Document:

AMEND.#2 TO SHAREHOLDERS RIGHTS AGREEMENT

  
 Exhibit 4.2 
  
 AMENDMENT NO. 2 TO 
 SHAREHOLDER RIGHTS AGREEMENT 

 
 Amendment No. 2, dated as of December 10, 2002 (the “Amendment”), to the Shareholder Rights Agreement, dated as of
September 16, 2002 and amended as of November 27, 2002 (the “Rights Agreement”), between Monarch Dental Corporation, a Delaware corporation (the “Company”), and Mellon Investor Services LLC, a New Jersey limited liability company
(the “Rights Agent”). 
  
 W I T N E S S E T H 
  

WHEREAS, pursuant to Section 27 of the Rights Agreement, the Company may prior to a Section 11(a)(ii) Event (as defined in the Rights Agreement) supplement or amend
the Rights Agreement without the approval of any holders of certificates representing shares of common stock of the Company; and 
  
 WHEREAS, the Company now desires to amend the Rights Agreement as set forth in this Amendment, and pursuant to Section 27 of the Rights Agreement, the Company hereby directs that the Rights Agreement should be amended as set forth in
this Amendment. 
  
 NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the
parties hereby agree as follows: 
  
 1. Amendments to Section 1. 
  
 (a)  Section 1 of the Rights Agreement is hereby amended by adding the following definition: 

 
 (rr)  “Stockholder Support Agreements” shall mean those certain stockholder support
agreements to be entered into as of the date hereof between Parent and the Company’s major shareholders, Europa International, Inc. and Bruce Galloway, in connection with the Merger. 
  
 (b)  The last sentence of the definition of “Acquiring Person” in Section 1(a) of the Rights Agreement is hereby amended to read as follows:

  
 “Notwithstanding the foregoing or any other provision of this Agreement to the contrary, none of (i) the
execution and delivery of the Merger Agreement, (ii) the consummation of the Merger, (iii) the execution and delivery of the Stockholder Support Agreements and (iv) the exercise by the parties thereto of their respective rights under the Stockholder
Support Agreements, shall be deemed to result in Parent, Merger Subsidiary or any other Person becoming an Acquiring Person.” 

  
 2.  Amendment to Section 3(a). The last sentence of Section 3(a)
of the Rights Agreement is hereby amended to read as follows: 
  
 “Notwithstanding anything in this Agreement to
the contrary, a Distribution Date shall not be deemed to have occurred as a result of any of (i) the execution and delivery of the Merger Agreement, (ii) the consummation of the Merger, (iii) the execution and delivery of the Stockholder Support
Agreements and (iv) the exercise by the parties thereto of their respective rights under the Stockholder Support Agreements.” 
  
 3.  Termination of Amendment. Upon the termination of the Merger Agreement in accordance with its terms and without any further action on the part of any of the parties hereto, as of the date of such
termination, this Amendment shall become null and void and of no further force or effect. 
  
 4.  Effectiveness. This Amendment shall be deemed effective as of the date first above written, as if executed on such date. Except as expressly set forth herein, this Amendment shall not by implication or otherwise
alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Rights Agreement, all of which are ratified and affirmed in all respects and shall continue in full force and effect and
shall be otherwise unaffected. 
  
 5.  Governing Law. This Amendment shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such state applicable to contracts to be made and performed entirely within such state. 

 
 6.  Counterparts. This Amendment may be executed in any number of counterparts, each of which shall for all
purposes be deemed an original, and all of which together shall constitute but one and the same instrument. 
  
 [REMAINDER OF
PAGE INTENTIONALLY LEFT BLANK] 

 
 2 

  
 IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to
Shareholder Rights Agreement to be duly executed as of the day and year first above written. 
  
 
	 MONARCH DENTAL CORPORATION 
 
	 
	 By:
 	 	 /s/    Lisa K. Peterson        
 

	  	 	 Name: Lisa K. Peterson
 
	  	 	 Title:  Chief Financial and Administrative
            Officer
 

 
  
 
	 MELLON INVESTOR SERVICES LLC,
 as Rights Agent 
 
	 
	 By:
 	 	 /s/    Mona L. Vorhees        
 

	  	 	 Name: Mona L. Vorhees
 
	  	 	 Title:  Client Service Manager
 

 

 
 3Letter Agreement dated December 10, 2002

	

December 10, 2002

Weichert Enterprise LLC 

 1625 State Route 10  

Morris Plains, New Jersey  07950  

Attn:  Gerald C. Crotty, President 

DL Holdings I, LLC

c/o Reservoir Capital

650 Madison Avenue

New York, New York 10022

Attn:   Marc A. Schwartz, Vice President

					Re:  		 Eos
International, Inc./Weichert Enterprise LLC/ 

 DL Holdings I, LLC                      
                    
   

	

     
     Reference
is made to (i) the  Registration Rights Agreement by and among Eos International, Inc.  (“Eos”),
Weichert Enterprise LLC (“Weichert”), and DL  Holdings I, LLC (“DL Holdings”),
dated as of December 14, 2001, as  amended (the “Registration Rights Agreement”),
(ii) the Secured  $3,500,000 Bridge Loan Promissory Note, date as of December 14, 2001,
as  amended, issued by Eos to DL Holdings (the “DL Note”), (iii) the  Warrant
to purchase common stock of Eos dated as of December 14, 2001, as  amended, issued by Eos
to DL Holdings (the “DL Warrant”), (iv) the  Secured $3,000,000 Bridge Loan
Promissory Note, dated as of December 14, 2001,  as amended, issued by Eos to Weichert
Enterprises, LLC (the “Weichert  Note”), and (v) the Warrant to purchase common
stock of Eos dated as of  December 14, 2001, as amended, issued by Eos to Weichert (the
“Weichert  Warrant”). The DL Note and the Weichert Note are together referred
to  herein as, the “Notes.” The DL Warrant and the Weichert Warrant are
together referred to herein as, the “Warrants.” Weichert and DL  Holdings are
together referred to herein as, the “Bridge Lenders.” 

     
     This
letter evidences the  agreement between Eos and each of the Bridge Lenders regarding the
refinancing  of the Notes, amendments to each of the Warrants, and an amendment to
Registration Rights Agreement.  

     
     Eos
and the Bridge Lenders hereby  agree as follows:  

     
     In
the event that (i) Eos acquires  I.F.S. of New Jersey, Inc., a New Jersey corporation,
solely in consideration  for a combination of common stock of Eos and Series E Junior
Preferred Stock of  Eos and substantially in accordance with the terms and conditions of
the form of  Agreement and Plan of Merger attached hereto, and (ii) Eos consummates a
private  placement of no less than 15 million shares of Eos common stock priced at $0.50
per share, then the Bridge Lenders shall promptly effect the following  transactions
(collectively, the “Refinancing”):  

	

     
          1.     
The Bridge  Lenders shall exchange the Notes for $4.0 million in cash and 1,000 shares of
Series D Preferred Stock of Eos, which preferred stock shall  have the rights,
privileges, terms and conditions substantially as set forth in  the attached form of
Certificate of Designation of Series D Preferred Stock;  

     
          2.     
The Bridge Lenders and Eos shall amend the Warrants  substantially as set forth in the
attached form of Amended and Restated Common Stock Purchase Warrants; and 

     
          3.     
The  Bridge  Lenders  and  Eos  shall  amend  the  Registration  Rights  Agreement
substantially as set forth in the attached form of Amended and Restated Registration
Rights Agreement. 

     
     If the Refinancing is not effected  by January 8, 2003, any party to this agreement may
terminate this agreement  without any liability to any other party by delivery of written
notice of such  termination to the other parties hereto; provided, however, that the
foregoing  shall not relieve Eos from any liability under the Notes, the Registration
Rights Agreement or the Warrants.  

     
     By
countersigning this agreement  where indicated below and returning it to Eos, each of
Weichert and DL Holdings  agrees to, and accepts, the terms of this agreement.  

     
     Please
indicate your confirmation  of the foregoing by signing where indicated below and
promptly returning this  letter to Eos.  

			Sincerely,

EOS INTERNATIONAL, INC.

By:         PETER A. LUND
——————————————

Name:    Peter A. Lund
Title:     Chairman

	AGREED UPON AND ACCEPTED BY:

WEICHERT ENTERPRISE LLC

By:         GERALD C. CROTTY
——————————————

Name:    Gerald C. Crotty

Title:     President
		

	DL HOLDINGS I, LLC

By:         DAN STERN
——————————————

Name:    Dan Stern

Title:     Managing Member
		

	

CERTIFICATE OF
DESIGNATIONS

of

SERIES D PREFERRED STOCK

of

Eos International, Inc.

