Document:

EXHIBIT 10.64

                                 PROMISSORY NOTE

$20,000                                                          August 12, 1999

                                                             Fremont, California

     FOR VALUE RECEIVED, George Walley ("Employee"), an employee of SSE Telecom,
Inc.  ("Company"),  hereby  unconditionally  promises  to pay to  the  order  of
Company,  in lawful  money of the United  States of America  and in  immediately
available  funds,  the principal sum of Twenty Thousand  Dollars  ($20,000) (the
"Loan") due and payable on the date and in the manner set forth below.

     1. Intent. It is the intent of the parties that the purpose of this Note is
not for consumer, family or household purposes.

     2. Purchase of Shares.  Employee agrees, within 25 days of the date hereof,
to use the  Loan  proceeds  to  purchase  shares  of the  Company's  stock  (the
"Shares") and to present to the Company evidence reasonably  satisfactory to the
Company that the foregoing purchase has been made.  Employee further agrees that
Employee  will not sell or  otherwise  transfer  the Shares at any time from the
date Employee purchases the Shares until August 31, 2001.

     3. Principal Repayment.  The outstanding principal amount of the Loan shall
be due and payable on the earlier of the following (the "Maturity Date"):

(a)  August 31, 2003;

(b)  Or, at the sole option of the Company, after August 31, 2001 on the date on
     which the closing  price of a Share as reported by NASDEQ has been equal to
     or greater than $5 per Share for a period of thirty consecutive days.

     4.  Interest  Rate Upon  Acceleration.  Any  principal  payment on the Loan
hereunder not paid when due,  whether at stated  maturity,  by  acceleration  or
otherwise, shall bear interest at eight percent (8%) per annum.

     5. Place of Payment;  Prepayment.  All amounts  payable  hereunder shall be
payable at the  office of  Company  unless  another  place of  payment  shall be
specified in writing by Company.  This is a full  recourse  loan.  Prepayment is
permitted.

     6. Application of Payments.  Payment on this Note shall be applied first to
accrued  interest,  if any, and thereafter to the outstanding  principal balance
hereof.

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     7.  Default.  Each of the  following  events shall be an "Event of Default"
hereunder:

(a)  Employee  fails to pay  timely any of the  principal  amount due under this
     Note on the date the same  becomes due and payable or any accrued  interest
     or other  amounts due under this Note, if any, on the date the same becomes
     due and payable, or fails to perform any other obligations hereunder;

(b)  Employee  files a  petition  or action  for  relief  under any  bankruptcy,
     insolvency  or  moratorium  law or any  other  law for the  relief  of,  or
     relating to, debtors,  now or hereafter in effect,  or makes any assignment
     for the benefit of creditors or takes any action in  furtherance  of any of
     the foregoing;

(c)  An involuntary  petition is filed against Employee (unless such petition is
     dismissed  or  discharged  within  sixty  (60) days)  under any  bankruptcy
     statute now or hereafter  in effect,  or a  custodian,  receiver,  trustee,
     assignee  for the  benefit of  creditors  (or other  similar  official)  is
     appointed  to take  possession,  custody  or  control  of any  property  of
     Employee; or

(d)  Employee's  employment by or association with the Company is terminated for
     any reason or no reason, including, without limitation, death of Employee.

Upon the  occurrence  of an Event of Default  hereunder,  all unpaid  principal,
accrued interest and other amounts owing hereunder, if any, shall, at the option
of  Company,  and,  in the case of an Event of  Default  pursuant  to (b) or (c)
above,  automatically,  be immediately  due,  payable and collectible by Company
pursuant to applicable  law. .  Notwithstanding  the  foregoing,  if an Event of
Default has occurred under (d) above due to, in the Company's  sole  discretion,
no malfeasance  or  misfeasance on the part of Employee,  this Note shall be due
and payable 90 days after Employee's  employment or association with the Company
has been  terminated.  The Company  shall have all rights and may  exercise  any
remedies  available  to it under law,  successively  or  concurrently.  Employee
expressly  acknowledges  and agrees that Company  shall have the right to offset
any obligations of Employee hereunder against salaries, bonuses or other amounts
that may be payable to Employee by Company.  Upon the  occurrence of an Event of
Default the stated requirements in Item 2 above are expressly waived.

     8. Waiver.  Employee waives  presentment and demand for payment,  notice of
dishonor, protest and notice of protest of this Note, and shall pay all costs of
collection when incurred,  including, without limitation,  reasonable attorneys'
fees, costs and other expenses.

     The right to plead any and all statutes of  limitations as a defense to any
demands hereunder is hereby waived to the full extent permitted by law.

     9.  Governing  Law.  This Note  shall be  governed  by, and  construed  and
enforced in  accordance  with,  the laws of the State of  California,  excluding
conflict  of laws  principles  that would cause the  application  of laws of any
other jurisdiction.

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<PAGE>
     10. Successors and Assigns.  The provisions of this Note shall inure to the
benefit of and be binding on any  successor  to Employee and shall extend to any
holder hereof.  Employee shall not, without the prior written consent of holder,
assign any of its rights or obligations hereunder.

     Dated: August 12, 1999

                                        EMPLOYEE

                                        By: George Walley

                                        Printed Name: George Walley

                                        Title: EVP Product Development

                                        3EXECUTION COPY

                          SECURITIES PURCHASE AGREEMENT

     Securities  Purchase Agreement (the  "Agreement"),  dated as of January 27,
2000, by and among Instant Video Technologies, Inc., a Delaware corporation (the
"Company"),  and each of the purchasers set forth on the signature  pages hereto
(individually, a "Purchaser" and, collectively, the "Purchasers").

     WHEREAS, the Company proposes to issue and sell to the Purchasers for cash,
or in exchange for  cancellation or conversion of outstanding  indebtedness,  an
aggregate of 5,940,125 shares (individually,  a "Share" and,  collectively,  the
"Shares") of common  stock,  par value  $0.00001 per share,  of the Company (the
"Common  Stock") and  warrants to  purchase  shares of Common  Stock (as further
described below); and

     WHEREAS,  the Company,  among other things,  has agreed to provide  certain
registration   rights  under  the  Securities  Act  of  1933,  as  amended  (the
"Securities  Act") with  respect to the Shares and the  warrants  that are being
issued to the Purchasers pursuant to this Agreement.

     NOW  THEREFORE,  in  consideration  of the above  recitals  and the  mutual
covenants set forth herein, the parties hereto agree as follows:

     1. Sale of Stock and Delivery of Warrants; Closing.

          (a) Purchase and Sale. Subject to the terms and conditions hereof, the
Company  shall  issue and sell to each of the  Purchasers,  and each  Purchaser,
severally,  shall  purchase  from the  Company,  the  number of Shares set forth
opposite such Purchaser's name on Schedule 1 hereto at a purchase price of $4.00
per Share for an  aggregate  purchase  price set forth on such  Schedule  1. The
Company shall  deliver to each  Purchaser  warrants to purchase,  at an exercise
price of $5.00 per  share,  such  number  of  shares  of Common  Stock set forth
opposite such Purchaser's name on Schedule 1 hereto (the "Warrants"). The shares
of Common Stock issued or issuable upon exercise of the Warrants are hereinafter
referred  to as the  "Warrant  Shares."  The  Warrants  shall  be in the form of
Exhibit A hereto.

          (b) First  Closing.  The first closing of the purchase and sale of the
Shares and  Warrants  (the "First  Closing")  shall take place at the offices of
Winston & Strawn,  200 Park Avenue, New York, New York, at 10:00 A.M. on January
27, 2000, or such later date on which the  conditions set forth in Sections 7(a)
and 8(a) hereof shall have been satisfied or waived; provided, however, that the
First Closing, in no event, shall occur later than January 31, 2000. The date of
the First Closing shall be hereinafter referred to as the "First Closing Date".

          (c) Second Closing. The Second Closing of the purchase and sale of the
Shares and Warrants  (the "Second  Closing")  shall take place at the offices of
the
<PAGE>
Securities Purchase Agreement

Company,  on or before  January  31,  2000,  or such  earlier  date on which the
conditions  set forth in Section 7(b) and 8(b) hereof shall have been  satisfied
or waived, provided that:

               (i)  Purchasers  participating  in the Second  Closing shall only
include (A) Klein-Hawk ("Klein-Hawk"),  (B) Ravinia Capital Ventures, LLC (which
may  only  participate  in  the  Second  Closing  in  its  corporate   capacity)
("Ravinia"); (C) those note holders listed on Schedule 3(y) attached hereto (the
"Second  Closing Note Holders"),  and (D) those  Purchaser  listed on Schedule 1
attached  hereto who did not  participate in the First Closing;  notwithstanding
the  foregoing,  Purchasers  listed on  Schedule 1 may only  participate  in the
Second  Closing in the amount set forth next to each such  Purchaser's  names on
Schedule 1;

               (ii)   the   aggregate   investment   made   by  the   Purchasers
participating  in the  Second  Closing  shall  not  exceed,  in the  case of (A)
Klein-Hawk,  $4,000,000,  (B) Ravinia,  $3,000,000,  (C) the Second Closing Note
Holders,  $765,000  and (D) any other  Purchaser  listed on  Schedule 1 attached
hereto  who did not  participate  in the First  Closing,  $1,025,500;  provided,
however,  Klein-Hawk may only participate in the Second Closing if its aggregate
investment  is at least  $2,000,000,  and  provided,  further,  Ravinia may only
participate  in the  Second  Closing  if its  aggregate  investment  is at least
$2,000,000; and

               (iii) Purchasers participating in the Second Closing shall become
a party to and agree to be bound by the  provisions  of this  Agreement and each
other Transaction Documents (as defined below).

               The date of the Second Closing shall be  hereinafter  referred to
as the "Second Closing Date", the First Closing Date and the Second Closing Date
are each referred to individually  as a "Closing Date" and,  collectively as the
"Closing Dates".

          (d)  Delivery.  At each  Closing,  the Company  shall  deliver to each
Purchaser  a  stock  certificate  representing  the  Shares  purchased  by  such
Purchaser and the Warrants to be delivered to such Purchaser, against payment of
the purchase  price therefor by check,  payable to the order of the Company,  by
wire transfer of immediately  available  funds to the Company in accordance with
the  Company's  wiring  instructions,   or  by  cancellation  or  conversion  of
indebtedness,  or some  combination  thereof.  In  addition,  the Company  shall
deliver to each Purchaser such other  agreements,  documents,  certificates  and
opinions as specified in this  Agreement  or as may  reasonably  be requested by
such Purchaser.

     2.  Representations  and Warranties of  Purchasers.  Each of the Purchasers
represents and warrants, severally, to the Company as follows:

          (a)  Authorization.  The Purchaser has the full power and authority to
execute and deliver this Agreement and to perform its obligations hereunder. The
execution  and delivery of, and the  performance  under,  this  Agreement by the
Purchaser

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Securities Purchase Agreement

will not conflict with any rule, regulation, judgment or agreement applicable to
the Purchaser.

          (b)  Investment  Purpose.  The Purchaser is purchasing  the Shares and
acquiring the Warrants,  and will purchase the Warrant Shares (together with the
Shares and the Warrants, the "Securities"), for investment purposes and not with
a present view to, or for sale in connection with, a distribution thereof within
the meaning of the Securities Act. The Purchaser  understands  that it must bear
the economic risk of this  investment  indefinitely,  unless the  Securities are
registered pursuant to the Securities Act and any applicable state securities or
blue  sky  laws  or  an  exemption   from  such   registration   is   available.
Notwithstanding anything in this Section 2(b) to the contrary, the Purchaser, by
making the representations herein, does not agree to hold the Securities for any
minimum  or other  specific  term and  reserves  the  right to  dispose  of such
Securities  at any time in  accordance  with or pursuant to  registration  or an
exemption therefrom under the Securities Act and any applicable state securities
or blue sky laws.

