Document:

EXHIBIT 10.1

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                            STOCK PURCHASE AGREEMENT

                                     Between

                               MARGO CARIBE, INC.
                                   ("SELLER")

                                       and

                              EMPRESAS MARGO, INC.
                                    ("BUYER")

                            DATED AS OF JUNE 30, 2000

        ================================================================

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Section                                                                     Page
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ARTICLE I - CERTAIN DEFINITIONS................................................1

ARTICLE II - SALE OF SHARES AND MARGO MARKS....................................4
         2.1  SALE OF SHARES AND MARGO MARKS...................................4
         2.2  PURCHASE PRICE...................................................4

ARTICLE III - CLOSING..........................................................4
         3.1  CLOSING..........................................................4
         3.2  SELLER'S DELIVERIES AT THE CLOSING...............................5
         3.3  BUYER'S DELIVERIES AT THE CLOSING................................5

ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLER..........................6
         4.1  ORGANIZATION AND AUTHORITY.......................................6
         4.2  SUBSIDIARIES AND DOCUMENTS.......................................7
         4.3  CAPITALIZATION OF SUBSIDIARIES...................................7
         4.4  OWNERSHIP OF SHARES..............................................7
         4.5  FINANCIAL STATEMENTS.............................................7
         4.6  ABSENCE OF CHANGES...............................................7
         4.7  TAX MATTERS......................................................8
         4.8  NO CONFLICT WITH PROPRIETARY RIGHTS..............................8
         4.9  NON-COMPETITION ARRANGEMENTS.....................................8
         4.10  EMPLOYEE BENEFITS...............................................8
         4.11  LITIGATION AND LABOR RELATIONS..................................9
         4.12  PROPERTY AND LIABILITY INSURANCE................................9
         4.13  CONSENTS AND APPROVALS..........................................9
         4.14  PROPERTIES AND ASSETS..........................................10
         4.15  COMPLIANCE WITH LAWS; LICENSES AND PERMITS.....................10
         4.16  ENVIRONMENTAL MATTERS..........................................10

ARTICLE V - REPRESENTATIONS AND WARRANTIES BY BUYER...........................11
         5.1  ORGANIZATION AND STANDING.......................................11
         5.2  AUTHORITY.......................................................11
         5.3  CONSENTS AND APPROVALS; NO VIOLATIONS...........................11

ARTICLE VI - CERTAIN COVENANTS AND AGREEMENTS OF SELLER
                           AND BUYER..........................................12
         6.1  ACCESS TO INFORMATION...........................................12
         6.2  DISCLOSURE SUPPLEMENTS..........................................12
         6.3  CONSENTS AND APPROVALS..........................................13
         6.4  FILINGS.........................................................13
         6.5  COVENANT TO SATISFY CONDITIONS..................................13
         6.6  FURTHER ASSURANCES..............................................13
         6.7  CONDUCT OF THE BUSINESS OF THE SUBSIDIARIES;
                           INTERCOMPANY ACCOUNTS..............................14
         6.8  PUBLIC DISCLOSURE...............................................14

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ARTICLE VII - CONDITIONS PRECEDENT OF BUYER...................................14
         7.1  REPRESENTATIONS AND WARRANTIES..................................14
         7.2  COVENANTS.......................................................15
         7.3  OFFICER'S CERTIFICATE...........................................15
         7.4  NO ORDER OR PROCEEDINGS.........................................15
         7.5  CONSENTS........................................................15
         7.6  OPINION OF COUNSEL..............................................15
         7.7  CONDUCT OF BUSINESS OF SUBSIDIARIES.............................15
         7.8  CLOSING DELIVERIES..............................................16

ARTICLE VIII - CONDITIONS PRECEDENT OF SELLER.................................16
         8.1  REPRESENTATIONS AND WARRANTIES..................................16
         8.2  COVENANTS.......................................................16
         8.3  OFFICER'S CERTIFICATE...........................................16
         8.4  NO ORDER OR PROCEEDING..........................................16
         8.5  CONSENTS........................................................17
         8.6  OPINION OF COUNSEL..............................................17
         8.7  iTract LLC MERGER...............................................17
         8.8  CLOSING DELIVERIES..............................................17
         8.9  STOCKHOLDER APPROVAL............................................17

ARTICLE IX - EMPLOYEE MATTERS.................................................18
         9.1  RETENTION OF EMPLOYEES..........................................18
         9.2  THIRD PARTY BENEFICIARIES.......................................18

ARTICLE X - SURVIVAL OF REPRESENTATIONS.......................................18
         10.1  SURVIVAL OF REPRESENTATIONS....................................18

ARTICLE XI - TERMINATION AND ABANDONMENT......................................18
         11.1  TERMINATION....................................................18
         11.2  PROCEDURE AND EFFECT OF TERMINATION............................19

ARTICLE XII - MISCELLANEOUS...................................................19
         12.1  EXPENSES OF THE PARTIES........................................19
         12.2  PARTIES IN INTEREST............................................20
         12.3  GOVERNING LAW..................................................20
         12.4  CAPTIONS.......................................................20
         12.5  ENTIRE AGREEMENT; AMENDMENTS...................................20
         12.6  NOTICES........................................................20
         12.7  COUNTERPARTS...................................................21
         12.8  ASSIGNMENT.....................................................21
         12.9  BROKERS........................................................22
         12.10  ACCESS TO INFORMATION.........................................22
         12.11  EXTENSION; WAIVER.............................................22
         12.12  VALIDITY......................................................22

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LIST OF EXHIBITS AND SCHEDULES

         Exhibit A        -    List of Subsidiaries

         Schedule 2.2     -    Lists of Debts to be Assumed by Buyer

         Schedule 4.3     -    Authorized and outstanding capital
                               of Subsidiaries

         Schedule 4.13    -    Required consents and approvals

         Schedule 4.15    -    Compliance with Laws

         Schedule 4.16    -    Environmental Matters

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                            STOCK PURCHASE AGREEMENT

         This Stock Purchase Agreement ("Agreement") is made and executed in San
Juan, Puerto Rico as of this 30st day of June, 2000, by and between Margo
Caribe, Inc., a Puerto Rico corporation ("Seller"), and Empresas Margo, Inc., a
Puerto Rico corporation ("Buyer") (collectively the "Parties").

                                   BACKGROUND

         WHEREAS, Seller owns all of the issued and outstanding shares of stock
(the "Shares") of the corporations listed in Exhibit A hereto (the
"Subsidiaries"); and

         WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, the Shares, as well as certain other proprietary rights of the
Seller, on the terms and conditions hereinafter set forth.

         NOW, THEREFORE, in consideration of the respective covenants,
representations and warranties contained herein, Seller and Buyer, intending to
be legally bound hereby, agree as follows:

                                    ARTICLE I

                               CERTAIN DEFINITIONS

         1.1  "Affiliated Company" means a company or other entity which
directly or indirectly (through one or more intermediaries) controls, is
controlled by, or is under common control with either Seller, on the one hand,
or Buyer, on the other hand, as the case may be.

         1.2  "Closing" means the consummation of the purchase and sale of the
Shares and the Margo Marks contemplated hereby which shall be effected by
delivery of the documents and instruments referred to in Sections 3.2 and 3.3
hereof, each in form and content satisfactory to Buyer, Seller and their
respective counsel and each dated or being effective as of the Closing Date.

         1.3  "Closing Date" means the date on which the Closing occurs.

         1.4  "Code" means the United States Internal Revenue Code of 1986, as
amended.

         1.5  "Commonwealth" means the Commonwealth of Puerto Rico.

         1.6  "Consent" means any consent, waiver, approval, authoriza tion or
permit.

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         1.7  "Contracts" has the meaning set forth in Section 4.9(a).

         1.8  "Damages" means all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, costs and expenses, including,
without limitation, defense costs, interest, penalties and attorneys' fees and
expenses.

         1.9  "Decree" means the decree of industrial tax exemption issued to
Rain Forest Products Group, Inc. on January 1, 1997 by the Governor of the
Commonwealth of Puerto Rico, pursuant to the provisions of the Commonwealth's
Tax Incentives Act of 1987, as amended.

         1.10 "Disclosure Schedules" means the schedules delivered to Buyer by
Seller and attached to this Agreement listing certain information with respect
to or exceptions to the representations and warranties of Seller contained in
this Agreement.

         1.11 "Employee Benefit Plans" means all employee benefit and welfare
plans, programs, policies or arrangements maintained or contributed to by any of
the Subsidiaries for the benefit of employees of the Subsidiaries, all
personnel, payroll or severance policies of the Subsidiaries, all other fringe
benefits provided by the Subsidiaries for the benefit of employees of the
Subsidiaries and all employment, severance, termination, consulting and
retirement agreements to which any Subsidiary is a party.

         1.12 "Encumbrance" means any lien, charge, restriction, security
interest or encumbrance of any nature.

         1.13 "Environmental Law" means any federal, Commonwealth or municipal
statute, law or regulation in effect on or prior to the Closing Date relating to
pollution or protection of human health or the environment, including but not
limited to the Comprehensive Environmental Response, Compensation and Liability
Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Clean
Water Act and similar Commonwealth laws.

         1.14 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.

         1.15 "Financial Statements" means the consolidated audited statements
of Seller and the Subsidiaries as of December 31, 1999 and 1998 and for each of
the three years in the period ended December 31, 1999, and the unaudited
consolidated statements of the Seller and its subsidiaries as of and for the
three-month period ended March 31, 2000, copies of which have previously been
delivered to the Buyer.