_________________ 

(Pursuant to Section
151 of the
Delaware General Corporation Law)

_________________ 

     
     Eos
International, Inc., a  corporation organized and existing under the General Corporation
Law of the  State of Delaware (hereinafter called the “Corporation”), hereby
certifies that the following resolution was adopted by the Board of Directors of  the
Corporation as required by Section 151 of the General Corporation Law on  December 10,
2002 at a meeting duly called and held:  

     
     RESOLVED, that pursuant to the  authority granted to and vested
in the Board of Directors of this
Corporation  (hereinafter called the “Board of Directors” or the “Board”)
in accordance with the provisions of the Restated Certificate of Incorporation  of the
Corporation (the “Certificate of Incorporation”), the Board of  Directors
hereby creates a series of preferred stock, $0.01 par value, of the  Corporation and
hereby states the designation and number of shares, and fixes  the relative rights,
preferences, and limitations thereof as follows:  

     
     Section 1.     Designation and Amount.  The shares of this series shall be designated as “Series
D Perpetual  Preferred Stock” (the “Series D Preferred Stock”) and the
number  of shares constituting the Series D Preferred Stock shall be 1,000. Such number
of shares may be increased or decreased by resolution of the Board of Directors;
provided, that no increase shall be made after shares of Series D Preferred  Stock have
been issued and no decrease shall reduce the number of shares of  Series D Preferred
Stock to a number less than the number of shares then  outstanding plus the number of
shares reserved for issuance upon the exercise of  outstanding options, rights or
warrants or upon the conversion of any  outstanding securities issued by the Corporation
convertible into Series D  Preferred Stock.  

     
     Section 2.     Dividends and Distributions. Subject to the rights of the holders of any shares of
any series  of preferred stock (or any other stock) ranking senior to the Series D
Preferred  Stock with respect to dividends, the holders of shares of Series D Preferred
Stock shall be entitled to receive dividends when, as and if declared by the  Board of
Directors out of funds legally available for that purpose.  

     
     Section 3.     Voting Rights. Except  as required by law, holders of
Series D Preferred Stock shall
have no voting  rights and their consent shall not be required for taking any corporate
action.  The Corporation shall have the right to purchase Series D Preferred Stock
without the vote or consent of any holders of Series D Preferred Stock. The  Corporation
shall not have the right to issue preferred stock ranking senior to  or on a parity with
(either as to dividends or upon liquidation, dissolution or  winding up) the Series D
Preferred Stock without the vote or consent of the  holders of Series D Preferred Stock.  

	

     
     Section 4.     Certain Restrictions. 

     
               (A)     So
long as any  shares  of the  Series  D Preferred  Stock  remain  outstanding,  the
Corporation shall not:  

     
               
          (i)
declare or pay dividends, or make any other distributions,  on any shares of stock
ranking junior (either as to dividends or upon liquidation,  dissolution or winding up)
to the Series D Preferred Stock, except that the  Corporation may declare and pay
dividends on the Common Stock payable in shares  of Common Stock;  

     
               
          (ii)
declare  or pay  dividends,  or make any other  distributions,  on any shares of stock
ranking on a parity (either as to dividends or upon  liquidation, dissolution or winding
up) with the Series D Preferred Stock,  except dividends paid ratably on the Series
D Preferred Stock and all such  parity stock on which dividends are payable; or  

     
               
          (iii)
redeem or purchase or otherwise acquire for consideration  shares of any stock ranking
junior (either as to dividends or upon liquidation,  dissolution or winding up) to the
Series D Preferred Stock, provided that the  Corporation may at any time redeem,
purchase or otherwise acquire (a) shares of  any such junior stock in exchange for shares
of any stock of the Corporation  ranking junior (as to dividends and upon dissolution,
liquidation or winding up)  to the Series D Preferred Stock, or (b) shares of any
such junior stock pursuant  to the terms of compensation plans relating to officers,
directors, employees or  consultants of the Corporation or any of its Subsidiaries, or
(c) shares of any  such junior stock pursuant to the exercise of dissenters’ rights
or  otherwise as required by law, or (d) fractional shares of any such junior stock  in
connection with any capital reorganization.  

     
               
(B)     The Corporation shall not permit any Subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase
or otherwise acquire such shares at such time and in such manner. 

     
          Section
5.     Reacquired Shares.   Any  shares of Series D 
Preferred Stock purchased or
otherwise acquired by the  Corporation in any manner whatsoever shall be retired and
canceled promptly  after the acquisition thereof. All such shares shall upon their
cancellation  become authorized but unissued shares of preferred stock and may be
reissued as  part of a new series of preferred stock subject to the conditions and
restrictions on issuance set forth herein or in the Certificate of  Incorporation,
including any Certificate of Designations creating a series of  preferred stock or any
similar stock, or as otherwise required by law.  

     
          Section
6.      Liquidation,  Dissolution or Winding Up.   Upon the voluntary or involuntary
liquidation,  dissolution or winding-up of the affairs of the Corporation, the holders of
shares of Series D Preferred Stock shall have a right prior to the payment of  any
amount to any class of preferred stock of the Corporation junior to the  Series D Preferred
Stock, and on a pro rata basis with any preferred stock of  the Corporation on parity
with (either as to dividends or upon liquidation,  dissolution or winding up) the Series
D Preferred Stock, to be paid for each  share an amount (the “Liquidation
Preference”) equal to the product of  (a) $__________1 (the “Initial
Liquidation Preference”),  (b) 1.13, and (c) the number of years and fraction
of any portion of a year  from the date of issuance of the share of Series D Preferred
Stock to, but not  including, the date fixed by the Corporation for payment of the
Liquidation  Preference. If the assets of the Corporation are not sufficient to pay the
full  amount of the Liquidation Preference to all holders of shares of Series D 
Preferred Stock, the assets shall be distributed ratably among the holders of  shares of
Series D Preferred Stock according to the number of shares held by  each. After
payment in full of the Liquidation Preference to the holders of  shares of Series D Preferred
Stock, the remaining assets of the Corporation  shall be distributed among the holders of
shares of Common Stock and other  securities junior to the Series D Preferred
Stock, as set forth elsewhere in  this Certificate of Incorporation.  

 4

	

     
          Section
7.     Redemption.  Shares of Series D Preferred Stock shall be redeemable as
provided below. 

     
               (A)     
Mandatory Redemption. 

     
               
          (i)     
The  Corporation  shall cause all shares of Series D Preferred  Stock to be
redeemed at the Redemption Price (as defined below)  effective as promptly as practicable
after the closing of any Complete Sale (as  defined below), but in no event later than 20
Business Days after such closing.  For the purposes hereof, “Business Day” shall
mean any weekday on  which banks are open for the conduct of business in the State of New
York.  

     
               
          (ii)     
If at any time the  Corporation  shall effect a Partial Sale (as defined below) then 50%
of the Net Proceeds (as defined below) therefrom shall  be applied to the redemption of
outstanding shares of Series D Preferred Stock  (to the extent that shares of
Series D Preferred Stock are then outstanding) at  the Redemption Price (as defined
below), with such redemption to take effect as  promptly as practicable after the closing
of the Partial Sale, but in no event  later than 20 Business Days after such closing.  

     
               
          (iii)     
“Complete Sale” means (a) a completed  tender offer, a merger or  consolidation
of the Corporation into or with one or more Persons, or any  other business combination
if the stockholders of the Corporation immediately  prior to such transaction do not hold
at least a majority of the Voting Power of  the surviving Person immediately following
completion of such transaction, or  (b) the voluntary sale, conveyance, exchange or
transfer (i) to another Person  of the Common Stock or other securities of the
Corporation if the stockholders  of the Corporation immediately prior to such transaction
do not hold at least a  majority of the Voting Power of the Corporation immediately after
completion of  such transaction, or (ii) to another Person other than one or more
Subsidiaries  of the Corporation of all or substantially all the assets of the
Corporation and  the Subsidiaries of the Corporation considered as a whole.  

_________________ 

1  Insert an
amount equal to the remaining unpaid principal and accumulated interest  on the Bridge
Notes, divided by
   the aggregate number of shares of series D Preferred Stock to be issued. 

 5

	

     
               
     (iv)     
“Convertible  Unsecured  Subordinated  Debt  of  the  Corporation”  means
indebtedness of the Corporation that is unsecured and  subordinated to all other
indebtedness of the Corporation and is fully  convertible into Common Stock of the
Corporation, with no portion of the  principal thereof having a scheduled maturity of
less than five years after the  date of original issuance.  