          (c)  Reliance  On  Exemptions.  The  Purchaser  understands  that  the
Securities are being offered and sold in reliance upon specific  exemptions from
the registration  requirements of Federal and state securities laws and that the
Company  is  relying  upon the truth and  accuracy  of the  representations  and
warranties  of the  Purchaser  set  forth  herein  in  order  to  determine  the
availability  of such exemptions and the eligibility of the Purchaser to acquire
the Securities.

          (d)  Information.  The  Purchaser  has been  furnished  all  documents
relating to the  business,  finances  and  operations  of the Company  which the
Purchaser  requested  from the  Company.  The  Purchaser  has been  afforded the
opportunity  to ask questions of the Company's  representatives  concerning  the
Company in making the decision to purchase the Shares and acquire the  Warrants,
and such questions have been answered to its satisfaction.  However, neither the
foregoing nor any other due diligence  investigation  conducted by the Purchaser
or on  its  behalf  shall  limit,  modify  or  affect  the  representations  and
warranties  of the  Company in Section 3 of this  Agreement  or the right of the
Purchaser to rely thereon.

          (e) Governmental Review. The Purchaser  understands that no Federal or
state agency or any other  government or governmental  agency has passed upon or
made any recommendation or endorsement of the Securities.

          (f)  Purchaser's  Qualifications.  The  Purchaser  is  an  "accredited
investor"  as  defined  in Rule 501 under  Regulation  D of the  Securities  Act
("Regulation D"). The Purchaser is capable of evaluating the merits and risks of
an investment in the Securities.

          (g)  Restrictions on Transfer.  The Purchaser  understands that it may
not transfer any of the Securities  unless such Securities are registered  under
the Securities Act or unless an exemption from  registration  and  qualification
requirements  are  available  under  the  Securities  Act and  applicable  state
securities laws. The Purchaser understands

                                      -3-
<PAGE>
Securities Purchase Agreement

that certificates  representing the Shares, the Warrants, the Warrant Shares and
shares of Common Stock issued pursuant to Section 4 of this Agreement shall bear
the following,  or a substantially similar,  legend until such time as they have
been registered under the Securities Act or otherwise may be sold under Rule 144
under the Securities Act:

     THE  SECURITIES  REPRESENTED  HEREBY  HAVE NOT BEEN  REGISTERED  UNDER  THE
     SECURITIES  ACT OF 1933 (THE  "ACT") OR UNDER  ANY STATE  SECURITIES  LAWS.
     THESE  SECURITIES  MAY NOT BE  SOLD,  TRANSFERRED  OR  ASSIGNED  EXCEPT  AS
     PERMITTED UNDER THE ACT AND APPLICABLE STATE  SECURITIES LAWS,  PURSUANT TO
     REGISTRATION OR EXEMPTION THEREFROM.

          (h)  Residence.  The Purchaser is a resident of the  jurisdiction  set
forth under its name on the signature pages hereto.

          (i) Investment Experience. The Purchaser has experience as an investor
in securities of Internet - related and  technology  companies and  acknowledges
that  it is  able  to  fend  for  itself,  can  bear  the  economic  risk of its
investment,  and has such  knowledge  and  experience  in  financial or business
matters that it is capable of evaluating  the merits and risks of the investment
in the Securities. If other than an individual, the Purchaser also represents it
has not been organized for the purpose of acquiring the Securities.

     3.  Representations  and Warranties of the Company.  The Company represents
and  warrants  to each  Purchaser  that,  except as set forth on a  Schedule  of
Exceptions attached hereto as follows:

          (a) Organization and Good Standing.  The Company is a corporation duly
organized,  validly existing and in good standing under the laws of the State of
Delaware,  and has all necessary  corporate  power and authority to own or lease
its assets and to carry on its  business as now being  conducted  and  presently
proposed  to be  conducted.  The Company is duly  qualified  to do business as a
foreign  corporation  and is in good standing in each  jurisdiction in which its
ownership  or leasing  of assets,  or the  conduct of its  business,  makes such
qualification  necessary,  except where the failure to be so qualified would not
result in a Material Adverse Change (as defined in Section 3(h) hereof).  Except
for any  subsidiaries  listed  on  Schedule  3(b)  hereto,  the  Company  has no
subsidiaries  and no equity  interests in any  corporation,  partnership,  joint
venture or other entity.

          (b)  Subsidiaries.  Schedule 3(b) hereto sets forth each subsidiary of
the Company, showing the jurisdiction of its incorporation or organization. Each
subsidiary  is a corporation  duly  incorporated,  validly  existing and in good
standing under the laws of the state of its  incorporation and has the requisite
corporate  power to own,  lease and  operate  its  properties  and assets and to
conduct  its  business as it is now being  conducted.  Each  subsidiary  is duly
qualified to do business as a foreign corporation

                                      -4-
<PAGE>
Securities Purchase Agreement

and is in good standing in each  jurisdiction  in which its ownership or leasing
of assets, or the conduct of its business,  makes such qualification  necessary,
except  where the  failure  to be so  qualified  would not  result in a Material
Adverse  Change.  All of  the  outstanding  shares  of  capital  stock  of  each
subsidiary have been duly authorized and validly issued,  and are fully paid and
nonassessable and are owned by the Company.

          (c) Requisite Power and  Authorization.  The Company has all necessary
corporate  power and  authority  to execute  and  deliver  this  Agreement,  the
Registration  Rights Agreement  attached hereto as Exhibit B (the  "Registration
Rights Agreement") and the Warrants (collectively,  the "Transaction Documents")
and  to  perform  its  obligations  under  each  of the  Transaction  Documents,
including  without  limitation  the issuance of the  Securities  hereunder.  All
corporate  action of the Company  required for the execution and delivery of the
Transaction  Documents and the issuance and delivery of the  Securities has been
duly and  effectively  taken,  and,  except as set forth on  Schedule  3(g),  no
further actions,  authorizations or consents, including, without limitation, any
consents  of  the  stockholders  of  the  Company,  are  required.  Each  of the
Transaction  Documents  constitutes  the valid  and  binding  obligation  of the
Company,  enforceable  against the Company in accordance with its terms,  except
(i) as limited by applicable bankruptcy, insolvency, reorganization,  moratorium
or other laws of general application affecting enforcement of creditor's rights,
(ii) as limited by general  principles of equity that restrict the  availability
of equitable remedies and (iii) as the indemnity  provisions of the Registration
Rights Agreement may be limited by law. The Shares,  when issued,  delivered and
paid for in compliance  with the provisions of this  Agreement,  will be validly
issued,  fully  paid and  non-assessable,  free and clear of any and all  liens,
charges,  claims  or  encumbrances.  The  Warrant  Shares,  if and when  issued,
delivered and paid for in compliance  with the  provisions of this Agreement and
the Warrants will be validly  issued,  fully paid and  non-assessable,  free and
clear of any and all liens,  charges,  claims or  encumbrances.  The Company has
reserved a sufficient number of shares of Common Stock necessary for issuance of
the Shares and the Warrant Shares.

          (d) SEC Documents. Prior to the date hereof, the Company,  voluntarily
filed with the  Securities  and  Exchange  Commission  (the "SEC") all  reports,
statements,  schedules and other documents to its knowledge required to be filed
by reporting  companies  pursuant to the  Securities  Act and the Exchange  Act.
Since  December 31, 1998,  all such  reports,  statements,  schedules  and other
documents (collectively,  the "SEC Documents") required to be filed by reporting
companies  were filed by the  Company.  As of their  respective  dates,  the SEC
Documents  complied  in all  material  respects  with  the  requirements  of the
Securities  Act or the  Exchange  Act,  as the case may be,  and the  rules  and
regulations of the SEC promulgated thereunder, and none of the SEC Documents, at
the time they were  filed with the SEC,  contained  any  untrue  statement  of a
material fact or omitted to state a material fact required to be stated  therein
or  necessary  in  order  to  make  the  statements  therein,  in  light  of the
circumstances under which they were made, not misleading. As of their respective
dates,  the financial  statements  included in the SEC Documents (the "Financial
Statements")  complied  as to  form in all  material  respects  with  applicable
accounting  requirements and the published rules and regulations of the SEC with
respect thereto. Except (i) as may be indicated

                                      -5-
<PAGE>
Securities Purchase Agreement

in the notes to the  Financial  Statements  or (ii) in the case of the unaudited
interim  statements,  as  permitted  by Form 10-Q under the  Exchange  Act,  the
Financial  Statements have been prepared in accordance  with generally  accepted
accounting  principles  consistently  applied and fairly present in all material
respects the financial  position of the Company and its  subsidiaries  as of the
dates thereof and the results of its  operations  and cash flows for the periods
then ended (subject,  in the case of unaudited  statements,  to normal recurring
year-end  adjustments  and  footnotes).  Except  as set  forth in the  Financial
Statements  filed  with  the SEC  prior to the date  hereof  or as set  forth on
Schedule  3(d),  neither  the  Company  nor  any of  its  subsidiaries  has  any
liabilities,   whether  absolute,   contingent  or  otherwise,  other  than  (i)
liabilities  incurred in the ordinary course of business  subsequent to the date
of  such  Financial   Statements  and  (ii)  obligations   under  contracts  and
commitments  incurred in the ordinary  course of business and not required under
generally  accepted  accounting  principles  to be reflected  in such  Financial
Statements,  which  liabilities and  obligations  referred to in clauses (i) and
(ii),  individually  or in the  aggregate,  are not  material  to the  financial
condition or operating results of the Company or any of its subsidiaries.

          (e)  Capitalization.  The capitalization of the Company as of the date
hereof is set forth on  Schedule  3(e),  including  (i) the  authorized  capital
stock,  (ii) the number of shares  issued and  outstanding,  (iii) the number of
shares reserved for issuance pursuant to stock option, employee benefit or other
plans,  (iv) the number of shares reserved for issuance or issuable  pursuant to
securities  exercisable for, or convertible into or exchangeable for, any shares
of Common Stock,  (v) the number of shares of Common Stock reserved for issuance
with respect to the sale of the Shares,  and (vi) the number of shares of Common
Stock  reserved for issuance  upon  exercise of the  Warrants.  All  outstanding
shares of capital  stock have been duly  authorized  and validly  issued and are
fully paid and non-assessable. Except as set forth on Schedule 3(e), the Company
has (i) no  outstanding  securities  convertible  into or  exchangeable  for any
shares of capital stock of the Company, (ii) no rights, options, warrants, calls
or other  agreements or  commitments  of any nature  whatsoever  relating to the
purchase or other  acquisition  of any shares of its capital stock or securities
convertible into or exchangeable for any shares of its capital stock or (iii) no
shares  of its  capital  stock  reserved  for  issuance.  Except as set forth on
Schedule  3(e),  the Company is not a party to, and it has no knowledge  of, any
agreement  restricting the voting or transfer of any shares of the capital stock
of the Company.

          (f) No Conflicts.  Neither the execution,  delivery and performance by
the  Company  of  this  Agreement,  the  other  Transaction  Documents,  and all
instruments and documents to be delivered by the Company,  nor the  consummation
of the transactions  contemplated by any of the foregoing (i) has constituted or
resulted  in,  or will  constitute  or result  in, a default  under or breach or
violation of any term or provision of the organizational  documents or bylaws of
the Company or material  contracts or instruments to which the Company or any of
its  subsidiaries  is a  party  or  Federal,  state  or  local  laws,  rules  or
regulations,  writs,  orders,  judgments or decrees which are  applicable to the
Company,  any of its  subsidiaries  or their  assets,  (ii)  will  result in the
acceleration  or  termination  of any  rights  under any  material  contract  or
instrument to which the

                                      -6-
<PAGE>
Securities Purchase Agreement

Company  or any of its  subsidiaries  is a party or  (iii)  will  result  in the
creation or imposition of any liens,  charges or encumbrances upon any assets of
the Company or any of its subsidiaries.