         1.16 "GAAP" means generally accepted accounting principles in the
United States.

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         1.17 "Governmental Entity" means any governmental or regulatory
authority, department, board, bureau, agency or commission, including courts of
competent jurisdiction, domestic or foreign.

         1.18 "Information Memorandum" means the Confidential Information
Memorandum dated April 2000 describing the business of the Seller and the
Subsidiaries and heretofore delivered to Buyer.

         1.19 "Interim Balance Sheet" means the consolidated unaudited balance
sheet of the Seller as of March 31, 2000.

         1.20 "Litigation" means any action, lawsuit, claim, proceed ing or
investigation, in any court or before any federal, state, Commonwealth,
municipal or other governmental department, commis sion, board, bureau, agency
or instrumentality, domestic or foreign.

         1.21 "Margo Marks" means each trademark, trade name, service mark and
patent which has been registered or for which an applica tion for registration
is pending in the name of Seller or any of the Subsidiaries, or in which the
Seller or any of the Subsidiaries have otherwise acquired rights under any
federal, state or Commonwealth laws, including but not limited to the right to
use the name "Margo."

         1.22 "Material Adverse Effect" means an effect on the business,
financial condition or results of operations of the Subsidiaries, taken as a
whole, which is both material and adverse.

         1.23 "Order" means any order, writ, judgment, injunction, decree,
statute, ordinance, rule or regulation.

         1.24  "Person" means any natural person or legal entity not a
party to this Agreement.

         1.25  "PRIRC" means the Puerto Rico Internal Revenue Code of
1994, as amended.

         1.26 "Public Disclosure" means any press release or public announcement
or publicity statement or other disclosure to the public, including any
announcement to employees.

         1.27 "Proprietary Information" means all writings for which a claim to
copyright, know-how, formulas and trade secrets have been recorded or claimed by
the Subsidiaries.

         1.28 "Purchase Price" means the aggregate purchase price for the Shares
and the Margo Marks set forth in Section 2.2 hereof.

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         1.29 "Subsidiaries" or "Subsidiary" shall have the meaning assigned in
the introductory paragraph of this Agreement.

         1.30 "Tax" means any, and "Taxes" means collectively all, federal,
state, Commonwealth, local and foreign taxes and assess ments, including all
interest, penalties and additions imposed with respect to such amounts.

                                   ARTICLE II

                         SALE OF SHARES AND MARGO MARKS

         2.1  SALE OF SHARES AND MARGO MARKS

         Upon the terms and subject to the conditions contained in this
Agreement, Seller agrees to sell, assign and transfer to Buyer and Buyer agrees
to purchase from Seller at the Closing, for the consideration provided in
Section 2.2 below, the Shares and the Margo Marks, free and clear of any
Encumbrance.

         2.2  PURCHASE PRICE

         Upon the terms and subject to the conditions contained in this
Agreement, in consideration of the aforesaid sale, assignment and transfer of
the Shares and the Margo Marks at the Closing, Buyer will pay to Seller, in
cash, FIVE MILLION DOLLARS ($5,000,000) (the "Cash Purchase Price") by wire
transfer of immediately available funds to an account designated in writing by
Seller to Buyer at least two (2) business days prior to the Closing. The Buyer
shall also agree to expressly assume those debts or liabilities of the Seller
listed on Schedule 2.2 hereof. The payment of the cash amount and the assumption
of such indebtedness are hereinafter collectively referred to as the "Purchase
Price."

                                   ARTICLE III

                                     CLOSING

         3.1  CLOSING

         Upon the terms and subject to the conditions contained in this
Agreement, the Closing of the purchase and sale of the Shares and the Margo
Marks contemplated hereby will take place at the offices of Pietrantoni Mendez &
Alvarez LLP, Banco Popular Center, Suite 1901, 209 Munoz Rivera Avenue, Hato
Rey, Puerto Rico at 10:00 a.m. (local time), on the first business day following
the date on which all the conditions to each party's obligations

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hereunder have been satisfied or waived, or at such other time or place or both
as the parties may agree.

         Closing shall occur by delivery of the documents and instruments
described in Sections 3.2 and 3.3 hereof, each in form and content satisfactory
to Buyer, Seller and their respective counsel and each dated or being effective
as of the Closing Date.

         3.2  SELLER'S DELIVERIES AT THE CLOSING

             (a) Stock certificates representing the Shares, duly endorsed in
blank or accompanied by stock transfer powers;

             (b) A certified copy of the resolutions adopted by the Board of
Directors of Seller authorizing the execution, delivery and performance by
Seller of this Agreement and the transactions contemplated hereby;

             (c) Written resignations of all directors and officers of the
Subsidiaries requested by Buyer to resign prior to the Closing Date;

             (d) The officer's certificate referred to in Section 7.3;

             (e) The opinion of counsel referred to in Section 7.6;

             (f) The stock books, stock ledgers, minute books and corporate
seals of the Subsidiaries;

             (g) All records pertaining to bank accounts of the Subsidiaries;

             (h) An assignment by Seller to Buyer of all of its rights with
respect to the Margo Marks; and

             (i) Such other documents, instruments and certificates as may be
provided for under this Agreement or reasonably requested by Buyer prior to
Closing.

         3.3  BUYER'S DELIVERIES AT THE CLOSING

             (a) The Purchase Price;

             (b) An assumption agreement in form and substance satisfactory to
Seller and its counsel pursuant to which Buyer agrees to assume all of Seller's
debt listed on Schedule 2.2 which shall have not been cancelled prior to or
concurrently with the Closing.

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             (c) One or more releases executed by each of the creditors listed
on Schedule 2.2 releasing the Seller and its successors and assigns from any and
all liability with respect to the debt listed on Schedule 2.2.

             (d) A certified copy of the resolutions adopted by the Board of
Directors of Buyer authorizing the execution, delivery and performance by Buyer
of this Agreement and the transactions contemplated hereby;

             (e) The officer's certificate referred to in Section 8.3; and

             (f) The opinion of counsel referred to in Section 8.6; and

             (g) Such other documents, instruments and certificates as may be
provided for under this Agreement or reasonably requested by Seller prior to
Closing.

                                   ARTICLE IV

                    REPRESENTATIONS AND WARRANTIES OF SELLER

         Seller represents and warrants to Buyer as follows:

         4.1  ORGANIZATION AND AUTHORITY

             (a) Seller and each of the Subsidiaries are corporations duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Puerto Rico. The execution, delivery and performance by Seller
of this Agreement have been duly authorized by all necessary corporate action on
the part of Seller. This Agreement has been duly executed and delivered by
Seller and, assuming due execution thereof by Buyer, constitutes a valid and
binding agreement of Seller enforceable against Seller in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization and
similar laws affecting the rights of creditors generally and by the availability
of equitable remedies.

             (b) Each of the Subsidiaries (i) has all corporate power and
authority to own or lease its properties and to operate its business as
presently conducted; (ii) has all governmental licenses, authorizations and
permits required to own or lease its properties and to carry on its business as
presently conducted, and (iii) is duly qualified to do business and is in good
standing under the laws of the Commonwealth and each other jurisdiction in which
the conduct of its business or the ownership or leasing of its properties
requires such qualification, except in the case of clauses (ii) and (iii) where
the failure to have any such license,

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authorization or permit to be so qualified or in good standing would not have a
Material Adverse Effect on the business of the Subsidiaries, taken as a whole.

         4.2  SUBSIDIARIES AND DOCUMENTS

         The Subsidiaries do not own any subsidiaries and do not own any capital
stock or other interest in any other corporation or business entity nor are any
of them subject to any obligations or requirements to make any investment in any
entity. True and complete copies of the charter documents, the by-laws and the
minutes of meetings of the Board of Directors and the sole stockholder of each
of Subsidiaries have heretofore been delivered to Buyer, and said charters and
by-laws are in full force and effect.

         4.3  CAPITALIZATION OF SUBSIDIARIES

         Each of the Subsidiaries entire authorized and outstanding capital is
as set forth in Schedule 4.3 hereof. All such issued and outstanding shares of
the Subsidiaries common stock have been duly and validly issued and are fully
paid and non-assessable, free of any preemptive rights and are owned by Seller
free and clear of any and all Encumbrances. Neither Seller nor any of the
Subsidiaries is a party to or bound by any options, calls, contracts or
commitments of any character relating to any issued or unissued stock or any
other equity security issued or to be issued by the Subsidiaries.

         4.4  OWNERSHIP OF SHARES

         Seller has good and marketable title to the Shares, free of any and all
Encumbrances and has full and unrestricted power and authority to sell, assign,
transfer and deliver to Buyer valid title to the Shares. Upon delivery of the
certificates representing the Shares as provided herein, Buyer will acquire good
and marketable title to the Shares, free and clear of any and all Encumbrances,
except those, if any, created by Buyer.

         4.5  FINANCIAL STATEMENTS

         The Financial Statements fairly present the financial position and
results of operations of Seller and the Subsidiaries on a consolidated basis as
of the date and for the periods presented, all in accordance with GAAP.

         4.6  ABSENCE OF CHANGES

         Since the date of the Interim Balance Sheet, the Subsidiaries have
conducted their business in the ordinary course of business and there has not
been:

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             (a) any material adverse change in the financial condition,
operations, properties, assets, liabilities or business of the Subsidiaries,
taken as a whole.

             (b) any damage, destruction or loss (whether or not covered by
insurance) which, either singly or in the aggregate, would have a Material
Adverse Effect.

