Document:

FOURTH AMENDMENT AND WAIVER
                           ---------------------------

               THIS FOURTH AMENDMENT TO CREDIT AGREEMENT AND WAIVER, dated as of
February 15, 2000 (this "AMENDMENT AND WAIVER"), to the Credit Agreement,  dated
as of March 31, 1998 and as previously amended to date, is by and among Columbus
McKinnon Corporation, a New York corporation (the "BORROWER"), the Lenders party
thereto and Fleet  National  Bank, as the Initial  Issuing Bank,  the Swing Line
Bank and the Administrative Agent.

                             PRELIMINARY STATEMENTS
                             ----------------------

               (A) The  Borrower,  the Lenders and Fleet  National  Bank, as the
Initial  Issuing Bank,  the Swing Line Bank and the  Administrative  Agent,  are
parties to the Credit  Agreement,  dated as of March 31, 1998, as amended by the
First Amendment to Credit Agreement,  dated as of September 23, 1998, the Second
Amendment to Credit  Agreement and Consent,  dated as of February 12, 1999,  and
the Third  Amendment to Credit  Agreement,  dated as of November 16, 1999 (as it
may be further amended,  restated,  supplemented or otherwise modified from time
to time, the "CREDIT AGREEMENT").

               (B) Gaffey, Inc., a subsidiary of the Borrower and Guarantor,  is
in the process of selling its facility (a service center and office  structure),
located on 12th Street in Tulsa,  Oklahoma at fair market value for an aggregate
cash purchase price not to exceed $800,000 (the "Sale of Assets"),  as permitted
by Section 5.02(e)(iii) of the Credit Agreement.

               (C) Section 2.06(b)(ii) of the Credit Agreement requires that the
Net Cash  Proceeds  from the  Sale of  Assets  be  applied  to make a  mandatory
prepayment of the then outstanding Advances.

               (D) The  Administrative  Agent  and  Lenders  desire to waive the
requirements  of  Section  2.06(b)(ii)  of the  Credit  Agreement  and to  amend
Sections  5.03(b),  5.03(c),  5.03(d) and 5.04(d) of the Credit Agreement as set
forth herein.

               Terms defined in the Credit  Agreement and not otherwise  defined
herein shall have the meanings ascribed to them in the Credit Agreement.

               NOW,  THEREFORE,  in  consideration  of the  premises  and of the
mutual  covenants and  agreements  contained  herein,  the parties hereto hereby
agree as follows:

               ARTICLE 1.   WAIVER.     Subject  to  the  satisfaction  of   the
conditions set forth in Article 4 hereof:

               (a)  The  Administrative  Agent  and  Lenders  hereby  waive  any
prepayment required by Section 2.06(b)(ii) of the Credit Agreement in connection
with the Sale of Assets and consent to the use of the Net Cash Proceeds from the
Sale of Assets  for  working  capital  and  other  general  corporate  purposes;
PROVIDED,  THAT,  the Sale of Assets  complies  with the  provisions  of Section
5.02(e)(iii) of the Credit Agreement;  and, FURTHER PROVIDED, THAT, the Net Cash
Proceeds from the Sale of Assets do not exceed $800,000.

                                       1
<PAGE>

               (b) The  foregoing  waiver is only  applicable  and shall only be
effective in the specific  instance and for the specific purpose for which made.
The waiver is  expressly  limited  to the facts and  circumstances  referred  to
herein and shall not  operate  (i) as a waiver of or  consent to  non-compliance
with any other  Section or provision  of the Credit  Agreement or any other Loan
Document or (ii) as a waiver of any other  right,  power or remedy of either the
Administrative Agent or any Lender Party under the Credit Agreement or any other
Loan Document.

               ARTICLE 2.   AMENDMENTS.

               Section 2.1  Section 5.03(b) of  the Credit  Agreement is deleted
in its entirety and replaced by the following:

               "(b) QUARTERLY FINANCIALS.  As soon as available and in any event
within forty-five (45) days after the end of each of the first, second and third
fiscal  quarters of each Fiscal Year,  and as soon as available and in any event
within  ninety  (90) days  after the end of the  fourth  fiscal  quarter of each
Fiscal Year, a Consolidated  balance sheet of the Borrower and its Subsidiaries,
as of the end of such  quarter  and a  Consolidated  statement  of income  and a
Consolidated  statement of cash flows of the Borrower and its Subsidiaries,  and
consolidating   statements  of  income  of  the  Borrower  and  its  Significant
Subsidiaries,  for  the  period  commencing  at the end of the  previous  fiscal
quarter  and  ending  with the end of such  fiscal  quarter  and a  Consolidated
statement of income and a  Consolidated  statement of cash flows of the Borrower
and its Subsidiaries, and consolidating statements of income of the Borrower and
its  Significant  Subsidiaries,  for  the  period  commencing  at the end of the
previous  Fiscal Year and ending with the end of such  fiscal  quarter,  setting
forth  in each  case in  comparative  form  the  corresponding  figures  for the
corresponding period of the preceding Fiscal Year and the corresponding  figures
from the  budgeted  forecasts  delivered  pursuant  to Section  5.03(e) for such
period and for the Fiscal Year which  includes  such period,  all in  reasonable
detail and duly  certified  by the chief  financial  officer of the  Borrower as
having been prepared in accordance  with GAAP (subject to normal  year-end audit
adjustments),  together with (i) a certificate  of said officer  stating that no
Default has  occurred  and is  continuing  or, if a Default has  occurred and is
continuing,  a  statement  as to the  nature  thereof  and the  action  that the
Borrower has taken and proposes to take with respect thereto and (ii) a schedule
in form satisfactory to the Administrative Agent of the computations used by the
Borrower in determining  compliance  with the financial  covenants  contained in
Sections 5.04(a) through (d), PROVIDED,  that in the event of any change in GAAP
used in the  preparation of such financial  statements,  the Borrower shall also
provide,  if necessary for the  determination of compliance with Section 5.04, a
statement of  reconciliation  conforming  such financial  statements to GAAP. In
connection with the Borrower's  delivery of all quarterly  financial  statements
pursuant to the foregoing, the Borrower shall also furnish to the Administrative
Agent and Lender  Parties a contract  progress  report with  respect to each and
every ongoing contracted for project in process of the Borrower,  LICO or any of
their respective  Subsidiaries which involves aggregate payments during the life
of such contract in excess of $5,000,000.  All such contract in progress reports
shall be prepared in a manner and presented in a form  reasonably  acceptable to
the Administrative Agent."