     
               
     (v)     
“Equity Securities” of the Corporation means Common Stock,  preferred stock, or
Convertible Unsecured Subordinated Debt of the Corporation but  does not include
warrants, options, phantom securities or other derivative  securities, or Common Stock or
preferred stock issuable upon the conversion of  debt securities other than Convertible
Unsecured Subordinated Debt of the  Corporation.  

     
               
     (vi)     
“Net Proceeds” means actual cash proceeds,  net of all  out-of-pocket  expenses
incurred by the Corporation or any Subsidiary of the Corporation  in connection with the
Partial Sale, and the amount of any indebtedness or other  obligation required to be paid
by the Corporation or any Subsidiary of the  Corporation as a condition to or as a result
of the Partial Sale, and net of  taxes (due or estimated to be due in connection with the
Partial Sale), in each  case as determined in good faith by the Board of Directors. In
the event the  Corporation receives proceeds in a Partial Sale in the form of securities
or  other property, and if the Corporation directly or indirectly liquidates such
securities or other property for cash, such cash (subject to reduction as  provided in
this clause (vi)) shall at that time be deemed “Net  Proceeds.” 

     
               
     (vii)     
“Partial Sale” means any of the following transactions,  unless the transaction
also fits within the definition of “Complete Sale,” in  which case the
transaction will be deemed a “Complete Sale” and not a  “Partial Sale” hereunder:  

	 	     

               
     (a)     
a  private  placement  or  public  offering  for  cash  of  Equity Securities
by the Corporation in  which more than $500,000 in cash is raised (net of underwriting
commissions and  payments to placement agents), other than pursuant to (x) an exercise of
warrants which were issued by the Corporation to the initial holders of the  Series D Preferred
Stock, or (y) an exercise of options which were issued by the  Corporation as
compensation, or as a pre-employment award, to directors,  officers, employees or
consultants of the Corporation or any of its  Subsidiaries, or 

	 	     

               
     (b)      the
merger or  consolidation  of a Subsidiary of the Corporation into      or
with one or more Persons if (i)  the Corporation or one or more of its Subsidiaries do
not hold a majority of the  Voting Power of the surviving Person immediately following
completion of such  transaction and (ii) the Corporation or one or more of its
Subsidiaries receives  cash compensation in such transaction, or 

	 	     

               
     (c)     
the sale,  conveyance,  exchange or transfer by the  Corporation  for      cash
to a Person other than a  Subsidiary of the Corporation of (i) common stock or other
securities of a  Subsidiary of the Corporation, or (ii) all or substantially all the
assets of a  Subsidiary of the Corporation. 

	

 6

	

     
               
     (viii)      “Person” means
any  individual,  firm,  corporation,  partnership,  limited  liability company, trust,
incorporated or unincorporated  association, joint venture,  joint stock company,
governmental body, or other  entity of any kind.  

     
               
     (ix)     “Subsidiary” of
the  Corporation  means (a) any  corporation,  association  or  other business entity of
which more than 50% of the Voting Power  is held by the  Corporation or a Subsidiary and
(b) any partnership (i) the sole  general partner or the  managing general partner of
which is the Corporation or a  Subsidiary of the Corporation  or (ii) the only general
partners of which are the  Corporation or of one or more  Subsidiaries of the Corporation
(or any  combination thereof).  

     
               (x)     
“Voting  Power” of a Person  is deemed to be held by a second  Person if shares
or other interests of the first Person’s capital stock or  other interests entitled
(without regard to the occurrence of any contingency)  to vote in the election of
directors, managers or trustees thereof and to vote  on matters generally submitted to a
vote of equity holders is at the time owned  or controlled, directly or indirectly, by
the second Person or by one or more  Subsidiaries of the second Person (or a combination
thereof).  

     
               (B)     Redemption
at the Corporation’s  Option.  The Corporation shall have the right,
at its  option, at any time and from time to time on notice as  hereinafter provided, to
redeem  all or any number of the outstanding shares of  the Series D Preferred
Stock by  paying for each share an amount (the  “Redemption Price”) equal to
the product  of (a) the Initial  Liquidation Preference, (b) 1.13 and (c) the number
of years and  fraction  of any portion of a year from the date of issuance of the share
of Series D  Preferred Stock to, but not including, the date fixed for redemption in the
notice of  redemption (the “Redemption Date”). Shares of Series D  Preferred
Stock so  redeemed shall not be reissued.  

     
               (C)     Redemption
Procedures.  

     
               
     (i)      In
all cases of redemption of shares of Series D Preferred  Stock, no less  than
20 nor more than 40 Business Days’ notice shall be mailed  to the respective
stockholders whose shares are to be redeemed at their  respective addresses appearing on
the books of the Corporation. The notice shall  specify (w) the Redemption Date, (x) the
Redemption Price, (y) if fewer than all  outstanding shares of Series D Preferred
Stock are to be redeemed, the  identification of the particular shares to be redeemed,
and (z) the place or  places where such Series D Preferred Stock is to be
surrendered for payment of  the Redemption Price. “Business Day” means any day
other than a  Saturday, Sunday or other day on which commercial banks in the State of New
York  are authorized or required by law or executive order to close.  

     
               
     (ii)      Notice
of redemption  having been given as aforesaid,  the Redemption  Price of the  Series D Preferred
Stock so to be redeemed shall, on the  Redemption Date, become  due and payable, and from
and after such date (unless  the Corporation shall default in  the payment of the
Redemption Price), such  shares of Series D Preferred Stock  shall no longer
be outstanding, and all  rights of the holders thereof as stockholders of  the
Corporation (except the  right to receive the Redemption Price without interest)  shall
cease. Upon  surrender of any certificate representing any such share of Series D  Preferred
Stock for redemption in accordance with said notice, the Redemption Price shall
thereupon be paid (without interest, in cash). Notwithstanding the foregoing,  the
Corporation’s obligation to complete a mandatory redemption under  Section 7(A)
shall be conditioned upon the closing of the Complete Sale or  Partial Sale which is the
basis for such mandatory redemption, whether or not  the notice of redemption so
specifies.  

 7

	

     
               
     (iii)     
In the case of any partial  redemption,  the Corporation will select the shares of Series
D Preferred Stock to be redeemed on a pro rata basis.  In the event any
certificate  that represents more than one share of Series D  Preferred Stock, not all of
which are  subject to redemption, is surrendered at  any office or agency of the
Corporation  designated for that purpose (with, if  the Corporation so requires, due
endorsement by,  or a written instrument of  transfer in form satisfactory to the
Corporation duly  executed by, the holder  thereof or such holder’s attorney duly
authorized in  writing), the  Corporation shall execute and deliver to the holder of such
shares of  Series D  Preferred Stock without service charge, a new certificate or
certificates,  representing any number of shares of Series D Preferred Stock,
as requested by  such holder, in an aggregate amount equal to the number of shares not
redeemed  and  represented by the certificate so surrendered.  

     
               
     (iv)     
Notwithstanding the foregoing,  the Corporation shall not be required to redeem shares of
Series D Preferred Stock in violation of any law to  which the Corporation is
subject or in circumstances in which such redemption  would violate any agreement between
the Corporation and holders of Senior Debt  of the Corporation. “Senior Debt” means
indebtedness of the  Corporation for borrowed money, but does not include indebtedness of
Subsidiaries of the Corporation for borrowed money for which the Corporation is  not also
obligated.  

     
     IN
WITNESS WHEREOF, this  Certificate of Designation is executed on behalf of the
Corporation this __th  day of December, 2002.  

			EOS INTERNATIONAL, INC.

By: 
——————————————

Name:
Title:

	

 8

	

AGREEMENT

     AGREEMENT,
dated as of December  __, 2002 (this “Agreement”), among Eos International,
Inc., a Delaware  corporation (the “Corporation”), DL Holdings, LLC, a Delaware
limited  company (“DL Holdings”), and Weichert Enterprise LLC, a Delaware
limited liability company (“Weichert”).  

