Document:

EXHIBIT 10.2

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                              CONSULTING AGREEMENT

         THIS CONSULTING AGREEMENT (the "Agreement") is made and entered into as
of the 10th day of July,  2000,  by and  among  Avatar  Systems,  Inc.,  a Texas
corporation  (the  "Company"),  Merchant Capital  Holdings,  Limited,  a British
Virgin  Islands  company  ("MCH") and its  affiliate,  First  Merchants  Capital
Limited, a company incorporated in England and Wales ("Consultant").

                                R E C I T A L S:

         The  Company  was  introduced  by  Geoffrey  Dart,  a  director  of the
Consultant to Cybertec Holdings Plc ("Cybertec"),  who is purchasing 1.6 million
shares of the Company's  common stock for $1.6 million  pursuant to that certain
Stock  Purchase  Agreement (the "Stock  Agreement")  dated of even date herewith
between the Company and Cybertec.

         The Company desires to compensate  Consultant for its assistance to the
Company in finding a purchaser of the 1.6 million  shares of common stock of the
Company and to retain Consultant to provide the services  described herein,  and
Consultant desires to be retained pursuant to the terms of this Agreement.

         Consultant  shall,  as a  consultant  to the  Company,  have  access to
confidential  information  in  which  the  Company  and  its  affiliates  or its
customers or suppliers have a proprietary interest.

         In  consideration  of the mutual  covenants  and  agreements  contained
herein,  and  for  other  good  and  valuable  consideration,  the  receipt  and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

                  1.  Services.  Consultant  is  hereby  retained  to serve as a
         consultant  to the Company to provide the Services set forth in Exhibit
         I hereto (the "Services"). Consultant shall provide the Services to the
         Company as and when requested by the Company.

                  2. Term. The term of this Agreement shall commence on the date
         hereof  and shall  continue,  unless  earlier  terminated  pursuant  to
         Section 7 below,  for a period of one (1) year (the  "Term").  The term
         may be renewed for one  additional  one-year  term with the approval of
         the Board of  Directors  of the Company and  Consultant  under the same
         provisions  as herein  stated,  except that there will be no additional
         payments pursuant to Section 3(a) herein upon renewal.

                  3.  Compensation.  As  compensation  for rendering the Service
         during the Term,  Consultant  shall be  entitled  to  receive  from the
         Company the following compensation:

                           (a) A one-time  payment of $15,000 upon  execution by
                  the parties of this Agreement.

                           (b) An annual fee of $60,000 payable to Consultant in
                  twelve (12) monthly payments of $5,000 ("Base  Compensation").
                  The first such payment being due August 1, 2000 and continuing
                  on the  1st of each  succeeding  month  for  the  Term of this
                  Agreement until the Base Compensation is paid to Consultant.

Consulting Agreement-Page 1

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                           (c) Upon  execution of this Agreement by the parties,
                  the Company shall issue and deliver to MCH a five-year warrant
                  to purchase two million  shares of the Company's  common stock
                  at an exercise price of $1.00 per share (the "MCH Warrant") in
                  substantially  the same form as attached as Exhibit "D" to the
                  Stock Agreement.

                           The  compensation set forth in this Section 3 will be
                  the sole  compensation  payable to Consultant  and MCH and the
                  sole issuance of a warrant for  performing the Services and no
                  additional  compensation,  fee or issuance  will be payable by
                  the  Company  to  Consultant  or MCH by reason of any  benefit
                  gained  by  the  Company   directly  or   indirectly   through
                  Consultant's performing the Services, nor shall the Company be
                  liable  in any  way for any  additional  compensation,  fee or
                  issuance for performing the Services  unless the Company shall
                  have  expressly  agreed  thereto in  writing.  Notwithstanding
                  anything in this Agreement to the contrary,  the Company shall
                  be entitled to withhold from such compensation such amounts as
                  are  necessary  to  comply  with U.S.  tax laws as  reasonably
                  determined by counsel for the Company.  The Company shall have
                  no obligation to reimburse  Consultant,  MCH, or both, for any
                  expenses incurred pursuant to this Agreement.

         4.  Independent  Contractor  Status.  In all  matters  relating to this
Agreement,  Consultant  shall be acting as an  independent  contractor.  MCH may
assist  the  Consultant  with  providing  the  Services  hereunder  and shall be
compensated by Consultant,  if applicable.  Neither Consultant nor any employee,
agent or affiliate of Consultant is an employee of the Company under the meaning
or  application  of any  federal  or state  unemployment  or  insurance  laws or
worker's   compensation   laws,  or  otherwise.   Consultant  shall  assume  all
liabilities or obligations imposed by any of such laws with respect to employees
or affiliates of Consultant  in the  performance  of this  Agreement as shall be
identified  and agreed  upon,  in writing,  between the Company and  Consultant.
Consultant  shall pay timely all local,  state,  and federal  taxes arising from
payments  made to  Consultant  for the  Services  provided  hereunder  and shall
prepare and file all required U.S. tax returns,  including,  without limitation,
income, self-employment, and other taxes attributable to payments hereunder. The
Company shall not provide  Consultant  with  insurance of any kind in connection
with the  Services  to be  provided  hereunder.  Consultant  shall  not have any
authority to assume or create any obligation,  express or implied,  on behalf of
the  Company,  except as may be  requested  or  required  by the Company for the
performance  of  Consultant's  duties  and  Services.  Consultant  shall have no
authority to represent  itself or any of its employees,  officers and directors,
shareholders  or affiliates as an agent,  employee,  or in any other capacity of
the Company,  except as may be  requested  or required by the  Company,  for the
performance of Consultant's duties and Services.

         Consultant  acknowledges  that,  as an  independent  contractor  to the
Company, neither it nor any of its employees, officers, directors,  shareholders
or affiliates are entitled to participation in, coverage under, or benefits from
the Company or any of its employee benefit plan funds,  programs or arrangements
sponsored  or  maintained  by the  Company  for  its  employees.  In  the  event
Consultant's and its employees, directors, officers, shareholders or affiliates'
relationship  with the  Company  is  determined  to be as an  "employee"  of the
Company  rather than as an  independent  contractor  to the Company,  Consultant
expressly waives and declines, from the date hereof,  participation in, coverage
under, or benefits from the Company or any of its employee benefit plans, funds,
programs  or  arrangements  sponsored  or  maintained  by the  Company  for  its
employees.

Consulting Agreement-Page 2

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         5. Ownership of Work Product.

                  (a) The  Company  shall  own all  right,  title  and  interest
         (including patent rights,  copyrights,  trade secret rights,  mask work
         rights,  trademark  rights and all other  intellectual  and  industrial
         property  rights of any sort  throughout the world) relating to any and
         all inventions (whether or not patentable),  works of authorship,  mask
         works,  designations,  designs, know-how, ideas and information made or
         conceived or reduced to practice, in whole or in part, by Consultant or
         any employee, agent, or affiliate of Consultant,  including MCH, during
         the term of this  Agreement  that relate to the  subject  matter of, or
         arise out of, the Services  performed by  Consultant  or any  employee,
         agent,  or  affiliate  of  Consultant,  including  MCH, for the Company
         (collectively, "Inventions") and Consultant and any employee, agent, or
         affiliate of  Consultant,  including  MCH, will  promptly  disclose and
         provide all  Inventions to the Company.  All Inventions are "works made
         for hire" to the extent allowed by law and, in addition, Consultant and
         any employee, agent, or affiliate of Consultant,  including MCH, hereby
         make all assignments necessary to accomplish the foregoing ownership.

                  (b) To the extent such  Inventions are not deemed to be "works
         made for hire,"  Consultant  and any employee,  agent,  or affiliate of
         Consultant,   including   MCH,   hereby   assign  to  the  Company  all
         intellectual and industrial  property rights of any sort throughout the
         world  in  and to  the  Inventions  without  further  compensation.  If
         Consultant or any employee,  agent,  or affiliate of Consultant has any
         rights to the  Inventions  that  cannot  be  assigned  to the  Company,
         Consultant  and  any  employee,  agent,  or  affiliate  of  Consultant,
         including MCH,  unconditionally  and irrevocably waives the enforcement
         of such rights, and if such rights cannot be waived, Consultant and any
         employee,  agent,  or affiliate of Consultant,  including  MCH,  hereby
         grant to the Company an exclusive,  irrevocable,  perpetual, worldwide,
         fully paid and royalty-free  license, with rights of sublicense through
         one  or  more  levels  of  subcustomers,   to  use,  reproduce,  create
         derivative works of, distribute,  publicly distribute, publicly perform
         and  publicly  display  such  rights  by all  means  now known or later
         developed.  The Company hereby acknowledges and agrees,  however,  that
         the  Inventions  shall not include  any  Consultant  owned  proprietary
         program,  or any part thereof, or to the ideas,  concepts,  know-how or
         techniques employed by Consultant in performing the work and delivering
         the  Inventions  to  the  Company,   or  to  any  modifications  of  or
         enhancements to such Consultant owned proprietary  programs;  provided,
         however,  if and to the extent any proprietary  information or material
         of Consultant or any employee,  agent,  or affiliate of Consultant,  is
         embodied in any  Invention,  Consultant  and any  employee,  agent,  or
         affiliate  of  Consultant,  including  MCH,  hereby grant the Company a
         irrevocable, perpetual, worldwide, fully paid and royalty-free license,
         with rights of sublicense  through one or more levels of  subcustomers,
         to use,  reproduce,  create derivative works of,  distribute,  publicly
         distribute,  publicly  perform and publicly  display  such  proprietary
         information  or material by all means now known or later  developed  in
         conjunction with the Invention.