                                       2
<PAGE>

               Section 2.2  Section 5.03(c) of the Credit  Agreement is  deleted
in its entirety and replaced by the following:

               "(c) ANNUAL  FINANCIALS.  As soon as  available  and in any event
within one hundred and five (105) days after the end of each Fiscal Year, a copy
of the annual audit report for such year for the Borrower and its  Subsidiaries,
including  therein  a  Consolidated  balance  sheet  of  the  Borrower  and  its
Subsidiaries,  as of the end of such Fiscal Year and a Consolidated statement of
income  and a  Consolidated  statement  of cash  flows of the  Borrower  and its
Subsidiaries,  and  consolidating  statements  of income of the Borrower and its
Significant  Subsidiaries,  for such Fiscal Year,  in each case setting forth in
comparative  form the  corresponding  figures for the prior  Fiscal Year and the
corresponding  figures from the budgeted forecasts delivered pursuant to Section
5.03(e) for such Fiscal Year and in each case  accompanied  (in the case of such
Consolidated   financial   statements)   by  an   opinion   acceptable   to  the
Administrative Agent, with the consent of the Required Lenders, of Ernst & Young
LLP or other  independent  certified public  accountants of recognized  national
standing  acceptable  to the  Administrative  Agent,  with  the  consent  of the
Required  Lenders,  together  with (i) a letter of such  accounting  firm to the
Administrative  Agent  and  Lender  Parties  stating  that in the  course of the
regular audit of the business of the Borrower and its Subsidiaries,  which audit
was conducted by such  accounting  firm in accordance  with  generally  accepted
auditing  standards,  such  accounting  firm has  obtained no  knowledge  that a
Default has occurred and is continuing, or if, in the opinion of such accounting
firm,  a Default has occurred  and is  continuing,  a statement as to the nature
thereof, (ii) a schedule in form satisfactory to the Administrative Agent of the
computations  used by such  accountants  in  determining,  as of the end of such
Fiscal Year, compliance with the covenants contained in Sections 5.04(a) through
(d),  PROVIDED,  that in the event of any change in GAAP used in the preparation
of such financial statements,  the Borrower shall also provide, if necessary for
the determination of compliance with Section 5.04, a statement of reconciliation
conforming  such  financial  statements to GAAP and (iii) a  certificate  of the
chief financial officer of the Borrower stating that no Default has occurred and
is continuing or, if a Default has occurred and is continuing, a statement as to
the nature  thereof and the action that the  Borrower  has taken and proposes to
take with respect thereto."

               Section 2.3  Section 5.03(d) of the Credit  Agreement is  deleted
in its entirety and replaced by the following:

               "(d) PRO FORMA FINANCIALS. In connection with the delivery of all
financial statements delivered under Section 5.03(b) or 5.03(c) above, pro forma
statements  of  income   reflecting  the  acquisition  of  LICO  and  all  other
acquisitions  made by the Borrower or one of its Subsidiaries at any time during
such period,  such pro forma statement of income to be prepared both (i) for the
period commencing at the end of the previous Fiscal Year and ending with the end
of such fiscal quarter or Fiscal Year, as the case may be, as if the acquisition
of LICO and all such other  acquisitions  had occurred at the  beginning of such
period  and (ii) for the  corresponding  period of the  preceding  Fiscal  Year,
setting forth the  corresponding  figures for such  corresponding  period of the
preceding  Fiscal  Year,  as if the  acquisition  of  LICO  and all  such  other
acquisitions  had occurred at the beginning of such  corresponding  period.  All
such pro forma  statements of income shall be prepared as if the  acquisition of
LICO and all such  other  acquisitions  had  occurred  at the  beginning  of the

                                       3
<PAGE>

relevant periods reflected therein.  All pro forma statements of income shall be
prepared  on a  basis  and  presented  in a form  reasonably  acceptable  to the
Administrative  Agent.  The  requirements  set forth in this Section  5.03(d) to
deliver pro forma  statements of income with respect to the  acquisition of LICO
or any other acquisition made by the Borrower or one of its Subsidiaries, as the
case may be, shall continue  until such time as the  acquisition of LICO or such
other acquisition, as the case may be, has been fully reflected for all relevant
time periods in the financial  statements  delivered  under  Section  5.03(b) or
5.03(c) above, as appropriate,  whereupon the  requirements to deliver pro forma
statements  of income  with  respect  to the  acquisition  of LICO or such other
acquisition,  as the case may be, shall cease with respect to the acquisition of
LICO or such other  acquisition,  as the case may be, only,  but shall  continue
with  respect  to  any  and  all  acquisitions  of  the  Borrower  or one of its
Subsidiaries  other than the acquisition of LICO or such other  acquisition,  as
the case may be."

