
Gross-Up Payment.

         For purposes of this letter agreement, "Change of Control" shall have
the same meaning as under the Amended and Restated IDEX Corporation Supplemental
Executive Retirement Plan as in effect on the date of this letter.

         For the purposes of this letter agreement, Termination of Service is
defined as (1) a termination of your employment by IDEX for any reason other
than for Cause, as hereinafter defined; (2) your reasonable belief that there
has been a material diminution in responsibilities, duties, title, reporting
responsibilities within the business organization, status, role or authority
(without limiting the generality of the foregoing, such a material diminution in
responsibilities, duties, title, reporting responsibilities within the business
organization, status, role or authority will be deemed to have taken place if
any of the following occur: (a) you cease to be an officer of a reporting
company under the Securities Exchange Act of 1934 or (b)

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Mr. Rodney L. Usher
April 24, 2000
Page 5

your degree of involvement in executive decision making relating to IDEX has
been materially diminished); (3) a reduction in your annual base salary,
reduction in the aggregate compensation provided to you (aggregate compensation
to be determined by taking into consideration, without limitation, the target
level of MICP Awards (other than changes in award amounts which are the result
of IDEX performance), retirement or pension plans, non-qualified deferred
compensation plans, stock option awards, severance benefits, or any other fringe
benefit plan), or degradation in working conditions or (4) if following a Change
of Control where IDEX Corporation is no longer the ultimate parent corporation,
the failure of the then ultimate parent corporation (a) to appoint you to a
position with the then ultimate parent corporation having the same
responsibilities, duties, title, reporting responsibilities within the business
organization, status, role and authority as you now hold with IDEX, (b) to
acknowledge and assume, in writing, this letter agreement at the time of the
Change of Control, or (c) to acknowledge and assume, in writing, the
indemnification agreement with you which is in effect at the time the Change of
Control. After notification to you or your obtaining specific and reliable
information which gives rise to your reasonable belief, that one of the
preceding events is to occur in the near future, you may, after providing
reasonable notice, voluntarily terminate your employment (which, if prior to the
happening of the event, must be effective no earlier than, and be contingent on,
the occurrence of the event) and the termination will be deemed a Termination of
Service. If a Change of Control occurs and your responsibilities, duties, title,
reporting responsibilities within the business organization, status, role or
authority are reduced or in any manner adversely affected prior to the date of
the Change of Control (hereafter referred to as a "Modification"), and if you
reasonably demonstrate that the modification was at the request of a third party
who has taken steps reasonably calculated to effect a Change of Control or
otherwise arose, directly or indirectly, in connection with, or in anticipation
of, a Change of Control, then the level of your responsibilities, duties, title,
reporting responsibilities within the business organization, status, role or
authority for purposes of this letter agreement shall be those in effect on the
date immediately prior to the Modification. If your termination of employment
occurs prior to a Change of Control and if you reasonably demonstrate that the
termination was at the request of a third party who has taken steps reasonably
calculated to effect a Change of Control or otherwise arose, directly or
indirectly, in connection with, or in anticipation of, a Change of Control, then
your termination will be deemed a Termination of Service. If one of the events
which would be a Termination of

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Mr. Rodney L. Usher
April 24, 2000
Page 6

Service occurs, and if your termination of employment at that time would be in a
period of time during which you would be unable to exercise stock options or
sell shares of IDEX or its successor, either by law or contractual agreement (a
"Restrictive Period"), then you may continue in employment until a reasonable
period after the Restrictive Period ends and your subsequent termination of
employment will be a Termination of Service.

         For purposes of this letter Agreement, "Cause" exists if (1) you
breach, in a substantive and material manner, your fiduciary duty to IDEX, (2)
you commit a felony criminal act, or (3) you fail, after repeated requests of
the Chief Executive Officer of IDEX, which have been documented to you in
writing, to perform the material duties assigned to you (the nature of which
must be consistent with the duties assigned to you prior to the Change of
Control or prior to any modification of your assigned duties made in connection
with, or anticipation of, such Change of Control).

         For purposes of this letter agreement, the term "Determination Date"
means the date immediately prior to the date of (1) payment of any Severance
Benefit, (2) the Change of Control, (3) your Termination of Service, or (4) your
last day of employment, on whichever of the four preceding dates a factor (i.e.
the rate, level, amount, practice, quality or other factor, as the context may
indicate) used to calculate a Severance Benefit under this letter agreement is
the factor which will result, with respect to such Severance Benefit, in the
greatest or largest benefit to be provided. For avoidance of doubt, the
Determination Date may be different with respect to different Severance
Benefits.

         If IDEX, or any entity which has an obligation to you under this letter
agreement, fails to honor any provision of this letter agreement or if a contest
or dispute as to the terms of this letter agreement arises, all legal fees and
expenses incurred by you to enforce this agreement or to contest or dispute its
terms will be paid, or at your request, advanced, by IDEX to you or directly to
your attorney, as you may direct.

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Mr. Rodney L. Usher
April 24, 2000
Page 7

         To the extent that this letter agreement provides a larger or greater
separate Severance Benefit than may be provided to you pursuant to any policy,
program, contract or arrangement previously adopted by IDEX prior to your
Termination of Service, this letter agreement will supersede and be in full
substitution of such other policy, program, contract or arrangement with respect
to the larger or greater separate Severance Benefit to be provided. To the
extent that any policy, program, contract or arrangement adopted by IDEX prior
to your Termination of Service provides a larger or greater separate severance
benefit than provided to you pursuant to this letter agreement, such other
policy, program, contract or arrangement will supersede and be in full
substitution of this letter agreement with respect to the larger or greater
separate Severance Benefit to be provided.

         This letter agreement shall apply to a Change of Control that occurs on
or before the date on which IDEX provides written notice to you that the terms
this letter agreement will terminate (the date so specified in the notice will
not be less than two years following the date of such notice), or, if a Change
of Control is pending as of such date, this letter agreement will also apply if
that Change of Control does occur in a reasonable period thereafter. If a Change
of Control has not occurred as of the date specified in the notice, or is
pending as of the date so specified in the notice and is not subsequently
consummated in a reasonable period thereafter, this letter agreement shall be
null and void.

         The terms of this letter agreement will be governed by the laws of the
State of Illinois and will be binding on IDEX and its successors (who consent to
jurisdiction in the State of Illinois with respect to the subject matter of this
letter agreement) and will inure to the benefit of your heirs. You will not be
required to mitigate the amount of any payment or benefit provided for in this
letter agreement by obtaining other employment or other sources of income or
benefits nor will the amount of any payment or benefit be reduced by offset
against any amount claimed to be owed by you to IDEX (except to the extent that
medical benefits are provided by a subsequent employer). For any matter in this
letter agreement wherein the determination of the existence of any fact or other
matter is indicated to be in your reasonable belief, your belief will be
respected and upheld provided you have obtained specific and reliable
information giving rise to your reasonable belief and unless IDEX demonstrates,
by a preponderance of the evidence, that the basis for your belief was arbitrary
or capricious. If any provision of this letter agreement is

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Mr. Rodney L. Usher
April 24, 2000
Page 8

held invalid or unenforceable for any reason, all other provisions shall remain
in effect.

         All notices and other communications given pursuant to this letter
agreement will be deemed to have been properly given if hand delivered or
mailed, addressed to the appropriate party at the address as shown on the first
page of this letter agreement, postage prepaid, by certified or registered mail,
return receipt requested and, in the case of notice to IDEX to the attention of
the President. A copy of any notice sent must also be sent to Hodgson, Russ,
Andrews, Woods & Goodyear, LLP, 1800 One M&T Plaza, Buffalo, New York 14203,
Attention: Richard E. Heath, Esq. and Richard W. Kaiser, Esq. Any party may from
time to time designate, by written notice given in accordance with these
provisions, any other address or party to which such notice or communication or
copies thereof shall be sent.

                                               Very truly yours,

                                               /s/ Frank J. Hansen
                                               ------------------------------
                                               Frank J. Hansen

Agreed to and accepted by:

/s/ Rodney L. Usher
--------------------------
Rodney L. Usher

Date:  April 30, 2000<PAGE>   1
                                                                   Exhibit 10.48

                            Dated as of July 18, 2000

                          SECURITIES PURCHASE AGREEMENT

                                    SERIES C
                         CONVERTIBLE PREFERRED STOCK AND

                       TWO COMMON STOCK PURCHASE WARRANTS

                                       OF

                     VASCO DATA SECURITY INTERNATIONAL, INC.

                                                   LINKLATERS
                                                   1345 Avenue of the Americas
                                                   19th Floor
                                                   New York, NY 10105

                                                   Telephone:   (212) 424 9000
                                                   Facsimile:   (212) 424 9100

                                                   Ref: WBH/IYS

                                                   LINKLATERS & ALLIANCE
                                                   Linklaters is a member
                                                   firm of Linklaters & Alliance
                                                   a non-partnership association

<PAGE>   2

                          SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT ("AGREEMENT"), dated as of July 18, 2000,
between VASCO DATA SECURITY INTERNATIONAL, INC., a Delaware corporation (the
"COMPANY") and UBIZEN N.V., a Belgian stock corporation (the "PURCHASER").

                                   WITNESSETH:

WHEREAS, the Company desires to raise capital through the sale by the Company of
equity securities resulting in gross proceeds of fifteen million U.S. dollars
($15,000,000) (the "FINANCING");

WHEREAS, on the Closing Date (as defined below), the Company desires to issue
and sell to the Purchaser, and the Purchaser desires to purchase from the
Company, 150,000 shares of the Company's Series C Convertible Preferred Stock,
$0.01 par value per share (the "SERIES C PREFERRED STOCK"), for a purchase price
of fifteen million U.S. dollars ($15,000,000), on the terms, and subject to the
conditions, set forth in this Agreement; and

WHEREAS, on the Closing Date, the Company further desires to issue to the
Purchaser a common stock purchase warrant (the "COMMON STOCK PURCHASE WARRANT")
entitling the Purchaser to acquire 789,474 shares of the Company's class of
common stock, par value $.001 per share (the "COMMON STOCK") on the terms, and
subject to the conditions, set forth therein.

WHEREAS, on the Closing Date, the Company further desires to issue to the
Purchaser an additional common stock purchase warrant (the "ADDITIONAL COMMON
STOCK PURCHASE WARRANT") granting the Purchaser the rights to acquire up to an
additional 480,000 shares of Common Stock, which rights shall vest in the
Purchaser in accordance with the vesting schedule appended thereto as Exhibit B,
on the terms, and subject to the conditions, set forth therein.

NOW, THEREFORE, in consideration of these premises, the mutual covenants and
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

1      DEFINITIONS

       For purposes hereof unless the context otherwise requires, the following
       terms shall have the meanings indicated. All accounting terms not
       otherwise defined herein, shall have the respective meanings accorded to
       them under GAAP (as defined below). Unless the context otherwise
       requires, (i) references to a "Schedule" or an "EXHIBIT" are to a
       Schedule or an Exhibit attached to this Agreement, (ii) references to a
       "SECTION" are to a section of this Agreement and (iii) any of the
       following terms may be used in the singular or the plural, depending on
       the reference.

       "ADDITIONAL COMMON STOCK PURCHASE WARRANT" has the meaning ascribed
       thereto in the introduction hereof, substantially in the form of Exhibit
       C hereto.

       "AFFILIATE" means any Person (i) which directly or indirectly through one
       or more intermediaries controls, or is controlled by, or is under common
       control with another Person (ii) which beneficially owns or holds 20% or
       more of any class of the outstanding Voting Stock of such other Person,
       or (iii) which is a relative or spouse of such person, or any relative of
       such spouse, who has the same home as such Person. The term "CONTROL"
       means the possession,

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       directly or indirectly, of the power to direct or cause the direction of
       the management and policies of a Person, whether through ownership of
       Voting Stock, by Contract or otherwise.

       "AGREEMENT" means this Agreement, as amended, modified or supplemented
       from time to time, in accordance with the terms hereof, together with any
       exhibits, schedules or other attachments thereto.

       "BENEFIT PLANS" has the meaning ascribed thereto in Section 5.7 hereof.

       "BUSINESS DAY" means any day that is not a Saturday, a Sunday or a day on
       which banking institutions in New York, New York or Brussels, Belgium are
       authorized or obligated by Law, executive order or government decree to
       be closed.

       "CAPITAL STOCK" means, with respect to any Person, any and all shares,
       interests, participations, rights in or other equivalents (however
       designated and whether voting or non-voting) of such Person's capital
       stock, whether outstanding on the Closing Date or issued after the
       Closing Date and any and all rights, warrants or options exercisable or
       exchangeable for or convertible into such capital stock.

       "CERTIFICATE OF DESIGNATIONS" means the Certificate of Designations of
       the Series C Preferred Stock, substantially in the form of Exhibit A
       hereto.

       "CHARTER DOCUMENTS" means (i) the certificate of incorporation, (ii) the
       Certificate of Designations and (iii) the by-laws of the Company, each as
       amended from time to time.

       "CLOSING DATE" has the meaning ascribed thereto in Section 3.1 hereof.

       "CODE" means the Internal Revenue Code of 1986, and the rules and
       regulations promulgated thereunder, as amended from time to time.

       "COMMISSION" means the United States Securities and Exchange Commission
       or any other federal agency at the time administering the Securities Act.

       "COMMON STOCK" has the meaning ascribed thereto in the introduction
       hereof.

       "COMMON STOCK PURCHASE WARRANT" has the meaning ascribed thereto in the
       introduction hereof, substantially in the form of Exhibit B hereto.

       "COMPANY" has the meaning ascribed thereto in the introduction hereof.

       "COMPANY FINANCIAL STATEMENTS" has the meaning ascribed thereto in
       Section 5.10 hereof.

       "COMPANY SEC DOCUMENTS" has the meaning ascribed thereto in Section 5.9
       hereof.

       "CONTRACTS" has the meaning ascribed thereto in Section 5.15 hereof.