Consulting Agreement-Page 3

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                  (c) To the extent  allowed by law,  Section 5(a)  includes all
         rights of paternity, integrity, disclosure and withdrawal and any other
         rights that may be known as or referred to as "moral rights," "artist's
         rights,"  "droit  moral," or the like. To the extent  Consultant or any
         employee, agent, or affiliate of Consultant, including MCH, retains any
         such moral rights under  applicable  law,  Consultant and any employee,
         agent,  or affiliate of Consultant,  including  MCH,  hereby ratify and
         consent to, and provide all  necessary  ratifications  and consents to,
         any action  that may be taken with  respect to such moral  rights by or
         authorized  by the Company.  Consultant  and any  employee,  agent,  or
         affiliate of  Consultant,  including MCH, agree not to assert any moral
         rights with respect to the  Inventions.  Consultant  and any  employee,
         agent, or affiliate of Consultant, including MCH, will confirm any such
         ratifications,  consents and agreements  from time to time as requested
         by the Company.

                  (d) To the extent any of the  foregoing is  ineffective  under
         applicable law,  Consultant and MCH, if applicable,  hereby provide any
         and all ratifications and consents necessary to accomplish the purposes
         of the  foregoing  to the  extent  possible.  Consultant  and  MCH,  if
         applicable,  shall  further  assist the  Company  to further  evidence,
         record and perfect such assignments,  and to perfect, obtain, maintain,
         enforce,  and  defend any rights  assigned.  Consultant  and MCH hereby
         irrevocably  designate  and  appoint  the  Company  as its  agents  and
         attorneys-in-fact  to act for and in  Consultant's  or MCH's  behalf to
         execute and file any  document and to do all other  lawfully  permitted
         acts to further the  foregoing  with the same legal force and effect as
         if executed by Consultant.

         6. Non-Disclosure of Confidential Information.

                  (a)  Consultant  and MCH hereby agree that  Consultant and MCH
         currently  have and may  acquire  in the future  valuable  confidential
         information  concerning  the business of the Company or its  successors
         and  assigns,  including,  but not  limited  to,  inventions,  patents,
         technologies,  developments, products, processes, customers, suppliers,
         vendors,  discoveries,  trade secrets,  customer lists,  property owner
         lists,  sales  techniques,  financial  information,  sales  literature,
         canvassing or solicitation  techniques,  instruction manuals,  business
         plans,  presentation  information,   information  systems,   suppliers,
         developed or utilized promotional materials,  operating policies, rules
         of conduct, note books,  reports,  data, records and other information,
         whether  considered  confidential or not.  Consultant and MCH agree not
         to, directly or indirectly,  use,  disclose,  permit  disclosure of, or
         reveal to any person,  firm, or corporation,  or take from the premises
         of  the  Company,   at  any  time  any   Confidential  and  Proprietary
         Information  (including,  but not limited to, computer programs) except
         as may be necessary for performance of Consultant's duties and Services
         hereunder and with the written  consent of the Company.  Consultant and
         MCH  acknowledge  that all such documents and  information  are, at all
         times,  the property of the Company and  constitute  trade  secrets and
         proprietary information and property belonging to the Company.

                  The parties  expressly  understand,  acknowledge,  agree,  and
         stipulate  that  any  and  all  of  the  information  described  in the
         immediately  preceding  paragraph shall  constitute  "Confidential  and
         Proprietary Information" for all purposes of this Agreement.

Consulting Agreement-Page 4

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                  (b)  Notwithstanding  the right to cure  defaults  under  this
         Agreement,  Consultant  and MCH understand and recognize that breach of
         this Agreement by them may cause immediate and irreparable  harm to the
         legitimate  business  interests  of the  Company,  not  necessarily  or
         readily compensable by ascertainable money damages.  Consultant and MCH
         agree  that in the  event  it is  determined  by a court  of  competent
         jurisdiction  that  they  have  individually  or  jointly  violated  or
         breached any of the covenants,  conditions, or terms of this Agreement,
         the Company shall have the right in accordance  with the Texas rules of
         civil procedure to obtain injunctive  relief against  Consultant or MCH
         or both  restraining  and  enjoining  one or  both  from  breaching  or
         violating  or further  breaching  or  violating  this  Agreement.  Such
         injunctive  relief  shall be in addition to the right of the Company to
         seek  damages for any such breach or violation  of this  Agreement,  to
         recover all costs thus expended,  including reasonable attorneys' fees,
         and to obtain all other relief, whether legal,  equitable,  or both, to
         which the Company may be entitled.

         7. Termination.  This Agreement and the consulting relationship created
hereby shall terminate upon the earlier to occur of any of the following events:

                  (a) The  expiration of the Term of this Agreement as set forth
         in Section 2 above;

                  (b)  Agreement by written  instrument  executed by each of the
         parties hereto;

                  (c) A material  breach by Consultant or by MCH of Section 6 of
         this  Agreement  that remains  uncured  thirty (30) days after  written
         notice of such  breach by the  Company  to  Consultant  or to MCH or to
         both; or

                  (d) A material  breach by  Consultant  or by MCH or by both of
         this  Agreement  (including but not limited to the refusal or inability
         of Consultant to provide the Services) that remains uncured thirty (30)
         days after  written  notice of such breach by the Company to Consultant
         or to MCH or to both.

                  If this  Agreement  is  terminated  for any  reason,  all Base
         Compensation  due and payable to such termination date shall be paid to
         Consultant  within thirty (30) days of such  termination.  The Company,
         Consultant and MCH further  acknowledge  and agree that the termination
         of this  Agreement  pursuant  to  Section  7(c) and (d),  shall have no
         affect on the  enforceability of the Non-Disclosure of Confidential and
         Proprietary  Information  provisions  of this  Agreement.  In all other
         events,  termination of this Agreement and/or default by the Company of
         any of the  terms  of this  Agreements  voids  Consultant's  and  MCH's
         obligations   pursuant  to  the   Non-Disclosure  of  Confidential  and
         Proprietary Information.

         8. Notices. Any notices,  consents,  demands,  requests,  approvals and
other  communications  to be given under this  Agreement  by either party to the
other shall be deemed to have been duly given if given in writing and personally
delivered or sent by facsimile transmission, courier service, overnight delivery
service or by mail, registered or certified, postage prepaid with return receipt
requested, as follows:

Consulting Agreement-Page 5

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         If to the Company:         Avatar System, Inc.
                                    5728 LBJ Freeway, Suite 270
                                    Dallas, Texas 75240
                                    Attention: Robert C. Shreve, Jr., President
                                    Fax:  972-720-1900

         with a copy to:            Paul Wehrmann, Esq.
                                    Haynes and Boone LLP
                                    1600 N. Collins, Suite 2000
                                    Richardson, Texas 75080
                                    Fax:  972-692-9064

         If to Consultant:          First Merchant Capital Limited
                                    133 Ebury Street
                                    London ENGLAND
                                    SW1W9QU
                                    Fax: 011-44-207-7305

         If to MCH:                 Merchant Capital Holdings Limited
                                    Trident Chambers
                                    Wickham Cay.
                                    P.O. Box 146
                                    Roadtown, Tontola BVI
                                    Fax:  011-44-207-7305

                                    with a copy to:   Richard B. Goodner
                                    Jackson Walker L.L.P.
                                    901 Main Street, Suite 6000
                                    Dallas, Texas 75021
                                    Fax:  214-953-5822

         Notices  delivered  personally  or by facsimile  transmission,  courier
service or overnight delivery shall be deemed communicated as of actual receipt;
mailed notices shall be deemed  communicated  as of three days after the date of
mailing.