               Section 2.4  Section  5.04(d)(ii)  of  the  Credit  Agreement  is
amended by deleting  therefrom the words "March 31, 1998" and by replacing  them
with the words "October 3, 1999".

               ARTICLE 3.   REPRESENTATIONS AND WARRANTIES.  The Borrower hereby
represents and warrants to the Lenders and Administrative Agent that:

               Section 3.1  EXISTING REPRESENTATIONS.  Each of  the  representa-
tions and warranties  contained in Article IV of the Credit Agreement is true in
all respects on, and as though made as of, the date hereof,  other than any such
representation  or warranty  that, by its terms,  refers to a specific  date, in
which case, as of such specific date.

               Section 3.2  NO DEFAULT.  As of the date hereof,  there exists no
Default or Event of Default under the Credit Agreement and no event which,  with
the giving of notice or lapse of time,  or both,  would  constitute a Default or
Event of Default.

               ARTICLE 4.   CONDITIONS TO AMENDMENT AND WAIVER.The effectiveness
of the waiver  contained in Article 1 and the amendments  contained in Article 2
shall be subject to the fulfillment of the following conditions precedent:

               (a) The  Borrower,  Administrative  Agent and Lenders  shall have
executed and delivered to the Administrative Agent this Amendment and Waiver.

               ARTICLE 5.   REFERENCE TO AND  EFFECT UPON  THE CREDIT  AGREEMENT
AND OTHER LOAN AGREEMENTS.

               Section 5.1  Except as specifically waived or amended herein, the
Credit Agreement and each of the other Loan Documents shall remain in full force
and effect in accordance with their respective terms and are hereby ratified and
confirmed in all respects.

               Section 5.2  The execution, delivery and effect of this Amendment
and Waiver shall be limited  precisely as written and shall not be deemed to (i)
be a consent  to any waiver of any term or  condition,  or to any  amendment  or
modification of any term or condition (except as specifically waived pursuant to
Section  1 herein or  amended  pursuant  to  Section 2  herein),  of the  Credit
Agreement  or any other Loan  Document  or (ii)  prejudice  any right,  power or
remedy  which any Agent or any Lender now has or may have in the future under or

                                       4
<PAGE>

in connection with the Credit  Agreement,  the Notes or any other Loan Document.
Each  reference  in the  Credit  Agreement  to  "this  Agreement",  "hereunder",
"hereof",  "herein" or any other word or words of similar  import shall mean and
be a reference to the Credit Agreement as amended hereby,  and each reference in
any other Loan Document to the Credit  Agreement or any word or words of similar
import shall be and mean a reference to the Credit Agreement as amended hereby.

               ARTICLE 6.   MISCELLANEOUS.

               Section 6.1  GOVERNING  LAW.  THIS  AMENDMENT AND WAIVER SHALL BE
GOVERNED BY AND  CONSTRUED IN  ACCORDANCE  WITH THE INTERNAL LAWS (AS OPPOSED TO
CONFLICTS OF LAW PROVISIONS) OF THE STATE OF NEW YORK.

               Section 6.2  COUNTERPARTS.  This  Amendment  and  Waiver  may  be
signed in any number of  counterparts  with the same effect as if the signatures
thereto  and  hereto  were upon the same  instrument.  Delivery  of an  executed
signature page to this  Amendment and Waiver by facsimile  shall be as effective
as delivery of an original executed signature page.

               Section 6.3  BINDING EFFECT;ASSIGNMENT. This Amendment and Waiver
shall  be  binding  upon  and  inure  to the  benefit  of the  Borrower  and its
respective  successors  and to the benefit of the  Administrative  Agent and the
Lenders and their respective successors and assigns.

               Section 6.4  FEES  AND  EXPENSES.  The  Borrower  shall  pay the
Administrative Agent for all reasonable  expenses,  including reasonable fees of
legal  counsel,  incurred by the  Administrative  Agent in  connection  with the
preparation,  negotiation  and  execution of this  Amendment  and Waiver and any
related matters.

                            [SIGNATURE PAGES FOLLOW]

                                       5
<PAGE>

IN WITNESS WHEREOF,  the parties hereto have caused this Amendment and Waiver to
be executed by their respective  officers  thereunto duly authorized on the date
first above written.

                                    COLUMBUS MCKINNON CORPORATION

                                    By: /S/ R. L. MONTGOMERY
                                        -------------------------------
                                        Title: Executive Vice President

<PAGE>

               The  undersigned  hereby  acknowledge and agree to this Amendment
and  Waiver,  and agree  that the  Guaranty,  the  Security  Agreement,  and the
Intellectual Property Security Agreement,  and each other Loan Document executed
by the  undersigned  shall  remain in full  force and  effect and each is hereby
ratified  and  confirmed by and on behalf of the  undersigned,  this 15th day of
February, 2000.

                                    AUTOMATIC SYSTEMS, INC.