     WHEREAS,
prior to the execution of  this Agreement, DL Holdings and Weichert were the holders of
(i) Secured Bridge  Loan Promissory Notes, dated December 14, 2001 as amended, (the
“Notes”), in the aggregate principal amount of $6,500,000 issued by  the
Corporation and (ii) common stock purchase warrants, dated December 14,  2001, as
amended, with respect to 2,600,000 shares of common stock, par value  $0.01 per share, of
the Corporation (the “Old Warrants”); and  

     WHEREAS,
on the date hereof, the  Corporation is paying $4,000,000 of the principal amount of the
Notes from  $7,500,000 of proceeds the Corporation is receiving from the sale of its
capital  stock to certain investors for cash (the “Issuance Proceeds”); and  

     WHEREAS,
the principal amount of  the Notes, and accrued interest thereon, not being paid by the
Corporation on  the date hereof is being exchanged for ____ shares of Series D Preferred
Stock  of the Corporation (the “Series D Preferred Stock”), the terms and
conditions of which are set forth in the Certificate of Designations (the  “Certificate
of Designations”), a copy of which is attached hereto;  and  

     WHEREAS,
the Corporation is  segregating $1,200,000 of the Issuance Proceeds into an account
selected with  the approval of DL Holdings and Weichert (the “Redemption Account”)
to  be used for the purposes specified herein; and  

     WHEREAS,
the Corporation has  amended and restated the Old Warrant by issuing warrants (the  “Warrants”)
to purchase an aggregate of 3,000,000 shares, par value  $0.01 per share, of common stock
of the Corporation to DL Holdings and Weichert,  and the Old Warrants are thereby
replaced by the Warrants; and  

     WHEREAS,
the Corporation, DL  Holdings and Weichert (together, the “parties”) entered
into an  Amended and Restated Registration Rights Agreement (the “Registration
Rights Agreement”), dated the date hereof; and  

     WHEREAS,
the parties wish to set  forth certain agreements among the parties related to the Series
D Preferred Stock which agreements are specific to the parties and therefore are
not  included among the terms and conditions set forth in the Certificate of
Designations;  

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

 9

	

     
     1.     
Definitions.  Capitalized  terms  used in this  Agreement  and not  otherwise  defined
herein  have the  meanings assigned to them in the Certificate of Designations. 

          
2.      Issuance  and Restrictions. 

     
     (A)     
On the date  hereof,  the  Corporation  is  issuing to (i) DL  Holdings,  certificates
representing ____ shares of Series D Preferred Stock, and (ii)  Weichert,
certificates representing ____ shares of Series D Preferred Stock. All  of such
shares are referred to collectively as the “Issued Shares.” The Corporation
represents and warrants to DL Holdings and Weichert that (1) the  Corporation has all
requisite corporate power and authority to issue the Issued  Shares and to perform its
obligations hereunder, under the Registration Rights  Agreement, and under the
Certificate of Designations (collectively, the  “Operative Documents”), (2)
upon issuance, the Issued Shares will be  duly and validly issued, fully paid and
non-assessable and entitled to the  rights and preferences set forth in the Certificate
of Designations, (3) the  execution, delivery and performance by the Corporation of the
Operative  Documents does not contravene or conflict with any law, regulation, order,
judgment, contract, agreement or other instrument binding on or otherwise  affecting the
Corporation, (4) there are no approvals, authorizations, permits,  consents or other
actions required to be obtained or undertaken by the  Corporation with respect to the
issuance and delivery of the Issued Shares or  the execution, delivery, and performance
by the Corporation of the Operative  Documents, (5) each of the Operative Documents
constitutes the legal, valid and  binding obligation of the Corporation, enforceable
against the Corporation in  accordance with its terms, and (6) as of the date hereof, the
Series D Preferred  Stock is the only class of preferred stock of the Corporation
of which shares  are outstanding.  

     
     (B)     
So long as any shares of the Series D Preferred Stock remain  outstanding  (subject  to
Section 4(d) hereof), the Corporation shall not pay management  fees to insiders other
than those set forth on Schedule A hereto, or make any  payment to any Director,
Executive Officer, or Known 10% Holder of the  Corporation, other than as compensation as
an employee or director, unless such  payment is at market rates, terms and conditions
determined in the good faith  judgment of the Board of Directors, except in those
instances where such payment  is required by law or by an agreement in effect on the date
hereof by which the  Corporation is obligated to make such payment. “Executive
Officer” for  purposes of the foregoing shall have the meaning set forth by the
Securities and  Exchange Commission in Rule 3b-7 under the Securities Exchange Act of
1934, as  amended, on the date hereof, as interpreted in good faith by the Board of
Directors. “Director” for purposes of the foregoing means an  individual
serving as a director of the Corporation with the right to vote at  meetings of the Board
of Directors and does not include advisory or honorary  directors. “Known 10% Holder” for
purposes of the foregoing means any  Person or group which at the time the obligation to
make such payment is  incurred is known by a majority of the Board of Directors to own,
directly or  indirectly, 10% or more of the Common Stock of the Corporation.  

     
     (C)     
If at any time  between the date hereof and the first  anniversary  of the date hereof
the Corporation receives a cash dividend or other cash  distribution from any Subsidiary
of the Corporation, then 50% of the Net  Dividend (as defined below) shall be applied to
the redemption of outstanding  shares of Series D Preferred Stock (to the extent  that
shares of Series D  Preferred Stock are then outstanding), with such redemption to  take
effect as  promptly as reasonably practical following receipt of the Net Dividend by  the
Corporation, but in no event later than 20 Business Days after receipt of such  dividend
or distribution. “Net Dividend” means the cash amount of the  dividend  or
distribution actually received by the Corporation from its  Subsidiary, less (x) that
portion of the dividend or distribution, if any, as to  which application to redemption
of outstanding shares of Series D Preferred  Stock would violate any agreement with  a
lender by which the Corporation or any  of its Subsidiaries is bound, and (y) that
portion of the dividend or  distribution, if any, which is applied by the Corporation (or
is intended to be  applied by the Corporation, as determined in good faith by the Board
of  Directors) to one or more of the following purposes: (i) payments to holders of
Series D Preferred Stock, (ii) payment of directors and officers insurance or  any
other corporate insurance premiums, (iii) payment of taxes, or  (iv) payment of
audit, accounting, and/or legal fees.  

 10

     3.
     Redemption. 

     Funds
on deposit in the Redemption  Account shall be used by the Corporation solely for the
purpose of (i) paying  Qualified Expenses (as defined below) or (ii) redeeming
outstanding shares of  Series DPreferred Stock in accordance with the terms of
this Section 3. At any  time prior to the 10th day prior to the 18-month anniversary of
the date hereof  (such 18-month anniversary being the “Partial Redemption Date”),
upon  prior approval of the Board of Directors, the Corporation may withdraw funds  from
the Redemption Account to pay Qualified Expenses. Subject to Section 4(a)  hereof, all
funds remaining in the Redemption Account on the Partial Redemption  Date shall be
applied by the Corporation on the Partial Redemption Date to the  redemption of shares of
Series DPreferred Stock. Procedures for a redemption  contemplated by this Section
3 shall be as set forth in Section 7(C) of the  Certificate of Designations.  

     “Qualified
Expenses” mean amounts approved by the Board of Directors and actually expended, or
contractually committed to be expended, by the Corporation during the period  beginning
on the date hereof and ending on that date which is 10 days prior to  the Partial
Redemption Date, for one or more of the following purposes:  (a) compensation
(including any “moving allowances,” or other  one-time or sign on bonuses
or payments) for a Chief Executive Officer of  the Corporation, for a Chief Financial
Officer of the Corporation, or for  accounting staff or consultants, (b) recruiting
fees for the foregoing  positions, (c) up-front fees and out-of-pocket costs of
acquisitions of  businesses by the Corporation or any Subsidiary, (d) up-front fees
and  out-of-pocket costs of refinancing of the bank debt of Subsidiaries of the
Corporation, (e) investment banking fees and costs incurred by the Corporation  to raise
or attempt to raise additional funds or for strategic initiatives or  acquisitions or
proposed acquisitions of businesses, (f) payments required to be  made to avoid an event
of default by the Corporation or any Subsidiary on the  debt of the Corporation or any
Subsidiary, or (g) any expenditures upon which  the parties mutually agree. On the 90th,
180th, 270th, 360th, and 450th day  after the date hereof and on the tenth day prior to
the Partial Redemption Date,  the Corporation shall furnish to each of DL Holdings and
Weichert a report  setting forth, in reasonable detail, each Qualified Expense made by
the  Corporation since the date of the last such report (or since the date hereof  with
respect to the first of such reports). The redemption rights provided in  this Section 3
shall be in addition to the rights set forth in the Certificate  of Designations.  