         9. Entire  Agreement.  This Agreement,  the Investors' Rights Agreement
and Shareholders' Agreement included as part of the Stock Agreement, and the MCH
Warrant  contain the entire  agreement of the parties  hereto and  supersede all
prior agreements and understandings, oral or written between the parties hereto.
No  modification  or amendment  of any of the terms,  conditions  or  provisions
herein may be made  otherwise  than by written  agreement  signed by the parties
hereto.

         10. Governing Law. THE RIGHTS AND OBLIGATIONS OF THE PARTIES  HEREUNDER
SHALL BE INTERPRETED, CONSTRUED, AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS, WITHOUT REGARD TO ITS CHOICE OF LAW PRINCIPLES,  AND VENUE SHALL
BE IN THE COURTS OF DALLAS COUNTY, TEXAS.

Consulting Agreement-Page 6

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         11.  Parties  Bound.  This  Agreement  and the rights  and  obligations
hereunder  shall be  binding  upon  and  inure to the  benefit  of the  Company,
Consultant  and MCH,  and  their  respective  heirs,  personal  representatives,
successors and assigns. The Company,  Consultant and MCH shall have the right to
assign this  Agreement to any  affiliate or to their  respective  successors  or
assigns.  The  terms  "successors"  and  "assigns"  shall  include  any  person,
corporation,  partnership or other entity that buys all or substantially  all of
the Company's, Consultant's or MCH's assets or all of their stock, or with which
the Company, Consultant or MCH merges or consolidates.

         12. Enforceability. If, for any reason, any provision contained in this
Agreement  should be held invalid in part by a court of competent  jurisdiction,
then it is the intent of each of the  parties  hereto  that the  balance of this
Agreement  be  enforced to the  fullest  extent  permitted  by  applicable  law.
Accordingly,  should a court of competent  jurisdiction determine that the scope
of any covenant is too broad to be enforced as written, it is the intent of each
of the parties that the court should reform such covenant to such narrower scope
as it determines enforceable.

         13. Waiver of Breach. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by any party.

         14.  Captions.  The captions in this  Agreement are for  convenience of
reference  only and  shall  not limit or  otherwise  affect  any of the terms or
provisions hereof.

         15. Costs. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and necessary disbursements in addition to any
other relief to which it may be entitled.

         16. Other  Obligations.  Consultant  and MCH represent and warrant that
each is not  subject to any  agreement  which would be violated or breached as a
direct or indirect result of Consultant or MCH executing this Agreement.

         17. Affiliate. An "affiliate" of any party hereto shall mean any person
controlling, controlled by or under common control with such party.

         18.  Counterparts.  This  Agreement  may be  executed  in  one or  more
counterparts,  each of which shall be deemed an original  and all of which shall
constitute one and the same instrument, but only one of which need be produced.

Consulting Agreement-Page 7

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

                    AVATAR SYSTEMS, INC.

                            By: /s/ Robert Charles Shreve, Jr.
                               -------------------------------------------------
                               Robert Charles Shreve, Jr., President

                            MERCHANTS CAPITAL HOLDINGS LIMITED.

                            By:/s/ Geoffrey Dart
                               -------------------------------------------------
                               Geoffrey Dart, Director

                            FIRST MERCHANT CAPITAL LIMITED

                            By:/s/ Geoffrey Dart
                               -------------------------------------------------
                               Geoffrey Dart, Director

Consulting Agreement-Page 8

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                                    EXHIBIT I

Services:

Financial and business consulting services as requested by the Company.

Development of new business relationships as requested by the Company.

Assist the  Company  and  Cybertec  with  locating a U.S.  non-operating  public
company (the "Public  Company") which will acquire the Company or into which the
Company  will  merge  upon  terms  agreed  to by the  Company  and its  Board of
Directors and shareholders,  if required.  Such duties may include  conducting a
due  diligence  investigation  of the Public  Company as may be  required by the
Company.  Additionally,  Consultant  shall assist the Company  with  securing an
underwriter  or  investment  banker for a public  offering of  securities of the
Company.

Consulting Agreement-Page 9EXHIBIT 10.3

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                           INVESTORS' RIGHTS AGREEMENT

         THIS  INVESTORS'  RIGHTS  AGREEMENT is made as of the 10th day of July,
2000 by and among Avatar Systems,  Inc., a Texas  corporation  (the  "Company"),
Cybertec Holdings, Plc ("Cybertec"),  Merchants Capital Holdings,  Ltd. ("MCH"),
Stephen A. Komlosy ("Komlosy"), Robert C. Shreve, Jr., Tim Allen and Gregg Allen
(each of whom is  referred  to  herein as an  "Investor")  and  collectively  as
"Investors").

         The Company and each of the Investors  are either  parties to the Stock
Purchase  Agreement  of even date or  certain  exhibits  attached  thereto  (the
"Purchase Agreement"), pursuant to which the Company sold and Cybertec purchased
1,600,000 shares of Common Stock of the Company.  In order to induce Cybertec to
invest funds in the Company pursuant to the Purchase Agreement,  the Company and
the Investors  hereby agree that this  Agreement  shall govern the rights of the
Investors to cause the Company to register  pursuant to the terms herein  shares
of Common  Stock  purchased  by  Cybertec,  shares of Common  Stock owned by the
Investors and shares of common stock  issuable to the Investors upon exercise of
the Warrants issued to the Investors pursuant to the Purchase Agreement.

         INTENDING  TO BE  LEGALLY  BOUND,  and in  consideration  of the mutual
agreements stated below and in the Purchase Agreement,  the parties hereby agree
as follows:

         1.       Definitions.

                  1.1  Certain  Definitions.  As  used in  this  Agreement,  the
         following terms shall have the following respective meanings:

                           (a)  "Commission"   shall  mean  the  Securities  and
                  Exchange  Commission or any other  federal  agency at the time
                  administering the Securities Act.

                           (b) "Common Stock" shall mean the Common Stock, $1.00
                  par value, of the Company or any successor  security  intended
                  to be Common Stock.

                           (c) "Convertible  Securities" shall mean any security
                  that is convertible into or exchangeable for any shares of the
                  Company's  capital  stock or  other  equity  interests  in the
                  Company.

                           (d) "Exchange Act" shall mean the Securities Exchange
                  Act of 1934, as amended.

                           (e) "Form  S-1,  Form SB-1,  Form S-2,  Form SB-2 and
                  Form S-3" shall mean a  registration  statement Form S-1, Form
                  SB-1,   Form  S-2,  Form  SB-2  or  Form  S-3,   respectively,
                  promulgated  by the  Commission or any  substantially  similar
                  form then in effect.

                           (f)  "Investors"   shall  mean,   collectively,   the
                  Investors, their assignees and transferees,  and individually,
                  a Investor and any transferee or assignee of such Investor.

INVESTORS' RIGHTS AGREEMENT - Page 1

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                           (g)  "Person"  means  any  individual,   corporation,
                  partnership,   limited  liability  company,   trust,   estate,
                  association,  cooperative,  government or governmental  entity
                  (or any branch,  subdivision  or agency  thereof) or any other
                  entity.

                           (h) "Public Offering" shall mean a public offering of
                  the Company's Common Stock pursuant to the Securities Act.

                           (i) "Public  Merger" means the completion of a merger
                  of the Company into, or the  acquisition  of the Company by, a
                  public non-operating U.S. company (the "Public Company").

                           (j)   The   terms   "Register,"    "Registered"   and
                  "Registration"  refer to a registration  effected by preparing
                  and filing a  Registration  Statement in  compliance  with the
                  Securities  Act,  and  the  declaration  or  ordering  of  the
                  effectiveness of such Registration Statement.

                           (k)  "Registrable  Securities"  shall mean the Shares
                  (as  defined  herein)  so long as such  shares  either (a) are
                  ineligible for sale under subparagraph (k) of Rule 144, or (b)
                  constitute more than 10% of the Company's  outstanding  Common
                  Stock.

                           (l)  "Registration  Expenses" shall mean all expenses
                  incurred by the Company in  complying  with  Section 1 hereof,
                  including,   without   limitation,   all   federal  and  state
                  registration,   qualification   and  filing   fees,   printing
                  expenses,  fees and  disbursements of counsel for the Company,
                  blue sky fees and expenses,  the expense of any special audits
                  incident  to or  required  by any  such  Registration  and the
                  reasonable fees and  disbursements  of counsel for the Selling
                  Stockholders, as selling stockholders.

                           (m)  "Registration  Statement"  shall  mean Form S-1,
                  Form  SB-1,  Form S-2,  Form SB-2 or Form  S-3,  whichever  is
                  applicable.