                                    By: /S/ R. L. MONTGOMERY
                                        -------------------------------
                                        Title: Treasurer

                                    LICO STEEL, INC.

                                    By: /S/ R. L. MONTGOMERY
                                        -------------------------------
                                        Title: Treasurer

                                    ABELL-HOWE CRANE, INC.

                                    By: /S/ R. L. MONTGOMERY
                                        -------------------------------
                                    Title: Treasurer

                                    G.L. INTERNATIONAL INC.

                                    By: /S/ R. L. MONTGOMERY
                                        -------------------------------
                                        Title: Treasurer

                                    GAFFEY, INC.

                                    By: /S/ R. L. MONTGOMERY
                                        -------------------------------
                                        Title: Treasurer

                                    HANDLING SYSTEMS AND CONVEYORS, INC.

                                    By: /S/ R. L. MONTGOMERY
                                        -------------------------------
                                        Title: Treasurer
<PAGE>

                                    YALE INDUSTRIAL PRODUCTS, INC.

                                    By: /S/ R. L. MONTGOMERY
                                        -------------------------------
                                        Title: Treasurer

                                    WASHINGTON EQUIPMENT COMPANY

                                    By: /S/ R. L. MONTGOMERY
                                        -------------------------------
                                        Title: Treasurer

<PAGE>

                                    FLEET NATIONAL BANK, as Administrative Agent

                                    By: /S/ JOHN G. TIERNEY
                                        -------------------------------
                                        Title:  Vice President

                                    FLEET NATIONAL BANK, as Initial Issuing Bank

                                    By: /S/ JOHN G. TIERNEY
                                        -------------------------------
                                        Title:  Vice President

                                    FLEET NATIONAL BANK, as Swing Line Bank

                                    By: /S/ JOHN G. TIERNEY
                                        -------------------------------
                                        Title:  Vice President

                                    LENDERS

                                    FLEET NATIONAL BANK

                                    By: /S/ JOHN G. TIERNEY
                                        -------------------------------
                                        Title:  Vice President

<PAGE>

                                    LENDERS

                                    ABN-AMRO BANK N.V. NEW YORK

                                    BRANCH, as a Co-Agent and Lender

                                    By: /S/ DONALD SUTTON
                                        -------------------------------
                                        Title:  Vice President

                                    By: /S/ JULIETTE MOUND
                                        -------------------------------
                                        Title: Assistant Vice President

<PAGE>

                                    LENDERS

                                    THE BANK OF NOVA SCOTIA,  as  a Co-Agent and
                                    Lender

                                    By: /S/ WILLIAM R. COLLINS
                                        -------------------------------
                                        Title:  Managing Director

<PAGE>

                                    LENDERS

                                    MANUFACTURERS AND TRADERS TRUST COMPANY,  as
                                    a Co-Agent and Lender

                                    By: /S/ STEPHEN J. WYDYSH
                                        -------------------------------
                                        Title: Vice President

<PAGE>

                                    LENDERS

                                    HSBC BANK USA   (formerly  known  as  Marine
                                    Midland Bank), as a Co-Agent and Lender

                                    By: /S/ D. C. ENGLISH
                                        -------------------------------
                                        Title:  Associate Director

<PAGE>

                                    LENDERS

                                    COMERICA BANK

                                    By: /S/ KRISTINE L. VIGLIOTTI
                                        -------------------------------
                                        Title: Assistant Vice President

<PAGE>

                                    LENDERS

                                    FIRST UNION NATIONAL BANK

                                    By: /S/ MARK B. FELKER
                                        -------------------------------
                                        Title:  Senior Vice President

<PAGE>

                                    LENDERS

                                    KEYBANK NATIONAL ASSOCIATION

                                    By: /S/ FRANCIS W. LUTZ, JR.
                                        -------------------------------
                                        Title:  Portfolio Officer

<PAGE>

                                    LENDERS

                                    MELLON BANK, N.A.

                                    By: /S/ ED KLOECKER
                                        -------------------------------
                                        Title:  Vice President

<PAGE>

                                    LENDERS

                                    BANKERS TRUST COMPANY

                                    By:
                                        -------------------------------

                                        Title:

<PAGE>

                                    LENDERS

                                    THE BANK OF NEW YORK

                                    By: /S/ THOMAS C. MCCROHAN
                                        -------------------------------
                                    Title:  Vice President

<PAGE>

                                    LENDERS

                                    NATIONAL BANK OF CANADA

                                    By: /S/ ROBERT UHRIG
                                        -------------------------------
                                        Title: Vice President and Manager

                                    By: /S/ MICHAEL S. WOODARD
                                        -------------------------------
                                        Title:  Vice President

<PAGE>

                                    LENDERS

                                    NATIONAL CITY BANK OF PENNSYLVANIA

                                    By: /S/ WILLIAM A. FELDMANN
                                        -------------------------------
                                        Title:  Vice PresidentNEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.

                             FIDELITY HOLDINGS, INC.