         4.7  TAX MATTERS

             (a) Each Subsidiary has (i) timely (after giving effect to
applicable extensions) filed all material returns required to be filed by it
with respect to Taxes; (ii) timely paid all Taxes shown to have become due
pursuant to such returns and (iii) paid all other Taxes for which a notice of
assessment or demand for payment has been received.

             (b) All Tax returns for each Subsidiary have been prepared in
accordance with all applicable laws and requirements and accurately reflect the
taxable income (or other measure of Tax) of the corporation filing the return.

             (c) None of the Subsidiaries are a party to or bound by any Tax
allocation or Tax sharing agreement or have any current or potential contractual
obligation to indemnify any other Person with respect to Taxes.

             (d) The Decree is in full force and effect.

         4.8  NO CONFLICT WITH PROPRIETARY RIGHTS

             (a) To the best knowledge of Seller, the conduct of the
Subsidiaries' respective businesses as presently conducted does not infringe or
otherwise conflict with any valid trademark, tradename, service mark, patent or
copyright of others in any way which would have a Material Adverse Effect.

         4.9  NON-COMPETITION ARRANGEMENTS

              Following the Closing, none of the Subsidiaries will be subject to
any agreement which contains covenants limiting the freedom of such Subsidiary
(or any successor) to compete in any line of business or with any Person.

         4.10 EMPLOYEE BENEFITS

              There are no claims, actions or proceedings (other than routine
claims for benefits) pending or, to the best knowledge of Seller, threatened,
against any Subsidiary with respect to any Employee Benefit Plan.

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         4.11 LITIGATION AND LABOR RELATIONS

              (a) There is no Litigation which, if decided adversely, would have
a Material Adverse Effect.

              (b) There are (i) no labor disputes, material grievances,
arbitration proceedings, actual or threatened strikes, work stoppages or
slowdowns pending or, to the best knowledge of Seller, threatened against any
Subsidiary or affecting any Subsidiary by any of their employees or their
representatives; and (ii) no charges of unfair labor practices are pending or,
to the best knowledge of Seller, threatened before any governmental, regulatory
or administrative agency or authority.

              (c) None of the Subsidiaries are a party to a collective
bargaining agreement.

              (d) Each of the Subsidiaries has complied with and is currently in
compliance with all applicable federal and Commonwealth laws relating to
employment, labor and working conditions, except such noncompliance which, in
the aggregate, would not have a Material Adverse Effect, and Seller is not aware
of the existence of any liability for any material arrearages of wages (other
than current wages not yet due or payable), severance pay or other applicable
laws or regulations relating to labor, or any taxes or penalties for failure to
comply with any of such laws.

         4.12 PROPERTY AND LIABILITY INSURANCE

         The property and liability insurance coverage relating to the business
of the Subsidiaries is sufficient for compliance with all requirements of law
and of all agreements to which any Subsidiary is a party and provides coverage
in amounts which are adequate against all risks usually insured against by
Persons operating similar businesses.

         4.13 CONSENTS AND APPROVALS

         Except as set forth in Schedule 4.13, neither the execution and
delivery of this Agreement by Seller nor the consummation of the transactions
contemplated hereby will (a) violate any provision of the Certificate of
Incorporation or By-Laws (or other comparable governing documents) of Seller or
of any of the Subsidiaries, (b) require any Consent of, or filing with or
notification to, any Governmental Entity, (c) require any Consent under, or
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration of any obligation to repay) under, any contract to
which the Seller or any Subsidiary is a party or by which they or any of their
property or assets may be

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bound, or (d) violate any Order of any Governmental Entity applicable to Seller
or the Subsidiaries.

         4.14 PROPERTIES AND ASSETS

         Each of the Subsidiaries has good, valid and marketable title to all of
its properties and assets, including without limitation all assets reflected on
the Interim Balance Sheet and all assets acquired since the date of the Interim
Balance Sheet (except for assets since sold, used or otherwise disposed of in
the ordinary course of business consistent with past practices) free and clear
of all Encumbrances.

         4.15 COMPLIANCE WITH LAWS; LICENSES AND PERMITS

              (a) Except as set forth in Schedule 4.15, the operations of the
Subsidiaries have been conducted in accordance with applicable laws, except such
noncompliance which, in the aggregate, would not have a Material Adverse Effect.

         4.16 ENVIRONMENTAL MATTERS

              (a) Except as set forth in Schedule 4.16, each of the Subsidiaries
holds, and is in substantial compliance with, all material permits, licenses and
government authorizations required for the Subsidiaries to conduct their
respective business under any Environmental Law, and the Subsidiaries are
otherwise in compliance with all applicable Environmental Laws, except where the
failure to be in compliance would not have a Material Adverse Effect;

              (b) None of the Subsidiaries have received any written request for
information, or been notified that they are a potentially responsible party,
under any Environmental Law with respect to any on-site or off-site location for
which liability is currently being asserted;

              (c) None of the Subsidiaries have entered into or agreed to any
consent decree or order, and are not subject to any judgment, decree or order
relating to compliance with any Environmental Law or to investigation or cleanup
of regulated substances under any Environmental Law;

              (d) No asbestos-containing material that could reasonably be
expected to pose a current hazard to health is present at any facility or
property owned or operated by any Subsidiary that could reasonably be expected
to have a Material Adverse Effect;

              (e) None of the Subsidiaries have either expressly or by operation
of law assumed or otherwise become subject to the liability of any other Person
pursuant to any Environmental Law or

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any related common law theory that could reasonably be expected to have a
Material Adverse Effect;

              (f) There are no other facts, events or circumstances with respect
to the past or present operations or facilities of any of the Subsidiaries or
any predecessor or affiliate thereof that would form the basis for any liability
(including contingent liability) or corrective or remedial obligation pursuant
to any Environmental Law or any related common law theory, including, without
limitation, any liability or obligation for on-site or off-site cleanup costs,
fines or penalties, property damage, personal injury or natural resources
damages that could reasonably be expected to have a Material Adverse Effect.

                                    ARTICLE V

                     REPRESENTATIONS AND WARRANTIES BY BUYER

         Buyer represents and warrants to Seller as follows:

         5.1  ORGANIZATION AND STANDING

         Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth and has full corporate power and
authority to enter into and perform this Agreement.

         5.2  AUTHORITY

         The execution, delivery and performance by Buyer of this Agreement have
been duly authorized by all necessary corporate action on the part of the Buyer.
This Agreement has been duly executed and delivered by Buyer and, assuming due
execution by Seller, constitutes a valid and binding agreement of Buyer
enforceable against Buyer in accordance with its terms, except as limited by
bankruptcy, insolvency, reorganization and similar laws affecting the rights of
creditors generally and by the availability of equitable remedies.

         5.3  CONSENTS AND APPROVALS; NO VIOLATIONS

         Neither the execution and delivery of this Agreement by Buyer nor the
consummation of the transactions contemplated hereby by Buyer will (a) violate
any provision of its Certificate of Incorporation or By-Laws, (b) require any
Consent of, or filing with or notification to, any Governmental Entity, except
where the failure to obtain such Consent or to make such filing or notification
would not impair, hinder or adversely affect the ability of Buyer to perform any
of its obligations under this Agreement or to consummate the transactions
contemplated hereby (a

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"Buyer Material Adverse Effect"), or (c) violate any Order of any Governmental
Entity applicable to Buyer, except such violations which, in the aggregate,
would not have a Buyer Material Adverse Effect.

                                   ARTICLE VI

              CERTAIN COVENANTS AND AGREEMENTS OF SELLER AND BUYER

         6.1  ACCESS TO INFORMATION

              (a) After the date of this Agreement, Seller shall continue to
permit Buyer and its representatives to have reasonable access during normal
business hours, upon reasonable advance notice, to the books and records,
properties and assets of the Subsidiaries, provided that such access shall be
conducted by Buyer and its representatives in such a manner as not to interfere
unreasonably with the business or operations of the Subsidiaries. Seller will
assist Buyer in conducting such review and investigation and, subject to the
aforesaid, will provide and will cause their independent public accountants to
provide Buyer, its employees, agents and representatives full access to, and
complete information concerning, all aspects of the businesses of the
Subsidiaries, including its books, records (including tax returns filed or in
preparation), personnel and premises and the audit work papers and other records
of its independent public accountants.

              (b) In the event Seller is subject to a tax examination for years
prior to the Closing Date, after the Closing Date Buyer shall permit the Seller
and its representatives reasonable access during normal business hours, upon
reasonable advance notice, to the books and records of the Subsidiaries for the
periods under examination and will cooperate with Seller in making available to
Seller and its representatives financial information reasonably requested by
Seller for the tax audit, in either case, so long as it does not interfere
unreasonably with the business or operations of the Subsidiaries.

         6.2  DISCLOSURE SUPPLEMENTS

         From time to time prior to the Closing Date, Seller will supplement or
amend the disclosure schedules with respect to any matter hereafter arising
which, if existing or occurring at or prior to the date of this Agreement, would
have been required to be set forth or described in the disclosure schedules or
which is necessary to complete or correct any information in the disclosure
schedule or in any representation or warranty of Seller which has been rendered
inaccurate thereby; provided, however, that for the purposes of determining the
satisfaction of the condition set forth

                                      12
<PAGE>

in Section 7.1 hereof, no such supplement or amendment shall be given effect.

         6.3  CONSENTS AND APPROVALS

         Each of the parties hereto shall use its best efforts to obtain as
promptly as practicable all Consents of Governmental Entities and third parties
required in connection with the consummation of the transactions contemplated by
this Agreement; it being understood, however, that neither party shall be
required, in satisfaction of its obligations under this or any other Section of
this Agreement, to agree to hold separate or sell any assets or operations or
otherwise take actions which it reasonably believes may interfere, in any
material respect, with the benefits intended to be realized by such party as a
result of the transactions contemplated hereby.