                           (n) "Restriction  Termination  Date" shall mean, with
                  respect to any Registrable Securities,  the earlier of (i) the
                  date  that  such   Registrable   Securities  shall  have  been
                  Registered  and sold or  otherwise  disposed of in  accordance
                  with the  intended  method of  distribution  by the  seller or
                  sellers  thereof  set  forth  in  the  Registration  Statement
                  covering such  securities or  transferred  in compliance  with
                  Rule 144,  and (ii) the date that an opinion of counsel to the
                  Company containing reasonable assumptions (which opinion shall
                  be  subject  to the  reasonable  approval  of  counsel  to any
                  affected  Purchaser)  shall have been  rendered  to the effect
                  that  any  legends  on the  certificates  of  the  Registrable
                  Securities can be properly  removed in which event the Company
                  shall be obligated to effectuate such removal.

                           (o) "Rule 144" shall mean Rule 144 promulgated by the
                  Commission pursuant to the Securities Act.

INVESTORS' RIGHTS AGREEMENT - Page 2

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                           (p) "Securities Act" shall mean the Securities Act of
                  1933, as amended.

                           (q) "Selling  Expenses"  shall mean all  underwriting
                  discounts  and selling  commissions  applicable to the sale of
                  Registrable Securities pursuant to this Agreement.

                           (r)  "Selling  Stockholders"  shall  mean a holder of
                  Registrable Securities who requests Registration under Section
                  2 herein.

                           (s)  "Shares"  shall  mean the  1,600,000  shares  of
                  Common Stock  purchased  by Cybertec  pursuant to the Purchase
                  Agreement,  shares of Common  Stock of the  Company  currently
                  owned by the Investors, shares of Common Stock issued or to be
                  issued to an  Investor  upon  exercise  of options or warrants
                  issued to such Investor,  shares of Common Stock  purchased by
                  any Investor or issued to any  Investor  pursuant to Section 4
                  hereof,  and any  shares  of  Common  Stock  purchased  by any
                  Investor from the Company or other shareholders of the Company
                  from time-to-time.

         Capitalized  terms used but not defined  herein shall have the meanings
ascribed to such terms in the Purchase Agreement.

         2.       Registration  Rights.  The  Company  covenants  and  agrees as
follows:

                  2.1      Required  Registration.   If  the  Company  shall  be
requested by holders of at least a majority of the  outstanding  Shares entitled
to  request   registration  as  set  forth  in  Section  2.2(a)  to  effect  the
Registration  of  Registrable  Securities,  then the Company shall promptly give
written  notice of such  proposed  Registration  to all  holders of Shares,  and
thereupon  the  Company  shall  promptly  use its best  efforts  to  effect  the
Registration of the  Registrable  Securities that the Company has been requested
to Register  for  disposition  as  described  in the request of such  holders of
Shares and in any response received from any of the holders of Shares within ten
(10) days or such longer  period as shall be set forth in the notice,  after the
giving of the written notice by the Company; provided, however, that the Company
shall not be obligated to effect any Registration  except in accordance with the
following provisions:

                           (a) The Company  shall not be  obligated  to file and
                  cause to  become  effective  more  than  two (2)  Registration
                  Statements  in which  Registrable  Securities  are  Registered
                  pursuant  to  this  Section  2.1.  A  Registration   requested
                  pursuant  to this  Section  2.1 is  referred  to  herein  as a
                  "Demand  Registration."  A  Registration  shall not count as a
                  Demand  Registration  until it has  become  effective  and the
                  holders of Registrable  Securities are able to register and to
                  sell  all  of  the  Registrable  Securities  requested  to  be
                  included in such Registration.

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                           (b) The  Company  shall  not  include  in any  Demand
                  Registration   any  securities   which  are  not   Registrable
                  Securities without the prior written consent of the holders of
                  a majority  of the  Registrable  Securities  included  in such
                  Registration, unless the holders of Registrable Securities are
                  able to register and to sell all of the Registrable Securities
                  requested  to be  included in such  Registration.  If a Demand
                  Registration  is an  underwritten  offering  and the  managing
                  underwriters  advise  the  Company  in  writing  that in their
                  opinion the number of Registrable Securities and, if permitted
                  hereunder,  other securities  requested to be included in such
                  offering  exceeds  the number of  Registrable  Securities  and
                  other  securities,  if any, which can be sold therein  without
                  adversely  affecting the  marketability  of the offering,  the
                  Company  shall  include  in such  registration,  prior  to the
                  inclusion  of  any  securities   which  are  not   Registrable
                  Securities,   all  Registrable   Securities  requested  to  be
                  included which in the opinion of such underwriters can be sold
                  without adversely affecting the marketability of the offering,
                  pro rata among the respective  holders thereof on the basis of
                  the  amount  of  Registrable  Securities  owned  by each  such
                  holder.

                           (c)  The  Company  shall  not be  required  to file a
                  registration  statement  pursuant  to this  Section  2.1:  (i)
                  within  six (6)  months  after any other  registration  by the
                  Company  (other  than  under  "Excluded  Forms," as defined in
                  Section  2.2(a)  below) or (ii) for six (6)  months  after the
                  request for Registration under this Section 2.1 if the Company
                  is  then   engaged  in   negotiations   regarding  a  material
                  transaction  for  which  it  has  reasonable  expectations  of
                  consummating   and  which  has  not  otherwise  been  publicly
                  disclosed,   or  such  shorter  period  ending  on  the  date,
                  whichever  first  occurs,  that such  transaction  is publicly
                  disclosed, abandoned or consummated.

                           (d) The registration  rights granted pursuant to this
                  Section 2.1 shall have no force or effect until the earlier of
                  (i) the Company having completed a Public Merger,  or (ii) the
                  Company  otherwise having become obligated to file periodic or
                  other reports pursuant to Section 13 of the Exchange Act.

                  2.2      Piggyback Registration.

                           (a) Each time that the Company proposes to Register a
                  Public Offering solely of its Common Stock other than pursuant
                  to a Registration Statement on Form S-4 or Form S-8 or similar
                  or  successor  forms  (collectively,  "Excluded  Forms"),  the
                  Company shall  promptly  give written  notice of such proposed
                  Registration to all holders of Shares,  which shall offer such
                  holders  the right to  request  inclusion  of any  Registrable
                  Securities in the proposed Registration.

                           (b) Each holder of Shares shall have thirty (30) days
                  or such longer period as shall be set forth in the notice from
                  the receipt of such notice to deliver to the Company a written
                  request   specifying  the  number  of  shares  of  Registrable
                  Securities  such  holder  intends  to sell  and  the  holder's
                  intended plan of disposition.

                           (c) In the event that the  proposed  Registration  by
                  the Company is, in whole or in part,  an  underwritten  public
                  offering of  securities  of the  Company,  any  request  under
                  Section 2.2(b) may specify that the Registrable  Securities be
                  included in the  underwriting on the same terms and conditions
                  as the shares of Common Stock,  if any,  otherwise  being sold
                  through underwriters under such Registration.

INVESTORS' RIGHTS AGREEMENT - Page 4

<PAGE>

                           (d) Upon  receipt of a written  request  pursuant  to
                  Section  2.2(b),  the  Company  shall  promptly  use its  best
                  efforts  to  cause  all  such  Registrable  Securities  to  be
                  Registered,   to  the  extent   required  to  permit  sale  or
                  disposition as set forth in the written request.

                           (e)  Notwithstanding  the foregoing,  if the managing
                  underwriter of an underwritten  public offering determines and
                  advises  in  writing  that the  inclusion  of all  Registrable
                  Securities  proposed to be included in the underwritten public
                  offering,  together  with any  other  issued  and  outstanding
                  shares of Common  Stock  proposed  to be  included  therein by
                  holders other than the holders of Registrable Securities (such
                  other  shares  hereinafter  collectively  referred  to as  the
                  "Other Shares"), would interfere with the successful marketing
                  of the securities  proposed to be included in the underwritten
                  public offering, then the number of such shares to be included
                  in such  underwritten  public  offering shall be reduced,  and
                  shares  shall  be  excluded  from  such  underwritten   public
                  offering  in  a  number  deemed  necessary  by  such  managing
                  underwriter,  first,  to the extent  necessary,  by  excluding
                  Other Shares, pro rata, based on the number of shares of Other
                  Shares each such holder proposed to include,  and then, to the
                  extent necessary,  by excluding  Registrable  Securities,  pro
                  rata, based on the number of shares of Registrable  Securities
                  each such holder proposed to include; provided,  however, that
                  this provision  shall not be applicable to any shares of stock
                  requested  to be  registered  by a  Stockholder  exercising  a
                  Demand   Registration   right.   Notwithstanding   any   other
                  provisions of this Section, if the underwritten  offering is a
                  Company  registration,  then  the  shares  being  sold  by the
                  Company shall not be excluded from such offering.