                                     WARRANT

Warrant No. [ ]                                          Dated: February 8, 2000

      Fidelity Holdings, Inc., a Nevada corporation (the "Company"), hereby
certifies that, for value received, [ ], or its registered assigns ("Holder"),
is entitled, subject to the terms set forth below, to purchase from the Company
up to a total of [ ] shares of common stock, $.01 par value per share (the
"Common Stock"), of the Company (each such share, a "Warrant Share" and all such
shares, the "Warrant Shares") at an exercise price equal to $16.00 per share (as
adjusted from time to time as provided in Section 9, the "Exercise Price"), or
to convert all or a portion of the Warrant Shares into a warrant to purchase a
pro-rata portion of the stock of a Spun-Off Entity (as defined in Section 11)
pursuant to the provisions of Section 11, at any time and from time to time from
and after the date hereof and through and including February 8, 2005 (the
"Expiration Date"), and subject to the following terms and conditions:

            1. Registration of Warrant. The Company shall register this Warrant,
upon records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, and the Company shall not be affected by
notice to the contrary.

            2. Registration of Transfers and Exchanges.

                  (a) The Company shall register the transfer of any portion of
this Warrant in the Warrant Register, upon surrender of this Warrant, with the
Form of Assignment attached

<PAGE>

hereto duly completed and signed, to the Transfer Agent or to the Company at the
office specified in or pursuant to Section 3(b). Upon any such registration or
transfer, a new warrant to purchase Common Stock, in substantially the form of
this Warrant (any such new warrant, a "New Warrant"), evidencing the portion of
this Warrant so transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring Holder. The acceptance of the New Warrant by
the transferee thereof shall be deemed the acceptance of such transferee of all
of the rights and obligations of a holder of a Warrant.

                  (b) This Warrant is exchangeable, upon the surrender hereof by
the Holder to the office of the Company specified in or pursuant to Section 3(b)
for one or more New Warrants, evidencing in the aggregate the right to purchase
the number of Warrant Shares which may then be purchased hereunder. Any such New
Warrant will be dated the date of such exchange.

            3. Duration and Exercise of Warrants.

                  (a) This Warrant shall be exercisable by the registered Holder
on any business day before 6:30 P.M., New York City time, at any time and from
time to time on or after the date hereof to and including the Expiration Date.
At 6:30 P.M., New York City time on the Expiration Date, the portion of this
Warrant not exercised prior thereto shall be and become void and of no value.
Prior to the Expiration Date, the Company may not call or otherwise redeem this
Warrant without the prior written consent of the Holder.

                  (b) Subject to Sections 2(b), 6 and 10, upon surrender of this
Warrant, with the Form of Election to Purchase attached hereto duly completed
and signed, to the Company at its address for notice set forth in Section 12 and
upon payment of the Exercise Price multiplied by the number of Warrant Shares
that the Holder intends to purchase hereunder, in the manner provided hereunder,
all as specified by the Holder in the Form of Election to Purchase, the Company
shall promptly (but in no event later than 3 business days after the Date of
Exercise (as defined herein)) issue or cause to be issued and cause to be
delivered to or upon the written order of the Holder and in such name or names
as the Holder may designate, a certificate for the Warrant Shares issuable upon
such exercise, free of restrictive legends except (i) either in the event that a
registration statement covering the resale of the Warrant Shares and naming the
Holder as a selling stockholder thereunder is not then effective or the Warrant
Shares are not freely transferable without volume restrictions pursuant to Rule
144(k) promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), or (ii) if this Warrant shall have been issued pursuant to a written
agreement between the original Holder and the Company, as required by such
agreement. Any person so designated by the Holder to receive Warrant Shares
shall be deemed to have become holder of record of such Warrant Shares as of the
Date of Exercise of this Warrant.

                  A "Date of Exercise" means the date on which the Company shall
have received (i) this Warrant (or any New Warrant, as applicable), with the
Form of Election to Purchase attached hereto (or attached to such New Warrant)
appropriately completed and duly signed, and (ii)

                                       -2-

<PAGE>

payment of the Exercise Price for the number of Warrant Shares so indicated by
the holder hereof to be purchased.

                  (c) This Warrant shall be exercisable, either in its entirety
or, from time to time, for a portion of the number of Warrant Shares. If less
than all of the Warrant Shares which may be purchased under this Warrant are
exercised at any time, the Company shall issue or cause to be issued, at its
expense, a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares for which no exercise has been evidenced by this Warrant.

            4. Piggyback Registration Rights. The Holder shall be entitled to
the piggyback registration rights afforded to a holder pursuant to Section 6(f)
of that certain Registration Rights Agreement dated as of the date hereof, among
the Company and the signatories thereto.

            5. Certain Exercise Restrictions.

                  (a) A Holder may not exercise this Warrant to the extent such
exercise would result in the Holder, together with any affiliate thereof,
beneficially owning (as determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and the rules
promulgated thereunder) in excess of 4.999% of the then issued and outstanding
shares of Common Stock, including shares of Common Stock issuable upon such
exercise and held by such Holder after application of this Section. Since the
Holder will not be obligated to report to the Company the number of shares of
Common Stock it may hold at the time of an exercise hereunder, unless the
exercise at issue would result in the issuance of shares of Common Stock in
excess of 4.999% of the then outstanding shares of Common Stock without regard
to any other shares of Common Stock which may be beneficially owned by the
Holder or an affiliate thereof, the Holder shall have the authority and
obligation to determine whether the restriction contained in this Section will
limit any particular exercise hereunder and to the extent that the Holder
determines that the limitation contained in this Section applies, the
determination of which portion of this Warrant is exercisable shall be the
responsibility and obligation of the Holder. If the Holder has delivered a Form
of Election to Purchase for a number of Warrant Shares that would result in the
issuance in excess of the permitted amount hereunder, the Company shall notify
the Holder of this fact and shall honor the exercise for the maximum portion of
this Warrant permitted to be exercised on such Date of Exercise in accordance
with the periods described herein and disregard the balance of such Form of
Election to Purchase, as if never delivered The provisions of this Section may
be waived by a Holder (but only as to itself and not to any other Holder) upon
not less than 61 days prior notice to the Company. Other Holders shall be
unaffected by any such waiver.