 11

	

     
4.     Miscellaneous. 

     
(a)     Prohibitions on Redemption.   Notwithstanding Sections 2(C) or 3 hereof, the
Corporation shall not be  required to redeem shares of Series D Preferred Stock in
violation of any law to  which the Corporation is subject or in circumstances in which
such redemption  would violate any agreement between the Corporation and holders of
Senior Debt  of the Corporation. “Senior Debt” means indebtedness of the
Corporation or any of its Subsidiaries for borrowed money incurred after the  date
hereof, but does not include indebtedness of Subsidiaries of the  Corporation for
borrowed money for which the Corporation is not also obligated.  After the date hereof,
the Corporation shall not incur Senior Debt that  specifically prevents the Corporation
from redeeming Series D Preferred Stock as  provided in this Agreement or the
Certificate of Designations of Series D  Preferred Stock without the approval of the
holders of a majority of Series D  Preferred Stock.  

     
(b)     Amendments and Waivers.   Except  as otherwise provided herein, the provisions of this
Agreement may not be  amended, modified or supplemented, and waivers or consents to
departures from  the provisions hereof may not be given unless consented to in writing by
each of  the parties.  

     
(c)     Notices.  All notices, demands  and other communications provided for or permitted
hereunder shall be made in  writing and shall be made by registered or certified
first-class mail, return  receipt requested, telecopier, courier service or personal
delivery:  

					(i) 		 if to the Corporation:

Eos International, Inc.
888 Seventh Avenue
New York, New York 10106
Telecopy: 212-554-9873
Attention:  James M. Cascino
Chief Executive Officer

with a copy to:

Pitney, Hardin, Kipp & Szuch LLP
Park Avenue at Morris County
P.O. Box 1945
Morristown, New Jersey 07962
Telecopy:  973-966-1550
Attention:  Frank E. Lawatsch

	

 12

					(ii)  		 if
to DL Holdings, at its address as it

appears on the record books of the Corporation. 

with a copy to:

Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Telecopy:  (212) 757-3990
Attention:  Carl Reisner

					(iii)  		 if
to Weichert, at its address as it appears
  on the record books of the Corporation. 

	

All such notices, demands and other
communications shall be  deemed to have been duly given when delivered by hand, if
personally delivered;  when delivered by courier, if delivered by commercial courier
service; five (5)  Business Days after being deposited in the mail, postage prepaid, if
mailed; and  when receipt is mechanically acknowledged, if telecopied. Any party may by
notice given in accordance with this Section 4(b) designate another address or  Person
for receipt of notices hereunder.  

     
(d)     Successors; Third Party  Beneficiaries; No Assignment or Transfer of Rights.   This
Agreement shall inure  to the benefit of and be binding upon the successors of the
parties hereto. No  person other than the parties hereto and their successors is intended
to be a  beneficiary of this Agreement. If either Weichert or DL Holdings shall sell or
otherwise transfer all or a portion of their shares of Series D Preferred Stock  to
any Person other than (i) as part of a sale or transfer of the entire  business of
Weichert or DL Holdings, as the case may be, or (ii) a sale or  transfer to an entity
with respect to which Weichert or DL Holdings holds all  Voting Power, then this
Agreement shall automatically terminate with respect to  the party (Weichert or DL
Holdings) making such transfer, and such party shall  have no further rights hereunder
and its transferee shall have no rights  hereunder and shall not be deemed to be a third
party beneficiary hereof.  

     
(e)     Counterparts.  This Agreement  may be executed in any number of counterparts and by the
parties in separate  counterparts, each of which when so executed shall be deemed to be
an original  and all of which taken together shall constitute one and the same agreement.  

     
(f)     Headings.   The headings in this  Agreement are for  convenience of reference only and
shall not limit or  otherwise affect the meaning hereof. 

     
(g)     GOVERNING  LAW.   THIS  AGREEMENT  SHALL BE GOVERNED BY AND  CONSTRUED IN ACCORDANCE  WITH
THE LAWS OF THE  STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW
THEREOF. 

     
(h)     Severability.  If any one or  more of the provisions contained herein, or the application
thereof in any  circumstance, is held invalid, illegal or unenforceable in any respect
for any  reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions hereof shall not be in any way  impaired,
unless the provisions held invalid, illegal or unenforceable shall  substantially impair
the benefits of the remaining provisions hereof.  

 13

	

     
(i)     Rules of  Construction.   Unless the context  otherwise  requires,  references to sections
or subsections  refer to sections or subsections of this Agreement. 

     
(j)     Entire Agreement.  This  Agreement is intended by the parties as a final expression of
their agreement  and intended to be a complete and exclusive statement of the agreement
and  understanding of the parties hereto with respect to the subject matter contained
herein as a supplement to the Certificate of Designations applicable to Weichert  and DL
Holdings. There are no restrictions, promises, representations,  warranties or
undertakings with respect to the subject matter contained herein,  other than those set
forth or referred to herein. This Agreement supersedes all  prior agreements and
understandings among the parties with respect to such  subject matter.  

     
(k)     Further  Assurances.   Each of the parties shall execute such  documents and perform such
further acts as  may be reasonably required or desirable to carry out or to perform the
provisions of this Agreement. 

     
(l)     Investor Representations.   Each  of Weichert or DL Holdings makes to the Corporation on
its own behalf the  representations and warranties set forth on Schedule B hereto (the
“Investor Representations”). Each of Weichert or DL Holdings  acknowledge that
the Corporation is relying on the Investor Representations in  issuing the Series D
Preferred Stock to it without registration under federal  and state securities laws.  

     IN
WITNESS WHEREOF, the  undersigned have executed, or have caused to be executed, this
Registration  Rights Agreement on the date first written above.  

			EOS INTERNATIONAL, INC.

By: 
——————————————

Name:  Peter A. Lund
Title:  Chairman

			DL HOLDINGS I, LLC

By: 
——————————————

Name:  Dan Stern
Title:  Managing Member

			WEICHERT ENTERPRISE LLC

By: 
——————————————

Name:  Gerald Crotty
Title:  President

	

 14

	

Schedule B

INVESTOR
REPRESENTATIONS AND WARRANTIES

     Each
of DL Holdings and Weichert  (each, a “Purchaser”) for itself hereby represents
and warrants to the  Corporation that:  

     Purchase
Entirely for Own  Account.  The Series D Preferred Stock and Warrants to be
received by  the Purchaser and the Common Stock issuable upon conversion of the Warrants
(collectively, the “Securities”) will be acquired for investment for  the
Purchaser’s own account, not as a nominee or agent, and not with a view  to the
resale or distribution of any part thereof, and that the Purchaser has no  present
intention of selling, granting any participation in, or otherwise  distributing the same
in violation of the Securities Act of 1933, as amended  (the “Act”). The
Purchaser does not presently have any contract,  undertaking, agreement or arrangement
with any person to sell, transfer or grant  participation’s to such person or to any
third person, with respect to any  of the Securities.  

     Disclosure
of  Information.  The Purchaser has: (i) received the information it
considers necessary or appropriate for deciding whether to acquire the  Securities; and
(ii) had an opportunity to ask questions and receive answers  from the Corporation
regarding the terms and conditions of the offering of the  Securities and the business,
properties, prospects and financial condition of  the Corporation.  

     Investment
Experience.  The Purchaser is an investor in securities of companies  in the
development stage and acknowledges that it is able to fend for itself,  can bear the
economic risk of its investment, and has such knowledge and  experience in financial or
business matters that it is capable of evaluating the  merits and risks of the investment
in the Securities. The Purchaser has not been  organized for the purpose of acquiring the
Securities.  

     Accredited
Investor.  Weichert is an “accredited investor” within the  meaning
of Securities and Exchange Commission (“SEC”) Rule 501 of  Regulation D, as
presently in effect and DL Holdings has such knowledge and  experience in financial and
business matters that it is capable of evaluating  the merits and risks of investing in
the Securities.  

     Restricted
Securities.  The Purchaser understands that the Securities it is  purchasing
are characterized as “restricted securities” under the  federal securities laws
inasmuch as they are being acquired from the Corporation  in a transaction not involving
a public offering and that under such laws and  applicable regulations such Securities
may be resold without registration under  the Act, only in certain limited circumstances.
In this connection, the  Purchaser represents that the Purchaser is familiar with SEC
Rule 144, as  presently in effect, and understands the resale limitations imposed thereby
and  by the Act.  