                           (f)  All  Shares   that  are  not   included  in  the
                  underwritten public offering shall be withheld from the market
                  by the holders  thereof  for a period,  not to exceed 6 months
                  following a public  offering,  that the  managing  underwriter
                  reasonably  determines  as  necessary  in order to effect  the
                  underwritten public offering. The holders of such Shares shall
                  execute  such   documentation  as  the  managing   underwriter
                  reasonably requests to evidence this lock-up.

                  2.3      Preparation  and Filing.  If and whenever the Company
         is under an obligation  pursuant to the provisions of this Section 2 to
         use its best  efforts to effect  the  Registration  of any  Registrable
         Securities, the Company shall, as expeditiously as practicable:

                           (a)   prepare   and  file  with  the   Commission   a
                  Registration   Statement  with  respect  to  such  Registrable
                  Securities and use its best efforts to cause such Registration
                  Statement to become and remain  effective in  accordance  with
                  Section  2.3(b)  hereof,   keeping  each  Selling  Stockholder
                  advised as to the  initiation,  progress and completion of the
                  Registration;

                           (b)  prepare  and  file  with  the  Commission   such
                  amendments and supplements to such Registration Statements and
                  the  prospectus  used  in  connection   therewith  as  may  be
                  necessary to keep such  Registration  Statement  effective for
                  six months or, if shorter,  until all  Registrable  Securities
                  covered by such Registration  Statement have been sold, and to
                  comply with the  provisions of the Securities Act with respect
                  to the sale or other disposition of all Registrable Securities
                  covered by such registration statement;

INVESTORS' RIGHTS AGREEMENT - Page 5

<PAGE>

                           (c) furnish to each Selling  Stockholder  such number
                  of  copies  of any  summary  prospectus  or other  prospectus,
                  including a preliminary  prospectus,  in  conformity  with the
                  requirements  of the Securities  Act, and such other documents
                  as such Selling Stockholder may reasonably request in order to
                  facilitate  the  public  sale  or  other  disposition  of such
                  Registrable Securities;

                           (d) use its best  efforts to  register or qualify the
                  Registrable  Securities covered by such registration statement
                  under the securities or blue sky laws of such jurisdictions as
                  each Selling  Stockholder shall reasonably  request and do any
                  and all  other  acts  or  things  which  may be  necessary  or
                  advisable to enable such holder to consummate  the public sale
                  or other disposition in such jurisdictions of such Registrable
                  Securities;  provided,  however, that the Company shall not be
                  required to consent to general service of process,  qualify to
                  do  business  as a foreign  corporation  where it would not be
                  otherwise required to qualify or submit to liability for state
                  or local taxes where it is not liable for such taxes; and

                           (e) at any time  when a  prospectus  covered  by such
                  Registration  Statement is required to be delivered  under the
                  Securities  Act within the  appropriate  period  mentioned  in
                  Section 2.3(b) hereof,  notify each Selling Stockholder of the
                  happening  of any event as a result  of which  the  prospectus
                  included in such Registration,  as then in effect, includes an
                  untrue  statement  of a  material  fact or  omits  to  state a
                  material  fact  required to be stated  therein or necessary to
                  make the statements therein not misleading in the light of the
                  circumstances  then  existing  and,  at the  request  of  such
                  seller,  prepare, file and furnish to such seller a reasonable
                  number of copies of a  supplement  to or an  amendment of such
                  prospectus   as  may  be  necessary  so  that,  as  thereafter
                  delivered to the  purchasers of such shares,  such  prospectus
                  shall not include an untrue  statement  of a material  fact or
                  omit to state a material fact required to be stated therein or
                  necessary to make the statement  therein not misleading in the
                  light of the circumstances then existing.

                  2.4      Expenses.  The  Company  shall  pay all  Registration
         Expenses  incurred by the  Company in  complying  with this  Section 2;
         provided,   however,  that  all  Selling  Expenses  applicable  to  the
         Registrable  Securities  covered by registrations  effected pursuant to
         Section  2.2 hereof  shall be borne by the  seller or sellers  thereof,
         based on the number of  Registrable  Securities  sold by such seller or
         sellers.

                  2.5      Information  Furnished  by Selling  Stockholders.  It
         shall be a condition precedent to the Company's  obligations under this
         Agreement as to any Selling  Stockholder that each Selling  Stockholder
         furnish to the  Company  in writing  such  information  regarding  such
         Selling  Stockholder  and the  distribution  proposed  by such  Selling
         Stockholder as the Company may reasonably request.

INVESTORS' RIGHTS AGREEMENT - Page 6

<PAGE>

                  2.6      Indemnification.

                           (a)    Company's     Indemnification    of    Selling
                  Stockholders.   The  Company  shall   indemnify  each  Selling
                  Stockholder,  each of its officers,  directors and constituent
                  partners,   and   each   Person   controlling   such   Selling
                  Stockholder, and each underwriter thereof, if any, and each of
                  its officers, directors, constituent partners, and each Person
                  who controls  such  underwriter,  against all claims,  losses,
                  damages  or  liabilities  (or  actions  in  respect   thereof)
                  suffered  or  incurred  by any of  them,  to the  extent  such
                  claims,  losses,  damages or  liabilities  arise out of or are
                  based upon any untrue statement (or alleged untrue  statement)
                  of a material  fact  contained in any  Registration  Statement
                  covering  the sale of  Registrable  Securities  or any related
                  prospectus,  or any  omission  (or alleged  omission) to state
                  therein a  material  fact  required  to be stated  therein  or
                  necessary to make the statements  therein not  misleading,  or
                  any  violation  by the  Company  of  any  rule  or  regulation
                  promulgated under the Securities Act applicable to the Company
                  and relating to actions or inaction required of the Company in
                  connection  with any such  Registration;  and the Company will
                  reimburse   each   such   Selling   Stockholder,   each   such
                  underwriter, each of their officers, directors and constituent
                  partners  and  each  Person  who  controls  any  such  Selling
                  Stockholder  or  underwriter,  for any  legal  and  any  other
                  expenses   as   reasonably   incurred   in   connection   with
                  investigating  or  defending  any such  claim,  loss,  damage,
                  liability or action;  provided,  however,  that the  indemnity
                  contained  in this  Section  2.6(a) shall not apply to amounts
                  paid in settlement of any such claim, loss, damage,  liability
                  or action if settlement is effected without the consent of the
                  Company (which consent shall not to be  unreasonably  withheld
                  or delayed); and provided,  however, that the Company will not
                  be liable in any such case to the extent  that any such claim,
                  loss,  damage,  liability or expense arises out of or is based
                  upon any untrue  statement  or  omission  based  upon  written
                  information   furnished   to  the  Company  by  such   Selling
                  Stockholder,   underwriter,   controlling   Person   or  other
                  indemnified  Person for use in connection with the offering of
                  securities of the Company.

                           (b) Selling Stockholders' Indemnification of Company.
                  Each Selling Stockholder shall indemnify the Company,  each of
                  its directors and officers,  each underwriter,  if any, of the
                  Company's  Registrable  Securities  covered by a  Registration
                  Statement,  each  Person  who  controls  the  Company  or such
                  underwriter within the meaning of the Securities Act, and each
                  other Selling Stockholder, each of its officers, directors and
                  constituent  partners and each Person  controlling  such other
                  Selling Stockholder,  against all claims,  losses, damages and
                  liabilities  (or  actions  in  respect  thereof)  suffered  or
                  incurred  by any of them and  arising out of or based upon any
                  untrue  statement (or alleged untrue  statement) of a material
                  fact  contained  in such  Registration  Statement  or  related
                  prospectus,  or any  omission  (or alleged  omission) to state
                  therein a  material  fact  required  to be stated  therein  or
                  necessary to make the statements  therein not  misleading,  or
                  any  violation  by such  Selling  Stockholder  of any  rule or
                  regulation  promulgated under the Securities Act applicable to
                  such Selling  Stockholder  and relating to actions or inaction
                  required of such Selling  Stockholder  in connection  with the

INVESTORS' RIGHTS AGREEMENT - Page 7

<PAGE>

                  Registration  of the Registrable  Securities  pursuant to such
                  Registration  Statement;  and will reimburse the Company, such
                  other  Selling   Stockholders,   such   directors,   officers,
                  partners,  Persons,  underwriters and controlling  Persons for
                  any  legal  and any  other  expenses  reasonably  incurred  in
                  connection  with  investigating  or defending  any such claim,
                  loss, damage,  liability or action;  such  indemnification and
                  reimbursement  shall be to the extent, but only to the extent,
                  that such untrue  statement (or alleged  untrue  statement) or
                  omission (or alleged  omission)  is made in such  Registration
                  Statement or  prospectus  in reliance  upon and in  conformity
                  with  written  information  furnished  to the  Company by such
                  Selling Stockholder for use in connection with the offering of
                  Registrable Securities.