          (g)  Consents.  Except as set forth on  Schedule  3(g),  no  approval,
consent,  order,  authorization or other action by, or notice to or filing with,
any governmental  authority or regulatory  agency or any other person or entity,
and no lapse of a waiting period,  is required in connection with the execution,
delivery or performance by the Company of this Agreement,  any other Transaction
Document,  the  issuance  and  delivery  of any of the  Securities  or any other
transactions contemplated by any of the Transaction Documents except for (i) the
filing of a Form D with the SEC, (ii) filings  required under  applicable  state
"blue  sky"  laws  (which  shall  be duly  filed)  and  (iii)  the  filing  of a
registration  statement  or  statements  pursuant  to  the  Registration  Rights
Agreement.

          (h) No Material Adverse Change.  Since December 31, 1998, the business
of the Company and each  subsidiary has been operated in the ordinary course and
substantially  consistent with past practice and there has not been any material
adverse  change  in  the  business,  assets,  financial  condition,  results  of
operations,  affairs or prospects of the Company or any of its  subsidiaries  (a
"Material Adverse Change"). Since December 31, 1998, neither the Company nor its
subsidiaries has (i) paid any obligation or liability or discharged or satisfied
any liens or encumbrances  other than in the ordinary  course of business;  (ii)
declared or made any payment or distribution to its stockholders or purchased or
redeemed  any  of its  shares  of  capital  stock  or  other  securities;  (iii)
mortgaged,  pledged or subjected to any lien, charge or other encumbrance any of
its assets,  tangible or intangible,  except in the ordinary course of business;
(iv) sold,  transferred or leased any of its assets except for fair value in the
ordinary course of business;  (v) increased the annual  compensation  payable to
any of its  officers  or other  employees,  consultants  or  representatives  by
greater than $25,000; (vi) cancelled or compromised any debt or claim, or waived
or released any right of material  value;  (vii)  entered  into any  transaction
other than in the ordinary course of business;  (viii) issued or sold any shares
of capital stock or other  securities or granted any options,  warrants or other
purchase rights with respect thereto that are not disclosed on Schedule 3(e); or
(ix) agreed to do any of the foregoing (other than pursuant hereto).

          (i)  Litigation.  Except as set forth on  Schedule  3(i),  there is no
claim,  action, suit,  proceeding or investigation  pending or, to the Company's
knowledge,  currently threatened against the Company or any of its subsidiaries,
or any of their respective  directors or officers,  in their capacities as such,
(i) that  questions  the  validity of this  Agreement  or any other  Transaction
Document or the issuance of the Securities, or the right of the Company to enter
into this  Agreement  or any other  Transaction  Document or to  consummate  the
transactions contemplated by any Transaction Document or (ii) that might result,
either  individually or in the aggregate,  in any Material  Adverse Change or in
any change in the current equity ownership of the Company.  The Company is not a
party or subject to the  provisions of any order,  writ,  injunction,  judgment,
stipulation or decree

                                      -7-
<PAGE>
Securities Purchase Agreement

of any court,  administrative agency,  commission,  regulatory authority,  other
government agency or instrumentality.

          (j) No Default.  Neither the Company nor any of its subsidiaries is in
violation of or default under any provision of its  organizational  documents or
bylaws or other  constituent  documents or is in default (or, with notice or the
lapse of time,  would be in default)  under any  material  agreement,  contract,
commitment or instrument to which it is a party or by which it or its properties
or assets is bound or affected. To the Company's knowledge, no third party is in
material  default  under or in  material  breach or  violation  of any  material
contract,  commitment  or  instrument  to  which  the  Company  or  any  of  its
subsidiaries is a party or by which any of their  properties or assets are bound
or affected.

          (k)  Compliance  with Laws.  The  Company  and each  subsidiary  is in
compliance  and has conducted  its business and  operations so as to comply with
all laws (including,  without limitation,  any environmental laws),  ordinances,
rules and regulations,  judgments, decrees or orders of any regulatory authority
or  other  governmental  or  administrative  body  or  instrumentality,  whether
domestic or foreign,  except where such  failure  would not result in a Material
Adverse  Change.  The Company has not during the past three years  received  any
notice  relating to any violation or potential  violation of  applicable  law or
regulations.

          (l) Title.  The Company and each  subsidiary  has good and  marketable
title to all real and  personal  property  owned by it which is  material to its
business,  in each case free and clear of all liens,  encumbrances  and defects.
Any  property,  real or personal,  held under lease by the Company or any of its
subsidiaries, is held by it under valid and enforceable leases.

          (m)  Intellectual  Property.  The Company and each  subsidiary owns or
possesses  adequate  and  enforceable   rights  to  use,  all  patents,   patent
applications,  trademarks,  trademark applications,  trade names, service marks,
copyrights,  copyright applications,  licenses,  permits, domain names, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential  information,  systems or procedures)  and other similar rights and
proprietary knowledge (collectively, the "Intangibles") necessary to conduct its
business as  heretofore  conducted  by it, as now being  conducted by it, and as
proposed to be conducted by it. To the Company's knowledge,  neither the Company
nor any of its subsidiaries has infringed, is infringing, or is in conflict with
any right of any other person with respect to, any Intangibles. To the knowledge
of the Company, no person is infringing on or violating the Intangibles owned or
used by the  Company or any of its  subsidiaries.  As of the date  hereof,  each
officer of the  Company  and its  subsidiaries,  and each other  employee of the
Company and its  subsidiaries  involved in the  development,  implementation  or
maintenance of the Company's or such subsidiary's  technology,  has entered into
non-compete,   non-solicitation   and  proprietary   information  and  invention
assignment agreements.

          (n)  Registration  Rights.  The only  registration  rights,  including
piggyback  rights,  granted  (or agreed to be  granted)  to any person or entity
other than the

                                      -8-
<PAGE>
Securities Purchase Agreement

Purchasers  are set forth on  Schedule  3(n).  None of the  registration  rights
disclosed  on Schedule  3(n) are senior in priority to the  registration  rights
provided for in the Registration Rights Agreement.

          (o) OTC  Bulletin  Board.  The Common Stock is, as of the date hereof,
traded by means of the National  Association  of Securities  Dealers,  Inc. (the
"NASD") OTC Bulletin Board(R) service (the "OTCBB").  The sale of the Securities
as  contemplated  hereby will not violate any Rule of the NASD applicable to the
Company or the Common Stock. The Company has not received notification,  written
or oral,  that the  Company has failed to satisfy  any  requirement  of the NASD
relating to the trading of the Common Stock in the OTCBB.

          (p)  Registration  Statement.  The  Company is  currently  eligible to
register the resale of its Common Stock under the  Securities  Act pursuant to a
registration  statement on Form S-1. To the Company's knowledge,  there exist no
facts or circumstances that would inhibit or delay the preparation and filing of
a registration  statement on Form S-1 with respect to the Shares and the Warrant
Shares.

          (q) No Misrepresentation. No representation or warranty by the Company
in this Agreement  (including any Exhibit or Schedule  hereto) and no statements
of the  Company  contained  in any  document,  certificate,  schedule  or  other
information furnished or to be furnished by or on behalf of the Company pursuant
to this Agreement or any other  Transaction  Document or in connection  with the
transactions  contemplated by any Transaction Document contains or shall contain
any untrue statement of material fact or omits or shall omit to state a material
fact  required  to be  stated  therein  or  necessary  in  order  to  make  such
statements,  in light of the  circumstances  under  which  they were  made,  not
misleading.  There exists no event or circumstances  with respect to the Company
or any of its subsidiaries  which would result in a Material Adverse Change that
has not been disclosed by the Company to the Purchasers.

          (r)  Anti-Dilution  and Other Shares.  Except as set forth on Schedule
3(r), no stockholder of the Company or other person or entity has any preemptive
right of  subscription  or purchase  or  contractual  right of first  refusal or
similar right with respect to any of the Securities.  Issuance of the Securities
will not result in the issuance of any additional  shares of Common Stock or the
triggering of other  anti-dilution  or similar rights  contained in any options,
warrants, debentures or other securities or agreements of the Company.

          (s) No Brokers or Finders.  Except as set forth on Schedule  3(s),  no
person or entity has or will  have,  as a result of any act or  omission  by the
Company,  any right,  interest or valid  claim  against  any  Purchaser  for any
commission,  fee or other  compensation as a finder or broker, or in any similar
capacity, in connection with the transactions contemplated by this Agreement.

          (t) Change of Control  Payments.  Neither the execution,  delivery and
performance  by  the  Company  of  any  of the  Transaction  Documents  nor  the

                                      -9-
<PAGE>
Securities Purchase Agreement

consummation of any of the transactions  contemplated  thereby shall require any
payment by the Company,  in cash or kind,  under any  agreement,  plan,  policy,
commitment  or other  arrangement.  There are no  agreements,  plans,  policies,
commitments or other arrangements with respect to any compensation,  benefits or
consideration which will be materially increased,  or the vesting of benefits of
which will be materially accelerated,  as a result of the execution and delivery
of the  Transaction  Documents  or  the  occurrence  of any of the  transactions
contemplated  thereby.  There are no  payments or other  benefits,  the value of
which will be calculated on the basis of any of the transactions contemplated by
this Agreement or any other Transaction Document.

          (u) Taxes.  The Company and each of its  subsidiaries  has  accurately
prepared and filed all federal,  state and other tax returns  required by law to
be filed by it, has paid or made  provisions  for the payment of all taxes shown
to be due and all additional assessments, and adequate provisions have been made
and are  reflected in the Financial  Statements  for all current taxes and other
charges to which the  Company  or any  subsidiary  is subject  and which are not
currently due and payable.  None of the income tax returns of the Company or any
subsidiary  is currently  being audited by the Internal  Revenue  Service or any
other governmental entity. Neither the Company nor any subsidiary has filed with
the Internal Revenue Service or any other  governmental  authority any agreement
or  document  extending,  or having  the  effect of  extending,  the  period for
assessment  or  collection  of any taxes.  The Company has no  knowledge  of any
additional assessments, adjustments or contingent tax liability (whether Federal
or state)  pending or threatened  against the Company or any  subsidiary for any
period, nor of any basis for any such assessment, adjustment or contingency.

          (v) ERISA. All "employee benefit plans", as defined in Section 3(3) of
the Employee  Retirement Income Security Act of 1974, as amended ("ERISA"),  and
any other  employee  benefit  arrangements  or payroll  practices (the "Plans"),
maintained by the Company and any of its subsidiaries or to which the Company or
any of its subsidiaries contributed or is obligated to contribute thereunder, is
and has been maintained in compliance  with  applicable  law,  including but not
limited to ERISA,  the Internal  Revenue Code of 1986,  as amended (the "Code"),
and any  applicable law of any other  governmental  authority and with any other
contractual  obligations and their terms. Each Plan that is intended to be a tax
qualified  plan  under  Section  401(a) of the Code has been  determined  by the
Internal  Revenue  Service to qualify  under  Section  401 of the Code,  and the
trusts created  thereunder  have been determined to be exempt from tax under the
provisions of Section 501 of the Code,  and nothing has occurred,  including the
adoption of or failure to adopt any Plan amendment, which would adversely affect
its qualification or tax-exempt status.

          (w)  Labor  Matters.  There are no  strikes  or other  labor  disputes
against the Company or any of its  subsidiaries  pending or, to the Company's or
its  subsidiaries'  knowledge,  threatened.  There  is  no  organizing  activity
involving the Company or any of its subsidiaries pending or, to the Company's or
its  subsidiaries'  knowledge,  threatened  by  any  labor  union  or  group  of
employees.