                  (b) A Holder may not exercise this Warrant to the extent such
exercise would result in the Holder, together with any affiliate thereof,
beneficially owning (as determined in accordance with Section 13(d) of the
Exchange Act and the rules promulgated thereunder) in excess of 9.999% of the
then issued and outstanding shares of Common Stock, including shares of Common
Stock issuable upon such exercise and held by such Holder after application of
this Section. Since the Holder will not be obligated to report to the Company
the number of shares of Common Stock

                                       -3-

<PAGE>

it may hold at the time of an exercise hereunder, unless the exercise at issue
would result in the issuance of shares of Common Stock in excess of 9.999% of
the then outstanding shares of Common Stock without regard to any other shares
of Common Stock which may be beneficially owned by the Holder or an affiliate
thereof, the Holder shall have the authority and obligation to determine whether
the restriction contained in this Section will limit any particular exercise
hereunder and to the extent that the Holder determines that the limitation
contained in this Section applies, the determination of which portion of this
Warrant is exercisable shall be the responsibility and obligation of the Holder.
If the Holder has delivered a Form of Election to Purchase for a number of
Warrant Shares that would result in the issuance in excess of the permitted
amount hereunder, the Company shall notify the Holder of this fact and shall
honor the exercise for the maximum portion of this Warrant permitted to be
exercised on such Date of Exercise in accordance with the periods described
herein and disregard the balance of such Form of Election to Purchase, as if
never delivered The provisions of this Section may be waived by a Holder (but
only as to itself and not to any other Holder) upon not less than 61 days prior
notice to the Company. Other Holders shall be unaffected by any such waiver.

            6. Payment of Taxes. The Company will pay all documentary stamp
taxes attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the registration
of any certificates for Warrant Shares or Warrants in a name other than that of
the Holder and the Company shall not be required to issue or cause to be issued
or deliver or cause to be delivered the certificates for Warrant Shares unless
or until the person or persons requesting the issuance thereof shall have paid
to the Company the amount of such tax or shall have established to the
reasonable satisfaction of the Company that such tax has been paid. The Holder
shall be responsible for all other tax liability that may arise as a result of
holding or transferring this Warrant or receiving Warrant Shares upon exercise
hereof.

            7. Replacement of Warrant. If this Warrant is mutilated, lost,
stolen or destroyed, the Company shall issue or cause to be issued in exchange
and substitution for and upon cancellation hereof, or in lieu of and
substitution for this Warrant, a New Warrant, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
indemnity, if requested, satisfactory to it. Applicants for a New Warrant under
such circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable charges as the Company may prescribe.

            8. Reservation of Warrant Shares. The Company covenants that it will
at all times reserve and keep available out of the aggregate of its authorized
but unissued Common Stock, solely for the purpose of enabling it to issue
Warrant Shares upon exercise of this Warrant as herein provided, the number of
Warrant Shares which are then issuable and deliverable upon the exercise of this
entire Warrant, free from preemptive rights or any other actual contingent
purchase rights of persons other than the Holder (taking into account the
adjustments and restrictions of Section 9). The Company covenants that all
Warrant Shares that shall be so issuable and deliverable shall, upon issuance
and the payment of the applicable Exercise Price in accordance with the terms
hereof, be duly and validly authorized, issued and fully paid and nonassessable.

                                       -4-

<PAGE>

            9. Certain Adjustments. The Exercise Price and number of Warrant
Shares issuable upon exercise of this Warrant are subject to adjustment from
time to time as set forth in this Section 9. Upon each such adjustment of the
Exercise Price pursuant to this Section 9, the Holder shall thereafter prior to
the Expiration Date be entitled to purchase, at the Exercise Price resulting
from such adjustment, the number of Warrant Shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.

                  (a) If the Company, at any time while this Warrant is
outstanding, (i) shall pay a stock dividend (except scheduled dividends paid on
outstanding preferred stock as of the date hereof which contain a stated
dividend rate) or otherwise make a distribution or distributions on shares of
its Common Stock or on any other class of capital stock payable in shares of
Common Stock, (ii) subdivide outstanding shares of Common Stock into a larger
number of shares, or (iii) combine outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price shall be multiplied by a fraction
of which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and of which the
denominator shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding after such event. Any adjustment made pursuant to
this Section shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a
subdivision or combination, and shall apply to successive subdivisions and
combinations.

                  (b) In case of any reclassification of the Common Stock, any
consolidation or merger of the Company with or into another person, the sale or
transfer of all or substantially all of the assets of the Company or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, then the Holder shall have the right
thereafter to exercise this Warrant only into the shares of stock and other
securities and property receivable upon or deemed to be held by holders of
Common Stock following such reclassification, consolidation, merger, sale,
transfer or share exchange, and the Holder shall be entitled upon such event to
receive such amount of securities or property equal to the amount of Warrant
Shares such Holder would have been entitled to had such Holder exercised this
Warrant immediately prior to such reclassification, consolidation, merger, sale,
transfer or share exchange. The terms of any such consolidation, merger, sale,
transfer or share exchange shall include such terms so as to continue to give to
the Holder the right to receive the securities or property set forth in this
Section 9(b) upon any exercise following any such reclassification,
consolidation, merger, sale, transfer or share exchange.