         6.4  FILINGS

         Promptly after the execution of this Agreement, each of the parties
hereto shall prepare and make or cause to be made any required filings,
submissions and notifications under the laws of any jurisdiction to the extent
that such filings are necessary to consummate the transactions contemplated
hereby, will use its best efforts to respond to and comply with any requests for
additional information made by any Governmental Entity, and will use its best
efforts to take all other actions necessary to consummate the transactions
contemplated hereby in a manner consistent with applicable law. Each of the
parties hereto will furnish to the other party such necessary information and
reasonable assistance as such other party may reasonably request in connection
with the foregoing.

         6.5  COVENANT TO SATISFY CONDITIONS

         Seller will use its best efforts to ensure that the conditions set
forth in Article VII hereof are satisfied, insofar as such matters are within
the control of Seller, and Buyer will use its best efforts to ensure that the
conditions set forth in Article VIII hereof are satisfied, insofar as such
matters are within the control of Buyer.

         6.6  FURTHER ASSURANCES

         Subject to the terms and conditions herein provided, each of the
parties hereto agrees to use its best efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement. If at any time after the
Closing Date any further action is necessary or desirable to carry out the

                                      13
<PAGE>

purposes of this Agreement, the parties hereto shall, at Buyer's expense, take
or cause to be taken all such reasonably necessary action, including, without
limitation, the execution and delivery of such further instruments and documents
as may be reasonably requested by either party for such purposes or otherwise to
consummate and make effective the transactions contemplated hereby.

         6.7  CONDUCT OF THE BUSINESS OF THE SUBSIDIARIES; INTERCOMPANY
ACCOUNTS

              (a) Prior to the Closing, except as consented to or approved by
Buyer in writing, Seller shall cause the Subsidiaries to:

                  (i)  conduct their respective businesses in the ordinary and
usual course consistent with past practice;

                  (ii)  use their best efforts to maintain satisfactory
relationships with customers, suppliers, distributors and others having
commercially beneficial business relationships;

              (b) All intercompany accounts between the Subsidiaries and the
Seller shall be settled at or prior to the Closing.

              (c) Seller shall apply the certificates of deposit with Banco
Santander Puerto Rico securing the indebtedness listed on Schedule 2.2 against
the amounts owed with respect to such indebtedness.

         6.8  PUBLIC DISCLOSURE

         The parties will consult with each other and agree on desirability,
timing and substance of any Public Disclosure, relating solely to the
transactions contemplated hereby. Subject to applicable law, including but not
limited to federal, state and Commonwealth securities laws, neither party will
make any Public Disclosure without the prior agreement of the other party as to
the time of the issuance, extent of distribution, and form and substance of the
Public Disclosure.

                                   ARTICLE VII

                          CONDITIONS PRECEDENT OF BUYER

         The obligation of Buyer to consummate the transactions contemplated
hereby is subject to the fulfillment or written waiver by Buyer of each of the
following conditions prior to or at the Closing:

                                      14
<PAGE>

         7.1  REPRESENTATIONS AND WARRANTIES

         The representations and warranties of Seller made hereunder shall be
true and correct in all material respects as of the date hereof and at and as of
the Closing Date, with the same force and effect as though made at and as of the
Closing Date, except for changes permitted or contemplated by this Agreement.

         7.2  COVENANTS

         Seller shall have performed and complied in all material respects with
all covenants and agreements required by this Agreement to be performed or
complied with by Seller.

         7.3  OFFICER'S CERTIFICATE

         Buyer shall have received a certificate of an authorized officer of
Seller, dated the Closing Date, certifying that the conditions contained in
Sections 7.1 and 7.2 have been fulfilled.

         7.4  NO ORDER OR PROCEEDINGS

         No Order shall have been enacted, entered or promulgated (and remain in
effect) or have been enforced by any Governmental Entity which prohibits or
restricts the consummation of the transactions contemplated hereby. No action or
proceeding by any Governmental Entity shall have been commenced (and remain
pending) against Buyer, Seller, the Subsidiaries or any of their respective
Affiliated Companies seeking to prevent, delay or materially change the
transactions contemplated hereby or challenging any of the terms or provisions
of this Agreement or seeking material damages in connection therewith.

         7.5  CONSENTS

         All Consents of Governmental Entities necessary for consummation of the
transactions contemplated hereby shall have been obtained.

         7.6  OPINION OF COUNSEL

         Buyer shall have received an opinion or opinions of Pietrantoni Mendez
& Alvarez LLP, counsel to Seller, in form and substance reasonably satisfactory
to Buyer.

         7.7  CONDUCT OF BUSINESS OF SUBSIDIARIES

         Since the date of this Agreement, the respective businesses of the
Subsidiaries shall have been conducted, in all material respects, in the
ordinary and usual course consistent with past practice.

                                      15
<PAGE>

         7.8 CLOSING DELIVERIES

         Buyer shall have received each of the following:

         (a) all documents, instruments and other closing deliveries specified
in Section 3.2; and

         (b) such other evidence as Buyer may reasonably request in order to
establish compliance with the conditions of Closing set forth herein.

                                  ARTICLE VIII

                         CONDITIONS PRECEDENT OF SELLER

         The obligation of Seller to consummate the transactions contemplated
hereby is subject to the fulfillment or written waiver by Seller of each of the
following conditions prior to or at the Closing:

         8.1  REPRESENTATIONS AND WARRANTIES

         The representations and warranties of Buyer made hereunder shall be
true and correct in all material respects as of the date hereof and at and as of
the Closing Date, with the same force and effect as though made at and as of the
Closing Date, except for changes permitted or contemplated by this Agreement.

         8.2  COVENANTS

         Buyer shall have performed and complied in all material respects with
all covenants and agreements required by this Agreement to be performed or
complied with by Buyer prior to or at the Closing.

         8.3  OFFICER'S CERTIFICATE

         Seller shall have received a certificate of an authorized officer of
Buyer, dated the Closing Date, certifying that the conditions contained in
Sections 8.1 and 8.2 have been fulfilled.

         8.4  NO ORDER OR PROCEEDING

         No Order shall have been enacted, entered or promulgated (and remain in
effect) or shall have been enforced by any Governmental Entity which prohibits
or restricts the consummation of the transactions contemplated hereby. No action
or proceeding by any Governmental Entity shall have been commenced (and remain
pending) against Buyer, Seller, the Subsidiaries or any of their respective
Affiliated Companies seeking to prevent, delay or materially change

                                      16
<PAGE>

the transactions contemplated hereby or challenging any of the terms or
provisions of this Agreement or seeking material damages in connection
therewith.

         8.5  CONSENTS

         All Consents of Governmental Entities necessary for consummation of the
transactions contemplated hereby shall have been obtained.

         8.6  OPINION OF COUNSEL

         Seller shall have received an opinion of Aviles & Colon Morales, LLP,
counsel to Buyer, in form and substance reasonably satisfactory to Seller.

         8.7  iTract LLC MERGER

         The S-4 Registration Statement filed with the Securities and Exchange
Commission by iTract, Inc. shall have been declared effective and Seller shall
have received evidence reasonably satisfactory to Seller and its counsel that
the mergers contemplated by that certain Agreement and Plan of Merger, dated as
of April 11, 2000, by and among Margo Caribe, Inc., iTract Acquisition Company,
LLC, iTract, Inc., iTract, LLC and International Commercial Exchange Systems,
Inc. will occur concurrently with or immediately following the sale of the
Shares and the Margo Marks hereunder.

         8.8  CLOSING DELIVERIES

         Seller shall have received each of the following:

         (a) all documents, instruments and other closing deliveries specified
in Section 3.3; and

         (b) such other evidence as Seller may reasonably request in order to
establish compliance with the conditions of Closing set forth herein.

         8.9  STOCKHOLDER APPROVAL

         Seller shall have obtained the approval of its stockholders of this
Agreement and the transactions contemplated hereby.

                                      17
<PAGE>

                                   ARTICLE IX

                                EMPLOYEE MATTERS

         9.1  RETENTION OF EMPLOYEES

         Buyer agrees to retain the employees currently employed by the
Subsidiaries and to honor their years of service for purposes of determining
applicable employee benefits, including vacation and severance benefits. This
Agreement shall not limit the ability of Buyer to terminate employees in the
ordinary course of business or it otherwise deems necessary or advisable in
connection with the business of the Subsidiaries following the Closing.

         9.2  THIRD PARTY BENEFICIARIES

         Notwithstanding any provision to the contrary contained herein, no
employee or former employee of any of the Subsidiaries will be construed as a
third party beneficiary under this Article IX of this Agreement or otherwise.

                                    ARTICLE X

                           SURVIVAL OF REPRESENTATIONS

         10.1  SURVIVAL OF REPRESENTATIONS

         All representations, warranties, covenants and agreements made by
either party to this Agreement or in any certificate delivered pursuant to this
Agreement shall expire on the Closing Date, and Seller shall have no liability
whatsoever with respect to said representations, warranties, covenants and
agreements other than the covenants and agreements contained in Article II
hereof and Sections 6.6, 6.8 and 11.1.