       "ENVIRONMENTAL LAW" means (i) any federal, state and local law, statute,
       ordinance, rule, regulation, code, license, permit, authorization,
       approval, consent, legal doctrine, order, judgement, decree, injunction,
       requirement or agreement with any governmental entity, (x) relating to
       the protection, preservation or restoration of the environment,
       (including, without limitation, air, water vapor, surface water,
       groundwater, drinking water supply, surface land, subsurface land, plant
       and animal life or any other natural resource), or to human health or
       safety, or (y) the exposure to, or the use, storage, recycling,
       treatment, generation, transportation, processing, handling, labeling,
       production, release or disposal of Hazardous

                                       -2-
<PAGE>   4

       Substances, in each case as amended and as now or hereafter in effect.
       The term Environmental Law includes, without limitation, the
       Comprehensive Environmental Response, Compensation and Liability Act, 42
       U.S.C.ss.ss.9601 et seq., the Emergency Planning and Community
       Right-to-Know Act of 1986, 42 U.S.C.ss.ss.11001 et seq., the Resource
       Conservation and Recovery Act 42 U.S.C.ss.ss.6901 et seq., the Toxic
       Substance Control Act, 15 U.S.C.ss.ss.2601 et seq., the Federal
       Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.ss.ss.136 et seq.,
       the Clean Air Act, 42 U.S.C.ss.ss.7401 et seq., the Clean Water Act
       (Federal Water Pollution Control Act), 33 U.S.C.ss.ss.1251 et seq., the
       Safe Drinking Water Act, 42 U.S.C.ss.ss.300 et seq., the Occupational
       Safety and Health Act 29 U.S.C.ss.ss.641 et seq., and the Hazardous
       Materials Transportation Act 49 U.S.C.ss.ss.1801, et seq., as any of the
       above statutes have been amended, all rules and regulations promulgated
       pursuant to any of the above statutes, and (ii) any common law or
       equitable doctrine (including, without limitation, injunctive relief and
       tort doctrines such as negligence, nuisance, trespass and strict
       liability) that may impose liability or obligations for injuries or
       damages due to, or threatened as a result of, the presence of or exposure
       to any Hazardous Substance.

       "ERISA" means the Employee Retirement Income Security Act of 1974, and
       the rules and regulations promulgated thereunder, as amended.

       "ERISA AFFILIATE" means any trade or business (whether incorporated or
       unincorporated) which is a member of a group described in Section 414(b),
       (c), (m) or (o) of the Code, of which the Company also is a member.

       "ERISA AFFILIATE TITLE IV PLAN" has the meaning ascribed thereto in
       Section 5.7 hereof.

       "EXCHANGE ACT" means the Securities Exchange Act of 1934, and the rules
       and regulations of the Commission promulgated thereunder, as amended.

       "FINANCING" has the meaning ascribed thereto in the introduction hereof.

       "GAAP" means generally accepted accounting principles and practices set
       forth in the opinions and pronouncements of the Accounting Principles
       Board of the American Institute of Certified Public Accountants and
       statements and pronouncements of the Financial Accounting Standards Board
       or in such other statements by such other entity as may be adopted by a
       significant segment of the accounting profession that are applicable to
       the circumstances as of the date of determination.

       "GOVERNMENTAL AUTHORITY" means any governmental or quasi-governmental
       authority including, without limitation, any federal, state, territorial,
       county, municipal or other governmental or quasi-governmental agency,
       board, branch, bureau, commission, court, arbitration panel, department,
       authority, body or other instrumentality or political unit or subdivision
       or official thereof, whether domestic or foreign.

       "HAZARDOUS SUBSTANCE" means any substance presently or hereafter listed,
       defined, designated or classified as hazardous, toxic, radioactive or
       dangerous, or otherwise regulated, under any Environmental Law, whether
       by type or by quantity, including any substance containing any such
       substances as a component. Hazardous Substance includes, without
       limitation, any toxic waste, pollutant, contaminant, hazardous substance,
       toxic substance, hazardous waste, special waste, industrial substance or
       petroleum or any derivative or by-

                                       -3-
<PAGE>   5

       product thereof, radon, radioactive material, asbestos, asbestos
       containing material, urea formaldehyde foam insulation, lead and
       polychlorinated biphenyl.

       "HOLDER" means any Person who acquires and holds the Securities or the
       Registrable Securities in compliance with this Agreement and applicable
       Law.

       "INDEMNIFIED PARTY" or "INDEMNIFIED PARTIES" has the meaning ascribed
       thereto in Section 13.1 hereof.

       "INSPECTORS" has the meaning ascribed thereto in Section 9.1.8 hereof.

       "INTELLECTUAL PROPERTY" means patents, patent applications, patented or
       unpatented inventions, design rights (including, without limitation,
       trademarks, trade names, service marks, service names and brand names),
       copyrights, know-how and trade secrets, and all other intellectual
       property rights and forms of protection of a similar nature having
       equivalent or similar effect as any of the foregoing rights, which may
       subsist anywhere in the world.

       "LAW" means any statute, ordinance, code, rule, regulation or order
       enacted, adopted, promulgated, applied or followed by any Governmental
       Authority.

       "LICENSE" or "LICENSES" has the meaning ascribed thereto in Section 5.17
       hereof.

       "LIEN" means any security agreement, financing statement (whether or not
       filed) mortgage, lien (statutory or otherwise), charge, pledge,
       hypothecation, conditional sales agreement, adverse claim, title
       retention agreement or other security interest, encumbrance, lien,
       charge, restrictive agreement, mortgage, deed of trust, indenture,
       pledge, option, limitation, exception to or other title defect in or on
       any interest or title of any vendor, lessor, lender or other secured
       party under any conditional sale, lease, consignment, or bailment given
       for security purposes, trust receipt or other title retention agreement
       with respect to any Property or asset of such Person, whether direct,
       indirect, accrued or contingent.

       "LOSSES" has the meaning ascribed thereto in Section 13.1 hereof.

       "MATERIAL ADVERSE EFFECT" means with respect to the Company, any
       significant and substantial adverse effect or change, or any event or
       condition which would, with the passage of time, constitute a significant
       and substantial adverse effect or change (a) in the condition (financial
       or other), business, results of operations, prospects of the Company or
       the business of the Company, taken as a whole, or (b) on the validity or
       enforceability of this Agreement or on the ability of the Company to
       consummate the transactions contemplated hereby.

       "NASD" means the National Association of Securities Dealers, Inc.

       "NASDAQ" means The Nasdaq Stock Market, Inc.

       "PERSON" means any individual, entity or group, including, without
       limitation, any corporation, limited liability company, limited or
       general partnership, joint venture, association, joint stock company,
       trust, unincorporated organization, or government or any agency or
       political subdivision thereof.

       "PREFERRED STOCK" means the class of preferred stock, par value $0.01 per
       share, of the Company.

                                      -4-
<PAGE>   6

       "PROPERTY" means any interest in any kind of property or asset, whether
       real, personal or mixed, or tangible or intangible.

       "PURCHASE PRICE" has the meaning ascribed thereto in Section 2.2 hereof.

       "PURCHASER" has the meaning ascribed thereto in the introduction hereof.

       "REGISTRABLE SECURITIES" means any Common Stock held or to be received by
       the Purchaser and any of its direct or indirect assignees or transferees
       upon conversion or redemption of the Series C Preferred Stock or upon
       exercise of the Common Stock Purchase Warrant or the Additional Common
       Stock Purchase Warrant and any Common Stock issued in respect thereof,
       including (i) by way of stock dividend or stock split, (ii) in connection
       with a combination of shares, recapitalization, merger, consolidation or
       other reorganization or (iii) otherwise. As to any particular Registrable
       Securities once issued, such securities shall cease to be Registrable
       Securities when (i) a Registration Statement with respect to the sale of
       such securities shall have become effective under the Securities Act and
       such securities shall have been disposed of in accordance with such
       Registration Statement, (ii) they shall have been distributed to the
       public pursuant to Rule 144 (or any successor rule) or (iii) they shall
       have ceased to be outstanding.

       "REGISTRATION EXPENSES" means all fees and expenses incident to the
       performance of or compliance with the provisions of this Agreement,
       whether or not any Registration Statement is filed or becomes effective,
       including, without limitation, all (i) registration and filing fees
       (including, without limitation, (A) fees with respect to filings required
       to be made with the NASD in connection with an underwritten offering and
       (B) fees and expenses of compliance with State securities or blue sky
       laws (including, without limitation, fees and disbursements of counsel
       for the underwriter or underwriters in connection with blue sky
       qualifications of the Registrable Securities and determination of the
       eligibility of the Registrable Securities for investment under the laws
       of such jurisdictions as provided in Section 9.1.4 hereof)), (ii)
       printing expenses (including, without limitation, expenses of printing
       certificates for Registrable Securities in a form eligible for deposit
       with The Depository Trust Company and of printing prospectuses), (iii)
       fees and disbursements of all independent certified public accountants
       relating to the Registration Statement(including, without limitation, the
       reasonable expenses of any special audit and "comfort" letters required
       by or incident to such performance), (iv) the fees and expenses of any
       "qualified independent underwriter" or other independent appraiser
       participating in an offering pursuant to Rule 2720 of the NASD Rules of
       Conduct, (v) liability insurance under the Securities Act or any other
       securities laws, if the Company desires such insurance, (vi) fees and
       expenses of all attorneys, advisers, appraisers and other persons
       retained by the Company or any Subsidiary of the Company, (vii) internal
       expenses of the Company and its Subsidiaries relating to the Registration
       Statement (including, without limitation, all salaries and expenses of
       officers and employees of the Company and its Subsidiaries performing
       legal or accounting duties), (viii) the expense of any annual audit, (ix)
       the expenses relating to printing, word processing and distributing all
       registration statements, underwriting agreements, securities sales
       agreements and any other documents necessary in order to comply with this
       Agreement, and (x) the reasonable out-of-pocket expenses of the holders
       of the Registrable Securities being registered in such registration
       incurred in connection therewith including, without limitation, the
       reasonable fees and disbursements of not more than one counsel chosen by
       the holders of a majority of Registrable Securities included in such
       registration. Registration Expenses shall not include any

                                      -5-
<PAGE>   7

       underwriting discounts or commissions or any transfer taxes payable in
       respect of the sale of Registrable Securities by the holders thereof.

       "REGISTRATION STATEMENT" means any registration statement under the
       Securities Act for purposes of effecting a registered public offering of
       securities of the Company.

       "REGULATION D" means Regulation D promulgated under the Securities Act.

       "REGULATION S" means Regulation S promulgated under the Securities Act.

       "RESTRICTED SECURITY" has the meaning ascribed thereto in Section 12.2
       hereof.

       "RETURNS" means all returns, declarations, reports, estimates,
       information returns and settlements of any nature regarding Taxes
       required to be filed by any Person with a Governmental Authority and
       relating to the Company or a Subsidiary.

       "RULE 144" means Rule 144 as promulgated by the Commission under the
       Securities Act, and any successor rule or regulation thereto.

       "RULE 144A" means Rule 144A as promulgated by the Commission under the
       Securities Act, and any successor rule or regulation thereto.

       "SECURITIES" means the Series C Preferred Stock, the Common Stock
       Purchase Warrant and the Additional Common Stock Purchase Warrant.

       "SECURITIES ACT" means the Securities Act of 1933, and the rules and
       regulations of the Commission promulgated thereunder, as amended.

       "SERIES C PREFERRED STOCK" has the meaning ascribed thereto in the
       introduction hereof.

       "SUBSIDIARY" means with respect to any Person, any corporation,
       association or other business entity of which securities representing
       more than 50% of the combined voting power or 50% of the combined value
       of the total outstanding Capital Stock (or in the case of an association
       or other business entity which is not a corporation, more than 50% of the
       equity interest) is at the time owned or controlled, directly or
       indirectly, by that Person or one or more Subsidiaries of that Person or
       a combination thereof. When used herein without reference to any Person,
       "SUBSIDIARY" means a Subsidiary of the Company.

       "TAXES" means any federal, state, local, foreign or other taxes, fees and
       charges of any nature whatsoever imposed by any jurisdiction or
       governmental or taxing authority thereof or therein (including, without
       limitation, income (net or gross), gross receipts, profits, alternative
       or add-on minimum, franchise, license, capital, capital stock,
       intangible, services, premium, mining, transfer, sales, value-added, use,
       ad valorem, payroll, wage, severance, windfall profits, import, excise,
       custom, stamp, withholding or estimated taxes), fees, duties,
       assessments, withholding or governmental charges of any kind whatsoever
       (including interest, penalties, additions to tax or additional amounts
       with respect to such items).

       "TRANSACTION DOCUMENTS" means, collectively, this Agreement, the
       Certificate of Designations, the Common Stock Purchase Warrant, the
       Additional Common Stock Purchase Warrant and any and all agreements,
       exhibits, schedules, certificates, instruments and other documents
       delivered pursuant hereto and thereto.

                                      -6-
<PAGE>   8

       "VOTING STOCK" means any class or classes of capital stock pursuant to
       which the holders thereof have the general voting power under ordinary
       circumstances to vote for the election of directors, managers or trustees
       of any Persons (irrespective of whether or not at the time, capital stock
       of any class or classes will have, or might have, voting power by the
       reason of the happening of any contingency).

2      ISSUANCE, PURCHASE AND SALE OF SECURITIES

       2.1    AUTHORIZATION OF THE SECURITIES The Company has authorized the
              issuance and sale of the Series C Preferred Stock in the aggregate
              amount of fifteen million U.S. dollars ($15,000,000) to be
              acquired by the Purchaser in accordance with the terms of this
              Agreement. The Series C Preferred Stock shall have the voting
              powers, dividend rights, liquidation rights, designations,
              preferences and relative, participating, optional or other special
              rights, and the qualifications, limitations and restrictions
              thereof, set forth in the Certificate of Designations, which shall
              be filed with the Secretary of State of the State of Delaware
              prior to the Closing Date. The Company has further authorized the
              issue of the Common Stock Purchase Warrant and the Additional
              Common Stock Purchase Warrant to the Purchaser.

       2.2    SALE AND PURCHASE OF THE SECURITIES

              2.2.1  Subject to the terms and conditions of this Agreement, on
                     the Closing Date, the Company will issue, sell and deliver
                     to the Purchaser and the Purchaser will purchase from the
                     Company one hundred fifty thousand (150,000) shares of
                     Series C Preferred Stock, each such share convertible into
                     7.0175466 shares of Common Stock or redeemable in cash by
                     the Company, all as provided in the Certificate of
                     Designations. At the Closing (as defined below), a purchase
                     price (the "PURCHASE PRICE") in the amount of one hundred
                     U.S. dollars ($100.00) per share or an aggregate of fifteen
                     million U.S. dollars ($15,000,000) shall be payable by the
                     Purchaser to the Company by certified check or wire
                     transfer of immediately available funds.