                  (c) If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not to holders
of this Warrant) evidences of its indebtedness or assets or rights or warrants
to subscribe for or purchase any security (excluding those referred to in
Sections 9(a), (b) and (d)) (collectively, "Assets"), then in each such case,
the Holder shall be entitled to receive, for each Warrant Share with respect to
which this Warrant is exercised

                                      -5-
<PAGE>

after the record date fixed for determination of stockholders entitled to
receive such distribution, the Assets received by all holders of Common Stock
with respect to one share of Common Stock.

                  (d) If, at any time while this Warrant is outstanding, the
Company shall issue or cause to be issued rights or warrants to acquire or
otherwise sell or distribute shares of Common Stock for a consideration per
share less than the market price of the Common Stock then in effect, then,
forthwith upon such issue or sale, the Exercise Price shall be reduced to the
price (calculated to the nearest cent) determined by multiplying the Exercise
Price in effect immediately prior thereto by a fraction, the numerator of which
shall be the sum of (i) the number of shares of Common Stock outstanding
immediately prior to such issuance, and (ii) the number of shares of Common
Stock which the aggregate consideration received (or to be received, assuming
exercise or conversion in full of such rights, warrants and convertible
securities) for the issuance of such additional shares of Common Stock would
purchase at the Exercise Price, and the denominator of which shall be the sum of
the number of shares of Common Stock outstanding immediately after the issuance
of such additional shares. Such adjustment shall be made successively whenever
such an issuance is made.

                  (e) For the purposes of this Section 9, the following clauses
shall also be applicable:

                        (i) Record Date. In case the Company shall take a record
of the holders of its Common Stock for the purpose of entitling them (A) to
receive a dividend or other distribution payable in Common Stock or in
securities convertible or exchangeable into shares of Common Stock, or (B) to
subscribe for or purchase Common Stock or securities convertible or exchangeable
into shares of Common Stock, then such record date shall be deemed to be the
date of the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.

                        (ii) Treasury Shares. The number of shares of Common
Stock outstanding at any given time shall not include shares owned or held by or
for the account of the Company, and the disposition of any such shares shall be
considered an issue or sale of Common Stock.

                  (f) All calculations under this Section 9 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.

                  (g)   If:

                        (i)   the Company shall declare a dividend (or any other
                              distribution) on its Common Stock; or

                                      -6-
<PAGE>

                        (ii)  the Company shall declare a special nonrecurring
                              cash dividend on or a redemption of its Common
                              Stock; or

                        (iii) the Company shall authorize the granting to all
                              holders of the Common Stock rights or warrants to
                              subscribe for or purchase any shares of capital
                              stock of any class or of any rights; or

                        (iv)  the approval of any stockholders of the Company
                              shall be required in connection with any
                              reclassification of the Common Stock of the
                              Company, any consolidation or merger to which the
                              Company is a party, any sale or transfer of all or
                              substantially all of the assets of the Company, or
                              any compulsory share exchange whereby the Common
                              Stock is converted into other securities, cash or
                              property; or

                        (v)   the Company shall authorize the voluntary
                              dissolution, liquidation or winding up of the
                              affairs of the Company,

then the Company shall cause to be mailed to each Holder at their last addresses
as they shall appear upon the Warrant Register, at least 30 calendar days prior
to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up; provided, however, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.

            10. Payment of Exercise Price. The Holder shall pay the Exercise
Price in one of the following manners:

                  (a) Cash Exercise. The Holder may deliver immediately
available funds; or

                  (b) Cashless Exercise. At the option of the Company, the
Holder may surrender this Warrant to the Company together with a notice of
cashless exercise, in which event the Company shall issue to the Holder the
number of Warrant Shares determined as follows:

                                      -7-
<PAGE>

                        X = Y (A-B)/A

      where:

                        X = the number of Warrant Shares to be issued
                        to the Holder.

                        Y = the number of Warrant Shares with respect to which
                        this Warrant is being exercised.

                        A = the average of the closing sale prices of the Common
                        Stock on the principal market or exchange in which the
                        Common Stock is then listed or traded, as reported by
                        Bloomberg Information Systems, Inc. (or any successor to
                        its function of reporting stock prices), for the five
                        (5) trading days immediately prior to (but not
                        including) the Date of Exercise.

                        B = the Exercise Price.

For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have been
commenced, on the issue date.

            11. Right to Receive a Warrant of a Spun-Off Entity. In addition to
any other rights available hereunder to the Holder, the Holder shall have the
right, exercisable at any time prior to the Expiration Date, to convert all or a
portion of the Warrant Shares into a common stock purchase warrant to purchase a
pro-rata portion of the stock of a Spun-Off Entity at an exercise price equal to
85% of the price at which the stock of such Spun-Off Entity is first offered for
sale to the public (the "Spun-Off Entity Warrant"). Upon a conversion of all or
a portion of the Warrant Shares into a Spun-Off Entity Warrant pursuant to the
terms hereof, the Holder shall, upon written request by the Company, enter into
a lock-up agreement relating to the stock underlying the Spun-Off Entity Warrant
which lock-up agreement shall be acceptable to the Holder and any underwriter of
the initial public offering of the stock of the Spun-Off Entity. For purposes
hereof, "Spun-Off Entity" shall mean any operating subsidiary of the Company
which is spun-off by the Company prior to the Expiration Date.