                                      -10-
<PAGE>
Securities Purchase Agreement

          (x)  Year  2000  Compliance.   Each  system,  comprised  of  software,
hardware,  databases or embedded control systems  (microprocessor  controlled or
controlled  by any robotic or other  device)  (collectively,  a  "System")  that
constitutes  any  material  part  of,  or is used in  connection  with  the use,
operation or enjoyment of, any material  tangible or  intangible  asset for real
property  of the  Company  or any of its  subsidiaries  will  not be  materially
adversely  affected  by  the  advent  of  the  year  2000,  the  advent  of  the
twenty-first  century or the transition  from the twentieth  century through the
year  2000 and into the  twenty-first  century.  The  Company  has no  reason to
believe that it or any of its subsidiaries  may incur material  expenses arising
from or  relating  to the  failure  of any of their  Systems  as a result of the
advent  of the  year  2000,  the  advent  of  the  twenty-first  century  or the
transition  from  the  twentieth  century  through  the  year  2000 and into the
twenty-first century. Each System of the Company and its subsidiaries is able to
accurately process,  provide and/or receive all date/time data,  including,  but
not limited to,  calculating,  comparing and sequencing  within,  from, into and
between  the  twentieth  century  (through  year  1999),  the year  2000 and the
twenty-first  century,  including  leap  year  calculations;  and  will,  as  to
performance and functionality,  not be affected by any dates/times prior to, on,
after or spanning January 1, 2000 ("Year 2000  Compliant").  To the knowledge of
the Company and its subsidiaries, each of the Company's vendors will continue to
furnish  its  products  or  services  to the  Company  or its  subsidiaries,  as
applicable,  without  interruption  or material  delay,  on and after January 1,
2000.

          (y)  Conversion  of  Preferred  Stock and Notes.  Upon filing with the
Secretary  of State of the  State of  Delaware,  as of the date  hereof,  of the
Amended and Restated  Certificate of Incorporation  of the Company,  in the form
attached hereto as Exhibit C, all outstanding shares of the Company's  preferred
stock, including,  without limitation, the Series A Convertible Preferred Stock,
par value $ .00001 per share (the  "Series A Preferred  Stock") and the Series B
Convertible  Preferred  Stock,  par  value  $.00001  per  share  (the  "Series B
Preferred  Stock"),  will be  converted  into Common  Stock and there will be no
outstanding equity securities of the Company senior to the Securities. Except as
set forth on  Schedule  3(y)  hereto,  concurrent  with the First  Closing,  all
outstanding  convertible  notes  of the  Company,  as of the date  hereof,  (the
"Notes") are being  converted into Shares of Common Stock at $4.00 per share and
warrants to purchase,  at an exercise price of $5.00 per share,  Common Stock on
the terms and conditions provided herein.

          (z)  Lock-Up   Agreement.   The  Company  has  entered   into  lock-up
agreements, in the form attached hereto as Exhibit D (each a "Lock-Up Agreement"
and,  collectively the "Lock-Up  Agreements")  with (i) each of the officers and
directors of the Company,  (ii) each of the holders of Series A Preferred  Stock
and Series B Preferred  Stock  convertible  into Common Stock upon filing of the
Company's  Amended and Restated  Certificate  of  Incorporation,  and (iii) each
stockholder of the Company owning or having the right to acquire in excess of 1%
of the issued and  outstanding  Common Stock of the Company (on a fully  diluted
basis).

     4. Right of First Refusal for New Securities. (a) The Company hereby grants
to each  Purchaser,  so long as such Purchaser  shall own the greater of 500,000

                                      -11-
<PAGE>
Securities Purchase Agreement

shares of Common Stock (including  shares issuable upon exercise of the Warrants
and adjusted for stock  splits,  combinations,  dividends  and the like) or (ii)
fifty percent (50%) of the Shares  purchased by such Purchaser  pursuant to this
Agreement, a right of first refusal to purchase shares of any New Securities (as
defined  below)  which the Company may,  from time to time,  propose to sell and
issue.  Such right of first refusal  shall allow each  Purchaser to purchase its
Proportionate  Share (as  defined  below) of the New  Securities  proposed to be
issued,  determined with reference to the aggregate number of outstanding shares
of Common Stock  (taking into account all shares of Common Stock  issuable  upon
exercise of the Warrants) held by such Purchasers or their permitted transferees
before the proposed issuance of New Securities.  In the event that any Purchaser
shall not purchase any or all of its Proportionate Share of New Securities,  the
other  Purchasers  shall  have  the  right  to  purchase  such  unpurchased  New
Securities,  as described  below.  The right of first refusal granted  hereunder
shall  terminate if  unexercised  within 20 Business  Days after  receipt of the
notice  described in Section 5(c) hereof.  The Purchasers  may reallocate  their
right of first refusal among themselves.  "Business Day" shall mean any day that
is not a Saturday, a Sunday or a day on which banks are required or permitted to
be closed in the State of New York. For the purposes  hereof,  any SSF Purchaser
(as hereinafter  defined) may exercise  rights  hereunder so long as all the SSF
Purchasers, in the aggregate, hold the requisite number of Shares referred to in
the first sentence of this Section 4(a).

          (b) "New  Securities"  shall mean any authorized but unissued  shares,
and any treasury shares, of capital stock of the Company and all rights, options
or warrants to purchase or exchangeable for capital stock, and securities of any
type  whatsoever  that are,  or may  become,  convertible  into  capital  stock;
provided,  however,  that  the  term  "New  Securities"  does  not  include  (i)
securities  issued pursuant to the acquisition of another  corporation or entity
by the Company by merger,  purchase of all or substantially all of the assets or
other reorganization whereby the Company shall become the owner of more than 50%
of the voting power of such  corporation or entity;  (ii) shares of Common Stock
issued in  connection  with any stock split or stock  dividend  of the  Company;
(iii) shares of Common Stock issued  pursuant to any public offering and sale of
equity securities of the Company pursuant to an effective registration statement
under the Securities  Act; (iv) Warrant Shares  delivered to the Purchasers upon
exercise of the  Warrants;  (v) shares of Common  Stock  issued  pursuant to the
exercise  of options  granted or to be granted  under the current  stock  option
plans of the Company,  provided  that the total number of shares of Common Stock
issuable  or issued  pursuant  to such  options  does not  exceed 39% of (A) the
outstanding  shares of Common Stock (on a fully diluted basis) as of the date of
this Agreement and (B) any additional  outstanding  shares of Common Stock (on a
fully  diluted  basis)  issued on or before  January 31,  2000  pursuant to this
Agreement, (vi) shares of Common Stock issued upon the exercise or conversion of
any securities  outstanding as of the date of this Agreement,  (vii)  securities
issued by the  Company  in  connection  with any  credit,  financing  or leasing
agreements  or similar  instruments  with  financial  institutions  or equipment
lessors; and (viii) securities issued in connection with an offering pursuant to
an engagement letter dated October 5, 1999, as amended January 26, 2000, between
E*Offering and the Company (the "E*Offering  Engagement  Letter"),  whether such
securities  are issued to E*Offering or to any investor

                                      -12-
<PAGE>
Securities Purchase Agreement

for which  E*Offering is entitled is be  compensated  pursuant to the E*Offering
Engagement  Letter.  "Proportionate  Share"  shall be equal to a  fraction,  the
numerator  of which  shall  equal  the total  number  of shares of Common  Stock
(taking into account all shares of Common Stock  issuable  upon  exercise of the
Warrants) then owned by such Purchaser and the  denominator of which shall equal
the total number of shares of Common Stock outstanding  immediately prior to the
issuance of the New Securities on a fully diluted basis.

          (c) If the Company  shall  propose to issue New  Securities,  it shall
give each Purchaser written notice thereof,  describing the New Securities,  the
number thereof to be issued, the purchase price therefor (which shall be payable
solely in cash) and the terms upon which the Company  shall propose to issue the
same.  Each  Purchaser  shall have 10 Business Days from the date such notice is
given to determine  whether to purchase  all or any portion of such  Purchaser's
Proportionate  Share of such New  Securities for the purchase price and upon the
terms  specified  in the  notice by giving  written  notice to the  Company  and
stating therein the number of New Securities to be purchased.

          (d) If the  Purchasers  shall not have elected within such 10 Business
Day period to purchase  all of the New  Securities  proposed  to be issued,  the
Company shall provide to each Purchaser, within five Business Days thereafter, a
schedule  setting  forth  the  following  information:  (i)  the  amount  of New
Securities   elected  to  be  purchased;   (ii)  the  purchasers   thereof  (the
"Participating Purchasers") and the specific amount of New Securities elected to
be purchased by each such Participating  Purchaser;  and (iii) the amount of New
Securities  not elected to be  purchased.  Each  Participating  Purchaser  shall
thereafter  have an  additional  five Business Days after such five Business Day
period has elapsed to  determine  whether to purchase all or any portion of such
Participating  Purchaser's  Residual  Proportionate  Share (as defined below) of
such  remaining  New  Securities  for the  purchase  price  and upon  the  terms
specified  in the notice by giving  written  notice to the  Company  and stating
therein the number of New  Securities to be purchased.  "Residual  Proportionate
Share"  shall be equal to a  fraction,  the  numerator  of which shall equal the
total  number of shares of Common  Stock (as  determined  in the  definition  of
Proportionate  Share)  then  owned  by  such  Participating  Purchaser  and  the
denominator  of which shall equal the total  number of such shares  owned by all
Participating Purchasers.

          (e) If the  Purchasers  shall not have  elected to purchase all of the
New  Securities  proposed to be issued (within the time period for notifying the
Company set forth above),  then the Company shall have 60-calendar days in which
to complete  the  proposed  issuance of the  portion of the New  Securities  not
purchased  by the  Purchasers  at a price not less than  that  contained  in the
notice  previously  given to the Purchasers and on terms and conditions not more
favorable to the third party than those contained in such notice. If, at the end
of such  60-calendar  day period,  the  Company  shall not have  completed  such
issuance of New  Securities,  the Company  shall no longer be permitted to issue
such New  Securities  pursuant to this Section 4 without  again fully  complying
with all of the provisions of this Section 4.

                                      -13-
<PAGE>
Securities Purchase Agreement

          (f) The right of first  refusal  granted  under  this  Section 4 shall
terminate upon a Termination  Event (as defined in the Warrant).  This Section 4
may be amended,  waived or otherwise terminated by a vote or the written consent
of sixty-six and two-thirds  percent (66 2/3%) of the  Purchasers  having rights
pursuant to this  Section 4 (which 66 2/3% must include the SSF  Purchasers  (as
defined below), Bay Star Capital, L.P. (and its affiliate, BayStar International
Limited (together  "BayStar")),  and Chelsey Capital ("Chelsey")),  for purposes
hereof,  SSF Purchasers shall include Special Situations Fund III, L.P., Special
Situations Cayman Fund, L.P.,  Special Situations Private Equity Fund, L.P., and
Special Situations Technology Fund, L.P.

     5. Buy-In Rights.

          (a) In the event  that (i) the  Company  shall  fail for any reason to
deliver  Warrant Shares to a Purchaser upon exercise of any Warrants  within the
time period  specified in paragraph  (a) of such  Warrants or the Company  shall
fail to remove any restrictive  legend on any  certificates  evidencing  Shares,
Warrant  Shares or shares of Common Stock  issued  pursuant to Section 5 of this
Agreement (the "Buy-In  Shares") as and when required under Section 6(f) of this
Agreement and (ii) thereafter,  such Purchaser shall purchase (in an open market
transaction   or  otherwise)   shares  of  Common  Stock  to  make  delivery  in
satisfaction  of a sale by such  Purchaser of (A) the Warrant  Shares which such
Purchaser anticipated receiving upon such exercise or (B) such unlegended Buy-In
Shares,  as the case may be (in each case, the "Sold Shares"),  then the Company
shall pay to such Purchaser (in addition to any other remedies  available to the
Purchaser)  the  amount  by which  (x) such  Purchaser's  total  purchase  price
(including  brokerage  commissions,  if any) for the  shares of Common  Stock so
purchased shall exceed (y) the net proceeds  received by such Purchaser from the
sale of the Sold Shares.