                                   ARTICLE XI

                           TERMINATION AND ABANDONMENT

         11.1  TERMINATION

         This Agreement may be terminated at any time prior to the Closing Date
as follows:

              (a) by mutual consent of Buyer and Seller;

              (b) by either Buyer or Seller at any time after October 15, 2000
if, through no fault of the party seeking termination, the Closing shall not
have occurred;

                                      18
<PAGE>

              (c) by Buyer, if there has been a material violation or breach by
Seller of any agreement, representation, covenant or warranty contained in this
Agreement which has rendered the satisfaction of any condition to the
obligations of Buyer impossible and such violation or breach has not been waived
by Buyer;

              (d) by Seller, if there has been a material violation or breach by
Buyer of any agreement, representation, covenant or warranty contained in this
Agreement which has rendered the satisfaction of any condition to the
obligations of Seller impossible and such violation or breach has not been
waived by Seller;

              (e) by either Buyer or Seller if a court of competent jurisdiction
shall have issued an Order permanently restraining or prohibiting the
transactions contemplated by this Agreement, and such Order shall have become
final and nonappealable; or

         11.2  PROCEDURE AND EFFECT OF TERMINATION

         In the event of termination of this Agreement and abandonment of the
transactions contemplated hereby by either of the parties pursuant to Section
11.1 hereof, written notice thereof shall forthwith be given to the other party
hereto and this Agreement shall terminate and the transactions contemplated
hereby shall be abandoned, without any liability or further obligation except
that (i) in the event of the termination of this Agreement by Buyer under
Section 11.1(c), Seller shall be obligated to reimburse Buyer for all
out-of-pocket expenses incurred by Buyer in connection with this Agreement and
the transactions contemplated thereby, up to a maximum of $100,000 and (ii) in
the event of the termination of this Agreement by Seller under Section 11.1(d),
Buyer shall be obligated to reimburse Seller for all out-of-pocket expenses
incurred by Seller in connection with the Agreement and the transactions
contemplated thereby, up to a maximum of $100,000.

                                   ARTICLE XII

                                  MISCELLANEOUS

         12.1  EXPENSES OF THE PARTIES

         Buyer will pay its own expenses, and Seller will pay its own expenses
and the expenses of the Subsidiaries, including the expenses of its accountants
and attorneys, in connection with the negotiation, execution and consummation of
the transactions contemplated by this Agreement. Seller shall be responsible for
any and all stock transfer taxes or documentation, any other

                                      19
<PAGE>
similar registration costs, taxes and fees in connection with the transfer of
the Shares contemplated hereby.

         12.2  PARTIES IN INTEREST

         This Agreement will inure to the benefit of and be binding on and
enforceable against the parties hereto and their respective successors and
permitted assigns.

         12.3  GOVERNING LAW

         This Agreement will be governed by and construed in accordance with the
laws of the Commonwealth, regardless of the laws that might otherwise govern
under applicable principles of conflict of laws thereof.

         12.4  CAPTIONS

         The captions and section numbers appearing in this Agreement are
inserted only as a matter of convenience and in no way define, limit or construe
the scope and intent of such sections nor in any way affect the interpretation
of this Agreement.

         12.5  ENTIRE AGREEMENT; AMENDMENTS

         This Agreement, the disclosure schedules and the documents and other
agreements referred to herein, set forth the entire agreement of the parties
with respect to the subject matter hereof, and supersede any prior oral or
written agreement or understanding (other than any confidentiality agreement
executed by the parties prior to this Agreement) between the parties. No
modification or amendment of this Agreement may be made except in writing signed
by both parties.

         12.6  NOTICES

         Any notices or communications required or permitted hereunder will be
deemed sufficiently given by either of the parties hereto to the other party if
such notice or communication is in writing and delivered in person or by a
nationally recognized overnight delivery service, sent via facsimile, or mailed
(postage prepaid), by registered or certified mail, return receipt requested, as
follows:

                                      20
<PAGE>

                  If to Seller, to:

                           Margo Caribe, Inc.
                           Road 690, Kilometer 5.8
                           Vega Alta, Puerto Rico  00692

                           Fax:  (787) 883-3244
                           Attention:  Chief Executive Officer

                  with a required copy to:

                           Ignacio Alvarez, Esq.
                           Pietrantoni Mendez & Alvarez LLP
                           Banco Popular Center, Suite 1901
                           209 Munoz Rivera Avenue
                           Hato Rey, Puerto Rico  00918
                           Fax:  (809) 274-1470

                  If to Buyer, to:

                           Empresas Margo, Inc.
                           Road 690, Kilometer 5.8
                           Vega Alta, Puerto Rico  00692

                           Fax:  (787) 883-3244
                           Attention: Michael J. Spector

                  with a required copy to:

                           Luis Anibal Aviles Pagan, Esq.
                           Suite 1112, Home Mortgage Plaza
                           268 Ponce de Leon Avenue
                           San Juan, PR 00918

                           Fax: (787) 754-2077

or to such other address or addresses as hereafter will be furnished as provided
in this Section 12.6 by either of the parties hereto to the other party hereto.
Each such notice will be deemed to have been given as of the date received. A
return receipt, or evidence of refusal, obtained by the Post Office authorities
at the request of the sender, or the expiration of ten days after mailing, will
be conclusive as of the fact of receipt.

         12.7  COUNTERPARTS

         This Agreement may be executed in counterparts, each of which will be
deemed to be an original, and together will constitute one and the same
instrument.

                                      21
<PAGE>

         12.8  ASSIGNMENT

         This Agreement may not be assigned by either party hereto without the
prior written consent of the other party, except that Buyer may assign its right
to any of its Affiliated Company, but no such assignment shall relieve Buyer of
its obligations hereunder.

         12.9  BROKERS

         Buyer and Seller each represent and warrant to the other that, except
for San Juan Holdings, Inc., the fees and expenses of which will be paid by
Seller, all negotiations between them have been carried out by them directly,
without the intervention of any third person, and that there are no broker's
commissions, finder's fees or other payment payable to any Person in connection
with the transactions contemplated hereby.

         12.10  ACCESS TO INFORMATION

         For a period of eighteen (18) months following the Closing Date, Buyer
will give Seller and its officers, employees and representatives reasonable
access, upon reasonable advance notice, to such documentation and information
which Seller or its affiliates may reasonably request for inspection and copying
at Seller's expense, provided that such access and inspection and copying shall
be conducted in such a manner as not to interfere unreasonably with the business
and operations of the Subsidiaries and, provided further, that Seller and its
officers, employees and representatives shall keep all such documentation and
information confidential.

         12.11  EXTENSION; WAIVER

         At any time prior to the Closing Date, the party entitled to the
benefits of the respective term or provision may (a) extend the time for the
performance of any of the obligations or other acts of the other party hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document, certificate or writing delivered pursuant hereto or
(c) waive compliance with any obligation, covenant, agreement or condition
contained herein. Any agreement on the part of either party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of the party entitled to the benefits of such extended or
waived term or provision.

         12.12  VALIDITY

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

                                      22
<PAGE>

                 [BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                      23
<PAGE>

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

                                                       MARGO CARIBE, INC.

                                               By: /s/ MICHAEL RUBIN
                                                   -----------------------------
                                             Name:         Michael Rubin
                                            Title:           Director

                                                  EMPRESAS MARGO, INC.

                                               By: /s/ MICHAEL J. SPECTOR
                                                   -----------------------------
                                             Name:      Michael J. Spector
                                            Title:      President and Chief
                                                         Executive Officer

                                      24Exhibit (4)(d)

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.

                           STOCK SUBSCRIPTION WARRANT

                           To Purchase Common Stock of

               Startech Environmental Corporation (the "Company")

                   DATE OF INITIAL ISSUANCE: December 29, 1998

     THIS CERTIFIES THAT for value received, the CONNECTICUT DEVELOPMENT
AUTHORITY or its registered assigns (hereinafter called the "Holder") is
entitled to purchase from the Company, at any time during the Term of this
Warrant, the number of shares of common stock, no par value, of the Company (the
"Common Stock") specified herein, at the Warrant Price, payable in lawful money
of the United States of America to be paid upon the exercise hereof. The
exercise of this Warrant shall be subject to the provisions, limitations and
restrictions herein contained, and only may be exercised in whole.

SECTION 1.  Definitions.
            ------------

     For all purposes of this Warrant, the following terms shall have the
meanings indicated:

     Common Stock - shall mean and include the Company's authorized Common
Stock, no par value, as constituted at the date hereof, and shall also include
any capital stock of any class or series of the Company hereafter authorized
which shall not be limited to a fixed sum or percentage of par value or of the
purchase price of such stock in respect of the rights of the holders thereof to
participate in dividends and/or in the distribution of assets upon the voluntary
or involuntary liquidation, dissolution or winding up of the Company.
Notwithstanding the foregoing, for purposes of determining the class or series
of the Company's capital stock which the Holder is entitled to purchase pursuant
hereto, the term "common stock" shall mean the Company's authorized Common
Stock, no par value, as constituted at the date hereof.

<PAGE>

     Current Market Price - of one share of Common Stock shall be deemed to be,
at any date, the average of the daily closing prices for the 30 consecutive
business days ending no more than 15 business days before the day in question
(as adjusted for any stock dividend, split, combination or reclassification that
took effect during such 30 business day period). The closing price for each day
shall be the last reported sales price regular way or, in case no such reported
sales took place on such day, the average of the last reported bid and asked
prices regular way, in either case on the principal national securities exchange
on which the Common Stock is listed or admitted to trading (or if the Common
Stock is not at the time listed or admitted for trading on any such exchange,
then such price as shall be equal to the average of the last reported bid and
asked prices, as reported by the National Association of Securities Dealers
Automated Quotations System ("Nasdaq") on such day, or if, on any day in
question, the security shall not be quoted on the Nasdaq, then such price shall
be equal to the average of the last reported bid and asked prices on such day as
reported by The National Quotation Bureau Incorporated or any similar reputable
quotation and reporting service, if such quotation is not reported by The
National Quotation Bureau Incorporated); provided, however, that if the Common
Stock is not traded in such manner that the quotations referred to herein are
available for the period required hereunder, the Current Market Price shall be
determined in good faith by the Board of Directors of the Company or, if such
determination cannot be made, by a nationally recognized independent investment
banking firm selected by the Board of Directors of the Company (or if such
selection cannot be made, by a nationally recognized independent investment
banking firm selected by the American Arbitration Association in accordance with
its rules).