              2.2.2  In consideration for the Purchaser's participation in the
                     Financing, subject to the terms and conditions of this
                     Agreement, on the Closing Date the Company will issue to
                     the Purchaser the Common Stock Purchase Warrant to purchase
                     an aggregate of seven hundred eighty nine thousand four
                     hundred and seventy four (789,474) shares of Common Stock
                     at an exercise price of $15.00 per share, pursuant to the
                     terms and conditions set forth in that Common Stock
                     Purchase Warrant, which shall be substantially in the form
                     of Exhibit B hereto.

              2.2.3  In consideration for the Purchaser's participation in the
                     Financing, subject to the terms and conditions of this
                     Agreement, on the Closing Date the Company will issue to
                     the Purchaser the Additional Common Stock Purchase Warrant
                     to purchase up to an aggregate of four hundred eighty
                     thousand (480,000) additional shares of Common Stock at an
                     exercise price of $4.25 per share, pursuant to the terms
                     and conditions set forth in that Additional Common Stock
                     Purchase Warrant, which shall be substantially in the form
                     of Exhibit C hereto.

                                      -7-
<PAGE>   9

3      CLOSING OF SALE OF THE SECURITIES

       3.1    CLOSING

              The closing of the purchase and sale of the Securities pursuant to
              Section 2.2 hereof (the "CLOSING") shall take place at the offices
              of Linklaters, 1345 Avenue of the Americas, 19th Floor, New York,
              New York 10105 on July 20, 2000 or at such other place and date as
              the parties may agree (such date on which the Closing shall have
              actually occurred, the "CLOSING DATE").

4      DELIVERIES AT CLOSING

       4.1    DELIVERIES BY THE COMPANY TO THE PURCHASER ON THE CLOSING DATE
              At the Closing, the Company will deliver or cause to be delivered
              to the Purchaser, against payment of the Purchase Price as
              provided herein:

              4.1.1  The Series C Preferred Stock as provided in Section 2.2
                     hereof, and

              4.1.2  An opinion of Piper Marbury Rudnick & Wolfe LLP, counsel
                     for the Company, in form and substance acceptable to the
                     Purchaser, addressed to the Purchaser, dated the Closing
                     Date.

              4.1.3  The Common Stock Purchase Warrant as provided in Section
                     2.2 hereof.

              4.1.4  The Additional Common Stock Purchase Warrant as provided in
                     Section 2.2 hereof.

       4.2    DELIVERIES BY THE PURCHASER TO THE COMPANY ON THE CLOSING DATE

              4.2.1  At the Closing, the Purchaser will deliver or cause to be
                     delivered to the Company the Purchase Price.

5      REPRESENTATIONS AND WARRANTIES, ETC. OF THE COMPANY

       In order to induce the Purchaser to purchase the Securities, the Company
       represents and warrants to the Purchaser that, except as set forth on the
       disclosure schedule hereto:

       5.1    ORGANIZATION AND QUALIFICATION; AUTHORITY
              The Company is a corporation duly incorporated, validly existing
              and in good standing under the laws of the State of Delaware. All
              of the Subsidiaries of the Company are listed on Schedule 5.1
              hereto. The Company has full corporate power and authority and all
              necessary government approvals to own and lease its properties and
              carry on its business as presently conducted or as intended to be
              conducted, is duly qualified, registered or licensed as a foreign
              corporation to do business and is in good standing in each
              jurisdiction in which the ownership or leasing of its properties
              or the character of its present operations makes such
              qualification, registration or licensing necessary, except where
              the failure to so qualify or be in good standing would not have a
              Material Adverse Effect. The Company has heretofore delivered to
              the Purchaser complete and correct copies of the Charter Documents
              as presently in effect.

                                      -8-
<PAGE>   10

       5.2    CORPORATE AUTHORIZATION

              The execution, delivery and performance by the Company of this
              Agreement and the other Transaction Documents are within the
              Company's corporate power and authority. The execution and
              delivery of this Agreement and the other Transaction Documents by
              the Company and the performance by the Company of its obligations
              hereunder and thereunder, have been duly authorized by all
              requisite corporate action and no other corporate proceedings on
              the part of the Company other than those listed on Schedule 5.2
              are necessary to authorize this Agreement and the other
              Transaction Documents. This Agreement and the other Transaction
              Documents have been duly executed and delivered by duly authorized
              officers of the Company and, assuming the due authorization,
              execution and delivery thereof by all parties thereto other than
              the Company, constitute legal, valid and binding obligations of
              the Company, enforceable against it in accordance with its terms,
              except as may be limited by bankruptcy, reorganization,
              moratorium, fraudulent conveyance and insolvency laws and by other
              laws affecting the rights of creditors generally and except as may
              be limited by the availability of equitable remedies.

       5.3    NO CONFLICT; REQUISITE CONSENTS

              The execution, delivery and performance by the Company of this
              Agreement and the other Transaction Documents do not and will not
              (i) contravene or conflict with the Charter Documents, (ii) (A)
              conflict with or result in a violation of or (B) constitute a
              default under or give rise to a right of termination, cancellation
              or acceleration of any right or obligation of the Company under
              any provision of any written agreement or other instrument binding
              upon the Company or require the consent of any third party under
              any Law applicable to the Company or any License held by the
              Company, (iii) conflict with or result in a violation or breach of
              any term or provision of any Law applicable to the Company, or
              (iv) result in the creation or imposition of any Lien on any asset
              of the Company, except, with respect to each of the occurrences or
              results referred to in clauses (ii) and (iv) of this sentence, the
              third party consents set forth in Schedule 5.3 and such items
              which would not have a Material Adverse Effect.

       5.4    CAPITALIZATION

              5.4.1  As of July 18, 2000, the authorized Capital Stock of the
                     Company consists of 75,000,000 shares of Common Stock and
                     500,000 shares of Preferred Stock, of which 27,341,222
                     shares of Common Stock and no shares of Preferred Stock are
                     currently issued and outstanding.

              5.4.2  All issued and outstanding shares of the Company's Common
                     Stock are validly issued, fully paid and nonassessable.
                     Except as set forth on Schedule 5.4, there are no (i)
                     outstanding subscriptions, options, warrants or rights
                     (including conversion rights and preemptive rights),
                     agreements, calls, convertible securities, arrangements or
                     commitments of any character to which the Company is a
                     party relating to any unissued Capital Stock or other
                     securities of the Company or otherwise obligating the
                     Company to grant, issue or sell any such options, warrants
                     or rights or (ii) shares of Common Stock reserved for
                     issuance upon the exercise of any warrants, options granted
                     or to be granted

                                      -9-
<PAGE>   11

                     under any stock option plan or any options previously
                     granted outside of any stock option plan.

       5.5    LITIGATION; DEFAULTS
              There is no action, suit, proceeding or investigation pending or,
              to the knowledge of the Company, threatened against or affecting
              the Company, or any properties of the Company, before or by any
              Governmental Authority or any other Person, which would (i) have a
              Material Adverse Effect, or (ii) impair the ability of the Company
              to perform any material obligation which the Company has under any
              Transaction Document, except as set forth on Schedule 5.5 or
              Schedule 5.11. Except as set forth on Schedule 5.5, the Company is
              not in violation of, or in default under (and there does not exist
              any event or condition which, after notice or lapse of time or
              both, would constitute such a default under), any term of its
              Charter Documents, or of any term of any agreement, Contract,
              instrument, judgement, decree, writ, determination, arbitration
              award, or Law applicable to the Company or to which the Company is
              bound, or to any Properties of the Company.

       5.6    NO MATERIAL ADVERSE EFFECT
              Except as set forth in Schedule 5.6, since March 31, 2000, there
              has been (i) no event or condition which has had or is reasonably
              likely to result in a Material Adverse Effect, and (ii) no
              acquisition or disposition of any material assets by the Company
              (or any Contract or arrangement therefor), or any other material
              transaction, otherwise than for fair value in the ordinary course
              of business, except in any such case as set forth in the Company
              SEC Documents.

       5.7    EMPLOYEE PROGRAMS
              5.7.1  Schedule 5.7 lists each material benefit arrangement,
                     including (i) any employment or consulting agreement, (ii)
                     any arrangement providing for insurance coverage or
                     workers' compensation benefits, (iii) any incentive bonus
                     or deferred bonus arrangement, (iv) any arrangement
                     providing termination allowance, severance or similar
                     benefits, (v) any equity compensation plan, (vi) any
                     deferred compensation plan and (vii) any compensation
                     policy and practice. The Company does not provide, and does
                     not have an obligation to provide, or make contributions to
                     provide any compensation or benefits to its current or
                     former employees or directors of the Company, other than
                     any plans, programs or other arrangements which only
                     provide for the payment of cash compensation currently from
                     the general assets of the Company on a payday by payday
                     basis as base salary or hourly wages for current services
                     and other than policies for vacation, sick days and
                     holidays, medical, disability and life insurance and except
                     as set forth on Schedule 5.7 (individually, a "BENEFIT
                     PLAN," and collectively, the "BENEFIT PLANS").

              5.7.2  Except as disclosed on Schedule 5.7:

                     (i)    No ERISA Affiliate (other than the Company)
                            provides, or has an obligation to provide,
                            contributions, compensation or benefits of or

                                      -10-
<PAGE>   12

                            under any plan, program or arrangement which is
                            subject to Title IV of ERISA ("ERISA AFFILIATE TITLE
                            IV PLAN").

                     (ii)   No assets have been set aside in a trust or other
                            separate account to pay directly or indirectly any
                            benefits under any Benefit Plan or to the extent
                            assets have been set aside, all assets are shown on
                            the books and records of such trust or separate
                            account at their fair market value as of the date of
                            any report last provided with respect to such trust;
                            except in each case any assets with respect to the
                            Company's "401(k) plan", which is disclosed in
                            Schedule 5.7.

                     (iii)  Each Benefit Plan and each ERISA Affiliate Title IV
                            Plan has been established, maintained and
                            administered in compliance in all material respects
                            with all applicable Laws.

                     (iv)   The Company has not incurred any material liability
                            for any tax or penalty with respect to any Benefit
                            Plan, ERISA Affiliate Title IV Plan or any group
                            health plan (as described in Section 5000 of the
                            Code) of an ERISA Affiliate including, without
                            limitation, any tax or penalty under ERISA or under
                            the Code.

                     (v)    The Company has not terminated or withdrawn from, or
                            sought a funding waiver with respect to, any Benefit
                            Plan which is subject to Title IV of ERISA.

                     (vi)   To the knowledge of the Company, there is no
                            proposed or actual material audit or investigation
                            by any Governmental Authority with respect to any
                            Benefit Plan or ERISA Affiliate Title IV Plan.

                     (vii)  The Company has no obligation to make, or reimburse
                            another employer, directly or indirectly, for
                            making, contributions to a multi-employer plan as
                            described in Title IV of ERISA.

       5.8    PRIVATE OFFERINGS
              Neither the Company nor any Person acting on its behalf (other
              than the Purchaser, as to whom the Company makes no
              representations) has offered or sold the Securities by means of
              any general solicitation or general advertising within the meaning
              of Rule 502(c) under the Securities Act. No securities of the same
              class or series as the Securities have been issued and sold by the
              Company prior to the date hereof. The Securities shall bear
              substantially the same legend set forth in Section 12.1 hereof for
              so long as required by the Securities Act.

       5.9    COMPANY SEC DOCUMENTS
              The Company has filed with the Commission, and has heretofore made
              available to the Purchaser, true and complete copies of its Annual
              Report on Form 10-K for the year ended December 31, 1999, its
              quarterly report on Form 10-Q for the quarter ended March 31,
              2000, and its definitive proxy materials relating to its annual
              meeting of stockholders held on June 13, 2000 (collectively, the
              "COMPANY SEC DOCUMENTS"). As of their respective dates, the
              Company SEC Documents did not contain any untrue

                                      -11-
<PAGE>   13

              statement of a material fact or omit to state a material fact
              required to be stated therein or necessary in order to make the
              statements therein, in the light of the circumstances under which
              they were made, not misleading.

       5.10   FINANCIAL STATEMENTS: NO UNDISCLOSED LIABILITIES
              The financial statements of the Company included or incorporated
              by reference in the Company SEC Documents (the "COMPANY FINANCIAL
              STATEMENTS") have been prepared in accordance with GAAP applied on
              a consistent basis (except as may be indicated therein or in the
              notes thereto) and fairly present in all material respects the
              financial position of the Company as at the dates thereof and the
              results of operations and cash flows for the periods then ended
              (subject, in the case of any unaudited interim financial
              statements, to normal year-end adjustments and any other
              adjustments described therein). Since March 31, 2000, the Company
              has not incurred any liabilities or obligations of any nature,
              whether or not accrued, absolute, contingent or otherwise, that
              would have a Material Adverse Effect, other than liabilities (i)
              disclosed on Schedule 5.10, or in the Company SEC Documents, (ii)
              adequately provided for in the Company Financial Statements or
              disclosed in any related notes thereto, (iii) not required under
              GAAP to be reflected in the Company Financial Statements, or
              disclosed in any related notes thereto or (iv) incurred in
              connection with this Agreement or the other Transaction Documents.

       5.11   ENVIRONMENTAL REGULATION, ETC.
              Except as set forth on Schedule 5.11 (i) the business as presently
              or formerly engaged in by the Company is and has been conducted in
              compliance with all applicable Environmental Law, including,
              without limitation, having all permits, licenses and other
              approvals and authorizations, (ii) the Company has not received
              notice from any governmental authority or third party of an
              asserted claim under applicable Environmental Law and, to the best
              of its knowledge, the Company does not know of any such claim
              which is pending or threatened and (iii) to the best of its
              knowledge, the Company will not be required to make any future
              capital expenditures to comply with applicable Environmental Law.

       5.12   PROPERTIES AND ASSETS
              The Company has good record and marketable fee title to all real
              Property and all other Property, whether tangible or intangible,
              owned by it, except defects in title which would not have a
              Material Adverse Effect or as otherwise disclosed on Schedule
              5.12. The Company has complied with all commitments and
              obligations on its part to be performed or observed under each of
              the leases listed on Schedule 5.12, except for such non-compliance
              as would not have a Material Adverse Effect.