          (b) The  Company  shall make any  payments  required  pursuant to this
Section 5 within five (5) Business Days after receipt of written notice from the
Purchaser  setting forth the  calculation of the amount due  hereunder.  Nothing
contained  herein shall  relieve the Company from its  continuing  obligation to
deliver Warrant Shares upon any such exercise of the Warrants, or the unlegended
Buy-In Shares, as the case may be.

          (c) The rights  granted under this Section 5 shall be applicable  only
to those Purchasers having rights under Section 4 of this Agreement.

     6. Covenants of the Company. The Company hereby covenants that:

          (a) Exchange Act  Filings.  The Company  shall use its best efforts to
file in a timely manner all reports and other documents  required to be filed by
it under the  Exchange  Act, and deliver  copies of such  reports not  otherwise
available  on the  SEC's  web site to each  Purchaser.  The  Company  shall  not
terminate  its status as an issuer  required to file reports  under the Exchange
Act even if the Exchange Act or the rules and regulations promulgated thereunder
would permit such termination.

                                      -14-
<PAGE>
Securities Purchase Agreement

          (b) Authorized  Shares. The Company shall, from and at all times after
the Closing,  maintain a reserve of authorized shares of Common Stock sufficient
to cover the  issuance of the Warrant  Shares  underlying  the  Warrants and the
issuance of any Default Shares pursuant to the terms of the Registration  Rights
Agreement.

          (c) Use of Proceeds.  The Company shall use the proceeds from the sale
of the Securities for general working capital purposes;  provided,  however, the
Company  shall not use the proceeds  from the sale of the  Securities to the SSF
Purchasers,  BayStar,  Chelsey,  Kline-Hawk  and  Ravinia to repay or retire any
outstanding indebtedness listed on Schedule 3(y) attached hereto.

          (d) Listing.  The Company  shall,  within seven  business  days of the
Closing Date,  file an  application  for listing on the Nasdaq  SmallCap  Market
("Nasdaq  SmallCap").  The Company will take all action  necessary to effect the
listing of the Common Stock on the Nasdaq  SmallCap and, if so listed,  will use
its best  efforts to maintain  such  listing,  or in the event not listed on the
Nasdaq SmallCap then on OTCBB or any relevant  market or system,  if applicable,
and will comply in all respects with the Company's  reporting,  filing and other
obligations under the bylaws or rules of NASD, the Nasdaq SmallCap system or any
relevant market or system.

          (e) Certain Legal Expenses. The Company shall pay to Winston & Strawn,
counsel to certain of the  Purchasers,  at the  Closing,  its fees and  expenses
relating to the  negotiation and  documentation  of this Agreement and the other
documents and  transactions  contemplated  hereby in an aggregate  amount not to
exceed $20,000.

          (f) Removal of Legends.  Any legend endorsed on a certificate pursuant
to Section 2(g) and any related stop transfer  instructions  with respect to any
Securities shall be removed,  and the Company shall issue promptly a certificate
without  such  legend to the holder  thereof,  if (i) such  Securities  shall be
registered  under the Securities  Act, (ii) such legend may be properly  removed
under the terms of Rule 144 under the  Securities Act or (iii) such holder shall
provide the Company with an opinion of counsel,  reasonably  satisfactory to the
Company,  to the effect that a sale,  transfer or assignment of such  Securities
may be made pursuant to Rule 144(k) under the Securities Act.

          (g)  Maintenance  of Existence  and Conduct of  Business.  The Company
shall,  and shall cause each of its  subsidiaries to: (i) do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence, and its rights and franchises; (ii) at all times use its best efforts
to  maintain,  preserve and protect all of its  material  intellectual  property
including,  but not limited to, licenses,  patents, trade secrets,  confidential
and proprietary information, domain names, copyrights, trademarks, service marks
and trade names, and preserve all the remainder of its material  assets,  in use
or useful  in the  conduct  of its  business  and keep the same in good  repair,
working order and condition (taking into  consideration  ordinary wear and tear)
and from time to time make, or cause to be made, all needful and proper repairs,
renewals and replacements,  betterments and improvements thereto consistent with

                                      -15-
<PAGE>
Securities Purchase Agreement

industry  practices;  (iii)  ensure  that each  officer of the  Company  and its
subsidiaries,  and each  other  employee  of the  Company  and its  subsidiaries
involved in the development,  implementation  or maintenance of the Company's or
such  subsidiary's  technology,  enters into non-compete,  non-solicitation  and
proprietary  information and invention assignment agreements;  and (iv) continue
to conduct only the business that the Company or its  subsidiaries is engaged in
on the date hereof or businesses related thereto.

          (h) Director; Observer. So long as the SSF Purchasers collectively own
at least 25% of the Securities  purchased by the SSF Purchasers pursuant to this
Agreement  (assuming the exercise of the SSF  Purchasers'  Warrants and adjusted
for stock  splits,  combinations,  dividends and the like),  the SSF  Purchasers
shall have the right, but not the obligation, to designate a nominee, reasonably
acceptable to the Board of Directors of the Company, to be elected as a director
of the Company and shall  promptly  notify the  Company of such  designee.  Upon
receipt of such notice,  the Company shall cause the SSF Purchasers'  nominee to
be placed on the slate at the next annual or special  meeting of stockholders of
the Company  for the  election of  directors  and shall use its best  efforts to
cause such nominee to be elected at such meeting of  stockholders.  In the event
the SSF  Purchasers  elect not to  designate  a nominee  for  director,  the SSF
Purchasers  may  designate  one  individual  (the "SSF  Observer") to attend all
meetings of the Company's  Board of Directors (and any committees  thereof) in a
non-voting observer capacity.  The SSF Observer shall be entitled to receive all
reports,  presentations  and  materials as if such SSF Observer were a member of
the Company's Board of Directors. The Company shall promptly reimburse, in full,
each  director  designated by the SSF  Purchasers  for any  reasonable  expenses
incurred in connection  with  meetings of the  Company's  Board of Directors and
committees   thereof,   and  shall   similarly   reimburse   the  SSF  Observer.
Notwithstanding  the foregoing,  (a) in the event the Board of Directors intends
to discuss or vote upon any matter that is subject to attorney-client privilege,
or otherwise  involves  confidential or proprietary  information of the Company,
the SSF Observer  may be excluded  from the portion of the meeting at which such
matter is discussed by the vote of a majority of the directors present,  and (b)
in the event any SSF Purchaser or any of its  affiliates or its  representatives
becomes  a direct  competitor  of the  Company,  the  Chairman  of the  Board of
Directors  or a majority of the  directors  present may exclude the SSF Observer
from the meetings of the Board of Directors.

          (i)  Amendment of Lock-Up  Agreement.  The Company shall not amend any
Lock-Up  Agreement  without the consent of those Purchasers owning or having the
right to acquire  sixty-six and  two-thirds  percent (66 2/3%) of the Shares and
the Warrant Shares (which such 66 2/3% must include the  Securities  held by the
SSF Purchasers).

          (j) Subsequent  Issuances.  In the event the Company proposes to issue
Common  Stock,   options  or  rights  to  acquire  Common  Stock  or  securities
convertible  into  Common  Stock to any  investor  during the twelve  month (12)
period following the First Closing Date, the Company shall be required to obtain
the prior written  consent of the SSF  Purchasers if the proposed  investment is
(i) for less than $10,000,000 in the

                                      -16-
<PAGE>
Securities Purchase Agreement

aggregate,  (ii) for less than  $5,000,000 by any one  purchaser,  or (iii) by a
Qualified Institutional Buyer (as such term is defined in the Securities Act) (a
"QIB"),  or any entity  controlled  by, under common control with, or affiliated
with a QIB,  regardless of the  investment  amount made by such QIB. The Company
shall require any investor  specified in clauses (i) through (iii) above,  (each
an  "Investor"),  to execute a lock-up  agreement  substantially  in the form of
Exhibit  D  attached  hereto  beginning  on the date of such  investment  by the
Investor  and  ending  180 days  after the  effective  date of the  registration
statement filed pursuant to the Registration  Rights Agreement.  Notwithstanding
the  foregoing,  this Section 6(k) shall not apply to any issuance of securities
by the Company  specified in (i),  (iii),  (v) through (viii) of Section 4(b) of
this  Agreement.  In connection  with this Section 6(k), or otherwise,  no party
shall be granted registration rights which would adversely impact the ability of
the  Purchasers  to register  all of their  Securities  in  accordance  with the
Registration Rights Agreement.

     7. Conditions to Obligations of the Purchasers at the Closings.

          (a) First Closing.  The obligation of each Purchaser purchasing Shares
at the First Closing to purchase such Shares shall be subject to the fulfillment
on or prior to the First Closing Date of the following conditions,  any of which
may be waived by such Purchaser:

               (i)  Certificates.  The Company shall have delivered to each such
Purchaser a duly executed  certificate  representing the Shares and the Warrants
issuable to such Purchaser.

               (ii) Trading. The Common Stock shall be trading on the OTCBB.

               (iii) Representations and Warranties; Performance of Obligations.
The  representations  and  warranties of the Company set forth in this Agreement
and in any other  Transaction  Document shall be true and correct when made, and
shall be true and  correct  on the First  Closing  Date with the same  force and
effect  as  if  they  had  been  made  on  and  as  of  said  date,  except  for
representations  and  warranties  made as of a specific date which shall be true
and correct as of such date.  The Company  shall have  performed,  satisfied and
complied  with all  obligations  and  conditions  required  to be  performed  or
observed  by it under this  Agreement  or any other  Transaction  Document on or
prior to the First Closing Date.

               (iv)  Consents  and  Waivers.  The  Company  shall  have made all
filings and obtained any and all consents  (including,  without limitation,  all
governmental or regulatory consents),  approvals or authorizations,  permits and
waivers   necessary  or  appropriate  for   consummation  of  the   transactions
contemplated by this Agreement and any other Transaction Document.

               (v) No Litigation or Legislation.  No statute,  rule, regulation,
decree,  ruling  or  injunction  shall  have been  enacted  or  entered,  and no
litigation,

                                      -17-
<PAGE>
Securities Purchase Agreement

proceeding,   government  inquiry  or  investigation  shall  be  pending,  which
challenges,  prohibits  or  restricts,  or seeks to  prohibit or  restrict,  the
consummation  of the  transactions  contemplated  by this Agreement or any other
Transaction  Document,  or restricts or impairs the ability of the Purchasers to
own an equity interest in the Company.

               (vi) Compliance Certificate.  The Company shall have delivered to
the Purchasers a  certificate,  executed by the Chief  Executive  Officer of the
Company,  dated as of the First Closing Date,  certifying to the  fulfillment of
the conditions set forth in Sections  7(a)(ii),  (iii), (iv), (v) and (viii) and
such other matters as the Purchasers shall reasonably request.

               (vii) Opinion of Counsel.  Certain Purchasers shall have received
from Bay Venture Counsel, LLP, counsel to the Company, an opinion addressed only
to those  Purchasers  named  therein,  dated as of the First  Closing  Date,  in
substantially the form attached hereto as Exhibit E.

               (viii) No Material Adverse Change.  There shall not have occurred
since the execution of any of the  Transaction  Documents  any Material  Adverse
Change.

               (ix)  Registration  Rights  Agreement.  The  Company  shall  have
executed and delivered the Registration Rights Agreement with such Purchasers.

               (x) Lock-Up  Agreement.  Except as otherwise  provided on Section
3(z) of the Schedule of  Exceptions,  the Company and certain of its  directors,
officers and stockholders shall have each entered into a lock-up  agreement,  in
substantially the form attached hereto as Exhibit D.

               (xi)  Amended and  Restated  Certificate  of  Incorporation.  The
Company shall have executed and delivered to Winston and Strawn, counsel for the
SSF Purchasers, the Amended and Restated Certificate of Incorporation,  together
with a letter of direction  for filing with the  Secretary of State of the State
of Delaware.