     Exchange Act - shall mean the Securities Exchange Act of 1934, as amended
from time to time.

     Loan Agreement - shall mean that certain Loan Agreement between the Company
and the Connecticut Development Authority dated December 29, 1998.

     Note - shall mean that certain promissory note from the Company to the
Connecticut Development Authority, dated as of December 29, 1998, in the
original principal amount of $750,000.00 issued in connection with the Loan
Agreement.

     Securities Act - the Securities Act of 1933, as amended.

     Term of this Warrant - shall mean the two (2) year period beginning on the
date of initial issuance hereof and ending on December 31, 2000.

     Warrant Price - shall be equal to $7.00 for each share of Common Stock.

     Warrants - this Warrant and any other Warrant or Warrants issued pursuant
to the Loan Agreement to the original holder of this Warrant, or any transferees
from such original holder or the Holder.

                                      -2-

<PAGE>

     Warrant Shares - shares of Common Stock purchased or purchasable by the
Holder of this Warrant upon the exercise hereof.

SECTION 2.  Exercise of Warrant.
            --------------------

     2.1 Right to Exercise. The Holder may exercise this Warrant for an amount
of Shares of Common Stock on a fully-diluted basis during the period commencing
on the date of initial issuance hereof and ending on December 31, 2000, equal to
five percent (5%) of the issued and outstanding Common Stock as of the date of
exercise.

     2.2. Procedure for Exercise of Warrant. To exercise this Warrant, the
Holder shall deliver to the Company at its office referred to in Section 11
hereof at any time during the Term of this Warrant: (i) the Notice of Exercise
in the form attached hereto, (ii) cash, certified or official bank check payable
to the order of the Company, wire transfer of funds to the Company's account, or
evidence of any indebtedness of the Company to the Holder (or any combination of
any of the foregoing) in the amount of the Warrant Price for each share being
purchased, and (iii) this Warrant.

     In the event of any exercise of the rights represented by this Warrant, a
certificate or certificates for the shares of Common Stock so purchased,
registered in the name of the Holder or such other name or names as may be
designated by the Holder, shall be delivered to the Holder hereof within a
reasonable time, not exceeding fifteen (15) days, after the rights represented
by this Warrant shall have been so exercised; and, unless this Warrant has
expired, a new Warrant representing the number of shares (except a remaining
fractional share), if any, with respect to which this Warrant shall not then
have been exercised shall also be issued to the Holder hereof within such time.
The person in whose name any certificate for shares of Common Stock is issued
upon exercise of this Warrant shall for all purposes be deemed to have become
the holder of record of such shares on the date on which the Warrant was
surrendered and payment of the Warrant Price and any applicable taxes was made,
irrespective of the date of delivery of such certificate, except that, if the
date of such surrender and payment is a date when the stock transfer books of
the Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.

     2.3. Transfer Restriction Legend. Each certificate for Warrant Shares shall
bear the following legend (and any additional legend required by (i) any
applicable state securities laws and (ii) any securities exchange upon which
such Warrant Shares may, at the time of such exercise, be listed) on the face
thereof unless at the time of exercise such Warrant Shares shall be registered
under the Securities Act:

                                      -3-

<PAGE>

     "The shares represented by this certificate have not been registered under
     the Securities Act of 1933, as amended, and may not be sold or transferred
     in the absence of such registration or an exemption therefrom under said
     Act."

Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution under a registration statement of the securities
represented thereby) shall also bear such legend unless, in the opinion of
counsel for the Holder thereof the securities represented thereby are not, at
such time, required by law to bear such legend.

SECTION 3. Covenants as to Common Stock. The Company covenants and agrees that
all shares of Common Stock that may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully paid
and nonassessable, and free from all taxes, liens and charges with respect to
the issue thereof. The Company further covenants and agrees that it will pay
when due and payable any and all Federal and state taxes which may be payable in
respect of the issue of this Warrant or any Common Stock or certificates
therefor issuable upon the exercise of this Warrant. The Company further
covenants and agrees that the Company will at all times have authorized and
reserved, free from preemptive rights, a sufficient number of shares of Common
Stock to provide for the exercise of the rights represented by this Warrant.

SECTION 4.  Ownership.
            ----------

     4.1. Ownership of This Warrant. The Company may deem and treat the person
in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary until presentation of this Warrant for registration of transfer
as provided in this Section 4.

     4.2. Transfer and Replacement. This Warrant and all rights hereunder are
transferable in whole or in part upon the books of the Company by the Holder
hereof in person or by duly authorized attorney, and a new Warrant or Warrants,
of the same tenor as this Warrant but registered in the name of the permitted
transferee or transferees (and in the name of the Holder, if a partial transfer
is effected) shall be made and delivered by the Company upon surrender of this
Warrant duly endorsed, at the office of the Company referred to in Section 11
hereof. Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft or destruction, and, in such case, of indemnity or security
reasonably satisfactory to it, and upon surrender of this Warrant if mutilated,
the Company will make and deliver a new Warrant of like tenor, in lieu of this
Warrant; provided that if the Holder hereof is an instrumentality of a state or
local government or an institutional holder or a nominee for such an
instrumentality or institutional holder an irrevocable agreement of indemnity by
such instrumentality or institutional holder shall be sufficient for all
purposes of this Section 4, and no evidence of loss or theft or destruction
shall be necessary. This Warrant shall be promptly canceled by the Company upon

                                      -4-

<PAGE>

the surrender hereof in connection with any transfer or replacement. Except as
otherwise provided above, in the case of the loss, theft or destruction of a
Warrant, the Company shall pay all expenses, taxes and other charges payable in
connection with any transfer or replacement of this Warrant, other than stock
transfer taxes (if any) payable in connection with a transfer of this Warrant,
which shall be payable by the Holder. Holder will not transfer this Warrant and
the rights hereunder except in compliance with Federal and state securities
laws.

SECTION 5. Mergers; Consolidation; Sales. In the case of any proposed
consolidation or merger of the Company with another entity, or the proposed sale
of all or substantially all of its assets (a "Sale") to another person or
entity, or any proposed reorganization or reclassification of the capital stock
of the Company, then, as a condition of such consolidation, merger, Sale,
reorganization or reclassification, lawful and adequate provision shall be made
whereby the Holder of this Warrant shall thereafter have the right to receive
upon the basis and upon the terms and conditions specified herein, in lieu of
the shares of the Common Stock of the Company immediately theretofore
purchasable hereunder, such shares of stock, securities or assets as may (by
virtue of such consolidation, merger, Sale, reorganization or reclassification)
be issued or payable with respect to or in exchange for the number of shares of
such Common Stock purchasable hereunder immediately before such consolidation,
merger, Sale, reorganization or reclassification. In any such case appropriate
provision shall be made with respect to the rights and interests of the Holder
of this Warrant to the end that the provisions hereof shall thereafter be
applicable as nearly as may be practicable in relation to any shares of stock,
securities or assets thereafter deliverable upon the exercise of this Warrant.
The Company shall not effect any such consolidation, merger or Sale unless (i)
either (A) the Holder shall have given its written consent thereto, or (B) the
other party to the consolidation, merger or Sale is not controlled by, does not
control, and is not under common control with, the Company and the transaction
is not being undertaken with the purpose of diminishing, defeating or avoiding
the Holder's rights hereunder, and (ii) prior to or simultaneously with the
consummation thereof the successor corporation or purchaser, as the case may be,
shall assume by written instrument the obligation to deliver to the Holder such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, the Holder is entitled to receive.

SECTION 6. Notice of Dissolution or Liquidation. In case of any distribution of
the assets of the Company in dissolution or liquidation (except under
circumstances when the foregoing Section 5 shall be applicable), the Company
shall give notice thereof to the Holder hereof and shall make no distribution to
shareholders until the expiration of thirty (30) days from the date of mailing
of the aforesaid notice and, in any case, the Holder hereof may exercise this
Warrant within thirty (30) days from the date of the giving of such notice, and
all rights herein granted not so exercised within such thirty-day period shall
thereafter become null and void.

SECTION 7. Notice of Extraordinary Dividends. Subject to further compliance with
Section 9.2 hereof, if the Board of Directors of the Company shall declare any
dividend or other distribution on its Common Stock except out of earned surplus
or by way of a stock dividend payable in shares of its Common Stock, the Company
shall mail notice thereof to the Holder hereof not less than thirty (30) days

                                      -5-

<PAGE>

prior to the record date fixed for determining shareholders entitled to
participate in such dividend or other distribution, and the Holder hereof shall
not participate in such dividend or other distribution unless this Warrant is
exercised prior to such record date. The provisions of this Section 7 shall not
apply to distributions made in connection with transactions covered by Section
5.