       5.13   EMPLOYMENT PRACTICES
              The Company is not a party to, or bound by, any collective
              bargaining agreement, Contract or other agreement or understanding
              with a labor union organization except as set forth on Schedule
              5.13. Except as set forth on Schedule 5.13, there (i) is no unfair
              labor practice or material labor arbitration proceeding pending or
              threatened against the Company, (ii) are no organizational efforts
              with respect to the formation of a collective bargaining unit
              presently' being made or, to the Company's knowledge, threatened

                                      -12-
<PAGE>   14

              involving employees of the Company, and (iii) is no labor
              controversy in existence with respect to the Company's business
              and operations, except as would not in any such case have a
              Material Adverse Effect.

       5.14   INTELLECTUAL PROPERTY
              The Company has the right to use all Intellectual Property
              necessary for the conduct of its business. All registrations with
              and applications to any Governmental Authority in respect of such
              Intellectual Property are valid and in full force and effect and
              are not subject to the payment of any taxes or maintenance fees or
              the taking of any other actions by the Company (other than the
              payment of fees not yet due or the taking of actions not yet
              required) to maintain their validity or effectiveness. The Company
              has taken reasonable security measures to protect the secrecy,
              confidentiality and value of its trade secrets in respect of the
              business of the Company. The Company has not received any notice
              that it is, and, to the best of its knowledge, the Company is not,
              in default (or with the giving of notice or lapse of time or both,
              would be in default) under any license to use such Intellectual
              Property, and, to the best of the Company's knowledge, such
              Intellectual Property is not being infringed by any other Person.
              No claim is pending or has been made to such effect that has not
              been resolved and, to the knowledge of the Company, the Company is
              not infringing any Intellectual Property rights of any other
              Person in connection with the conduct of the business of the
              Company.

       5.15   MATERIAL CONTRACTS
              The Company has previously furnished or made available to the
              Purchaser all contracts, agreements, commitments, obligations and
              licenses to which the Company is a party that are material
              ("CONTRACTS"); provided, however, purchase agreements involving
              payments in the aggregate of $50,000 per annum or less shall not
              be deemed to be material unless such purchase agreement is by and
              between the Company and any Affiliate. All of the Contracts are
              valid and binding and are in full force and effect; and, except as
              set forth on Schedule 5.15 hereto, there are no existing defaults
              (or events which, with notice or lapse of time or both, would
              constitute a material default) by the Company or its Subsidiaries,
              or, to the Company's knowledge, any other party thereunder, except
              as would not have a Material Adverse Effect.

       5.16   TAXES
              Except as set forth in Schedule 5.16:

              5.16.1 all material Returns have been or will be timely filed when
                     due in accordance with all applicable Laws:

              5.16.2 all Taxes shown on the Returns have been timely paid,
                     except those which are being contested (as described on
                     Schedule 5.16);

              5.16.3 the Returns completely, accurately and correctly reflect in
                     all material respects the facts regarding the income,
                     properties, operations and status of any entity required to
                     be shown thereon;

                                      -13-
<PAGE>   15

              5.16.4 the Company and each Subsidiary have adequate reserves on
                     their financial statements for Taxes accrued but not yet
                     due, relating to the income, property or operations of the
                     Company or the Subsidiary;

              5.16.5 there are no legally binding agreements or consents
                     currently in effect for the extension or waiver of the time
                     (A) to file any Return or (B) for assessment or collection
                     of any Taxes relating to the Company or any Subsidiary, and
                     neither the Company nor any Subsidiary has been requested
                     to enter into any such agreement or consent by a
                     Governmental Authority;

              5.16.6 to the best of the Company's reasonable knowledge and
                     belief, none of the Returns have been examined by any
                     Governmental Authority;

              5.16.7 all Taxes which the Company and each Subsidiary is required
                     by Law to withhold or collect have been duly withheld or
                     collected, and have been timely paid over to the
                     appropriate Governmental Authority to the extent due and
                     payable;

              5.16.8 there is no action, suit, proceeding, investigation by a
                     Governmental Authority, audit or claim currently pending,
                     or, to the Company's reasonable best knowledge, threatened
                     by any Governmental Authority, regarding any Taxes relating
                     to the Company, any Subsidiary or any group of which the
                     Company is now or was formerly a member;

              5.16.9 all Tax deficiencies which have been claimed or asserted
                     against the Company, any Subsidiary or any affiliated group
                     (as defined in Section 1504 of the Code) of which the
                     Company is now or was formerly a member, have been fully
                     paid or finally settled;

              5.16.10 no Person has executed or entered into a closing agreement
                      pursuant to Section 7121 of the Code (or any comparable
                      provision of State, local or foreign Law) that is
                      currently in force and determines the Tax liabilities of
                      the Company or any Subsidiary;

              5.16.11 there are no liens for any Tax on the assets of the
                      Company or any Subsidiary other than liens in the ordinary
                      course of business which arise as a matter of law and
                      liens for Taxes not yet due and payable or Taxes that the
                      Company or any Subsidiary is contesting in good faith;

              5.16.12 there are no Tax allocation or other agreements with or
                      relating to any income or other Taxes with any other
                      person to which the Company or any Subsidiary is now or
                      ever has been a party;

              5.16.13 neither the Company nor any Subsidiary is a party to any
                      written agreement, contract, arrangement or plan that
                      would result, separately or in the aggregate, in the
                      payment of any "EXCESS PARACHUTE PAYMENTS" within the
                      meaning of Section 280G of the Code (or any comparable
                      provision of state, local or foreign Law);

              5.16.14 neither the Company nor any Subsidiary has agreed, nor is
                      required, to make any adjustment under Section 481(a) of
                      the Code (or any comparable provision

                                      -14-
<PAGE>   16

                      of state, local, or foreign Law) by reason of a change in
                      accounting method or otherwise;

              5.16.15 no power of attorney is currently in effect, and no Tax
                      ruling has been requested of any Governmental Authority,
                      with respect to any Tax matter relating to the Company;

              5.16.16 no indebtedness of the Company consists of "CORPORATE
                      ACQUISITION INDEBTEDNESS" within the meaning of Section
                      279 of the Code;

              5.16.17 the Company is not a "UNITED STATES REAL PROPERTY HOLDING
                      CORPORATION" within the meaning of Section 897(c)(2) of
                      the Code; and

              5.16.18 neither the Company nor any Subsidiary is either a passive
                      foreign investment company (a "PFIC"), as defined in
                      Section 1297 of the Code, or a foreign personal holding
                      company (an "FPHC"), as defined in Section 552 of the
                      Code.

       5.17   LICENSES; COMPLIANCE WITH LAWS
              The Company holds all licenses, franchises, permits, consents,
              registrations, certificates and other approvals (individually, a
              "LICENSE" and collectively, "LICENSES") required for the conduct
              of its business as now being conducted, and is operating in
              substantial compliance therewith, except where the failure to hold
              any such License or to operate in compliance therewith would not
              have a Material Adverse Effect. Except as set forth on Schedule
              5.17, the Company is in substantial compliance with all Laws
              applicable to it, except in each case where the failure so to
              comply would not have a Material Adverse Effect taken as a whole.

       5.18   TRANSACTIONS WITH AFFILIATES
              There are no material transactions, agreements or understandings,
              existing or presently contemplated, between or among the Company
              and any of its officers or directors or stockholders or any of
              their Affiliates or associates except as set forth on Schedule
              5.18. Except as set forth on Schedule 5.18, no officer, director
              or Affiliate of the Company or any Affiliate of any such officer
              or director provides or causes to be provided any assets
              (including Intellectual Property), know how, services or
              facilities used or held for use by the Company in connection with
              its business and the Company does not provide or cause to be
              provided any assets (including Intellectual Property), know how,
              services or facilities to any such officer, director or Affiliate.
              Except as set forth on Schedule 5.18, each of the transactions
              listed on such Schedule is engaged in on an arm's-length basis.

       5.19   CONFIDENTIAL INFORMATION
              The Company has taken and shall take all reasonable steps to
              protect the confidentiality of the knowhow and trade secrets which
              the Company presently uses or reasonably expects to use in the
              future conduct of its business.

       5.20   INSURANCE
              The Company maintains all liability (including product liability),
              property (including Intellectual Property), workers' compensation,
              fire, casualty, officers' and directors' and other insurance
              policies to the extent and in the manner customary in the industry
              for

                                      -15-
<PAGE>   17

              companies in similar businesses similarly situated. Except as set
              forth on Schedule 5.20, each insurance policy is valid and binding
              and in full force and effect and all premiums thereunder have been
              paid. Except as set forth on Schedule 5.20, the Company has not
              received any notice of cancellation or termination in respect of
              any such policy and is not in default thereunder. Except as set
              forth on Schedule 5.20, the Company has not received any notice
              that any insurer under any policy referred to in such notice is
              denying, liability with respect to a claim thereunder or defending
              under a reservation of rights clause.

       5.21   SUBSTANTIAL CUSTOMERS AND SUPPLIERS
              Except as set forth on Schedule 5.21, no material customer or
              supplier of the Company has ceased or materially reduced its
              purchases from or sales or provisions of materials, services or
              facilities to the Company since March 31, 2000 or has threatened
              to cease or materially reduce such purchases or sales or provision
              of materials, services or facilities. Except as set forth on
              Schedule 5.21, to the best of the Company's knowledge, no material
              customer or supplier of the Company is threatened with bankruptcy
              or insolvency.

       5.22   REGISTRATION RIGHTS
              Except as set forth on Schedule 5.22 and except as contemplated by
              this Agreement, the Company is not under any contractual
              obligation to register any of its currently outstanding Capital
              Stock or any of its securities which may hereafter be issued.

       5.23   EXPORT CONTROLS
              The Company has complied, is in compliance, and has not received
              any notice from any governmental or other regulatory authority
              that it is not in compliance, with all United States laws, rules
              and regulations regarding the export of technology.

       5.24   DIVIDENDS
              On or after March 31, 2000, the Company has not declared or paid
              any dividends, or authorized or made any distribution upon or with
              respect to any class or series of its Capital Stock.

       5.25   YEAR 2000 COMPLIANCE
              The software used by the Company: (i) has accurately in all
              material respects processed date information before, during and
              after January 1, 2000, including, but not limited to, accepting
              date input, providing date output and performing calculations on
              dates or portions of dates; (ii) has functioned accurately in all
              material respects, and without material interruption immediately
              before, during and after January 1, 2000 without any material
              change in operations associated with the advent of the new
              century; (iii) responds to two (2) digit year date input in a way
              that resolves the ambiguity as to century in disclosed, defined
              and predetermined manner; and (iv) stores and provides output of
              date information in ways that are unambiguous as to century.

       5.26   DISCLOSURE
              The Company has provided the Purchaser with all the information
              reasonably available to the Company without undue expense that the
              Purchaser has requested for deciding

                                      -16-
<PAGE>   18

              whether to purchase the Securities and all information that the
              Company believes is reasonably necessary to enable the Purchaser
              to make such decision. None of the Schedules attached to this
              Agreement contains any untrue statement of a material fact or
              omits to state a material fact necessary to make the statements
              therein, in light of the circumstances under which they were made,
              not misleading.

6      REPRESENTATIONS AND WARRANTIES, ETC. OF THE PURCHASER

       In order to induce the Company to sell the Securities, the Purchaser
       represents and warrants to the Company that:

       6.1    REGULATION S

              6.1.1  The Securities to be issued and delivered in connection
                     with the transactions contemplated by this Agreement have
                     not been registered under the Securities Act or under the
                     securities laws of any state of the United States or the
                     laws of any other jurisdiction. The Purchaser acknowledges
                     that the Company is relying on the exemption from
                     registration under the Securities Act afforded by
                     Regulation S and that the Securities will be deemed
                     "restricted securities" within the meaning of Rule 144
                     under the Securities Act. Accordingly, the Securities to be
                     delivered pursuant to this Agreement (together with any
                     other shares in respect thereof received pursuant to
                     conversions, exchanges, stock split, stock dividends or
                     other reclassifications or changes thereof, or
                     consolidations or reorganizations of the Company) may not
                     be offered or sold, and no hedging transactions may be
                     engaged in, within the United States, except in accordance
                     with Regulation S or pursuant to a registration statement
                     filed on an appropriate form under the Securities Act and
                     declared effective by the Commission or pursuant to another
                     viable exemption from registration. All share certificates
                     representing the Securities will have imprinted thereon a
                     legend to such effect. The Company and its transfer agent,
                     if any, will refuse to register any transfer of all or any
                     portion of the Securities unless made in accordance with
                     the registration or exemptive provisions of the Securities
                     Act and Purchaser acknowledges, and each subsequent holder
                     will be deemed to have acknowledged, that the Company and
                     its transfer agent, if any, will not be required to accept
                     for registration or transfer any of the Securities, except
                     upon presentation of evidence satisfactory to the Company
                     and its transfer agent, if any, that the restrictions set
                     forth herein have been complied with. The Purchaser agrees
                     that all subsequent offers and sales by it of the
                     Securities shall be conducted as set forth herein.

              6.1.2  The Purchaser is not an "AFFILIATE" (as defined in Rule 144
                     under the Securities Act) of the Company or acting on
                     behalf of the Company and, at the time of executing this
                     Agreement, was outside the United States and was not a U.S.
                     Person (and was not acquiring the Securities for the
                     account or benefit of a U.S. Person) within the meaning of
                     Regulation S. No offer to purchase or acquire the
                     Securities was made by the Purchaser in the United States.

              6.1.3  The Purchaser acknowledges that the Company, the Company's
                     transfer agent, if any, and others will rely upon the truth
                     and accuracy

                                      -17-
<PAGE>   19

                     of the representations and warranties, covenants and
                     agreements made herein and agrees that if any of the
                     acknowledgments, representations, warranties or agreements
                     deemed to have been made by its purchase or acquisition of
                     the Securities are no longer accurate, it shall promptly
                     notify the Company and its transfer agent, if any. If the
                     Purchaser is acquiring the Securities as a fiduciary or
                     agent for another person, the Purchaser represents that it
                     has full power to make the foregoing acknowledgements,
                     representations and agreements on behalf of each such other
                     person; and that each such other person is eligible to
                     purchase or acquire the Securities as applicable.