                           (c) Indemnification Procedure. Promptly after receipt
                  by an  indemnified  party under this  Section 2.6 of notice of
                  the  commencement of any action which may give rise to a claim
                  for indemnification hereunder, such indemnified party will, if
                  a  claim  in  respect   thereof  is  to  be  made  against  an
                  indemnifying   party  under  this  Section  2.6,   notify  the
                  indemnifying party in writing of the commencement  thereof and
                  generally  summarize such action. The indemnifying party shall
                  have the right to  participate in and to assume the defense of
                  such claim,  and shall be  entitled to select  counsel for the
                  defense  of  such  claim  with  the  approval  of any  parties
                  entitled  to  indemnification,  which  approval  shall  not be
                  unreasonably  withheld.  Notwithstanding  the  foregoing,  the
                  parties  entitled to  indemnification  shall have the right to
                  employ  separate  counsel  (reasonably   satisfactory  to  the
                  indemnifying party) to participate in the defense thereof, but
                  the fees and expenses of such counsel  shall be at the expense
                  of such  indemnified  parties unless the named parties to such
                  action or proceedings  include both the indemnifying party and
                  the  indemnified  parties and the  indemnifying  party or such
                  indemnified  parties  shall have been  advised by counsel that
                  there  are  conflicting   interests  between  the  indemnified
                  parties  and the  indemnifying  party (in which  case,  if the
                  indemnified  parties notify the indemnifying  party in writing
                  that they elect to employ  separate  counsel at the reasonable
                  expense of the  indemnifying  party,  the  indemnifying  party
                  shall not have the right to assume the  defense of such action
                  or proceeding on behalf of the indemnified  parties;  it being
                  understood, however, that the indemnifying party shall not, in
                  connection  with any such action or  proceeding or separate or
                  substantially  similar or related  action or proceeding in the
                  same jurisdiction  arising out of the same general allegations
                  or  circumstances,  be  liable  for the  reasonable  fees  and
                  expenses of more than one separate counsel at any time for all
                  indemnified  parties,  which  counsel  shall be  designated in
                  writing  by  the  holder  of a  majority  of  the  Registrable
                  Securities).

                           (d) Contribution. If the indemnification provided for
                  in this Section 2.6 from an indemnifying  party is unavailable
                  to an  indemnified  party  hereunder in respect to any losses,
                  claims,  damages,  liabilities or expenses referred to herein,
                  then the  indemnifying  party,  in lieu of  indemnifying  such
                  indemnified  party,  shall  contribute  to the amount  paid or
                  payable by such indemnified  party as a result of such losses,
                  claims, damages, liabilities or expenses in such proportion as
                  is   appropriate   to  reflect  the  relative   fault  of  the
                  indemnifying  party and  indemnified  party in connection with
                  the  statements  or  omissions  which  result in such  losses,

INVESTORS' RIGHTS AGREEMENT - Page 8

<PAGE>

                  claims, damages, liabilities or expenses, as well as any other
                  relevant equitable considerations.  The relative fault of such
                  indemnifying  party and indemnified  party shall be determined
                  by  reference  to, among other  things,  whether the untrue or
                  alleged untrue statement of a material fact or the omission or
                  alleged   omission  to  state  a  material   fact  relates  to
                  information supplied by such indemnifying party or indemnified
                  party and the parties' relative intent,  knowledge,  access to
                  information supplied by such indemnifying party or indemnified
                  party and  opportunity to correct or prevent such statement or
                  omission. The amount paid or payable by a party as a result of
                  the losses, claims, damages, liabilities and expenses referred
                  to above shall be deemed to include any legal or other fees or
                  expenses  reasonably incurred by such party in connection with
                  investigating  or defending  any action,  suit,  proceeding or
                  claim.

                           (e)  Limitation  on  Liability.  Notwithstanding  any
                  provision of this Section 2 of this Agreement to the contrary,
                  the  aggregate   liability  of  each  Selling  Stockholder  in
                  connection with any Registration Statement shall be limited to
                  the aggregate  proceeds paid to such Selling  Stockholder upon
                  the sale of such Selling Stockholder's  Registrable Securities
                  pursuant to such Registration Statement.

         3.       Covenants of the Company.

                  3.1      Notification of Stop Orders.  The Company will notify
         the  holders  of  Registrable  Securities  included  in a  Registration
         Statement  of  the  issuance  by  the  Commission  of  any  stop  order
         suspending  the  effectiveness  of such  Registration  Statement or the
         initiation of any proceedings  for that purpose.  The Company will make
         every reasonable  effort to prevent the issuance of any stop order and,
         if any stop  order is  issued,  to obtain  the  lifting  thereof at the
         earliest possible time.

                  3.2      Listing of Common Stock.  If the Common Stock is then
         listed on a national securities exchange, the Company will use its best
         efforts  to cause  the  Registrable  Securities  to be  listed  on such
         exchange.  If  the  Common  Stock  is not  then  listed  on a  national
         securities  exchange,   the  Company  will  use  its  best  efforts  to
         facilitate  the reporting of the  Registrable  Securities on the Nasdaq
         National Market or Nasdaq SmallCap Market.

                  3.3      Company's  Facilitation of Disposition of Registrable
         Securities.   The  Company  will  take  all  other  reasonable  actions
         necessary to expedite and  facilitate  disposition  of the  Registrable
         Securities  by  the  holders  thereof   pursuant  to  the  Registration
         Statement.

                  3.4      Rule  144.  With a view to  making  available  to the
         holders of Registrable  Securities the benefits of Rule 144 promulgated
         under  the  Securities  Act and any  other  rule or  regulation  of the
         Commission  that may at any time permit the Investor to sell securities
         of the Company to the public without registration,  the Company,  after
         it has become  obligated to file periodic or other reports  pursuant to
         Section 13 of the Exchange Act (a "Reporting Company") agrees to:

INVESTORS' RIGHTS AGREEMENT - Page 9

<PAGE>

                           (a) make and keep public  information  available,  as
                  those  terms are  understood  and  defined in Rule 144, at all
                  times  after 90 days  after  the  effective  date of the first
                  Registration  Statement  filed by the Company for the offering
                  of its securities to the general public;

                           (b) file with the  Commission  in a timely manner all
                  reports and other documents  required of the Company under the
                  Securities Act and the Exchange Act; and

                           (c) furnish to each holder of Shares, so long as such
                  holder of  Shares  owns any  Shares,  forthwith  upon  written
                  request:  (i) a written  statement  by the Company that it has
                  complied with the reporting  requirements  of Rule 144 (at any
                  time  after 90 days  after  the  effective  date of the  first
                  registration  statement filed by the Company),  the Securities
                  Act and the  Exchange  Act (at any time  after  it has  become
                  subject to such  reporting  requirements),  (ii) a copy of the
                  most recent annual or quarterly report of the Company and such
                  other reports and documents so filed by the Company, and (iii)
                  such other  information as may be reasonably  requested and as
                  is publicly available in availing the holders of Shares of any
                  rule or regulation of the Commission which permits the selling
                  of any such securities without registration.

                  3.5      Drafts  of  Prospectus  Pages  Referring  to  Selling
         Stockholders.  Prior to the filing of the Registration Statement or any
         amendment thereto (whether pre-effective or post-effective),  and prior
         to the  filing  of any  prospectus  or  prospectus  supplement  related
         thereto,  the Company will provide each Selling Stockholder with copies
         of all pages thereto, if any, which reference such Selling Stockholder.