     Further
Limitations on  Disposition.  Without in any way limiting the representations
set  forth above, the Purchaser further agrees not to make any disposition of all or  any
portion of the Securities unless and until  

 15

     
     (a)
There is then in effect a registration  statement under the Act covering such proposed
disposition and such disposition is made in accordance with such registration statement;
or 

     
     (b)
(i) The Purchaser shall have notified the Corporation of the proposed  disposition and
shall have furnished the Corporation with a detailed statement  of the circumstances
surrounding the proposed disposition, and (ii) if  reasonably requested by the
Corporation, the Purchaser shall have furnished the  Corporation with an opinion of
counsel, reasonably satisfactory to the  Corporation, that such disposition will not
require registration under the Act.  

     Legends.  The
Purchaser  understands that the Securities, and any securities issued in respect thereof
or  exchange therefor, may bear one or all of the following legends:  

     
     (a)
"These  securities  have not been  registered  under the Securities Act of 1933.
They may not be sold, offered for sale, pledged or hypothecated in  the absence of a
registration statement in effect with respect to the securities  under such Act or an
opinion of counsel satisfactory to the Corporation that  such registration is not
required or unless sold pursuant to Rule 144 of such  Act.” 

     
     (b)
Any  legend  required  by the Blue Sky laws of any state to the  extent  such laws are
applicable to the shares represented by the certificate so legended. 

     Securities
Speculative in Nature.  The Purchaser is aware that an investment in the Securities is
speculative and  involves a high degree of risk. The Purchaser has assumed that it may
have to  bear the entire economic risk of its investment in the Securities for an
indefinite period of time. The Purchaser understands that an investment in the
Securities should only be made by an investor who can afford the loss of its  entire
investment and whose financial condition would not be materially  adversely effected if
such loss is actually sustained, and the Purchaser  represents and warrants that it is
that type of investor. The Purchaser  acknowledges that it does not anticipate that the
Securities will achieve,  initially or over time, a specific rate of return of
appreciation in value.  

     No
Advertising. The Purchaser is  not participating in the purchase of the Securities as a
result of or subsequent  to any advertisement, article, notice or communication published
in any  newspaper, magazine, the internet or similar media or broadcast over television,
radio or the internet, or any seminar or meeting whose attendees have been  invited by
general solicitation or advertising.  

     Questions
and Other Matters. The  Purchaser has had full opportunity to ask questions of and to
receive  satisfactory answers from the Corporation about the Corporation, the Securities
and the operations of the Corporation, and all questions have been answered to  the
satisfaction of the Purchaser. The Purchaser has been provided with an  adequate
opportunity to obtain any additional information concerning the  Corporation, the
Securities and the operations of the Corporation as it has  requested.  

 16

	

AMENDED AND RESTATED

REGISTRATION RIGHTS
AGREEMENT

among

EOS INTERNATIONAL,
INC.  
(formerly dreamlife, inc.)

DL HOLDINGS I, LLC

and

WEICHERT ENTERPRISE LLC

Dated: December _, 2002

	

AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT

     AMENDED
AND RESTATED REGISTRATION  RIGHTS AGREEMENT, dated as of December __, 2002 (this “Agreement”),
among Eos International, Inc. (formerly dreamlife, inc.), a Delaware corporation  (the
“Company”), DL Holdings I, LLC, a Delaware limited company  (“DL Holdings”),
and Weichert Enterprise LLC, a Delaware limited  liability company (“Weichert”).  

     WHEREAS,
the Company has issued  amended and restated warrants (the “Warrants”) to
purchase an  aggregate of 3,000,000 shares, par value $0.01 per share, of common stock of
the  Company to DL Holdings and Weichert; and  

     WHEREAS,
in connection with the  original issuance of the Warrants, the Company agreed to grant
registration  rights and certain other rights with respect to the Warrants and the
Registrable  Securities (as hereinafter defined) as set forth in this Agreement.  

     WHEREAS,
the parties hereto wish  to amend and restate the terms of the Registration Rights
Agreement among them,  dated as of December 14, 2001, as amended.  

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

     1.
Definitions.  As used in this  Agreement,  and unless the  context  requires a  different
meaning,  the  following terms have the meanings indicated: 

     “Agreement” mean
this  Agreement as the same may be amended, supplemented or modified in accordance  with
the terms hereof.  

     “Approved
Underwriter” has the meaning set forth in Section 3(f) of this Agreement.  

     “Board
of Directors” means the Board of Directors of the Company.  

     “Business
Day” means any  day other than a Saturday, Sunday or other day on which commercial
banks in the  State of New York are authorized or required by law or executive order to
close.  

     “Commission” means
the  Securities and Exchange Commission or any similar agency then having  jurisdiction
to enforce the Securities Act.  

     “Common
Stock” means the  Common Stock, par value $0.01 per share, of the Company or any
other capital  stock of the Company into which such stock is reclassified or
reconstituted and  any other common stock of the Company.  

     “Company” has
the  meaning set forth in the preamble to this Agreement.  

	

     Company
Underwriter” has the  meaning set forth in Section 4(a) of this Agreement.  

     “Demand
Registration” has the meaning set forth in Section 3(a) of this Agreement.  

     “Designated
Holder” means each of DL Holdings, Weichert and any transferee of any of them to
whom  Registrable Securities have been transferred, other than a transferee to whom
Registrable Securities have been transferred pursuant to a Registration  Statement under
the Securities Act or Rule 144 or Regulation S under the  Securities Act (or any
successor rule thereto).  

     “DL
Holdings” has the  meaning set forth in the preamble to this Agreement.  

     “Exchange
Act” means the  Securities Exchange Act of 1934, as amended, and the rules and
regulations of  the Commission thereunder.  

     “Holders’ Counsel” has
the meaning set forth in Section 6(a)(i) of this Agreement.  

     “Incidental
Registration” has the meaning set forth in Section 4(a) of this Agreement.  

     “Indemnified
Party” has  the meaning set forth in Section 7(c) of this Agreement.  

     “Indemnifying
Party” has  the meaning set forth in Section 7(c) of this Agreement.  

     “Initiating
Holders” has the  meaning set forth in Section 3(a) of this Agreement.  

     “Inspector” has
the  meaning set forth in Section 6(a)(vii) of this Agreement.  

     “Liability” has
the meaning  set forth in Section 7(a) of this Agreement.  

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

     “Person” means
any  individual, firm, corporation, partnership, limited liability company, trust,
incorporated or unincorporated association, joint venture, joint stock company,  limited
liability company, government (or an agency or political subdivision  thereof) or other
entity of any kind, and shall include any successor (by merger  or otherwise) of such
entity.  

     “Records” has
the  meaning set forth in Section 6(a)(vii) of this Agreement.  

     “Registrable
Securities” means each of the following: (a) any and all shares of Common Stock
owned by the  Designated Holders or issued or issuable upon the exercise of the Warrants
and  any shares of Common Stock issued or issuable upon conversion of any shares of
preferred stock or exercise of any warrants acquired by any of the Designated  Holders
after the date hereof and (b) any shares of Common Stock issued or  issuable to any of
the Designated Holders with respect to the Registrable  Securities by way of stock
dividend or stock split or in connection with a  combination of shares, recapitalization,
merger, consolidation or other  reorganization or otherwise and any shares of Common
Stock or voting common  stock issuable upon conversion, exercise or exchange thereof.  

 19

	

     “Registration
Expenses” has the meaning set forth in Section 6(d) of this Agreement.  

     “Registration
Statement” means a Registration Statement filed pursuant to the Securities Act.  

     “Securities
Act” means  the Securities Act of 1933, as amended, and the rules and regulations of
the  Commission promulgated thereunder.  

     “Valid
Business Reason” has the meaning set forth in Section 3(a) of this Agreement.  

     “Warrants” has
the  meaning set forth in the preamble to this Agreement.  

     “Weichert” has
the meaning  set forth in the preamble to this Agreement.  

     2.
General; Securities Subject to this Agreement. 

     (a)
Grant of Rights.  The Company  hereby  grants  registration  rights to the  Designated
Holders upon the  terms and conditions set forth in this Agreement. 

     (b)
Registrable Securities. For  the purposes of this Agreement, Registrable Securities will
cease to be  Registrable Securities, when (i) a Registration Statement covering such
Registrable Securities has been declared effective under the Securities Act by  the
Commission and such Registrable Securities have been disposed of pursuant to  such
effective Registration Statement, (ii) (x) the entire amount of the  Registrable
Securities owned by a Designated Holder may be sold in a single  sale, in the opinion of
counsel satisfactory to the Company and such Designated  Holder, each in their reasonable
judgment, without any limitation as to volume  pursuant to Rule 144 (or any successor
provision then in effect) under the  Securities Act or (y) such Designated Holder
owning such Registrable  Securities owns less than one percent (1%) of the outstanding
shares of Common  Stock on a fully diluted basis, or (iii) the Registrable Securities are
proposed  to be sold or distributed by a Person not entitled to the registration rights
granted by this Agreement.  