              6.1.4  The Purchaser agrees that it will give to each person to
                     whom it transfers the Securities notice of any restrictions
                     on transfer of the Securities.

              6.1.5  The Purchaser understands that no United States or foreign
                     federal or state agency has passed on or made any
                     recommendation or endorsement of the Securities.

              6.1.6  In connection with the issuance of the Securities, the
                     Purchaser agrees to the inclusion of a legend, in
                     substantially the following form, on each certificate
                     representing Securities as set forth in Section 12.1
                     hereof.

       6.2    ORGANIZATION AND STANDING
              The Purchaser is a corporation duly incorporated and validly
              existing under the laws of the jurisdiction of its incorporation
              and has full corporate power and authority to enter into and
              perform this Agreement and to carry out the transactions
              contemplated by this Agreement.

       6.3    AUTHORITY
              The execution, delivery and performance by the Purchaser of this
              Agreement and the other Transaction Documents are within the
              Purchaser's corporate power and authority. The execution and
              delivery of this Agreement and the other Transaction Documents by
              the Purchaser and the performance by the Purchaser of its
              obligations hereunder and thereunder, have been duly authorized by
              all requisite corporate action and no other corporate proceedings
              on the part of the Company other than those listed on Schedule 6.3
              are necessary to authorize this Agreement and the other
              Transaction Documents. This Agreement and the other Transaction
              Documents have been duly executed and delivered by duly authorized
              officers of the Purchaser and, assuming the due authorization,
              execution and delivery thereof by all parties thereto other than
              the Purchaser, constitute legal, valid and binding obligations of
              the Purchaser, enforceable against it in accordance with its
              terms, except as may be limited by bankruptcy, reorganization,
              moratorium, fraudulent conveyance and insolvency laws and by other
              laws affecting the rights of creditors generally and except as may
              be limited by the availability of equitable remedies.

       6.4    BROKERAGE FEES
              The Purchaser has no contract, arrangement or understanding with
              any broker, finder or similar agent with respect to the
              transactions contemplated by this Agreement.

                                      -18-
<PAGE>   20

7      COVENANTS OF THE COMPANY

       The Company covenants and agrees that from the date hereof until the
       Closing Date, except with respect to Sections 7.2, 7.4, 7.6, 7.7, 7.8,
       7.12 and 7.13 of this Agreement and, unless otherwise provided for in
       this Agreement, or unless the Purchaser shall otherwise consent in
       writing, it will do or cause the following:

       7.1    ORDINARY COURSE
              The Company's business shall be conducted only in the ordinary
              course of business and in a manner consistent with past practice
              and the business plan(s) approved by the Company's Board of
              Directors. The Company shall use commercially reasonable efforts,
              within the limits of its available resources, to preserve
              substantially intact its business organization, and to maintain or
              improve its profitability.

       7.2    RESERVATION OF COMMON STOCK
              The Company shall reserve and set apart and have at all times,
              free from preemptive rights, the number of authorized but unissued
              shares of Common Stock to conform to the Company's obligations
              hereunder, under the Certificate of Designation, under the Common
              Stock Purchase Warrant and under the Additional Common Stock
              Purchase Warrant.

       7.3    ISSUANCE OF SECURITIES
              The Company shall not issue, deliver, sell, redeem, acquire,
              authorize or propose to issue, deliver, sell, redeem, acquire or
              authorize, any shares of its Capital Stock of any class or any
              securities convertible into, or any rights, warrants or options to
              acquire, any such shares or convertible securities or other
              ownership interest; provided that the Company shall be permitted
              to issue shares of Common Stock upon exercise of any warrants or
              employee share options or conversion of any securities convertible
              into Common Stock, in each case issued by the Company prior to the
              date hereof. The Company shall not amend its Charter Documents to
              increase the number of authorized shares of Common Stock or
              Preferred Stock thereunder without the consent of the Purchaser.

       7.4    NASDAQ LISTING
              The Company will use its best efforts to continue the listing of
              the Common Stock on the Nasdaq National Market and to ensure that
              the shares of Common Stock to be issued (i) upon conversion or
              redemption, if any, of the Series C Preferred Stock, (ii) upon
              exercise of the Common Stock Purchase Warrant, (ii) upon exercise
              of any rights which have vested pursuant to the Additional Common
              Stock Purchase Warrants and (iv) in payment of any dividends on
              the Series C Preferred Stock are listed or authorized to be quoted
              on the Nasdaq National Market or listed on any national securities
              exchange on which shares of Common Stock are then listed, to the
              extent that such listing is permitted at such time.

       7.5    DIVIDENDS; CHANGES IN CAPITAL STOCK
              While the Series C Preferred Stock is outstanding, the Company
              shall not, nor shall it propose to: (i) declare, set aside, make
              or pay any dividend or other distribution,

                                      -19-
<PAGE>   21

              payable in cash, stock, property or otherwise, with respect to any
              of its Capital Stock; or (ii) recapitalize or otherwise modify its
              Capital Stock.

       7.6    FINANCIAL INFORMATION
              Immediately following the date of execution of this Agreement, the
              Company shall commence providing the Purchaser with quarterly
              financial data to the extent that it is otherwise prepared by the
              Company and that it is reasonably requested by the Purchaser.

       7.7    RETURN AND OTHER TAX INFORMATION
              Following the Closing Date and for so long as Purchaser shall hold
              Capital Stock of the Company, and for a reasonable time
              thereafter, the Company shall provide the Purchaser with such
              cooperation and information as the Purchaser may reasonably
              request with respect to (A) the filing of any Return, amended
              Return, or claim for a refund of Taxes by the Purchaser, (B)
              determining any potential or asserted Tax liability or a right to
              a refund of Taxes under any Law, or (C) conducting or defending
              any audit or other proceeding in respect of Taxes. Any information
              obtained under this Section 7.7 shall be kept confidential, except
              as may be otherwise necessary in connection with filing any
              Return, amended Return, or claim for a refund of Taxes, or in
              conducting or defending any audit or other proceeding in respect
              of Taxes as may otherwise be required by any Law, rule, regulation
              or accounting principal or practice.

       7.8    STAMP TAXES
              The Company shall be liable for, and shall pay when due, any
              transfer, gains, documentary, sales, use, registration, stamp,
              value added or other similar Taxes payable by reason of the
              transactions contemplated by this Agreement or attributable to the
              initial sale to the Purchaser of the Securities, and the Company
              shall, at its own expense, file all necessary Returns and other
              documentation with respect to all such Taxes.

       7.9    FIRPTA
              On or prior to the Closing Date, the Company shall provide the
              Purchaser with a copy of a statement, issued by the Company
              pursuant to U.S. Treasury Regulation Section 1.897-2(h),
              certifying that neither the Series C Preferred Stock, the Common
              Stock Purchase Warrant nor the Additional Common Stock Purchase
              Warrant is a United States real property interest.

       7.10   REGULATORY APPROVAL
              The Company shall cooperate with the Purchaser by providing
              information upon request of the Purchaser to the extent the
              Purchaser receives any inquiry from any Governmental Authority in
              connection with the transactions contemplated by this Agreement.

       7.11   PUBLIC ANNOUNCEMENTS
              Upon the execution of this Agreement, the Company and the
              Purchaser will consult with each other with respect to the
              issuance of a joint press release to be released by the Company
              with respect to this Agreement and the transactions contemplated
              hereby. Prior to the Closing, except as otherwise agreed to by the
              parties, the parties shall not

                                      -20-
<PAGE>   22

              issue any report, statement or press release or otherwise make any
              public statements with respect to this Agreement, except as in the
              reasonable judgement of the party may be required by law or in
              connection with the obligations of a publicly-held company. Upon
              the Closing, the Company and the Purchaser will consult with each
              other with respect to the issuance of a joint press release with
              respect to the consummation of the transactions contemplated by
              this Agreement.

       7.12   NOTICE TO THE PURCHASER OF CERTAIN TRANSACTIONS
              In case at any time:

              7.12.1 the Company shall pay any dividend upon its outstanding
                     shares of Common Stock or Preferred Stock payable in shares
                     of Common Stock or Preferred Stock or make any distribution
                     (other than cash dividends out of earned surplus) to the
                     holders of its shares of Common Stock or Preferred Stock;
                     or

              7.12.2 the Company shall offer for subscription pro rata to the
                     holders of its Common Stock or Preferred Stock any
                     additional shares of Common Stock or Preferred Stock or
                     other rights to acquire such Common Stock or Preferred
                     Stock; or

              7.12.3 there shall be effected any recapitalization of the Company
                     or reclassification of the shares of Common Stock or
                     Preferred Stock of the Company, or any merger or
                     consolidation of the Company into or with any other
                     corporation or business entity and as a result of which the
                     Company is not the surviving corporation, or the sale or
                     transfer of all or substantially all of the assets of the
                     Company to any other corporation or business entity; or

              7.12.4 there shall be a voluntary or involuntary dissolution,
                     liquidation or winding up of the Company;

              then, in any one or more of said cases, the Company shall give
              written notice to the Purchaser of the date which is the record
              date for such dividend, distribution or subscription rights, or on
              which such recapitalization, reclassification, merger,
              consolidation, sale, transfer, dissolution, liquidation or winding
              up shall take place, as the case may be. Such notice shall also
              specify the date as of which the holders of record of the
              Company's classes of Common Stock or Preferred Stock shall
              participate in such dividend, distribution or subscription rights,
              or shall be entitled to exchange its Common Stock or Preferred
              Stock for securities or other property deliverable upon such
              recapitalization, reclassification, merger, consolidation, sale,
              transfer, dissolution, liquidation or winding up, as the case may
              be. Such written notice shall be given at least thirty (30) days
              prior to the action in question and not less than ten (10) days
              prior to the record date.

       7.13   TAXES OF THE COMPANY

              The Company shall timely prepare and file, or cause to be prepared
              and filed, all material Returns for the Company and each
              Subsidiary and timely pay, or cause to be paid, when due all Taxes
              shown on such Returns. The Company and each Subsidiary shall also
              pay when due all other Taxes for which the Company or Subsidiary
              is liable, except Taxes which the Company or Subsidiary is
              contesting in good faith.

                                      -21-
<PAGE>   23

                7.14 PASSIVE INVESTMENT. Neither the Company nor any Subsidiary
                will become either a PFIC or a FPHC, unless the Purchaser
                provides its prior written consent to the Company; provided
                however, that such consent will not be withheld unless becoming
                a PFIC or a FPHC could have a material adverse effect on the
                consolidated Tax liability of the Company or any Subsidiary
                subject to United States federal income tax on a net basis.

8      REGISTRATION RIGHTS

       8.1    MANDATORY REGISTRATION

              Within sixty (60) days from the Closing Date, the Company agrees
              to file a Registration Statement on Form S-3 with the Commission
              registering the Registrable Securities for sale under the
              Securities Act. If the Company is unable to use Form S-3 to
              register the Registrable Securities for resale, another form of
              Registration Statement for which the Company is eligible shall be
              used. Any Holder who does not wish to include its pro rata amount
              of Registrable Securities in the Registration Statement to be
              filed by the Company pursuant to this Section 8.1 shall provide
              written notice to the Company prior to the date upon which such
              filing is made with the Commission.

       8.2    ACKNOWLEDGEMENT

              By executing this Agreement, each Holder acknowledges that the
              Company's obligation to register is limited to one Registration
              Statement which becomes effective under the Securities Act.
              Subject to Section 8.4 and provided that the Company complies with
              its obligations under this Agreement, no further Registration
              Statements (other than required amendments or supplements to the
              original Registration Statement) will be filed for the benefit of
              such holders.

       8.3    EFFECTIVENESS OF REGISTRATION STATEMENT

              The Company shall use best efforts to obtain effectiveness of a
              Registration Statement as soon as practicable and shall continue
              to use its best efforts to maintain such effectiveness for the
              Registration Statement until either (i) there are no longer any
              Securities or Registrable Securities outstanding or (ii) the
              Company has provided written notice to all Holders that the
              Company intends to withdraw or allow the lapse in effectiveness of
              such Registration Statement and all such Holders have agreed to
              such withdrawal or lapse in writing. Any Registration Statement
              filed pursuant to this Agreement shall not be deemed to have been
              effected unless it has become effective with the Commission.
              Notwithstanding the foregoing, a Registration Statement will not
              be deemed to have been effected if, after it has become effective
              under the Securities Act, the registration is interfered with by
              any stop order, injunction or other order or requirement of the
              Commission or other governmental agency or any court proceeding
              for any reason. The Company shall use its best efforts to prevent
              the issuance of any stop order or other suspension of
              effectiveness of a Registration Statement, and, if such an order
              is issued, to obtain the withdrawal of such order at the earliest
              possible

                                      -22-
<PAGE>   24

              moment and to notify each Holder (and, in the event of an
              underwritten offering, the managing underwriters) of the issuance
              of such order and the resolution thereof.

       8.4    MODIFICATIONS, AMENDMENTS FOR ADDITIONAL REGISTRABLE SECURITIES;
              NEW REGISTRATION STATEMENT

              The Company agrees and warrants that it will prepare and file with
              the Commission any amendments in or modifications to such
              Registration Statement (or any subsequent Registration Statement)
              from time to time as necessary in order to ensure that all
              Registrable Securities (including additional Registrable
              Securities which are issuable as a result of (i) adjustments to
              the conversion price of the Series C Preferred Stock or the
              exercise price of the Common Stock Purchase Warrant or the
              Additional Common Stock Purchase Warrant or (ii) the vesting of
              rights pursuant to the Additional Common Stock Purchase Warrant)
              may be resold pursuant to such Registration Statement.
              Notwithstanding Section 8.2, in the event of any lapse in
              effectiveness or withdrawal of such Registration Statement (other
              than as provided for in Section 8.3 due to the fact that there are
              no longer any Registrable Securities outstanding or pursuant to
              the written consent of the Holders), the Company will file a new
              Registration Statement with respect to the Registrable Securities
              and obtain and maintain the effectiveness of such Registration
              Statement in accordance with this Section 8.

       8.5    REGISTRATION EXPENSES

              The Company shall pay all Registration Expenses incurred in
              connection with the registration of Registrable Securities
              pursuant to this Section 8.

       8.6    ELIGIBILITY FOR FORM S-3

              The Company represents and warrants that it meets as of the date
              hereof the requirements for the use of Form S-3 for the
              registration of the resale by a Holder of Registrable Securities.