SECTION 8.  Fractional  Shares.  Fractional  shares shall not be issued upon the
exercise of this Warrant but in any case where the Holder would,  except for the
provisions  of this  Section 8, be entitled  under the terms hereof to receive a
fractional share upon the complete exercise of this Warrant,  the Company shall,
upon the  exercise of this  Warrant for the largest  number of whole shares then
called  for,  pay a sum in  cash  equal  to the  excess  of the  value  of  such
fractional share  (determined in such reasonable  manner as may be prescribed in
good faith by the Board of Directors of the Company)  over the Warrant Price for
such fractional share.

SECTION 9. Special Arrangements of the Company. The Company covenants and agrees
that during the term of this Warrant, unless otherwise approved by the Holder of
this Warrant:

     9.1. Adjustments.
          -----------

     (a) Adjustment for Stock Splits and Combinations. If the Company shall at
any time, or from time to time, after the date hereof, effect a subdivision of
its outstanding Common Stock then, at the option of the Holder, (i) the Warrant
Price then in effect immediately before that subdivision shall be
proportionately decreased and (ii) the number of shares of Common Stock issuable
upon the exercise of this Warrant (the "Number of Issuable Shares") shall be
proportionately increased, and conversely, if the Company shall at any time, or
from time to time, after the date hereof, combine its outstanding shares of
Common Stock, then, at the option of the Holder, (i) the Warrant Price then in
effect immediately before the combination shall be proportionately increased and
(ii) the Number of Issuable Shares shall be proportionately decreased. Any
adjustment under this subsection (a) shall become effective at the close of
business on the day any such subdivision or combination becomes effective.

     (b) Adjustment for Certain Dividends and Distributions. If the Company at
any time, or from time to time, after the date hereof, shall make or issue, or
fix a record date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in additional shares of Common
Stock, then, and in each such event, at the option of the Holder:

(i) the Warrant Price shall be decreased as of the date of such issuance or, at
the time or upon the event such a record date shall have been fixed, as of the
close of business on such record date (the "Record Date") by multiplying the
Warrant Price by a fraction, determined as follows:

     (x) the numerator of which shall be the total number of shares of Common
Stock issued and outstanding immediately prior to the Record Date; and

                                      -6-

<PAGE>

     (y) the denominator of which shall be the total number of shares of Common
Stock issued and outstanding immediately prior to the Record Date plus the
number of shares of Common Stock issuable in payment of such dividend or
distribution, and

(ii) the Number of Issuable Shares shall be increased to equal the number
derived by dividing the aggregate Warrant Price by the adjusted per share
Warrant Price which would have resulted if the Holder had chosen option (i)
above.

     For purposes of this subsection (b), if such Record Date shall have been
fixed and such dividend is not fully paid or if such distribution is not fully
made on the date fixed therefor, the Warrant Price or the Number of Issuable
Shares, as the case may be, shall be recomputed accordingly as of the close of
business on such Record Date, and thereafter the Warrant Price or the Number of
Issuable Shares, as the case may be, shall be adjusted pursuant to this
subsection (b) as of the day and time that each actual payment of such dividends
or distributions is made.

     (c) Adjustment for Reclassification, Exchange and Substitution. If the
Common Stock issuable upon the exercise hereof shall be changed into the same or
a different number of shares of any class or classes of stock, whether by
reclassification, exchange, substitution or other transaction having similar
effect (other than a subdivision or combination of shares or stock dividend
provided for above, or a reorganization, merger, consolidation, or sale of
assets provided for elsewhere in this Section 9) then, and in each such event,
the Holder shall have the right thereafter to receive the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, exchange, substitution or other transaction having similar
effect, as did or shall the holders of shares of the Common Stock as of the date
immediately prior to the day that such reclassification, exchange or
substitution is or becomes effective, all subject to further adjustment as
provided herein.

     (d) Adjustment for Issuance of New Shares. If the Company at any time, or
from time to time, after the date hereof, shall issue additional shares of
Common Stock at a per share price less than the per share Warrant Price (other
than (i) pursuant to a subdivision, combination, reclassification, exchange,
substitution of shares, reorganization, merger, consolidation or Sale provided
for elsewhere in this Section 9 or in Section 5; or (ii) shares issued to any
instrumentality of the State of Connecticut then, and in each such event):

     (i) the per share Warrant Price shall be decreased as of the date of such
     issuance to a number determined by dividing (x) an amount equal to (1) the
     total number of shares of Common Stock outstanding immediately prior to
     such issuance multiplied by the per share Warrant Price, plus (2) the
     consideration, if any, received by the Company upon such issuance
     (including any consideration received prior to such issuance for securities
     the exercise or conversion of which resulted in such issuance) by (y) the
     total number of shares of Common Stock outstanding immediately after
     issuance of such additional shares, and

                                      -7-

<PAGE>

     (ii) the Number of Issuable Shares shall be increased to equal the number
     derived by dividing the aggregate Warrant Price by the adjusted per share
     Exercise Price after application of (i) above.

     9.2. Will Reserve Shares. The Company will reserve and set apart and have
available for issuance at all times, free from preemptive or other preferential
rights, the number of shares of authorized but unissued Common Stock deliverable
upon the exercise of this Warrant.

     9.3. Will Not Issue Certain Stock. The Company will not issue any capital
stock of any class which has rights to be preferred as to dividends and/or as to
the distribution of assets upon voluntary or involuntary liquidation,
dissolution or winding-up, unless such rights shall be limited to a fixed sum or
percentage of par value in respect of participation in dividends and in the
distribution of assets. The Company will be deemed to have issued stock which is
preferred as to dividends or as to distribution of assets if either (i) the
right to preferred dividends exceeds the amount of fifteen percent (15%) of par
value or of the purchase price of such shares or (ii) the right to preferred
distribution of assets exceeds the amount of one hundred percent (100%) of par
value or of the purchase price of such shares for the first year after issuance
of such stock or one hundred and twenty-five percent (125%) thereafter.

     9.4. Will Not Declare Dividends. The Company will not pay any dividend or
other distribution on any of its capital stock unless such dividend or other
distribution on such share of capital stock and all other dividends or
distributions paid during the prior one year period on such shares of capital
stock are paid out of earned surplus and the aggregate amount thereof is less
than fifteen percent (15%) of the fair market value of the shares of capital
stock (if then ascertainable) on the date of declaration of such dividend or
other distribution.

     9.5. Will Not Amend Certificate. The Company will not amend its Certificate
of Incorporation to eliminate as an authorized class of capital stock that class
denominated as "Common Stock" on the date hereof.

     9.6. Will Bind Successors. This Warrant shall be binding upon any
corporation or other person or entity succeeding to the Company by merger,
consolidation or acquisition of all or substantially all of the Company's
assets.

SECTION 10.  Registration Rights: etc.
             -------------------------

     10.1. Certain Definitions. As used in this Section 10, the following terms
shall have the following respective meanings:

                                      -8-

<PAGE>

     "Commission" shall mean the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.

     "Registrable Securities" shall mean the Warrant Shares less any Warrant
Shares theretofore sold to the public or in a private placement.

     The terms "register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the effectiveness of such registration statement.

     "Registration Expenses" shall mean all expenses incurred by the Company in
compliance with Section 10.2 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses, and the expense of any
special audits incident to or required by any such registration (but excluding
the compensation of regular employees of the Company, which shall be paid in any
event by the Company).

     "Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities, all fees and
disbursements of counsel for any Holder and any blue sky fees and expenses
excluded from the definition of "Registration Expenses."

     "Holder" shall mean any holder of outstanding Warrant Shares or Registrable
Securities which (except for purposes of determining "Holders" under Section
10.6 hereof) have not been sold to the public.

     "Other Shareholders" shall mean holders of securities of the Company who
are entitled by contract with the Company or who are permitted by the Company to
have securities included in a registration of the Company's securities.

                                      -9-
<PAGE>

     10.2. Company Registration.
           ---------------------

     (a) Notice of Registration. If the Company shall determine to register any
of its securities either for its own account or the account of a security holder
or holders, other than a registration relating solely to employee benefit plans,
or a registration relating solely to a Commission Rule 145 transaction, or a
registration on any registration form which does not permit secondary sales, the
Company will:

          (i) promptly give to each Holder written notice thereof (which shall
include a list of the jurisdictions in which the Company intends to attempt to
qualify such securities under the applicable blue sky or other state securities
laws); and

          (ii) include in such registration (and any related qualification under
blue sky laws or other compliance), and in any underwriting involved therein,
all the Registrable Securities specified in a written request or requests, made
by any Holder within fifteen (15) days after receipt of the written notice from
the Company described in clause (i) above, subject to any limitations on the
number of shares as set forth in Section 10.2(b) below.

     (b) Underwriting. If the registration of which the Company gives notice is
for a registered public offering involving an underwriting, the Company shall so
advise the Holders as part of the written notice given pursuant to Section 10.2
(a)(i). In such event, the right of any Holder to registration pursuant to
Section 10.2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company,
directors and officers and the Other Shareholders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for underwriting by the
Company.

     Notwithstanding any other provision of this Section 10.2, if the
underwriter determines that marketing factors require a limitation on the number
of shares to be underwritten, the underwriter may (subject to the allocation
priority set forth below) exclude from such registration and underwriting some
or all of the Registrable Securities which would otherwise be underwritten
pursuant hereto. The Company shall so advise all holders of securities
requesting registration, and the number of shares of securities that are
entitled to be included in the registration and underwriting shall be allocated
in the following manner. The number of shares that may be included in the
registration and underwriting on behalf of such Holders, directors and officers
and Other Shareholders shall be allocated among such Holders, directors and
officers and Other Shareholders in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities and other securities which they had
requested to be included in such registration at the time of filing the
registration statement.