     (c)
Holders of Registrable  Securities. A Person is deemed to be a holder of Registrable
Securities whenever  such Person owns of record Registrable Securities, or holds an
option to  purchase, or a security convertible into or exercisable or exchangeable for,
Registrable Securities whether or not such acquisition or conversion has  actually been
effected. If the Company receives conflicting instructions,  notices or elections from
two or more Persons with respect to the same  Registrable Securities, the Company may act
upon the basis of the instructions,  notice or election received from the registered
owner of such Registrable  Securities. Registrable Securities issuable upon exercise of
an option or upon  conversion of another security shall be deemed outstanding for the
purposes of  this Agreement.  

 20

	

     3.
Demand Registration. 

     (a)
Request for Demand  Registration. At any time, commencing on the date the Warrant is
exercisable in  accordance with its terms, any Designated Holder (the “Initiating
Holders”), may make a written request to the Company to register, and the  Company
shall register, under the Securities Act (other than pursuant to a  Registration
Statement on Form S-4 or S-8 or any successor thereto) (a  “Demand Registration”),
the number of Registrable Securities stated in  such request; provided, however, that the
Company shall not be obligated to  effect more than two such Demand Registrations for DL
Holdings and more than two  such Demand Registrations for Weichert, nor more than four
demand registrations  in the aggregate. For purposes of the preceding sentence, two or
more  Registration Statements filed in response to one demand shall be counted as one
Demand Registration. If the Board of Directors, in its good faith judgment,  determines
that any registration of Registrable Securities should not be made or  continued because
it would materially interfere with any material financing,  acquisition, corporate
reorganization or merger or other material transaction  involving the Company (a “Valid
Business Reason”), the Company may  postpone filing a Registration Statement
relating to a Demand Registration until  such Valid Business Reason no longer exists, but
in no event for more than  ninety (90) days. The Company shall give written notice of its
determination to  postpone a Registration Statement and of the fact that the Valid
Business Reason  for such postponement no longer exists, in each case, promptly after the
occurrence thereof. Notwithstanding anything to the contrary contained herein,  the
Company may not postpone a filing under this Section 3(a) more than once in  any twelve
(12) month period. Each request for a Demand Registration by the  Initiating Holders
shall state the amount of the Registrable Securities proposed  to be sold and the
intended method of disposition thereof.  

     (b)
Incidental or  “Piggy-Back” Rights with Respect to a Demand Registration. Each
of the  Designated Holders (other than Initiating Holders which have requested a
registration under Section 3(a)) may offer its or his Registrable Securities  under any
Demand Registration pursuant to this Section 3(b). Within five (5)  days after the
receipt of a request for a Demand Registration from an Initiating  Holder, the Company
shall (i) give written notice thereof to all of the  Designated Holders (other than
Initiating Holders which have requested a  registration under Section 3(a)) and (ii)
subject to Section 3(e), include in  such registration all of the Registrable Securities
held by such Designated  Holders from whom the Company has received a written request for
inclusion  therein within ten (10) days of the receipt by such Designated Holders of such
written notice referred to in clause (i) above. Each such request by such  Designated
Holders shall specify the number of Registrable Securities proposed  to be registered.
The failure of any Designated Holder to respond within such  10-day period referred to in
clause (ii) above shall be deemed to be a waiver of  such Designated Holder’s rights
under this Section 3 with respect to such  Demand Registration. Any Designated Holder may
waive its rights under this  Section 3 prior to the expiration of such 10-day period by
giving written notice  to the Company, with a copy to the Initiating Holders.  

     (c)
Effective Demand Registration.  The Company shall use its best efforts to cause any such
Demand Registration to  become and remain effective not later than sixty (60) days after
it receives a  request under Section 3(a) hereof. A registration shall not constitute a
Demand  Registration until it has become effective and remains continuously effective
for the lesser of (i) the period during which all Registrable Securities  registered in
the Demand Registration are sold and (ii) 120 days; provided,  however, that a
registration shall not constitute a Demand Registration if (x)  after such Demand
Registration has become effective, such registration or the  related offer, sale or
distribution of Registrable Securities thereunder is  interfered with by any stop order,
injunction or other order or requirement of  the Commission or other governmental agency
or court for any reason not  attributable to the Initiating Holders and such interference
is not thereafter  eliminated or (y) the conditions specified in the underwriting
agreement, if  any, entered into in connection with such Demand Registration are not
satisfied  or waived, other than by reason of a failure by the Initiating Holders.  

     (d)
Expenses.  The Company shall pay all  Registration  Expenses in connection  with a Demand
Registration,  whether or not such Demand Registration becomes effective. 

     (e)
Underwriting Procedures. If  the Company or the Initiating Holders holding a majority of
the Registrable  Securities held by all of the Initiating Holders so elect, the Company
shall use  its best efforts to cause such Demand Registration to be in the form of a firm
commitment underwritten offering and the managing underwriter or underwriters  selected
for such offering shall be the Approved Underwriter selected in  accordance with Section
3(f). In connection with any Demand Registration under  this Section 3 involving an
underwritten offering, none of the Registrable  Securities held by any Designated Holder
making a request for inclusion of such  Registrable Securities pursuant to Section 3(b)
hereof shall be included in such  underwritten offering unless such Designated Holder
accepts the terms of the  offering as agreed upon by the Company, the Initiating Holders
and the Approved  Underwriter, and then only in such quantity as will not, in the opinion
of the  Approved Underwriter, jeopardize the success of such offering by the Initiating
Holders. If the Approved Underwriter advises the Company that the aggregate  amount of
such Registrable Securities requested to be included in such offering  is sufficiently
large to have a material adverse effect on the success of such  offering, then the
Company shall include in such registration only the aggregate  amount of Registrable
Securities that the Approved Underwriter believes may be  sold without any such material
adverse effect and shall reduce the amount of  Registrable Securities to be included in
such registration, First as to the  Company, Second as to the Designated Holders (who are
not Initiating Holders and  who requested to participate in such registration pursuant to
Section 3(b)  hereof) as a group, if any, and Third as to the Initiating Holders as a
group,  pro rata within each group based on the number of Registrable Securities owned
by each such Designated Holder or Initiating Holder, as the case may be.  

     (f)
Selection of Underwriters. If  any Demand Registration of Registrable Securities is in
the form of an  underwritten offering, the Company shall select and obtain an investment
banking  firm of national reputation to act as the managing underwriter of the offering
(the “Approved Underwriter”); provided, however, that the Approved  Underwriter
shall, in any case, also be approved by the Initiating Holders.  

 22

	

     4.
Incidental or "Piggy-back" Registration. 

     (a)
Request for Incidental  Registration. At any time, commencing on the date the Warrant is
exercisable in  accordance with its terms, if the Company proposes to file a Registration
Statement under the Securities Act with respect to an offering by the Company  for its
own account (other than a Registration Statement on Form S-4 or S-8 or  any successor
thereto) or for the account of any stockholder of the Company  other than the Designated
Holders, then the Company shall give written notice of  such proposed filing to each of
the Designated Holders at least twenty (20)-days  before the anticipated filing date, and
such notice shall describe the proposed  registration and distribution and offer such
Designated Holders the opportunity  to register the number of Registrable Securities as
each Such Designated Holder  may request (an “Incidental Registration”). The
Company shall use its  best efforts (within twenty (20) days of the notice provided for
in the  preceding sentence) to cause the managing underwriter or underwriters in the
case of a proposed underwritten offering (the “Company Underwriter”)  to permit
each of the Designated Holders who have requested in writing to  participate in the
Incidental Registration to include its or his Registrable  Securities in such offering on
the same terms and conditions as the securities  of the Company or the account of such
other stockholder, as the case may be,  included therein. In connection with any
Incidental Registration under this  Section 4(a) involving an underwritten offering, the
Company shall not be  required to include any Registrable Securities in such underwritten
offering  unless the designated Holders thereof accept the terms of the underwritten
offering as agreed upon between the Company, such other stockholders, if any,  and the
Company Underwriter, and then only in such quantity as the Company  Underwriter believes
will not jeopardize the success of the offering by the  Company. If the Company
Underwriter determines that the registration of all or  part of the Registrable
Securities which the Designated Holders have requested  to be included would materially
adversely affect the success of such offering,  then the Company shall be required to
include in such Incidental Registration,  to the extent of the amount that the Company
Underwriter believes may be sold  without causing such adverse effect, First, all of the
securities to be offered  for the account of the Company; Second, the Registrable
Securities to be offered  for the account of the Designated Holders pursuant to this
Section 4, pro rata  based on the number of Registrable Securities owned by each such
Designated  Holder; and Third, any other securities requested to be included in such
offering.  