9      REGISTRATION PROCEDURES

       9.1    In connection with the Company's obligation to effect the
              registration of Registrable Securities under the Securities Act as
              provided in Section 8, the Company, as expeditiously as possible
              and subject to the terms and conditions herein, shall, as
              expeditiously as is commercially reasonable:

              9.1.1  Effect the registration of the Registration Statement
                     prepared and filed with the Commission pursuant to Section
                     8.1 above and cause such registration to become effective
                     as soon as practicable.

              9.1.2  Prepare and file with the Commission such amendments and
                     supplements to such Registration Statement and the
                     prospectus used in connection therewith as may be necessary
                     to keep such Registration Statement effective (in
                     accordance with Section 8.2) and to comply with the
                     provisions of the Securities Act with respect to the
                     disposition of all Registrable Securities.

              9.1.3  Furnish to the Holders such number of conformed copies of
                     such Registration Statement and of each such amendment and
                     supplement thereto (in each case

                                      -23-
<PAGE>   25

                     including all exhibits), such number of copies of the
                     prospectus contained in such Registration Statement
                     (including each preliminary prospectus and any summary
                     prospectus) and any other prospectus filed under the
                     Securities Act, in conformity with the requirements of the
                     Securities Act, and such other documents, in each case, as
                     the Holders may reasonably request.

              9.1.4  Register or qualify all Registrable Securities covered by
                     such Registration Statement under such other United States
                     state securities or blue sky laws of such jurisdictions as
                     the Holders shall reasonably request, to keep such
                     registration or qualification in effect for so long as such
                     registration remains in effect, and take any other action
                     which may be reasonably necessary or advisable to enable
                     the Holders to consummate the disposition of the
                     Registrable Securities owned by the Holders in such
                     jurisdictions, except that the Company shall not for any
                     such purpose be required to qualify generally to do
                     business as a foreign corporation in any jurisdiction
                     wherein it would not but for the requirements of this
                     Section 9.1.4 be obligated to be so qualified, subject
                     itself to taxation in any such jurisdiction, or consent to
                     general service of process in any such jurisdiction.

              9.1.5  Immediately notify the Holders at any time when a
                     prospectus relating thereto is required to be delivered
                     under the Securities Act, of the happening of any event as
                     a result of which the prospectus included in such
                     Registration Statement, as then in effect, includes an
                     untrue statement of a material fact or omits to state any
                     material fact required to be stated therein or necessary to
                     make the statements therein not misleading in the light of
                     the circumstances under which they were made, and promptly
                     prepare and furnish to the Holders a reasonable number of
                     copies of a supplement to or an amendment of such
                     prospectus as may be necessary so that, as thereafter
                     delivered to the purchasers of such securities, such
                     prospectus shall not include an untrue statement of a
                     material fact or omit to state a material fact required to
                     be stated therein or necessary to make the statements
                     therein not misleading in the light of the circumstances
                     under which they were made.

              9.1.6  Comply with all applicable rules and regulations of the
                     Commission, and not file (or withdraw or correct) any
                     amendment or supplement to such Registration Statement or
                     prospectus to which the Holders shall have reasonably
                     objected in writing on the grounds that such amendment or
                     supplement does not comply in all material respects with
                     the requirements of the Securities Act or of the rules or
                     regulations thereunder.

              9.1.7  In the event of any underwritten public offering enter into
                     and perform its obligations under an underwriting
                     agreement, in usual and customary form, with the managing
                     underwriter(s) of such offering.

              9.1.8  Make available for inspection by any seller of Registrable
                     Securities as to which any registration is being effected,
                     any underwriter participating in any disposition pursuant
                     to the related Registration Statement, and any attorney,
                     accountant or other agent retained by any such seller or
                     any such underwriter

                                      -24-
<PAGE>   26

                     (collectively, the "INSPECTORS"), all financial and other
                     records, pertinent corporate documents and properties of
                     the Company and its Subsidiaries, if any, as shall be
                     reasonably necessary to enable them to exercise their due
                     diligence responsibility, and shall cause the Company's and
                     its Subsidiaries' officers, directors and employees to
                     supply all information and respond to all inquiries
                     reasonably requested by any such Inspector in connection
                     with such Registration Statement.

              9.1.9  Furnish, at the request of any Holder requesting
                     registration of Registrable Securities, on the date that
                     such Registrable Securities are delivered to the
                     underwriters for sale, if such securities are being sold
                     through underwriters, or, if such securities are not being
                     sold through underwriters, on the date that the
                     Registration Statement with respect to such securities
                     becomes effective, (1) an opinion, dated as of such date,
                     of the counsel representing the Company for the purposes of
                     such registration, in form and substance as is customarily
                     given to underwriters in an underwritten public offering
                     and reasonably satisfactory to a majority in interest of
                     the Holders requesting registration, addressed to the
                     underwriters, if any, and to the Holders requesting
                     registration of Registrable Securities and (2) a "comfort"
                     letter dated as of such date, from the independent
                     certified public accountants of the Company, in form and
                     substance as is customarily given by independent certified
                     public accountants to underwriters in an underwritten
                     public offering and reasonably satisfactory to a majority
                     in interest of the Holders requesting registration,
                     addressed to the underwriters, if any, and to the Holders
                     requesting registration of Registrable Securities.

              9.1.10 Promptly list all Registrable Securities covered by such
                     Registration Statement on any securities exchange or
                     automated inter-dealer quotation system on which any shares
                     of Common Stock are then listed or traded (including,
                     without limitation, the Nasdaq National Market and EASDAQ).

              9.1.11 If necessary, appoint a transfer agent with respect to such
                     Registrable Securities.

       9.2    The Holders agree that upon receipt of any notice from the Company
              of the happening of any event of the kind described in Section
              9.1.5, the Holders will forthwith discontinue their disposition of
              Registrable Securities pursuant to the Registration Statement
              relating to such Registrable Securities until the Holders' receipt
              of the copies of the supplemented or amended prospectus
              contemplated by Section 9.1.5 and, if so directed by the Company,
              will deliver to the Company all copies, other than permanent file
              copies, then in the Holders' possession of the prospectus relating
              to such Registrable Securities current at the time of receipt of
              such notice and that they will immediately notify the Company, at
              any time when a prospectus relating to the registration of such
              Registrable Securities is required to be delivered under the
              Securities Act, of the happening of any event as a result of which
              information previously furnished by the Holders to the Company for
              inclusion in such prospectus contains an untrue statement of a
              material fact or omits to state any material fact required to be
              stated therein or

                                      -25-
<PAGE>   27

              necessary to make the statements therein not misleading in the
              light of the circumstances under which they were made.

       9.3    As a condition of the fulfillment of its obligations under this
              Agreement, the Company may require the Holders, at their own
              reasonable expense, to furnish the Company with such information
              and undertakings regarding such Holders and the distribution of
              such securities as the Company may from time to time reasonably
              request in writing to the extent necessary in order to cause the
              Registration Statement to comply with the Securities Act, and the
              Holders, by their execution hereof, agree to provide such
              information and make such undertakings as are requested.

       9.4    In connection with the preparation and filing of each Registration
              Statement under the Securities Act, the Company will give the
              Holders, and their respective counsel and accountants, the
              reasonable opportunity to participate in the preparation of such
              Registration Statement, each prospectus included therein or filed
              with the Commission and each amendment thereof or supplement
              thereto, and will give each of them such reasonable access to its
              books and records and such reasonable opportunities to discuss the
              business of the Company with its officers and the independent
              public accountants who have certified its financial statements as
              shall be necessary to conduct a reasonable investigation within
              the meaning of the Securities Act.

       9.5    Promptly after a sale of Registrable Securities pursuant to the
              Registration Statement (assuming that no stop order is in effect
              with respect to the Registration Statement at the time of such
              sale), the Company shall cooperate with the Holders and provide
              the transfer agent for the Common Stock with such instructions and
              legal opinions as may be required in order to facilitate the
              issuance to the purchaser (or the Holder's broker) of new
              unlegended certificates for such Registrable Securities.

10     TRANSFER OF REGISTRATION RIGHTS

       The registration rights granted pursuant to this Agreement shall be
       transferable to a transferee of any Securities or Registrable Securities,
       provided that (i) the transferring Holder is transferring such Securities
       or Registrable Securities in compliance with the terms and provisions of
       this Agreement and the transferring Holder gives the Company prompt
       written notice of such transfer, identifying the name and address of the
       transferee and the securities involved and (ii) the transferee agrees in
       writing to be bound by the terms and provisions of this Agreement.

11     CONDITIONS TO CLOSING

       11.1   CONDITIONS TO THE COMPANY'S OBLIGATIONS TO CONSUMMATE THE CLOSING

              The obligations of the Company to effect the sale and issuance of
              the Securities shall be subject to the satisfaction of the
              conditions set forth below at or before the Closing Date (which
              conditions may be waived by the Company in writing):

              11.1.1 The Purchaser shall have delivered to the Company at the
                     Closing the items set forth in Section 4.2., and

                                      -26-
<PAGE>   28

              11.1.2 The representations and warranties of the Purchaser forth
                     in Section 6 of this Agreement shall be true and correct as
                     of the date hereof and as of the Closing Date (except to
                     the extent specified by the Purchaser to be true and
                     correct as of an earlier date).

              11.2   CONDITIONS TO THE PURCHASER'S OBLIGATIONS TO CONSUMMATE THE
                     CLOSING The obligations of the Purchaser to effect the
                     purchase of the Securities shall be subject to the
                     satisfaction of the conditions set forth below, at or
                     before the Closing Date (which conditions may be waived by
                     the Purchaser in writing).

              11.2.1 The representations and warranties of the Company set forth
                     in Section 5 of this Agreement shall be true and correct as
                     of the date hereof and as of the Closing Date (except to
                     the extent specified by the Company to be true and correct
                     as of an earlier date) and the Purchaser shall have
                     received a certificate to such effect signed by the Chief
                     Executive Officer of the Company dated as of the Closing
                     Date.

              11.2.2 The Company shall have performed, satisfied and complied in
                     all material respects with all covenants, agreements and
                     conditions required by this Agreement, and the Purchaser
                     shall have received a certificate to such effect signed by
                     the Chief Executive Officer of the Company dated as of the
                     Closing Date.

              11.2.3 The Company shall have procured all regulatory approvals
                     and consents required by Law to be procured by it for the
                     transactions contemplated by this Agreement.

              11.2.4 If required under Nasdaq rules, the Company shall have
                     obtained shareholder approval of the purchase of the
                     Securities by the Purchaser.

              11.2.5 The Company shall deliver to the Purchaser at the Closing
                     the items set forth in Section 4.1.

              11.2.6 The Company shall have delivered to the Purchaser a
                     Certificate dated as of a recent date prior to the Closing
                     Date issued by the Secretary of State of the State of
                     Delaware to the effect that the Company is legally and
                     validly existing and in good standing.

              11.2.7 The Company shall have delivered to the Purchaser a
                     certificate executed by the Secretary of the Company dated
                     as of the Closing Date, certifying as to (a) the directors
                     resolutions authorizing the transactions contemplated by
                     this Agreement, (b) the Charter Documents, (c) the
                     incumbency and specimen signatures of the Chief Executive
                     Officer, President and Secretary of the Company, and (d)
                     such other matters as the Purchaser may reasonably request.

              11.2.8 As of the Closing Date, there shall not have occurred any
                     event or condition which has had a Material Adverse Effect,
                     and the Purchaser shall have received a certificate to such
                     effect signed by the Chief Executive Officer of the Company
                     dated as of the date of the Closing Date.

                                      -27-
<PAGE>   29

              11.2.9 The Company shall have filed or caused to be filed the
                     Certificate of Designations relating to the Series C
                     Preferred Stock with the Secretary of State for the State
                     of Delaware on or prior to the Closing Date.

12     RESTRICTIONS ON TRANSFER

       12.1   RESTRICTIVE LEGENDS

              Except as otherwise permitted by this Section 12, each share
              certificate constituting the Securities issued and sold pursuant
              to this Agreement and any share certificate issued upon exchange
              of the Series C Preferred Stock or exercise of the Common Stock
              Purchase Warrant or the Additional Common Stock Purchase Warrant
              for Common Stock shall be stamped or otherwise imprinted with a
              legend in substantially the following form:

              THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
              SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
              STATE OR OTHER SECURITIES LAWS, AND MAY NOT BE OFFERED, REOFFERED,
              SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
              DISPOSED OF OR DISTRIBUTED, DIRECTLY OR INDIRECTLY, WITHIN THE
              UNITED STATES OR TO OR FOR THE ACCOUNT OF U.S. PERSONS UNLESS THE
              TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
              REQUIREMENTS OF THE SECURITIES ACT OR PURSUANT TO AN EFFECTIVE
              REGISTRATION STATEMENT UNDER THE SECURITIES ACT. THE HOLDER OF
              THIS SECURITY BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT
              OFFER, REOFFER, SELL, ASSIGN, TRANSFER, PLEDGE, ENCUMBER OR
              OTHERWISE DISPOSE OF OR DISTRIBUTE DIRECTLY OR INDIRECTLY THESE
              SECURITIES IN THE UNITED STATES, ITS TERRITORIES, POSSESSIONS, OR
              AREAS SUBJECT TO ITS JURISDICTION, OR TO OR FOR THE ACCOUNT OR
              BENEFIT OF A U.S. PERSON, AT ANY TIME PRIOR TO TWO YEARS AFTER THE
              ORIGINAL ISSUANCE OF THESE SECURITIES, EXCEPT (A) TO THE COMPANY
              OR A SUBSIDIARY OF THE COMPANY, (B) IN CONJUNCTION WITH AN
              EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
              SECURITIES ACT, (C) IN COMPLIANCE WITH AN EXEMPTION FROM
              REGISTRATION UNDER SUCH ACT, OR (D) IN ACCORDANCE WITH THE
              PROVISIONS OF REGULATION S OF SUCH ACT, INCLUDING RULE 903, RULE
              904 AND RULE 905 THEREUNDER, AND AGREES THAT ANY HEDGING
              TRANSACTIONS INVOLVING THE SECURITIES WILL BE CONDUCTED IN
              COMPLIANCE WITH REGULATION S UNDER SUCH ACT AND AGREES THAT IT
              WILL GIVEN TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A
              NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT
              THE COMPANY, THE TRANSFER AGENT, AND THE REGISTRAR SHALL HAVE THE
              RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER, IN EACH OF THE
              FOREGOING CASES, TO REQUIRE DELIVERY OF A CERTIFICATION OF
              TRANSFER IN FORM SATISFACTORY TO THEM. AS USED HEREIN, THE TERMS
              "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM
              BY REGULATION S UNDER THE SECURITIES ACT.