                  3.6      Delivery of Financial  Statements.  After the Company
         becomes a Reporting Company, it shall deliver to each Investor:

                           (a) as soon as  practicable,  but in any event within
                  ninety  (90)  days  after the end of each  fiscal  year of the
                  Company,  an income  statement for such fiscal year, a balance
                  sheet of the Company and statement of stockholders'  equity as
                  of the end of such  year,  and a  statement  of cash flows for
                  such year, such year-end financial reports to be in reasonable
                  detail,   prepared  in  accordance  with  generally   accepted
                  accounting  principals ("GAAP"),  and audited and certified by
                  independent  public   accountants  of  nationally   recognized
                  standing selected by the Company;

                           (b)  within  forty-five  (45) days of the end of each
                  quarter,  an unaudited  income statement and statement of cash
                  flows and balance sheet for and as of the end of such quarter,
                  in reasonable detail comparing actual performance to budget;

                           (c)  as  soon  as  practicable,   but  in  any  event
                  forty-five  (45) days prior to the end of each fiscal  year, a
                  budget and business plan for the next fiscal year, prepared on
                  a quarterly basis,  including balance sheets and statements of
                  cash  flows  for  such  quarter  and,  as  soon  as  prepared,
                  statements  of  operating  goals  for  each  of the  Company's
                  functional  units and any other  budgets  or  revised  budgets
                  prepared by the Company;

INVESTORS' RIGHTS AGREEMENT - Page 10

<PAGE>

                           (d) with respect to the financial  statements  called
                  for in  subsections  (b)  and  (c) of  this  Section  3.6,  an
                  instrument   executed  by  the  Chief  Financial   Officer  or
                  President of the Company and certifying  that such  financials
                  were prepared in  accordance  with GAAP  consistently  applied
                  with prior practice for earlier periods (with the exception of
                  footnotes that may be required by GAAP) and fairly present the
                  financial   condition  of  the  Company  and  its  results  of
                  operation for the period specified,  subject to year-end audit
                  adjustment; and

                           (e) such other information  relating to the financial
                  condition, business, prospects or corporate affairs (including
                  press  releases and the like) of the Company as such  Investor
                  or  any  assignee  of  such  Investor  may  from  time-to-time
                  reasonably request, provided,  however, that the Company shall
                  not be  obligated  under  this  Subsection  (e)  or any  other
                  subsection  of Section  3.6 to provide  information  which the
                  Company's  Board  deems in good faith to be a trade  secret or
                  similar confidential  information or which is available to the
                  general public.

                  3.7      Inspection.  The Company shall permit each  Investor,
         at such Investor's  expense,  upon reasonable written notice, to visit,
         during normal business hours, and inspect the Company's properties,  to
         examine its books of account  and records and to discuss the  Company's
         affairs,  finances and accounts with its officers;  provided,  however,
         that the Company shall not be obligated pursuant to this Section 3.7 to
         provide access to any information which it reasonably considers to be a
         trade secret or similar confidential information.

                  3.8      Tax  Matters.  The  Company  will  promptly  pay  and
         discharge,  or cause to be paid and  discharged,  when due and payable,
         all  lawful  taxes,  assessments  and  governmental  charges  or levies
         imposed upon the income,  profits,  property or business of the Company
         or any subsidiary;  provided,  however,  that any such tax, assessment,
         charge or levy need not be paid if the validity thereof shall currently
         be  contested  in good  faith  by  appropriate  proceedings  and if the
         Company  shall  have set  aside on its  books  adequate  reserves  with
         respect thereto, and provided,  further,  that the Company will pay all
         such  taxes,   assessments,   charges  or  levies  forthwith  upon  the
         commencement  of  proceedings  to  foreclose  any lien  which  may have
         attached as security therefor.

                  3.9      Maintenance  of  Properties  and Leases.  The Company
         will keep its properties and those of its  subsidiaries in good repair,
         working order and condition,  reasonable  wear and tear  excepted,  and
         from  time to time  make all  needful  and  proper  repairs,  renewals,
         replacements,  additions and improvements  thereto; and the Company and
         its subsidiaries will at all times comply with each material  provision
         of all  leases  to which  any of them is a party or under  which any of
         them  occupies  property if the breach of such  provision  might have a
         material and adverse effect on the  condition,  financial or otherwise,
         or operations of the Company.

                  3.10     Insurance. The Company will keep its assets and those
         of its  subsidiaries  which are of an  insurable  character  insured by
         financially  sound and  reputable  insurers  against  loss or damage by
         fire,   explosion  and  other  risks  customarily  insured  against  by
         companies  in the  Company's  line of  business,  and the Company  will
         maintain,  with  financially  sound and reputable  insurers,  insurance
         against  other  hazards and risks and liability to persons and property
         to the extent  and in the manner  customary  for  companies  in similar
         businesses similarly situated.

INVESTORS' RIGHTS AGREEMENT - Page 11

<PAGE>

                  3.11     Accounts  and  Records.  The  Company  will keep true
         records  and books of account in which full,  true and correct  entries
         will  be  made of all  dealings  or  transactions  in  relation  to its
         business and affairs in accordance with generally  accepted  accounting
         principles applied on a consistent basis.

                  3.12     Maintenance of Corporate Existence. The Company shall
         maintain in full force and effect its corporate  existence,  rights and
         franchises  and all  licenses  and other  rights in or to use  patents,
         processes,  licenses,  trademarks,  trade names or copyrights  owned or
         possessed  by it or any  subsidiary  and  deemed by the  Company  to be
         necessary to the conduct of their business.

                  3.13     Notice of Breach.  The Company  shall furnish to each
         Investor  within ten (10) days after becoming aware of (a) any material
         default  or  breach  of the  terms  of  this  Agreement,  the  Purchase
         Agreement,   or   the   Shareholders   Agreement   (collectively,   the
         "Transaction  Agreements"),  or any document or agreement  delivered in
         connection with the Transaction Agreements, or (b) any material adverse
         event  affecting  the  Company or its  business,  financial  condition,
         operations,  prospects  or  affairs,  a  statement  setting  forth,  in
         reasonable  detail,  such  default,  breach  or  event,  including  the
         Company's proposed response thereto.

                  3.14     Maintenance of a Standard  System of Accounting.  The
         Company will maintain a standard  system of accounting  established and
         administered   in  accordance   with  generally   accepted   accounting
         principles.

         4. Right of First Offer.  Subject to the terms and conditions specified
in this Section 4, the Company  hereby  grants to each Investor a right of first
offer  with  respect  to future  sales by the  Company  of its Offer  Shares (as
hereinafter defined).  Each time the Company proposes to offer any shares of, or
securities  convertible  into or exercisable for any shares of, any class of its
capital stock ("Offer Shares"), the Company shall first make an offering of such
Offer Shares to each Investor in accordance with the following provisions:

                  4.1      The Company shall deliver a notice by certified  mail
         ("Notice")  to each  Investor  stating (a) its bona fide  intention  to
         offer such  Offer  Shares,  (b) the  number of such Offer  Shares to be
         offered,  (c) a full description of the Offer Shares, and (d) the price
         and terms upon which it proposes to offer such Offer Shares.

                  4.2      Within 20 calendar  days after receipt of the Notice,
         each Investor may elect in writing to purchase, at the price and on the
         terms specified in the Notice, up to the total number of Offer Shares.

                  4.3      If over-subscribed,  the right of first offer granted
         hereunder to the Investors  shall be allocated  among the Investors pro
         rata, based on their  respective  aggregate  holdings of Shares.  If an
         Investor  does not elect to purchase his entire pro rata portion of the
         Offer   Shares,   then  the   other   Investors   may   purchase   such
         non-participating      Investor's     unsubscribed     portion.     The
         non-participating  Investor's  unsubscribed portion of the Offer Shares
         shall be allocated among the other  Investors pro rata,  based on their
         respective aggregate holdings of Shares.

INVESTORS' RIGHTS AGREEMENT - Page 12

<PAGE>

                  4.4      If all Offer  Shares that  Investors  are entitled to
         obtain  pursuant  to  subsections  4.2 and 4.3  are not  elected  to be
         obtained as provided in such subsection, the Company may offer and sell
         the remaining  unsubscribed  portion of such Offer Shares to any Person
         or Persons at a price not less than,  and upon terms no more  favorable
         to the offeree than, those specified in the Notice.

                  4.5      The right of first offer in this  Section 4 shall not
         be applicable to:

                           (a)  options,   warrants,   or  any  other  security,
                  including shares of Common Stock granted or issued pursuant to
                  or under any stock option or stock purchase agreement, plan or
                  other  compensatory  arrangement  to employees,  directors and
                  consultants:  (x)  in  effect  on  the  date  hereof,  or  (y)
                  otherwise approved by the Board of Directors of the Company;

                           (b) Common  Stock,  options,  warrants,  or any other
                  security issued as a stock dividend or upon any subdivision or
                  combination of shares of Common Stock;

                           (c) Common  Stock,  options,  warrants,  or any other
                  security issued upon conversion or exercise of any convertible
                  securities,  options or warrants of the Company outstanding on
                  the date hereof,  or issued in compliance  with this Section 4
                  or issued pursuant to the Transaction Agreements;

                           (d) Common  Stock,  options,  warrants,  or any other
                  security  issued in  connection  with the  acquisition  of the
                  outstanding  capital  stock  of  another  corporation  by  the
                  Company or the merger of another corporation into the Company;

                           (e) Common  Stock,  options,  warrants,  or any other
                  security  issued as  consideration  for the acquisition by the
                  Company  or a  subsidiary  of  any of the  assets  of  another
                  person;

                           (f) Common Stock issued in  connection  with a Public
                  Offering;

                           (g) Common  Stock,  options,  warrants,  or any other
                  security  issued  to  the  Company's  customers,  vendors,  or
                  suppliers,  outstanding  on the date hereof or approved by the
                  director who was nominated to the Board by Cybertec;

                           (h) Any de minimis  issuances  of Common Stock by the
                  Company, provided, however, that any such issuance is approved
                  by the  director  who was  nominated to the Board of Cybertec;
                  and

                           (i)  Common  Stock  or  other  securities  issued  in
                  connection  with  a  debt  financing,   corporate   partnering
                  arrangement,  joint venture or other  arrangement  that is not
                  intended to serve as an equity financing for the Company.