            12. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant.
The number of full Warrant Shares which shall be issuable upon the exercise of
this Warrant shall be computed on the basis of the aggregate number of Warrant
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section 11, be issuable
on the exercise of this Warrant, the Company shall pay an amount in cash equal
to the Exercise Price multiplied by such fraction.

                                      -8-
<PAGE>

            13. Notices. Any and all notices or other communications or
deliveries hereunder shall be in writing and shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile telephone number specified in this
Section prior to 6:30 p.m. (New York City time) on a business day, (ii) the
business day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section later than 6:30 p.m. (New York City time) on any date and earlier than
11:59 p.m. (New York City time) on such date, (iii) the business day following
the date of mailing, if sent by nationally recognized overnight courier service,
or (iv) upon actual receipt by the party to whom such notice is required to be
given. The addresses for such communications shall be: (i) if to the Company, to
80-02 Kew Gardens Road, Suite 5000, Kew Gardens, New York 11415, Attention:
Chief Financial Officer, or to Facsimile No. (718) 793- 2455, or (ii) if to the
Holder, to the Holder at the address or facsimile number appearing on the
Warrant Register or such other address or facsimile number as the Holder may
provide to the Company in accordance with this Section 12.

            14. Warrant Agent. The Company shall serve as warrant agent under
this Warrant. Upon thirty (30) days' notice to the Holder, the Company may
appoint a new warrant agent. Any corporation into which the Company or any new
warrant agent may be merged or any corporation resulting from any consolidation
to which the Company or any new warrant agent shall be a party or any
corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or shareholders services business shall
be a successor warrant agent under this Warrant without any further act. Any
such successor warrant agent shall promptly cause notice of its succession as
warrant agent to be mailed (by first class mail, postage prepaid) to the Holder
at the Holder's last address as shown on the Warrant Register.

            15. Miscellaneous.

                  (a) This Warrant shall be binding on and inure to the benefit
of the parties hereto and their respective successors and assigns. This Warrant
may be amended only in writing signed by the Company and the Holder and their
successors and assigns.

                  (b) Subject to Section 14(a), above, nothing in this Warrant
shall be construed to give to any person or corporation other than the Company
and the Holder any legal or equitable right, remedy or cause under this Warrant.
This Warrant shall inure to the sole and exclusive benefit of the Company and
the Holder.

                  (c) This Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York without
regard to the principles of conflicts of law thereof. The Company and the Holder
hereby irrevocably submit to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such

                                      -9-
<PAGE>

court, or that such suit, action or proceeding is improper. Each of the Company
and the Holder hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
receiving a copy thereof sent to the Company at the address in effect for
notices to it under this instrument and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.

                  (d) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.

                  (e) In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
                             SIGNATURE PAGE FOLLOWS]

                                      -10-
<PAGE>

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

                                  FIDELITY HOLDINGS, INC.

                                  By: /s/ Doron Cohen
                                      ---------------

                                  Name: Doron Cohen

                                  Title: President and CEO

<PAGE>

                          FORM OF ELECTION TO PURCHASE

(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)

To Fidelity Holdings, Inc.:

      In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase _____________
shares of common stock, $.01 par value per share, of Fidelity Holdings, Inc.
(the "Common Stock") and , if such Holder is not utilizing the cashless exercise
provisions set forth in this Warrant, encloses herewith $________ in cash,
certified or official bank check or checks, which sum represents the aggregate
Exercise Price (as defined in the Warrant) for the number of shares of Common
Stock to which this Form of Election to Purchase relates, together with any
applicable taxes payable by the undersigned pursuant to the Warrant.

      The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of

                                          PLEASE INSERT SOCIAL SECURITY OR
                                          TAX IDENTIFICATION NUMBER

                                          ______________________________________

________________________________________________________________________________
                        (Please print name and address)

      If the number of shares of Common Stock issuable upon this exercise shall
not be all of the shares of Common Stock which the undersigned is entitled to
purchase in accordance with the enclosed Warrant, the undersigned requests that
a New Warrant (as defined in the Warrant) evidencing the right to purchase the
shares of Common Stock not issuable pursuant to the exercise evidenced hereby be
issued in the name of and delivered to:

________________________________________________________________________________
                        (Please print name and address)

________________________________________________________________________________

________________________________________________________________________________

Dated:______, _____                 Name of Holder:

                                          (Print)_______________________________

                                          (By:)_________________________________
                                          (Name:)
                                          (Title:)
                                          (Signature must conform in all
                                          respects to name of holder as
                                          specified on the face of the Warrant)

<PAGE>

                               FORM OF ASSIGNMENT

           [To be completed and signed only upon transfer of Warrant]

      FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Warrant to purchase ____________ shares of Common Stock of Fidelity Holdings,
Inc. to which the within Warrant relates and appoints ________________ attorney
to transfer said right on the books of Fidelity Holdings, Inc. with full power
of substitution in the premises.

Dated:

_______________, ____

                              __________________________________________________
                              (Signature must conform in all respects to name of
                              holder as specified on the face of the Warrant)

                              __________________________________________________
                              Address of Transferee

                              __________________________________________________

                              __________________________________________________

In the presence of:

___________________________

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