                                      -28-
<PAGE>   30

       12.2   NOTICE OF THE PROPOSED TRANSFER; OPINION OF COUNSEL

              The Purchaser of each share certificate bearing the restrictive
              legend set forth in Section 12.1 above ("RESTRICTED SECURITY")
              agrees that prior to any transfer or attempted transfer of such
              Restricted Security to give to the Company (a) written notice
              describing the manner or circumstances of such transfer or
              proposed transfer, and (b) an opinion of counsel, which is
              knowledgeable in securities law matters, in form and substance
              reasonably satisfactory to the Company, to the effect that the
              proposed transfer of such Restricted Security may be effected
              without registration of such Restricted Security under the
              Securities Act. If the holder of the Restricted Security delivers
              to the Company an opinion of counsel in form and substance
              reasonably satisfactory to the Company that subsequent transfers
              of such Restricted Security will not require registration under
              the Securities Act, the Company will after such contemplated
              transfer deliver new Securities for such Restricted Security which
              do not bear the Securities Act legend set forth in Section 12.1
              above. Except to the extent required by the Company's transfer
              agent, the requirements for an opinion of counsel imposed by this
              Section 12.2 upon the transferability of any particular Restricted
              Security shall not apply (i) when such Restricted Security is sold
              pursuant to an effective Registration Statement under the
              Securities Act, (ii) when such Restricted Security is transferred
              pursuant to Rule 144 or Rule 144A promulgated under the Securities
              Act or (iii) when such Restricted Security is transferred pursuant
              to Regulation S promulgated under the Securities Act. The
              restrictions imposed by this Section 12 shall cease and terminate
              upon the date which is two (2) years after the original issue date
              of the Restricted Security. As used in this Section 12.2, the term
              "transfer" encompasses any sale, transfer or other disposition of
              any Securities referred to herein.

13     INDEMNIFICATION

       13.1   INDEMNIFICATION, EXPENSES, ETC.

              13.1.1 Except as otherwise provided in Section 13.2, the Company
                     agrees to indemnify and hold harmless the Purchaser, its
                     Affiliates and each of its and their respective directors,
                     officers, partners, principals, shareholders and attorneys
                     (individually, an "INDEMNIFIED PARTY" and, collectively,
                     the "INDEMNIFIED PARTIES") from and against any and all
                     losses, claims, damages, liabilities, costs (including
                     reasonable attorneys' fees and including any costs of
                     investigation) and expenses (collectively, "LOSSES") to
                     which any Indemnified Party may become subject, insofar as
                     such Losses arise out of or result from (i) any breach of
                     any representation or warranty made by the Company, or the
                     failure of the Company to fulfill any agreement or covenant
                     contained in this Agreement or any other Transaction
                     Document, or (ii) any proceeding against the Company or any
                     Indemnified Party brought by any third party arising out of
                     or in connection with this Agreement or the other
                     Transaction Documents.

              13.1.2 If any Indemnified Party is entitled to indemnification
                     hereunder, such Indemnified Party shall give notice to the
                     Company of any claim or of the commencement of any
                     proceeding against the Company or any Indemnified Party
                     brought by any third party with respect to which such
                     Indemnified Party

                                      -29-
<PAGE>   31

                     seeks indemnification pursuant hereto; provided, however,
                     that the delay to so notify the Company shall not relieve
                     the Company from any obligation or liability except to the
                     extent the Company is materially prejudiced by such delay.
                     The Company shall have the right, exercisable by giving
                     written notice to an Indemnified Party within thirty (30)
                     days after the receipt of written notice from such
                     Indemnified Party of such claim or proceeding, to assume,
                     at the expense of the Company, the defense of any such
                     claim or proceeding with counsel reasonably satisfactory to
                     such Indemnified Party. After notice from the Company to
                     the Indemnified Party of its election to assume the defense
                     of such claim or proceeding, the Company shall not be
                     liable to the Indemnified Party for any legal or other
                     expenses subsequently incurred by the Indemnified Party in
                     connection with the defense thereof other than reasonable
                     costs of investigation; provided that the Indemnified Party
                     shall have the right to employ separate counsel to
                     represent the Indemnified Party which may be subject to
                     liability arising out of any claim in respect of which
                     indemnity may be sought by the Indemnified Party against
                     the Company, but the fees and expenses of such counsel
                     shall be borne by such Indemnified Party unless (i) the
                     Company and the Indemnified Party shall have mutually
                     agreed to the retention of such counsel or (ii) in the
                     reasonable opinion of counsel to such Indemnified Party,
                     representation of both parties by the same counsel would be
                     inappropriate due to actual or potential conflicts of
                     interest between them, it being understood, however, that
                     the Company shall not, in connection with any one such
                     claim or proceeding or separate but substantially similar
                     or related claims or proceedings in the same jurisdiction
                     arising out of the same general allegations or
                     circumstances, be liable for the fees and expenses of more
                     than one separate firm of attorneys (together with
                     appropriate local counsel) at any time for all Indemnified
                     Parties. The Company shall not consent to entry of any
                     judgement or enter into any settlement that does not
                     include as an unconditional term thereof the giving by
                     claimant or plaintiff to such Indemnified Party or Parties
                     of a release from all liability in respect of such claim,
                     litigation or proceeding.

              13.1.3 If the indemnification provided for in Section 13.1.1 is
                     unavailable or insufficient to hold harmless an Indemnified
                     Party in respect of any loss, claim, damage, liability,
                     cost or expense, then the indemnifying party, in lieu of
                     indemnifying such Indemnified Party thereunder, shall
                     contribute to the amount paid or payable by such
                     Indemnified Party as a result of such loss, claim, damage,
                     liability, cost or expense (i) in such proportion as is
                     appropriate to reflect the relative benefits received by
                     the Company on the one hand and the Purchaser on the other
                     hand from the sale and purchase of the Securities or (ii)
                     if the allocation provided by clause (i) is not permitted
                     by applicable law, in such proportion as is appropriate to
                     reflect not only the relative benefits referred to in
                     clause (i) above, but also the relative fault of the
                     Company on the one hand and the Purchaser on the other hand
                     in connection with the events or facts which gave rise to
                     such loss, claim, damage, liability, cost or expense, as
                     well as any other equitable considerations. The relative
                     fault shall be determined by

                                      -30-
<PAGE>   32

                     reference to, among other things, whether the events or
                     facts that gave rise to such loss, claim, damage,
                     liability, cost or expense relate to a breach of
                     representations and warranties or other covenants and
                     obligations under this Agreement and the other Transaction
                     Documents by the Company or the Purchaser and the intent of
                     the parties and their relative knowledge, access to
                     information and opportunity to correct or prevent such
                     events. The amount paid or payable by an Indemnified Party
                     as a result of such loss, claim, damage, liability, cost or
                     expense shall be deemed to include any reasonable and
                     documented legal or other expenses incurred by such
                     Indemnified Party in connection with investigation or
                     defending such claim.

       13.2   ADDITIONAL INDEMNIFICATION OBLIGATIONS

              13.2.1 The Company will indemnify each Holder, each of its
                     officers, directors and partners, legal counsel, and
                     accountants and each person controlling such Holder within
                     the meaning of Section 15 of the Securities Act, with
                     respect to which registration, qualification, or compliance
                     has been effected pursuant to this Agreement, and each
                     underwriter, if any, and each person who controls within
                     the meaning of Section 15 of the Securities Act any
                     underwriter, against all expenses, claims, losses, damages,
                     and liabilities (or actions, proceedings, or settlements in
                     respect thereof) arising out of or based on any untrue
                     statement (or alleged untrue statement) of a material fact
                     contained in any prospectus, offering circular, or other
                     document (including any related Registration Statement,
                     notification, or the like) incident to any such
                     registration, qualification, or compliance, or based on any
                     omission (or alleged omission) to state therein a material
                     fact required to be stated therein or necessary to make the
                     statements therein not misleading, or any violation by the
                     Company of the Securities Act or any rule or regulation
                     thereunder applicable to the Company and relating to action
                     or inaction required of the Company in connection with any
                     such registration, qualification, or compliance, and will
                     reimburse each such Holder, each of its officers,
                     directors, partners, legal counsel, and accountants and
                     each person controlling such Holder, each such underwriter,
                     and each person who controls any such underwriter, for any
                     legal and any other expenses reasonably incurred in
                     connection with investigating and defending or settling any
                     such claim, loss, damage, liability, or action; provided,
                     that the Company will not be liable in any such case to the
                     extent that any such claim, loss, damage, liability, or
                     expense arises out of or is based on any untrue statement
                     or omission based upon written information furnished to the
                     Company by such Holder or underwriter and stated to be
                     specifically for use therein. It is agreed that the
                     indemnity agreement contained in this Section 13.2.1 shall
                     not apply to amounts paid in settlement of any such loss,
                     claim, damage, liability, or action if such settlement is
                     effected without the consent of the Company (which consent
                     shall not be unreasonably withheld).

              13.2.2 Each Holder will, if Registrable Securities held by such
                     Holder are included in the securities as to which such
                     registration, qualification, or compliance is being
                     effected, severally and not jointly, indemnify the Company,
                     each of its directors, officers, partners, legal counsel,
                     and accountants and each

                                      -31-
<PAGE>   33

                     underwriter, if any, of the Company's securities covered by
                     such a Registration Statement, each person who controls the
                     Company or such underwriter within the meaning of Section
                     15 of the Securities Act, each other such Holder, and each
                     of its officers, directors, and partners, and each person
                     controlling such Holder, against all claims, losses,
                     damages and liabilities (or actions in respect thereof)
                     arising out of or based on any untrue statement (or alleged
                     untrue statement) of a material fact contained in any such
                     Registration Statement, prospectus, offering circular, or
                     other document, or any omission (or alleged omission) to
                     state therein a material fact required to be stated therein
                     or necessary to make the statements therein not misleading,
                     and will reimburse the Company and such Holders, directors,
                     officers, partners, legal counsel, and accountants,
                     persons, underwriters, or control persons for any legal or
                     any other expenses reasonably incurred in connection with
                     investigating or defending any such claim, loss, damage,
                     liability, or action, in each case to the extent, but only
                     to the extent, that such untrue statement (or alleged
                     untrue statement) or omission (or alleged omission) is made
                     in such Registration Statement, prospectus, offering
                     circular, or other document in reliance upon and in
                     conformity with written information furnished to the
                     Company by such Holder and stated to be specifically for
                     use therein; provided, however, that the obligations of
                     such Holder hereunder shall not apply to amounts paid in
                     settlement of any such claims, losses, damages, or
                     liabilities (or actions in respect thereof) if such
                     settlement is effected without the consent of such Holder
                     (which consent shall not be unreasonably withheld).

              13.2.3 The Indemnified Party shall give notice to the Indemnifying
                     Party promptly after such Indemnified Party has actual
                     knowledge of any claim as to which indemnity may be sought,
                     and shall permit the Indemnifying Party to assume the
                     defense of such claim or any litigation resulting
                     therefrom; provided, that counsel for the Indemnifying
                     Party, who shall conduct the defense of such claim or any
                     litigation resulting therefrom, shall be approved by the
                     Indemnified Party (whose approval shall not be unreasonably
                     withheld), and the Indemnified Party may participate in
                     such defense at such party's expense; and provided, further
                     that the failure of any Indemnified Party to give notice as
                     provided herein shall not relieve the Indemnifying Party of
                     its obligations under this Section 13.2, to the extent such
                     failure is not prejudicial. No Indemnifying Party, in the
                     defense of any such claim or litigation, shall, except with
                     the consent of each Indemnified Party, consent to entry of
                     any judgment or enter into any settlement that does not
                     include as an unconditional term thereof the giving by
                     claimant or plaintiff to such Indemnified Party or a
                     release from all liability in respect to such claim or
                     litigation. Each Indemnified Party shall furnish such
                     information regarding itself or the claim in question as an
                     Indemnifying Party may reasonably request in writing and as
                     shall be reasonably required in connection with defense of
                     such claim and litigation resulting therefrom.

              13.2.4 If the indemnification provided for in this Section 13.2 is
                     held by a court of competent jurisdiction to be unavailable
                     to an Indemnified Party with respect to

                                      -32-
<PAGE>   34

                     any loss, liability, claim, damage, or expense referred to
                     therein, then the Indemnifying Party, in lieu of
                     indemnifying such Indemnified Party hereunder, shall
                     contribute to the amount paid or payable by such
                     Indemnified Party as a result of such loss, liability,
                     claim, damage, or expense in such proportion as is
                     appropriate to reflect the relative fault of the
                     Indemnifying Party on the one hand and of the Indemnified
                     Party on the other in connection with the statements or
                     omissions that resulted in such loss, liability, claim,
                     damage, or expense as well as any other relevant equitable
                     considerations. The relative fault of the Indemnifying
                     Party and of the Indemnified Party shall be determined by
                     reference to, among other things, whether the untrue or
                     alleged untrue statement or a material fact or the omission
                     to state a material fact relates to information supplied by
                     the Indemnifying Party or by the Indemnified Party and the
                     parties' relative intent, knowledge, access to information,
                     and opportunity to correct or prevent such statement or
                     omission.

       13.3   CONTROLLING PROVISIONS
              Notwithstanding the foregoing, to the extent that the provisions
              on indemnification and contribution contained in the underwriting
              agreement entered into in connection with the underwritten public
              offering are in conflict with the foregoing provisions, the
              provisions in the underwriting agreement shall control.