INVESTORS' RIGHTS AGREEMENT - Page 13

<PAGE>

                  4.6      The Right of First Offer shall  terminate on the date
         of the  earlier to occur:  (i)  completion  by the  Company of a Public
         Offering which nets the Company at least $10 million or (ii) the Shares
         owned  by the  Investors  as a group  constitute  less  than 10% of the
         issued and outstanding shares of the Company's Common Stock (on a fully
         diluted basis).

         5.       Miscellaneous.

                  5.1      Successors and Assigns.  Except as otherwise provided
         herein,  the terms and conditions of this Agreement  shall inure to the
         benefit of and be binding upon the respective successors and assigns of
         the  parties  (including  transferees  of  any  shares  of  Registrable
         Securities  who shall be treated as  "Investors"  with  respect to such
         shares). Nothing in this Agreement,  express or implied, is intended to
         confer upon any party other than the parties hereto or their respective
         successors   and  assigns  any  rights,   remedies,   obligations,   or
         liabilities  under or by reason of this Agreement,  except as expressly
         provided in this Agreement.

                  5.2      Governing  Law. This  Agreement  shall be governed by
         and  construed  under  the laws of the  State of Texas  without  giving
         effect  to  conflict  of law  principles.  Any  legal  action,  suit or
         proceeding  arising  out  of or  relating  to  this  Agreement  may  be
         instituted in any state or federal court of competent  jurisdiction  in
         the State of Texas,  and each  party  waives any  objection  which such
         party  may now or  hereafter  have to the  laying  of the  venue in the
         County  of  Dallas  of  any  such  action,  suit  or  proceeding,   and
         irrevocably submits to the jurisdiction of any such court.

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

                  5.4      Titles  and  Subtitles.  The  headings  used  in this
         Agreement are used for convenience only and are not to be considered in
         construing or interpreting this Agreement.

                  5.5      Notices.  Unless  otherwise  provided,  all  notices,
         consents  or other  communications  required or  permitted  to be given
         under this  Agreement  shall be in writing  and shall be deemed to have
         been duly given:  (i) when  delivered  personally,  (ii) three business
         days after being mailed by first-class mail, postage prepaid,  or (iii)
         one  business  day after being sent by a reputable  overnight  delivery
         service,  postage or delivery charges prepaid,  to the parties at their
         respective  addresses  stated on the signature page of this  Agreement.
         Notices may also be given by prepaid telegram or facsimile and shall be
         effective  on  the  date  transmitted  if  confirmed  within  24  hours
         thereafter  by a signed  original  sent in the manner  provided  in the
         preceding sentence. Any party may change its address for notice and the
         address  to  which  copies  must be sent by  giving  notice  of the new
         addresses  to the other  parties in  accordance  with this Section 5.5,
         except that any such change of address  notice  shall not be  effective
         unless and until received.

                  5.6      Expenses.  If  any  action  at law  or in  equity  is
         necessary  to enforce or  interpret  the terms of this  Agreement,  the
         prevailing party shall be entitled to reasonable attorneys' fees, costs
         and  necessary  disbursements  in addition to any other relief to which
         such party may be entitled.

INVESTORS' RIGHTS AGREEMENT - Page 14

<PAGE>

                  5.7      Amendments  and  Waivers.  No failure or delay on the
         part of any holder of the  Registrable  Securities  in  exercising  any
         right, power or remedy hereunder shall operate as a waiver thereof; nor
         shall any single or partial exercise of any such right, power or remedy
         preclude any other or further  exercise  thereof or the exercise of any
         other right, power or remedy hereunder.  Any term of this Agreement may
         be amended  and the  observance  of any term of this  Agreement  may be
         waived  (either  generally  or  in a  particular  instance  and  either
         retroactively or  prospectively),  only with the written consent of the
         Company  and the  holders  of at least a  majority  of the  Registrable
         Securities  then  outstanding.  Any  amendment  or waiver  effected  in
         accordance with this paragraph shall be binding upon each holder of any
         Registrable  Securities then outstanding or securities  exercisable for
         or convertible into Registrable  Securities,  each future holder of all
         such Registrable Securities, and the Company.

                  5.8      Severability.  If  one or  more  provisions  of  this
         Agreement  are held to be  unenforceable  under  applicable  law,  such
         provision  shall be excluded from this Agreement and the balance of the
         Agreement  shall be  interpreted  as if such provision were so excluded
         and shall be enforceable in accordance with its terms.

                  5.9      Confidential Information.  Each Investor acknowledges
         that the information  received by them pursuant to Sections 3.6 and 3.7
         of this  Agreement may be  confidential.  Each Investor  agrees that it
         will not use such Confidential Information in violation of the Exchange
         Act or reproduce, disclose or disseminate such information to any third
         person  (other  than its  employees,  agents or  attorneys),  except in
         connection  with the exercise of any right  hereunder.  For purposes of
         this  Section  5.9,  "Confidential  Information"  shall not include any
         information that: (a) is or becomes  generally  available to the public
         other  than as a result of a  disclosure  by the  Company or any of its
         directors,  officers,  employees or agents, (b) is or becomes available
         to the Investors on a  non-confidential  basis from a source other than
         the  Company,  or (c) is  independently  acquired or  developed  by the
         Investors  without  violating any of the Investors'  obligations  under
         this Agreement.

                  5.10     Entire  Agreement.   This  Agreement  (including  the
         Exhibits  hereto,  if  any)  and  the  other   Transaction   Agreements
         constitute the full and entire  understanding and agreement between the
         parties with regard to the subjects hereof.

INVESTORS' RIGHTS AGREEMENT - Page 15

<PAGE>

         IN WITNESS  WHEREOF,  the  parties  have  executed  this  Shareholders'
Agreement on the day and year indicated above.

                                     THE COMPANY:

                                     AVATAR SYSTEMS, INC.

                                     By:              /s/ Robert C. Shreve, Jr.
                                        ----------------------------------------
                                        Robert C. Shreve, Jr., President

                                     Address:
                                             -----------------------------------

                                     -------------------------------------------
                                     Telephone No.:
                                                   -----------------------------
                                     Facsimile No.:
                                                   -----------------------------

                                     INVESTORS:

                                     CYBERTEC HOLDINGS, PLC

                                     By:              /s/ Stephen A. Komlosy
                                        ----------------------------------------
                                        Stephen A. Komlosy, Managing Director

                                     Address:
                                             -----------------------------------

                                     -------------------------------------------
                                     Telephone No.:
                                                   -----------------------------
                                     Facsimile No.:
                                                   -----------------------------

                                     MERCHANTS CAPITAL HOLDINGS, LTD.

                                     By:              /s/ Geoffrey Dart
                                        ----------------------------------------
                                        Geoffrey Dart, Managing Director

                                     Address:
                                             -----------------------------------

                                     -------------------------------------------
                                     Telephone No.:
                                                   -----------------------------
                                     Facsimile No.:
                                                   -----------------------------

                                                      /s/ Stephen A. Komlosy
--------------------------------------------------------------------------------
                                     STEPHEN A. KOMLOSY

                                     Address:
                                             -----------------------------------

                                     -------------------------------------------
                                     Telephone No.:
                                                   -----------------------------
                                     Facsimile No.:
                                                   -----------------------------

                                     STOCKHOLDERS:

                                                      /s/ Robert C. Shreve, Jr.
--------------------------------------------------------------------------------
                                     ROBERT C. SHREVE, JR.

                                     Address:
                                             -----------------------------------

                                     -------------------------------------------
                                     Telephone No.:
                                                   -----------------------------
                                     Facsimile No.:
                                                   -----------------------------

                                                      /s/ Tim Allen
--------------------------------------------------------------------------------
                                     TIM ALLEN

                                     Address:
                                             -----------------------------------

                                     -------------------------------------------
                                     Telephone No.:
                                                   -----------------------------
                                     Facsimile No.:
                                                   -----------------------------

                                                      /s/ Gregg Allen
--------------------------------------------------------------------------------
                                     GREGG ALLEN

                                     Address:
                                             -----------------------------------

                                     -------------------------------------------
                                     Telephone No.:
                                                   -----------------------------
                                     Facsimile No.:
                                                   -----------------------------

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