               (xii)  Aggregate  Investment.  The Company  shall have issued and
sold to the Purchasers at least 2,000,000 Shares at an aggregate  purchase price
of $8,000,000.

               (xiii) Fees and  Expenses.  The Company  shall have paid all fees
and expenses of Winston & Strawn pursuant to the terms of Section 6(e) hereto.

               (xiv) Notes.  In accordance  with Section 3(y) hereof,  the Notes
shall have been converted to Shares and warrants to purchase Common Stock.

          (b) Second Closing. The obligation of each Purchaser purchasing Shares
at  the  Second  Closing  to  purchase  such  Shares  shall  be  subject  to the
fulfillment

                                      -18-
<PAGE>
Securities Purchase Agreement

on or prior to the Second Closing Date of the following conditions, any of which
may be waived by such Purchaser:

               (i)  Certificates.  The Company shall have delivered to each such
Purchaser a duly executed  certificate  representing the Shares and the Warrants
issuable to such Purchaser.

               (ii) Trading. The Common Stock shall be trading on the OTCBB.

               (iii) Representations and Warranties; Performance of Obligations.
The  representations  and  warranties of the Company set forth in this Agreement
and in any other  Transaction  Document shall be true and correct when made, and
shall be true and  correct  on the Second  Closing  Date with the same force and
effect  as  if  they  had  been  made  on  and  as  of  said  date,  except  for
representations  and  warranties  made as of a specific date which shall be true
and correct as of such date.  The Company  shall have  performed,  satisfied and
complied  with all  obligations  and  conditions  required  to be  performed  or
observed  by it under this  Agreement  or any other  Transaction  Document on or
prior to the Second Closing Date.

               (iv)  Consents  and  Waivers.  The  Company  shall  have made all
filings and obtained any and all consents  (including,  without limitation,  all
governmental or regulatory consents),  approvals or authorizations,  permits and
waivers   necessary  or  appropriate  for   consummation  of  the   transactions
contemplated by this Agreement and any other Transaction Document.

               (v) No Litigation or Legislation.  No statute,  rule, regulation,
decree,  ruling  or  injunction  shall  have been  enacted  or  entered,  and no
litigation,  proceeding,  government inquiry or investigation  shall be pending,
which challenges,  prohibits or restricts, or seeks to prohibit or restrict, the
consummation  of the  transactions  contemplated  by this Agreement or any other
Transaction  Document,  or restricts or impairs the ability of the Purchasers to
own an equity interest in the Company.

               (vi) Compliance Certificate.  The Company shall have delivered to
each such Purchaser a certificate,  executed by the Chief  Executive  Officer of
the Company,  dated as of the Second Closing Date, certifying to the fulfillment
of the conditions set forth in Sections 7(b)(ii),(iii), (iv), (v) and (viii) and
such other matters as the Purchasers shall reasonably request.

               (vii) No Material  Adverse Change.  There shall not have occurred
since the execution of any of the  Transaction  Documents  any Material  Adverse
Change.

               (viii)  Registration  Rights  Agreement.  The Company  shall have
executed and delivered the Registration Rights Agreement with such Purchasers.

                                      -19-
<PAGE>
Securities Purchase Agreement

     8. Conditions to Obligation of the Company at the Closings.

          (a) First Closing. The obligation of the Company to sell and issue the
Shares and the Warrants to the  Purchasers at the First Closing shall be subject
to the  fulfillment  on or  prior to the  First  Closing  Date of the  following
conditions, any of which may be waived by the Company:

               (i) Purchase Price.  Each such Purchaser shall have delivered the
purchase price for the Shares to be purchased by such Purchaser hereunder.

               (ii)  Representations  and Warranties.  The  representations  and
warranties  made by such  Purchasers in this Agreement shall be true and correct
when made, and shall be true and correct on the First Closing Date with the same
force and effect as if they had been made on and as of said date.

               (iii) No Litigation or  Legislation.  No Federal,  State or local
statute, rule, regulation,  decree, ruling or injunction shall have been enacted
or entered, and no litigation,  proceeding,  government inquiry or investigation
shall be pending, which challenges,  prohibits,  restricts, or seeks to prohibit
or restrict, the consummation of the transactions contemplated by this Agreement
or the other agreements  referred to herein, or restricts or impairs the ability
of any Purchaser to own an equity interest in the Company.

          (b) Second  Closing.  The  obligation of the Company to sell and issue
the Shares and the  Warrants to each  Purchaser at the Second  Closing  shall be
subject  to the  fulfillment  on or prior to the  Second  Date of the  following
conditions, any of which may be waived by the Company:

               (i) Purchase Price.  Each such Purchaser shall have delivered the
purchase price for the Shares to be purchased by such Purchaser hereunder.

               (ii)  Representations  and Warranties.  The  representations  and
warranties  made by such  Purchasers in this Agreement shall be true and correct
when made,  and shall be true and  correct on the Second  Closing  Date with the
same force and effect as if they had been made on and as of said date.

               (iii) No Litigation or  Legislation.  No Federal,  State or local
statute, rule, regulation,  decree, ruling or injunction shall have been enacted
or entered, and no litigation,  proceeding,  government inquiry or investigation
shall be pending, which challenges,  prohibits,  restricts, or seeks to prohibit
or restrict, the consummation of the transactions contemplated by this Agreement
or the other agreements  referred to herein, or restricts or impairs the ability
of any Purchaser to own an equity interest in the Company.

                                      -20-
<PAGE>
Securities Purchase Agreement

     9. Miscellaneous.

          (a) Survival.  The  representations  and warranties of the Company and
the  agreements  and  covenants  set forth in this  Agreement  shall survive the
Closing  notwithstanding  any due  diligence  investigation  conducted  by or on
behalf of any  Purchaser.  The Company  shall  indemnify  and hold harmless each
Purchaser and each of such Purchaser's officers, directors, employees, partners,
members,  agents  and  affiliates  for any loss,  damage or  expense  (including
reasonable  counsel  fees)  arising  as a result of or  related to any breach or
alleged  breach by the  Company  of any of its  representations,  warranties  or
covenants set forth in this Agreement, including advancement of expenses as they
are incurred.

          (b) Governing Law; Jury Waiver.  This  Agreement  shall be governed by
and construed in accordance  with the laws of the State of New York. Each of the
Company and the Purchasers  irrevocably consent to the exclusive jurisdiction of
the United States Federal  courts and state courts,  located in New York County,
New York, in any suit or proceeding based on or arising under this Agreement and
irrevocably  agree that all claims in respect of such suit or proceeding  may be
determined  in such  courts.  The Company  irrevocably  waives the defense of an
inconvenient  forum to the  maintenance of such suit or  proceeding.  Service of
process  on the  Company  mailed by first  class  mail  shall be deemed in every
respect  effective  service  of  process  upon the  Company  in any such suit or
proceeding.  Nothing  herein  shall  affect the right of any  Purchaser to serve
process in any manner  permitted by law.  The parties  hereto waive all right to
trial by jury in any action or  proceeding to enforce or defend any rights under
this Agreement.

          (c)  Finder's  Fee.  Each  party  shall  indemnify  and hold the other
harmless from any liability for any commission or  compensation in the nature of
a finder's or broker's fee (and the costs and expenses of defending against such
liability or asserted  liability)  for which such party or any of its  officers,
partners, employees or representatives shall be responsible.

          (d)  Further  Assurances.  Each party,  whether  prior to or after the
Closing,  shall execute,  acknowledge and deliver all such other instruments and
documents, and shall take all such other actions, as may be reasonably requested
by any other party for the purpose of effecting and evidencing the  consummation
of the transactions contemplated by this Agreement.

          (e) Successors.  This Agreement shall be binding upon and inure to the
benefit of the successors and permitted assigns of the parties hereto; provided,
however,  that the  rights of any  Purchaser  hereunder  may be  transferred  in
connection with a transfer by such Purchaser of all or part of the Securities in
accordance with the terms of this Agreement or the terms of the Warrants, as the
case may be,  in a  private  transaction  exempt  from  registration  under  the
Securities  Act. Any transferee of any of the Securities to whom rights shall be
transferred in such a private transaction, other than

                                      -21-
<PAGE>
Securities Purchase Agreement

an affiliate of the Purchaser,  shall be required,  as a condition  precedent to
acquiring such Securities,  to agree in writing to be bound by all the terms and
conditions of this  Agreement.  A Purchaser may not assign its rights under this
Agreement in connection  with the sale of Shares or Warrant Shares pursuant to a
registration statement under the Securities Act or under Rule 144.

          (f) Counterparts;  Facsimile Execution. This Agreement may be executed
in  counterparts,  each of which shall be deemed an  original,  but all of which
together shall constitute one and the same instrument.  Any counterpart or other
signature  delivered by a party by facsimile shall be deemed for all purposes as
being good and valid execution and delivery of this Agreement by such party.

          (g) Entire Agreement. This Agreement,  including and incorporating all
Schedules  and all  Exhibits  hereto and  referred to herein,  the  Registration
Rights Agreement and the Warrants  constitute and contain the entire  agreements
and  understandings  of the parties  regarding  the subject  matter of each such
agreement  and  supercede  any  and  all  prior  negotiations,   correspondence,
understandings  and agreements,  written or oral, among the parties with respect
to the subject matter of any of the foregoing agreements.

          (h) Notices. All notices required to be given hereunder shall be given
by personal delivery,  facsimile  transmission,  nationally recognized overnight
carrier  (prepaid) or registered or certified mail,  postage prepaid with return
receipt  requested.  Notices  shall  be  addressed,  if to the  Company,  at its
principal  corporate  offices  located at 500  Sansome  Street,  Suite 503,  San
Francisco,  California  94111,  Facsimile No. (415) 391-3392,  Attention:  Chief
Executive  Officer and, if to a  Purchaser,  to the address set forth below such
Purchaser's  name on the signature pages hereto.  Notices  delivered  personally
shall  be  deemed  given  as of  actual  receipt;  notices  sent  via  facsimile
transmission  shall be deemed given as of one business day following  receipt by
the sender of written  confirmation  of transmission  thereof;  notices sent via
overnight  courier  shall be  deemed  given  as of one  business  day  following
sending; and notices mailed shall be deemed given as of five business days after
proper  mailing.  A party may  change his or its  address  by written  notice in
accordance with this Section 10(h).

          (i) Amendments and Waivers.  Except as otherwise provided therein,  no
provision of this Agreement or any other  Transaction  Document may be waived or
amended  other than by an  instrument  in writing  signed by the Company and the
Purchasers  owning  or having  the right to  acquire  sixty-six  and  two-thirds
percent  (66 2/3%) of the Shares and Warrant  Shares  (which such 66 2/3 percent
must include the Securities  held by the SSF  Purchasers).  Notwithstanding  the
foregoing,  no  amendment  or waiver  may  affect  any  Purchaser  in any manner
differently  from any other Purchaser  without the written consent of such first
mentioned Purchaser.

          (j) Severability. If one or more provisions of this Agreement shall be
held to be unenforceable under applicable law, such provisions shall be excluded
from  this  Agreement  to the  extent  unenforceable  and  the  balance  of this
Agreement shall be

                                      -22-
<PAGE>
Securities Purchase Agreement

unaffected  thereby  and shall  remain in full force and  effect to the  fullest
extent permitted by law.

          (k) Expenses.  Except as otherwise provided herein, the parties hereto
shall pay their own costs and expenses.

          (l)  Publicity.  The parties  shall  consult  with each other,  to the
extent  practicable,  as to the form and content of any press releases and other
third party  communications  or  disclosures  relating to this  Agreement or the
transactions  contemplated  hereby, and shall use reasonable efforts,  acting in
good faith, to agree upon disclosure  which shall be satisfactory to the parties
hereto.

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

          (n)  Termination of Covenants.  The covenants of the Company set forth
in Section 6 of this  Agreement  shall  terminate at such time as the Purchasers
shall not own any Securities issued pursuant to this Agreement.