                                      -10-

<PAGE>

     If any Holder of Registrable Securities or any officer, director or Other
Shareholder disapproves of the terms of any such underwriting, it, he or she may
elect to withdraw therefrom by written notice to the Company and the
underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.

     10.3. Registration Rights. In the event that the Company at any time after
the date of this Warrant grants registration rights, including demand
registration rights, to any other holder of securities of the Company, the
Company will promptly give to the Holder written notice thereof and, if in the
opinion of the Holder such registration rights are more favorable than the
registration rights provided under this Warrant, the Holder shall so notify the
Company within thirty (30) days of receipt of the foregoing notice from the
Company, whereupon such registration rights shall automatically be deemed to be
incorporated in this Warrant.

     10.4. Expenses of Registration. The Company shall bear all Registration
Expenses incurred in connection with any registration, qualification and
compliance by the Company pursuant to Section 10.2 hereof. All Selling Expenses
shall be borne by the holders of the securities so registered pro rata on the
basis of the number of their shares so registered.

     10.5. Registration Procedures. In the case of each registration effected by
the Company pursuant to this Section 10, the Company will keep each Holder
advised in writing as to the initiation of each registration and as to the
completion thereof. The Company will, at its expense:

          (a) keep such registration effective for a period of one hundred
twenty (120) days or until the Holder or Holders have completed the distribution
described in the registration statement relating thereto, whichever first
occurs;

          (b) furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request; and

          (c) register or qualify the Registrable Securities under the
securities laws or blue-sky laws of such jurisdictions as any Holder may
request; provided, however, that the Company shall not be obligated to register
or qualify such Registrable Securities in any particular jurisdiction in which
the Company would be required to execute a general consent to service of process
in order to effect such registration, qualification or compliance, unless the
Company is already subject to service in such jurisdiction and except as may be
required by the Securities Act or applicable rules or regulations thereunder.

                                      -11-
<PAGE>

     10.6. Indemnification.
           ----------------

          (a) The Company, with respect to each registration, qualification and
compliance effected pursuant to this Section 10, will indemnify and hold
harmless each Holder, each of its officers, directors, partners, and agents, and
each party controlling such Holder, and each underwriter, if any, and each party
who controls any underwriter, against all claims, losses, damages and
liabilities (or actions in respect thereof arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
prospectus, offering circular or other document (including any related
registration statement, notification or the like)) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of the Securities Act or any rule or regulation thereunder applicable to
the Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance, and will
reimburse each such Holder, each of its officers, directors, partners, and
agents, and each party controlling such Holder, each such underwriter and each
party who controls any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission based solely upon written information furnished to the Company by such
Holder or underwriter, as the case may be, and stated to be specifically for use
in any prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance.

          (b) Each Holder and Other Shareholder will, if Registrable Securities
held by it, him or her are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify and hold
harmless the Company, each of its directors and officers and each underwriter,
if any, of the Company's securities covered by such a registration statement,
each party who controls the Company or such underwriter, each other such Holder
and Other Shareholder and each of their respective officers, directors,
partners, and agents, and each party controlling such Holder or Other
Shareholder, against all claims, losses, damages and liabilities (or actions in
respect thereof arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Company and such Holders, Other Shareholders, directors, officers, partners,
agents, parties, underwriters or control persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document solely in reliance upon and in
conformity with written information furnished to the Company by such Holder or

                                      -12-

<PAGE>

Other Shareholder and stated to be specifically for use in any prospectus,
offering circular or other document (including any related registration
statement, notification or the like) incident to any such registration,
qualification or compliance; provided, however, that the obligations of such
Holders and Other Shareholders hereunder shall be limited to an amount equal to
the proceeds to each such Holder or Other Shareholder of securities sold as
contemplated herein.

          (c) Each party entitled to indemnification under this Section 10.7
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense (unless the Indemnified Party shall have been
advised by counsel that actual or potential differing interests or defenses
exist or may exist between the Indemnifying Party and the Indemnified Party, in
which case such expense shall be paid by the Indemnifying Party), and provided
further that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Section 10. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. Each Indemnified Party shall provide such information as may be
reasonably requested by an Indemnifying Party in order to enable such
Indemnifying Party to defend a claim as to which indemnity is sought.

     10.7. Information by Holder. Each Holder of Registrable Securities, and
each Other Shareholder holding securities included in any registration, shall
furnish to the Company such information regarding such Holder or Other
Shareholder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Section 10.

     10.8. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may permit the sale of the
Registrable Securities to the public without registration, the Company agrees
to:

          (a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times from
and after ninety (90) days following the effective date of the first
registration under the Securities Act filed by the Company for an offering of
its securities to the general public;

                                      -13-

<PAGE>

          (b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), at any time after it has
become subject to such reporting requirements; and

          (c) So long as the Holder owns any Registrable Securities, furnish to
the Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 (at any time from and
after ninety (90) days following the effective date of the first registration
statement in connection with an offering of its Securities to the general
public), and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
so filed as the Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing the Holder to sell any such securities
without registration.

SECTION 11. Notices. Any notice or other document required or permitted to be
given or delivered to the Holder shall be delivered at, or sent by certified or
registered mail to, the Holder at 999 West Street, Rocky Hill, Connecticut
06067, or to such other address as shall have been furnished to the Company in
writing by the Holder. Any notice or other document required or permitted to be
given or delivered to the Company shall be delivered at, or sent by certified or
registered mail to, the Company at 79 Old Ridgefield Road, Wilton, Connecticut
06897, or to such other address as shall have been furnished in writing to the
Holder by the Company. Any notice so addressed and mailed by registered or
certified mail shall be deemed to be given when so mailed. Any notice so
addressed and otherwise delivered shall be deemed to be given when actually
received by the addressee.

SECTION 12. No Rights as Stockholder: Limitation of Liability. This Warrant
shall not entitle the Holder to any of the rights of a shareholder of the
Company. No provision hereof, in the absence of affirmative action by the Holder
to purchase shares of Common Stock, and no mere enumeration herein of the rights
or privileges of the Holder, shall give rise to any liability of the Holder for
the Warrant Price hereunder or as a shareholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.

SECTION 13. Law Governing. THIS WARRANT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CONNECTICUT.

                                      -14-
<PAGE>

SECTION 14.  Miscellaneous.
             --------------

          (a) This Warrant and any provision hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
(or any predecessor in interest thereof against which enforcement of the same is
sought). The headings in this Warrant are for purposes of reference only and
shall not affect the meaning or construction of any of the provisions hereof;
and

          (b) All capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to them in the Financing Agreement.

     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer this 29th day of December, 1998.

                                    STARTECH ENVIRONMENTAL CORPORATION

                                 By:__________________________________
                                    Joseph F. Longo
                                    Its President
                                    Duly Authorized

                                      -15-
<PAGE>

                           FORM OF NOTICE OF EXERCISE

                [To be signed only upon exercise of the Warrant]

                     TO BE EXECUTED BY THE REGISTERED HOLDER
                         TO EXERCISE THE WITHIN WARRANT
                                                -------

     The undersigned hereby exercises the right to purchase _________ shares of
Common Stock which the undersigned is entitled to purchase by the terms of the
within Warrant according to the conditions thereof, and herewith makes payment
of the Warrant Price of such shares in turn. All shares to be issued pursuant
hereto shall be issued in the name of and the initial address of such person to
be entered on the books of the Company shall be:

     The shares are to be issued in certificates of the following denominations:

                                       -----------------------------------------
                                       [Type Name of Holder]

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

Dated:
      ---------------------------------

                                      -16-
<PAGE>

                               FORM OF ASSIGNMENT
                                    (ENTIRE)

               [To be signed only upon transfer of entire Warrant]

                     TO BE EXECUTED BY THE REGISTERED HOLDER
                         TO TRANSFER THE WITHIN WARRANT
                                                -------

     FOR VALUE RECEIVED __________________ hereby sells, assigns and transfers
unto _______________________________ all rights of the undersigned under and
pursuant to the within Warrant, and the undersigned does hereby irrevocably
constitute and appoint _______________________________ Attorney to transfer the
said Warrant on the books of the Company, with full power of substitution.

                                   ---------------------------------------------
                                   [Type Name of Holder]

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

                                    Title:
                                             -----------------------------------

Dated:
      ---------------------------------

NOTICE

     The signature to the foregoing Assignment must correspond to the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.

                                      -17-

<PAGE>

                               FORM OF ASSIGNMENT
                                    (PARTIAL)

              [To be signed only upon partial transfer of Warrant]

                     TO BE EXECUTED BY THE REGISTERED HOLDER
                         TO TRANSFER THE WITHIN WARRANT
                                                -------

     FOR VALUE RECEIVED _________________ hereby sells, assigns and transfers
unto __________________________________ (i) the rights of the undersigned to
purchase ___ shares of Common Stock under and pursuant to the within Warrant,
and (ii) on a nonexclusive basis, all other rights of the undersigned under and
pursuant to the within Warrant, it being understood that the undersigned shall
retain, severally (and not jointly) with the transferee(s) named herein, all
rights assigned on such non-exclusive basis. The undersigned does hereby
irrevocably constitute and appoint __________________________ Attorney to
transfer the said Warrant on the books of the Company, with full power of
substitution.

                                       -----------------------------------------
                                       [Type Name of Holder]

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

                                       Title:
                                             -----------------------------------

Dated:
      ------------------------------

NOTICE

     The signature to the foregoing Assignment must correspond to the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.

                                      -18-

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