       13.4   "MARKET STAND-OFF" AGREEMENT
              Each Holder hereby agrees that it shall not, to the extent
              requested by the Company and an underwriter of securities of the
              Company, sell or otherwise transfer or dispose of any Registrable
              Securities or other shares of stock of the Company then owned by
              such Holder (other than to donees or partners of the Holder who
              agree to be similarly bound) for one hundred eighty (180) days
              following the effective date of a Registration Statement of the
              Company filed under the Securities Act or such lesser period as is
              agreed by the Company and any such underwriter (the so-called
              "LOCK-UP PERIOD"); provided, however, that all officers and
              directors of the Company shall be bound by and have entered into
              similar agreements; and provided, further, that this Section 13.4
              shall only apply to Holders of two (2) percent or more of the
              Company's outstanding voting Capital Stock, and the lock-up period
              shall be ninety (90) days or such lesser period as is agreed by
              the Company and any such underwriter. In order to enforce the
              foregoing covenant, the Company shall have the right to place
              restrictive legends on the certificates representing the shares
              subject to this Section 13.4 and to impose stop transfer
              instructions with respect to the Registrable Securities and such
              other shares of each Holder (and the shares or securities of every
              other person subject to the foregoing restriction) until the end
              of such period.

       13.5   RULE 144 REPORTING
              With a view to making available to the Holders the benefits of
              certain rules and regulations of the SEC which may permit the sale
              of the Securities to the public without registration, the Company
              agrees to use its best efforts to:

                                      -33-
<PAGE>   35

              13.5.1 Make and keep public information available, as those terms
                     are understood and defined in Rule 144 or any similar or
                     analogous rule promulgated under the Securities Act, at all
                     times;

              13.5.2 File with the SEC in a timely manner all reports and other
                     documents required of the Company under the Securities Act
                     and the Exchange Act; and

              13.5.3 So long as a Holder owns any Securities, furnish to such
                     Holder forthwith upon request (i) a written statement by
                     the Company as to its compliance with the reporting
                     requirements of Rule 144 and of the Securities Act and the
                     Exchange Act; (ii) a copy of the most recent annual or
                     quarterly report of the Company; and (iii) such other
                     reports and documents as a Holder may reasonably request in
                     availing itself of any rule or regulation of the Commission
                     allowing it to sell any such securities without
                     registration.

       13.6   TREATMENT OF INDEMNIFICATION PAYMENTS.
              Any indemnification payment made pursuant to this Section 13 will
              be treated by the Company and the Purchaser as an adjustment to
              the Purchase Price for Tax purposes on all Returns and other
              correspondence with any Governmental Authority.

14     MISCELLANEOUS

       14.1   SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
              INDEMNIFICATION
              All representations and warranties contained in this Agreement or
              in the other Transaction Documents shall survive for a period of
              one year from the date hereof, except for representations and
              warranties relating to compliance with Laws, Taxes and Returns
              contained in Section 5.16 of this Agreement, and the covenants
              contained in Sections 7.7, 7.8, 7.9, 7.13 and 7.14 of this
              Agreement, all of which shall survive until the expiration of any
              applicable statute of limitations, and the indemnity agreements
              contained in Section 13.1 and Section 13.2 of this Agreement;
              provided, however, that such survival of representations and
              warranties relating to compliance with Laws, Taxes and Returns and
              of the covenants contained in Sections 7.7, 7.8 and 7.9 of this
              Agreement, shall only survive beyond one year to the extent there
              is any third party claim made directly against the Purchaser.

       14.2   AMENDMENT AND WAIVER
              This Agreement may be amended, modified or supplemented, and
              waivers or consents to departures from the provisions hereof may
              be given, provided that the same are in writing and signed by the
              Purchaser and the Company.

       14.3   NOTICES, ETC.

              Except as otherwise provided in this Agreement, notices and other
              communications under this Agreement shall be in writing and shall
              be delivered personally, sent by telecopier (with written
              confirmation of receipt), mailed by registered or certified mail,
              return receipt requested, or by a nationally recognized overnight
              courier, postage prepaid, addressed:

                                      -34-
<PAGE>   36

              If to Purchaser, to:

              Ubizen N.V.
              Grensstraat 1B
              B-3000
              Leuven, Belgium
              Facsimile No.: +32 16 31 0012
              Attn: Chief Financial Officer

              with a copy to:

              Linklaters
              William B. Hobbs
              1345 Avenue of the Americas, 19th Floor
              New York, New York 10105
              Facsimile No.: (212) 424-9100

              If to the Company, to:

              VASCO Data Security International, Inc.
              1901 South Meyers Road, Suite 210
              Oakbrook Terrace, Illinois  60181
              Facsimile No: (630) 932-8852

              Attn:Chief Executive Officer
                   Chief Financial Officer

              with a copy to:

              Robert B. Murphy, Esq.
              Piper Marbury Rudnick & Wolfe LLP
              1200 19th Street NW
              Washington, DC 20036
              Facsimile No.:  (202) 223-2085

              Any such notices which are mailed shall be deemed delivered five
              (5) Business Days after mailing.

       14.4   EXPENSES
              Except as otherwise provided in this Agreement, whether or not the
              transactions contemplated hereby are consummated, each party will
              pay its own costs and expenses incurred in connection with the
              negotiation, execution and closing of this Agreement and the other
              Transaction Documents and the consummation of the transactions
              contemplated hereby and thereby.

       14.5   ENTIRE AGREEMENT
              This Agreement and the other Transaction Documents embody the
              entire agreement and understanding between the Purchaser and the
              Company and supersede all prior agreements and understandings.

                                      -35-
<PAGE>   37

       14.6   SUCCESSORS AND ASSIGNS
              Whenever in this Agreement any of the parties hereto are referred
              to, such reference shall be deemed to include the successors and
              assigns of such party; and all covenants, promises and agreements
              by or on behalf of the respective parties which are contained in
              this Agreement shall bind and inure to the benefit of the
              successors and assigns of all other parties. The terms and
              provisions of this Agreement and the other Transaction Documents
              shall inure to the benefit of and shall be binding upon any
              assignee or transferee of any Purchaser, and in the event of such
              transfer or assignment, the rights and privileges herein conferred
              upon any such Purchaser shall automatically extend to and be
              vested in, and become an obligation of, such transferee or
              assignee, all subject to the terms and conditions hereof.

       14.7   TERMINATION

              14.7.1 This Agreement may be terminated and the transactions
                     contemplated hereby may be abandoned:

                     (i)    at any time prior to the Closing, by the mutual
                            written consent of the Company and the Purchaser;

                     (ii)   at any time prior to the Closing, by the Company or
                            Purchaser upon notice given to the other if the
                            Closing shall not have taken place for any reason by
                            August 3, 2000; provided that the failure of the
                            Closing to occur on or before such date (or the
                            inability to satisfy such condition) is not the
                            result of the breach of the covenants, agreements,
                            representations or warranties hereunder of the party
                            seeking such termination; or

                     (iii)  at any time prior to the Closing, by the Company or
                            the Purchaser upon written notice to the other party
                            if any court or Governmental Authority of competent
                            jurisdiction shall have issued a final permanent
                            order, enjoining or otherwise prohibiting the
                            transactions contemplated by this Agreement and the
                            time for appeal or reconsideration of such order
                            shall have expired.

              14.7.2 In the event of the termination of this Agreement as
                     provided in Section 14.7.1, this Agreement shall forthwith
                     become wholly void and of no further force and effect and
                     there shall be no liability on the part of the Company, the
                     Purchaser or their respective officers and directors
                     (except as a set forth in Sections 13.1 and 14.4; provided,
                     however, that nothing contained in this sentence is
                     intended to eliminate the liability of a breaching party to
                     a non-breaching party who terminates this Agreement
                     pursuant to Section 14.7.1(ii) of this Agreement). The
                     obligations of the parties to this Agreement under Sections
                     13.1, 13.2 and 14.4 shall survive any such termination.

       14.8   DESCRIPTIVE HEADINGS
              The headings in this Agreement are for purposes of reference only
              and shall not limit or otherwise affect the meaning hereof.

                                      -36-
<PAGE>   38

       14.9   GOVERNING LAW
              This Agreement shall be governed by and construed in accordance
              with the laws of the State of New York, without regard to any
              choice-of-law principles thereof.

       14.10  CONSENT TO JURISDICTION
              Each of the Purchaser and the Company hereby irrevocably submits
              to the non-exclusive jurisdiction of any court of the State of New
              York or United States federal court sitting in the Borough of
              Manhattan, New York, New York and any appellate court therefrom in
              any action or proceeding arising out of or relating to this
              Agreement, and the Company and the Purchaser hereby irrevocably
              agree that all claims in respect of such action or proceeding may
              be heard and determined in such court. The Company and the
              Purchaser hereby irrevocably waive, to the fullest extent
              permitted by applicable law, the defense of an inconvenient forum
              to the maintenance of such action or proceeding.

       14.11  COUNTERPARTS
              This Agreement may be executed simultaneously in two or more
              counterparts, each of which shall be deemed an original but which
              together shall constitute one and the same instrument.

                                      -37-
<PAGE>   39

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

                               VASCO DATA SECURITY INTERNATIONAL, INC.,
                               a Delaware corporation

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

                               UBIZEN N.V.,
                               a Belgian stock corporation

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

                                      -38-
<PAGE>   40

                                  SCHEDULES TO
                          SECURITIES PURCHASE AGREEMENT

                                       i
<PAGE>   41

                                  SCHEDULE 5.1
                   ORGANIZATION AND QUALIFICATION, AUTHORITY.

Vasco Data Security, Inc.
Vasco Data Security Europe NV/SA
Vasco Data Security NV/SA
Lintel Security NV/SA
Vasco Data Security France SA

                                       ii
<PAGE>   42

                                  SCHEDULE 5.2
                            CORPORATE AUTHORIZATION.

None.

                                      iii
<PAGE>   43

                                  SCHEDULE 5.3
                        NO CONFLICT; REQUISITE CONSENTS.

None.

                                       iv
<PAGE>   44

                                  SCHEDULE 5.4
                                 CAPITALIZATION.

       The Company is a party to an arrangement whereby the Company could
potentially issue up to 325,000 shares of its Common Stock in connection with
the potential merger and acquisition of a California corporation.

       The Company currently has outstanding warrants to purchase up to 680,943
shares of its Common Stock.

       The Company currently has outstanding options to purchase up to 2,233,100
shares of its Common Stock.

       The Company is a party to a convertible loan agreement in the principal
amount of $3,400,000 whereby the lender has the option to convert the loan into
shares of the Company's Common Stock.

                                       v
<PAGE>   45

                                  SCHEDULE 5.5
                              LITIGATION; DEFAULTS.

 None.

                                       vi
<PAGE>   46

                                  SCHEDULE 5.6
                           NO MATERIAL ADVERSE EFFECT.

None.

                                      vii
<PAGE>   47

                                  SCHEDULE 5.7
                               EMPLOYEE PROGRAMS.

The following have entered employment or consulting agreements with the Company:

Xiadong Zhong
Lawrence Yuter
Tim Wilson
Henry B. Wilson, Jr.
Weidong Wang
Steven M. Walker
Yoel Spotts
Howard J. Shear
Taunia Roberts
Susan Pepich
Rick Patterson
Christopher Allen Nicewanner
Andrew Marshall
Jim Wenxiong Liu
Nathan Levin
Mike Lange
Aryeh Katz
Scott Grykowski
Sherry Gaskill
Robert Garrant
Elchonon Edelson
Sharon Dougherty
Stuart Cohen
David Bianco
Gerold A. Baumgartner
Jonathan Chinitz
Micah Males
Gregory T. Apple
John Haggard
T. Kendall Hunt
Hyon C. Im
Jonathan C. Chinitz
Steven P. Sonnenberg

The Company has the following arrangements providing insurance coverage or
workers' compensation coverage:

Group Term Life Insurance and AD&D
Major Medical and Surgical Coverage

                                      viii

<PAGE>   48

Medical Health Care Coverage
Dental Health Care Coverage
Dependents Health Care Coverage
Dependents Dental Care Coverage
Dependents Life Insurance and AD&D
Prescription Drug Coverage

The Company has the following additional programs in place:

401(k) Plan
Stock Option Plan

                                       ix
<PAGE>   49

                                  SCHEDULE 5.10
                FINANCIAL STATEMENTS: NO UNDISCLOSED LIABILITIES.

None.

                                       x
<PAGE>   50

                                  SCHEDULE 5.11
                         ENVIRONMENTAL REGULATION, ETC.

None.

                                       xi
<PAGE>   51

                                  SCHEDULE 5.12
                             PROPERTIES AND ASSETS.

The Company or its Subsidiaries lease the following properties:

       Koningin astridlaan 164
       B-1780 Wemmel, Belgium

       481, Bd Alfred Daney
       33300 Bordeaux, France

       1901 S. Meyers Road
       Suite 210
       Oakbrook Terrace, Illinois 60181

                                      xii
<PAGE>   52

                                  SCHEDULE 5.13
                              EMPLOYMENT PRACTICES.

                                      None.

                                      xiii

<PAGE>   53

                                  SCHEDULE 5.15
                               MATERIAL CONTRACTS.

None.

                                      xiv
<PAGE>   54

                                  SCHEDULE 5.16
                                     TAXES.

1. The Company and Vasco Data Security, Inc. filed applications for extensions
of time to file their Federal and state income tax returns for the year ended
December 31, 1999.

2. The Company's debt includes a term loan in the principal amount of $3.4
million which matures on September 30, 2002 and bears interest at a rate of
3.25% annually. The note is convertible into common stock of the Company. This
debt may constitute "corporate acquisition indebtedness" within the meaning of
Section 279 of the Code.

                                       xv
<PAGE>   55

                                  SCHEDULE 5.17
                         LICENSES; COMPLIANCE WITH LAWS.

None.

                                    xvi

<PAGE>   56

                                  SCHEDULE 5.18
                          TRANSACTIONS WITH AFFILIATES.

See Schedule 5.7

                                      xvii
<PAGE>   57

                                  SCHEDULE 5.20
                                   INSURANCE.

None.

                                     xviii
<PAGE>   58

                                  SCHEDULE 5.21
                      SUBSTANTIAL CUSTOMERS AND SUPPLIERS.

None.

                                      xix
<PAGE>   59

                                  SCHEDULE 5.22
                              REGISTRATION RIGHTS.

In connection with the sale of 3,285,714 shares of Common Stock in February 1999
by the Corporation in an offshore transaction, certain registration rights were
granted to the six purchasers. Those registration rights were waived as part of
the Corporation's listing on EASDAQ and abandoned contemporaneous repeat public
offering. The distribution compliance period of one year has terminated with
respect to such shares and they may be resold in the United States pursuant to
Rule 144.

                                     xx

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