                                      -23-
<PAGE>
   Signature Pages to Instant Video Technologies Securities Purchase Agreement

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

THE COMPANY:

INSTANT VIDEO TECHNOLOGIES, INC.

By:
   -----------------------------
Name:  Richard Lang
Title:  Chairman and CEO
Address: 500 Sansome Street
         San Francisco, California 94111
Facsimile No.: (415) 391-3392

THE SPECIAL SITUATIONS FUNDS:

SPECIAL SITUATIONS FUND III, L.P.           SPECIAL SITUATIONS CAYMAN FUND, L.P.

By:                                         By:
   -----------------------------               -----------------------------
Name: David Greenhouse                      Name: David Greenhouse
Title: Managing Director                    Title: Managing Director
Address: 153 E. 53rd Street,                Address: 153 E. 53rd Street,
         55th Floor                                  55th Floor
         New York, New York 10022                    New York, New York 10022
Facsimile No.:  (212) 207-6515              Facsimile No.: (212) 207-6515
Residence:  New York                        Residence: Cayman Islands

SPECIAL SITUATIONS PRIVATE EQUITY           SPECIAL SITUATIONS TECHNOLOGY
FUND, L.P.                                  FUND, L.P.

By:                                         By:
   -----------------------------               -----------------------------
Name: David Greenhouse                      Name: David Greenhouse
Title: Managing Director                    Title: Managing Director
Address: 153 E. 53rd Street,                Address: 153 E. 53rd Street,
         55th Floor                                  55th Floor
         New York, New York 10022                    New York, New York 10022
Facsimile No.:  (212) 207-6515              Facsimile No.: (212) 207-6515
Residence:  New York                        Residence: New York

                                      S-1
<PAGE>
OTHER PURCHASERS:

BAYSTAR CAPITAL, L.P.                       BAYSTAR CAPITAL, L.P.

By:                                         By:
   -----------------------------               -----------------------------
Name: Steven Lamar                          Name: Steven Lamar
Title: Managing Partner                     Title: Managing Partner
Address: 425 Market Street,                 Address: 425 Market Street,
         22nd Floor                                  22nd Floor
         San Francisco, CA  94105                    San Francisco, CA  94105
Facsimile No.: (415) 512-6488               Facsimile No.: (415) 512-6488
Residence: California                       Residence: California

BAYSTAR INTERNATIONAL LIMITED               CHELSEY CAPITAL

By:                                         By:
   -----------------------------               -----------------------------
Name: Steven Lamar                          Name: Erik Franklin
Title: Managing Partner                     Title:
Address: 425 Market Street,                 Address: 1370 Avenue of the
         22nd Floor                                  Americas
         San Francisco, CA  94105                    New York, New York 10019
Facsimile No.: (415) 512-6488               Facsimile No.: (212) 399-5651
Residence: California                       Residence: New York

ERIK FRANKLIN

By:
   -----------------------------
Name: Erik Franklin
Title:
Address: c/o Chelsey Capital
         1370 Avenue of the
         Americas
         New York, New York 10019
Facsimile No.: (212) 399-5651
Residence:

                                      S-2
<PAGE>
RAVINIA CAPITAL VENTURES                    STORIE PARTNERS L.P.

By:                                         By:
   -----------------------------               -----------------------------
Name: Kevin Eilian                          Name: Steven A. Ledger
Title: Managing Member                      Title: Managing Partner
Address: 2025 Broadway, Suite 30H           Address: 100 Pine Street,
         New York, N.Y. 10023                        Suite 2700
Facsimile No.: (212) 362-1238                        San Francisco, CA 94111
Residence: New York                         Facsimile No.: (415) 434-8043
                                            Residence: California

MERCER MANAGEMENT, INC.                     REED SLATKIN

By:                                         By:
   -----------------------------               -----------------------------
Name: Gordon Rock                           Address: 890 North Kellogg Avenue
Title: President                                     Santa Barbara, CA 93111
Address: 4820 East Mercer Way               Facsimile No.: (805) 967-3844
         Mercer Island, WA 98040            Residence: California
Facsimile No.: (206) 232-6874
Residence: Washington

                                            KYLE FAULKNER
                                            CHARLES SCHWAB & CO., INC.
                                            CUSTODIAN FBO
ROBERT LONDON                               KYLE WILKE FAULKNER SEP-IRA

By:                                         By:
   -----------------------------               -----------------------------
Address: c/o Cruttenden & Roth              Title: Chief Technology Officer
         809 Presidio Avenue                       Instant Video Technologies,
         Santa Barbara, CA 93101                   Inc
Facsimile No.: (805) 966-9302               Address: 5690 Ocean View Drive
Residence: California                                Oakland, CA 94618
                                            Facsimile No.: __________________
                                            Residence: California

                                            DONALD C. REINKE
DOROTHY LYDDON TRUST                        (Reinke Investment Group)

By:                                         By:
   -----------------------------               -----------------------------
Name: Dorothy Lyddon                        Address: Bay Venture Counsel, LLP
Title: Trustee                                       Lake Merritt Plaza
Address: 11801 Dorothy Anne Way                      Building
         Cupertino, CA 95014                         1999 Harrison Street,
Facsimile No.: (408) 252-6122                        Suite 1300
Residence: California                                Oakland, CA 94612
                                            Facsimile No.: (510) 834-7440
                                            Residence: California

                                      S-3
<PAGE>
BRADLEY H. REINKE                           JAMES L. BERG
(Reinke Investment Group)                   (Reinke Investment Group)

By:                                         By:
   -----------------------------               -----------------------------
Address: Bay Venture Counsel, LLP           Address: Bay Venture Counsel, LLP
         Lake Merritt Plaza                          Lake Merritt Plaza
         Building                                    Building
         1999 Harrison Street,                       1999 Harrison Street,
         Suite 1300                                  Suite 1300
         Oakland, CA 94612                           Oakland, CA 94612
Facsimile No.: (510) 834-7440               Facsimile No.: (510) 834-7440
Residence: California                       Residence: California

ROGER E. REINKE, TRTE                       GREGORY L. BEATTIE
(Reinke Investment Group)                   (Reinke Investment Group)

By:                                         By:
   -----------------------------               -----------------------------
Address: Bay Venture Counsel, LLP           Address: Bay Venture Counsel, LLP
         Lake Merritt Plaza                          Lake Merritt Plaza
         Building                                    Building
         1999 Harrison Street,                       1999 Harrison Street,
         Suite 1300                                  Suite 1300
         Oakland, CA 94612                           Oakland, CA 94612
Facsimile No.: (510) 834-7440               Facsimile No.: (510) 834-7440
Residence: California                       Residence: California

BRUCE WHITLEY                               STEPHEN P. PEZZOLA
(Reinke Investment Group)                   (Reinke Investment Group)

By:                                         By:
   -----------------------------               -----------------------------
Address: Bay Venture Counsel, LLP           Address: Bay Venture Counsel, LLP
         Lake Merritt Plaza                          Lake Merritt Plaza
         Building                                    Building
         1999 Harrison Street,                       1999 Harrison Street,
         Suite 1300                                  Suite 1300
         Oakland, CA 94612                           Oakland, CA 94612
Facsimile No.: (510) 834-7440               Facsimile No.: (510) 834-7440
Residence: California                       Residence: California

BRUCE P. JOHNSON                            ANN LOUISE MICEK
(Reinke Investment Group)                   (Micek Investment Group)

By:                                         By:
   -----------------------------               -----------------------------
Address: Bay Venture Counsel, LLP           Address: c/o 3600 West Bayshore
         Lake Merritt Plaza                          Suite 101
         Building                                    Palo Alto, CA 94303
         1999 Harrison Street,              Facsimile No.: (650) 325-0830
         Suite 1300                         Residence: California
         Oakland, CA 94612
Facsimile No.: (510) 834-7440
Residence: California

                                      S-4
<PAGE>
ELISSA MICEK                                REECE MICEK
(Micek Investment Group)                    (Micek Investment Group)

By:                                         By:
   -----------------------------               -----------------------------
Address: c/o 3600 West Bayshore             Address: c/o 3600 West Bayshore
         Suite 101                                   Suite 101
         Palo Alto, CA 94303                         Palo Alto, CA 94303
Facsimile No.: (650) 325-0830               Facsimile No.: (650) 325-0830
Residence: California                       Residence: California

LAURA MICEK                                 KAROLYN KELLY
(Micek Investment Group)                    (Micek Investment Group)

By:                                         By:
   -----------------------------               -----------------------------
Address: c/o 3600 West Bayshore             Address: c/o 3600 West Bayshore
         Suite 101                                   Suite 101
         Palo Alto, CA 94303                         Palo Alto, CA 94303
Facsimile No.: (650) 325-0830               Facsimile No.: (650) 325-0830
Residence: California                       Residence: California

JOHN J. MICEK III                           INDEPENDENCE PROPERTIES LLC
(Micek Investment Group)

By:                                         By:
   -----------------------------               -----------------------------
Address: c/o 3600 West Bayshore             Name: Joseph Barletta
         Suite 101                          Title:
         Palo Alto, CA 94303                Address: 530 Westgate Drive
Facsimile No.: (650) 325-0830                        Napa, CA  94558
Residence: California                       Facsimile No.: (707) 256-0877
                                            Residence: California

DOUGLAS GLEN                                GREG FRIEDMAN

By:                                         By:
   -----------------------------               -----------------------------
Address: 507 Bayview Drive                  Address: 4138 Terrace Street
         Manhattan Beach, CA 90266                   Oakland, CA 94611
Facsimile No.: (310) 376-6248               Facsimile No.: __________________
Residence: California                       Residence: California

                                      S-5
<PAGE>
FRANK KRAMER                                RYAN ALLISON

By:                                         By:
   -----------------------------               -----------------------------
Address: 5330 E. 17th Avenue                Address: 2520 West Lake Avenue North
         Denver, CO 80203                            Suite 200
Facsimile No.: (303) 394-1189                        Seattle, WA 98109
Residence: Colorado                         Facsimile No.: (206) 352-6310
                                            Residence: Washington

ARTHUR DOUGLAS ALLEN                        SUZANNE M. LENTZ

By:                                         By:
   -----------------------------               -----------------------------
Address: 1322 Isabella Avenue               Address: 3337 Broderick
         Mountain View, CA 94040                     San Francisco, CA 94123
Facsimile No.: (650) 948-2989               Facsimile No.: __________________
Residence: California                       Residence: California

KEITH KOCH                                  BRUCE HENSEL

By:                                         By:
   -----------------------------               -----------------------------
Address: 1120 Lincoln Street, Suite 900     Address: 1212 Old Orchard Road
         Denver, CO 80203                            Vincennes, IN 47591
Facsimile No.: (303) 863-7080               Facsimile No.: (812) 882-8279
Residence: Colorado                         Residence: Indiana

UNIVERSAL ASSURORS AGENCY, INC.             THOMAS KOSHY

By:                                         By:
   -----------------------------               -----------------------------
Name: John J. Micek III                     Title: Chief Operating Officer
Title:                                             Instant Video Technologies,
      --------------------------                   Inc
Address: 3600 West Bayshore, Suite 101      Address: 500 Beal Street, Suite 320
         Palo Alto, CA 94303                         San Francisco, CA 94105
Facsimile No.: (650) 325-0830               Facsimile No.: __________________
Residence: California                       Residence: California

                                      S-6
<PAGE>
JUNE S. WHITE                               HAN JOO LEE

By:                                         By:
   -----------------------------               -----------------------------
Title: Vice President, Engineering          Address: 5509 Ash Creek Lane
       Instant Video Technologies, Inc.              Plano, TX 75093
Address: 20 Plaid Place                     Facsimile No.: (972) 699-7586
         Hillsborough, CA 94010             Residence: Texas
Facsimile No.: __________________
Residence: California

YUAN MENG                                   BAY VENTURE COUNSEL, LLP

By:                                         By:
   -----------------------------               -----------------------------
Address: 281 Alvarado Avenue                Name: Donald C. Reinke
         Los Altos, CA 94022                Title: Managing Partner
Facsimile No.: (650) 947-7168               Address: Bay Venture Counsel, LLP
Residence: California                                Lake Merritt Plaza
                                                     Building
                                                     1999 Harrison Street,
                                                     Suite 1300
                                                     Oakland, CA 94612
                                            Facsimile No.: (510) 834-7440
                                            Residence: California

VINCE SAKOWSKI                              JOHN WORTHING

By:                                         By:
   -----------------------------               -----------------------------
Address: 845 Oak Grove Avenue               Address: 845 Oak Grove Avenue,
         Suite 105                                   Suite 105
         Menlo Park, CA 94025                        Menlo Park, CA 94025
Facsimile No.: (650) 327-6699               Facsimile No.: (650) 327-6699
Residence: California                       Residence: California

ROBERT WALTER                               MICHAEL MOSKOWITZ

By:                                         By:
   -----------------------------               -----------------------------
Address: 1700 Lincoln Street.               Title: Vice President, Business
         Suite 4700                                Development
         Denver, CO 80203-4547                     Instant Video Technologies,
Facsimile No.: (303) 830-1705                      Inc.
Residence:   Colorado                       Address: 200 Eagle Street
                                                     San Francisco, CA 94114
                                            Facsimile No.: __________________
                                            Residence: California

                                      S-7
<PAGE>
                                            R&T SHEPPARD FAMILY PARTNERS
THOMAS A. BELL                              ROGER SHEPPARD, General Partner

By:                                         By:
   -----------------------------               -----------------------------
Address: 5536 Manila Avenue                 Name: Roger Sheppard,
         Oakland, CA 94618                        General Partner
Facsimile No.: __________________           Address: 14 Bracken Court
Residence: California                                San Rafael, CA 94901
                                            Facsimile No.: (415) 456-0907
                                            Residence: California

SONJA ERICKSON                              FRANK H. SCHWARTZ

By:                                         By:
   -----------------------------               -----------------------------
Address: 887 Indian Rock Avenue             Title: Vice President, Technology
         Berkeley, CA 94707                        Partnerships
Facsimile No.: __________________                  Instant Video Technologies,
Residence: California                              Inc
                                            Address: 351 W. Oakwood Boulevard
                                                     Redwood City, CA 94061
                                            Facsimile No.: (650) 562-0220
                                            Residence: California

STEVEN HEIST                                JAMES E. LANDY

By:                                         By:
   -----------------------------               -----------------------------
Address: 30 Corwin Street, Apt. 12          Address: 8 Bond Place
         San Francisco, CA 94114                     Mt. Holly, NJ  08060
Facsimile No.: __________________           Facsimile No.: (609) 261-8155
Residence: California                       Residence: New Jersey

ZHIPING LIU                                 KIMBERLEY L. MASSINGALE

By:                                         By:
   -----------------------------               -----------------------------
Address: 36 Avalon Avenue                   Address: 5270 Boyd Avenue
         San Francisco, CA 94112                     Oakland, CA 94618
Facsimile No.: __________________           Facsimile No.: __________________
Residence: California                       Residence: California

                                      S-8
<PAGE>
FRANCIS E. VEGLIANTE                        RICHARD P. TREVOR

By:                                         By:
   -----------------------------               -----------------------------
Address: 15010 Eaglerise Drive              Address: 919 Hillcroft Circle
         Lithia, FL 33547                            Oakland, CA 94610
Facsimile No.: (813) 662-2774               Facsimile No.: __________________
Residence: Florida                          Residence: California

EVAN ZHANG                                  ED LYONS

By:                                         By:
   -----------------------------               -----------------------------
Address: 1458 39th Avenue                   Address: 918 Jackson Street
         San Francisco, CA 94122                     Albany, CA 94706
Facsimile No.: __________________           Facsimile No.: __________________
Residence: California                       Residence: California

ALLAN BER                                   PAUL SOC BANH

By:                                         By:
   -----------------------------               -----------------------------
Address: 1259 6th Avenue                    Address: 3713 Langdon Common
         San Francisco, CA 94122                     Fremont, CA 94538
Facsimile No.: __________________           Facsimile No.: __________________
Residence: California                       Residence: California

                                      S-9
<PAGE>
Securities Purchase Agreement

<TABLE>
                                                    Schedule 1

                                  Purchasers/Purchased Shares and Warrant Shares

<CAPTION>
                                                 Number of                        Aggregate          Form of
                   Purchaser                      Shares      Warrant Shares    Purchase Price       Payment
                   ---------                      ------      --------------    --------------       -------
<S>                                              <C>              <C>             <C>              <C>
Special Situations Fund III, L.P.                375,000          375,000         $1,500,000       Wire Transfer
                                                              Warrant Shares                         $1,500,000
Special Situations Cayman Fund, L.P.             125,000          125,000           $500,000       Wire Transfer
                                                              Warrant Shares                           $500,000
Special Situations Private Equity Fund, L.P      250,000          250,000         $1,000,000       Wire Transfer
                                                              Warrant Shares                         $1,000,000
Special Situations Technology Fund, L.P.         250,000          250,000         $1,000,000       Wire Transfer
                                                              Warrant Shares                         $1,000,000
BayStar Capital, L.P.                            375,000          375,000         $1,500,000       Wire Transfer
                                                              Warrant Shares                         $1,500,000
BayStar International Limited                    375,000          375,000          1,500,000       Wire Transfer
                                                              Warrant Shares                          1,500,000
Chelsey Capital                                  750,000          750,000         $3,000,000       Wire Transfer
                                                              Warrant Shares                         $3,000,000
Klein Hawk*                                            0                0                  0                  0
Erik Franklin                                    100,000          100,000           $400,000       Wire Transfer
                                                              Warrant Shares                           $400,000
Ravinia Capital Ventures LLC                     593,500          593,500         $2,374,000       Wire Transfer
                                                              Warrant Shares                         $2,374,000
Storie Partners LLP                              500,000          500,000         $2,000,000      Cancelled Notes:
                                                              Warrant Shares                         $1,500,000
                                                                                                       $500,000
Mercer Management, Inc.                          387,500          387,500         $1,550,000      Cancelled Notes:
                                                              Warrant Shares                           $450,000
                                                                                                       $100,000
                                                                                                       $500,000
                                                                                                       $300,000
                                                                                                       $200,000
Reed Slatkin                                     130,000          130,000           $520,000      Cancelled Note
                                                              Warrant Shares                          $520,000
Robert London                                    125,000          125,000           $500,000      Cancelled Note
                                                              Warrant Shares                          $500,000
Kyle Faulkner                                     62,500          62,500            $250,000      Wire Transfer
                                                              Warrant Shares                          $250,000
Dorothy Lyddon Trust                              50,000          50,000            $200,000      Wire Transfer
                                                              Warrant Shares                          $200,000
Reinke Investment Group                           40,000          40,000            $160,000      Cancelled Note
                                                              Warrant Shares                          $110,000
                                                                                                  Check - $50,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                 Number of                        Aggregate          Form of
                   Purchaser                      Shares      Warrant Shares    Purchase Price       Payment
                   ---------                      ------      --------------    --------------       -------
<S>                                              <C>              <C>             <C>              <C>

Micek Investment Group                            31,250          31,250            $125,000       Cancelled Note
                                                              Warrant Shares                           $100,000
                                                                                                   Check - $25,000
Independence Properties LLC                       25,000          25,000            $100,000       Cancelled Note
                                                              Warrant Shares                           $100,000
Doug Glen                                         25,000          25,000            $100,000       Wire Transfer
                                                              Warrant Shares                           $100,000
Greg Friedman                                     23,000          23,000             $92,000       Wire Transfer
                                                              Warrant Shares                            $92,000
Frank Kramer                                      18,750          18,750             $75,000       Cancelled Note
                                                              Warrant Shares                            $75,000
Ryan Allison                                      18,750          18,750             $75,000       Cancelled Note
                                                              Warrant Shares                            $75,000
Arthur Douglas Allen                              18,750          18,750             $75,000           Check
                                                              Warrant Shares                            $75,000
Suzanne M. Lentz                                  15,000          15,000             $60,000           Check
                                                              Warrant Shares                            $60,000
Keith Koch                                        12,500          12,500             $50,000       Cancelled Note
                                                              Warrant Shares                            $50,000
Bruce Hensel                                      12,500          12,500             $50,000       Cancelled Note
                                                              Warrant Shares                            $50,000
Universal Assurors Agency, Inc.                   12,500          12,500             $50,000       Cancelled Note
                                                              Warrant Shares                            $50,000
Thomas Koshy                                      10,000          10,000             $40,000           Check
                                                              Warrant Shares                            $40,000
June S. White                                     10,000          10,000             $40,000           Check
                                                              Warrant Shares                            $40,000
Han Joo Lee                                       10,000          10,000             $40,000       Cancelled Note
                                                              Warrant Shares                            $40,000
Yuan Meng                                         10,000          10,000             $40,000       Wire Transfer
                                                              Warrant Shares                            $40,000
Bay Venture Counsel , LLP                         6,250            6,250             $25,000       Wire Transfer
                                                              Warrant Shares                            $25,000
Vince Sakowski                                    6,250            6,250             $25,000       Cancelled Note
                                                              Warrant Shares                            $25,000
John Worthing                                     6,250            6,250             $25,000       Cancelled Note
                                                              Warrant Shares                            $25,000
Robert Walter                                     6,250            6,250             $25,000       Cancelled Note
                                                              Warrant Shares                            $25,000
Michael Moskowitz                                 6,000            6,000             $24,000           Check
                                                              Warrant Shares                            $24,000
Tomas A. Bell                                     5,000            5,000             $20,000           Check
                                                              Warrant Shares                            $20,000
R&T Sheppard Family Partners
Roger Sheppard, Managing Partner                  3,750            3,750             $15,000       Cancelled Note
                                                              Warrant Shares                            $15,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                 Number of                        Aggregate          Form of
                   Purchaser                      Shares      Warrant Shares    Purchase Price       Payment
                   ---------                      ------      --------------    --------------       -------
<S>                                              <C>              <C>             <C>              <C>
Sonja Erickson                                    3,750            3,750             $15,000           Check
                                                              Warrant Shares                            $15,000
James E. Landy                                    3,750            3,750             $15,000           Check
                                                              Warrant Shares                            $15,000
Frank H. Schwartz                                 3,250            3,250             $13,000           Check
                                                              Warrant Shares                            $13,000
Steven Heist                                      2,500            2,500             $10,000           Check
                                                              Warrant Shares                            $10,000
Zhiping Liu                                       2,500            2,500             $10,000           Check
                                                              Warrant Shares                            $10,000
Kimberley L. Massingale                           2,000            2,000              $8,000           Check
                                                              Warrant Shares                             $8,000
Francis E. Vegliante                              2,000            2,000              $8,000           Check
                                                              Warrant Shares                             $8,000
Richard P. Trevor                                 2,000            2,000              $8,000           Check
                                                              Warrant Shares                             $8,000
Evan Zhang                                        2,000            2,000              $8,000           Check
                                                              Warrant Shares                             $8,000
Ed Lyons                                          1,250            1,250              $5,000           Check
                                                              Warrant Shares                             $5,000
Allan Ber                                         1,125            1,125              $4,500           Check
                                                              Warrant Shares                             $4,500
Paul Soc Banh                                     1,000            1,000              $4,000           Check
                                                              Warrant Shares                             $4,000
                                                ---------      ---------         -----------        -----------
Total                                           4,808,375      4,808,375         $19,233,500        $19,233,500
                                                =========      =========         ===========        ===========
</TABLE>

----------
*    While there was a provision in the  Agreement to allow Klein Hawk to invest
     by January 31, no investment was made.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00007-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00007-of-00352.parquet"}]]