     (b)
Expenses. The Company shall  bear all Registration Expenses in connection with any
Incidental Registration  pursuant to this Section 4, whether or not such Incidental
Registration becomes  effective.  

     5.
Restrictions on Public Sale by  the Company. The Company agrees not to effect any public
sale or distribution of  any of its securities, or any securities convertible into or
exchangeable or  exercisable for such securities (except pursuant to registrations on
form S-4 or  S-8 or any successor thereto), during the period beginning on the effective
date  of any Registration Statement in which the Designated Holders of Registrable
Securities are participating and ending on the earlier of (i) the date on which  all
Registrable Securities registered on such Registration Statement are sold  and (ii) 120
days after the effective date of such Registration Statement  (except as part of such
registration).  

 23

	

     6.
Registration Procedures. 

     (a)
Obligations of the Company.  Whenever registration of Registrable Securities has been
requested pursuant to  Section 3 or Section 4 of this Agreement, the Company shall use
its best efforts  to effect the registration and sale of such Registrable Securities in
accordance  with the intended method of distribution thereof as quickly as practicable,
and  in connection with any such request, the Company shall, as expeditiously as
possible:  

     (i)
prepare and file with the  Commission a Registration Statement on any form for which the
Company then  qualifies or which counsel for the Company shall deem appropriate and which
form  shall be available for the sale of such Registrable Securities in accordance  with
the intended method of distribution thereof, and cause such Registration  Statement to
become effective; provided, however, that (x) before filing a  Registration Statement or
prospectus or any amendments or supplements thereto,  the Company shall provide counsel
selected by the Designated Holders holding a  majority of the Registrable Securities
being registered in such registration  (“Holders’ Counsel”) and any other
Inspector with an adequate and  appropriate opportunity to review and comment on such
Registration Statement and  each prospectus included therein (and each amendment or
supplement thereto) to  be filed with the Commission, and (y) the Company shall notify
the Holders’ Counsel and each seller of Registrable Securities of any stop order
issued or  threatened by the Commission and take all action required to prevent the entry
of such stop order or to remove it if entered;  

     (ii)
prepare and file with the  Commission such amendments and supplements to such
Registration Statement and  the prospectus used in connection therewith as may be
necessary to keep such  Registration Statement effective for the lesser of (x) 120 days
and (y) such  shorter period which will terminate when all Registrable Securities covered
by  such Registration Statement have been sold; and comply with the provisions of  the
Securities Act with respect to the disposition of all securities covered by  such
Registration Statement during such period in accordance with the intended  methods of
disposition by the sellers thereof set forth in such Registration  Statement;  

     (iii)
furnish to each seller of  Registrable Securities, prior to filing a Registration
Statement, at least one  copy of such Registration Statement as is proposed to be filed,
and thereafter  such number of copies of such Registration Statement, each amendment and
supplement thereto (in each case including all exhibits thereto), and the  prospectus
included in such Registration Statement (including each preliminary  prospectus) and any
prospectus filed under Rule 424 under the Securities Act as  each such seller may
reasonably request in order to facilitate the disposition  of the Registrable Securities
owned by such seller;  

     (iv)
register or qualify such  Registrable Securities under such other securities or “blue
sky” laws  of such jurisdictions as any seller of Registrable Securities may
request, and  to continue such qualification in effect in such jurisdiction for as long
as  permissible pursuant to the laws of such jurisdiction, or for as long as any  such
seller requests or until all of such Registrable Securities are sold,  whichever is
shortest, and do any and all other acts and things which may be  reasonably necessary or
advisable to enable any such seller to consummate the  disposition in such jurisdictions
of the Registrable Securities owned by such  seller; provided, however, that the Company
shall not be required to (x) qualify  generally to do business in any jurisdiction where
it would not otherwise be  required to qualify but for this Section 6(a)(iv), (y) subject
itself to  taxation in any such jurisdiction or (z) consent to general service of process
in any such jurisdiction;  

 24

	

     (v)
notify each seller of  Registrable Securities at any time when a prospectus relating
thereto is  required to be delivered under the Securities Act, upon discovery that, or
upon  the happening of any event as a result of which, the prospectus included in such
Registration Statement contains an untrue statement of a material fact or omits  to state
any material fact required to be stated therein or necessary to make  the statements
therein, in light of the circumstances under which they were  made, not misleading and
the Company shall promptly prepare a supplement or  amendment to such prospectus and
furnish to each seller of Registrable  Securities a reasonable number of copies of such
supplement to or an amendment  of such prospectus as may be necessary so that, after
delivery to the purchasers  of such Registrable Securities, such prospectus shall not
contain an untrue  statement of a material fact or omit to state any material fact
required to be  stated therein or necessary to make the statements therein, in light of
the  circumstances under which they were made, not misleading;  

     (vi)
enter into and perform  customary agreements (including an underwriting agreement in
customary form with  the approved Underwriter or Company Underwriter, if any, selected as
provided in  Section 3 or Section 4, as the case may be) and take such other actions as
are  prudent and reasonably required in order to expedite or facilitate the  disposition
of such Registrable Securities, including causing its officers to  participate in “road
shows” and other information meetings organized  by the Approved Underwriter or
Company Underwriter;  

     (vii)
make available at reasonable  times for inspection by any seller of Registrable
Securities, any managing  underwriter participating in any disposition of such
Registrable Securities  pursuant to a Registration Statement, Holders’ Counsel and
any attorney,  accountant or other agent retained by any such seller or any managing
underwriter (each, an “Inspector” and collectively, the  “Inspectors”),
all financial and other records, pertinent corporate  documents and properties of the
Company and its subsidiaries (collectively, the  “Records”) as shall be
necessary to enable them to exercise their due  diligence responsibility, and cause the
Company’s and its  subsidiaries’ officers, directors and employees, and the
independent public  accountants of the Company, to supply all information reasonably
requested by  any such Inspector in connection with such Registration Statement. Records
that  the Company determines, in good faith, to be confidential and which it notifies
the Inspectors are confidential shall not be disclosed by the Inspectors (and  the
Inspectors shall confirm their agreement in writing in advance to the  Company if the
Company shall so request) unless (x) the disclosure of such  Records is necessary, in the
Company’s judgment, to avoid or correct a  misstatement or omission in the
Registration Statement, (y) the release of such  Records is ordered pursuant to a
subpoena or other order from a court of  competent jurisdiction after exhaustion of all
appeals therefrom or (z) the  information in such Records was known to the Inspectors on
a non-confidential  basis prior to its disclosure by the Company or has been made
generally  available to the public. Each seller of Registrable Securities agrees that it
shall, upon learning that disclosure of such records is sought in a court of  competent
jurisdiction, give notice to the Company and allow the Company, at the  Company’s
expense, to undertake appropriate action to prevent disclosure of  the Records deemed
confidential;  

 25

	

     (viii)
if such sale is pursuant to  an underwritten offering, obtain “cold comfort” letters
dated the  effective date of the Registration Statement and the date of the closing under
the underwriting agreement from the Company’s independent public  accountants in
customary form and covering such matters of the type customarily  covered by “cold
comfort” letters as Holders’ Counsel or the  managing underwriter reasonably
requests;  

     (ix)
furnish, at the request of  any seller of Registrable Securities on the date such
securities are delivered  to the underwriters for sale pursuant to such registration or,
if such  securities are not being sold through underwriters, on the date the Registration
Statement with respect to such securities becomes effective, an opinion, dated  such
date, of counsel representing the Company for the purposes of such  registration,
addressed to the underwriters, if any, and to the seller making  such request, covering
such legal matters with respect to the registration in  respect of which such opinion is
being given as the underwriters, if any, and  such seller may reasonably request and are
customarily included in such  opinions;  

     (x)
comply with all applicable  rules and regulations of the Commission, and make available
to its security  holders, as soon as reasonably practicable but no later than fifteen
(15) months  after the effective date of the Registration Statement, an earnings
statement  covering a period of twelve (12) months beginning after the effective date of
the Registration Statement, in a manner which satisfies the provisions of  Section 11(a)
of the Securities Act and Rule 158 thereunder;  

     (xi)
cause all such Registrable  Securities to be listed on each securities exchange on which
similar securities  issued by the Company are then listed, provided that the applicable
listing  requirements are satisfied;  

     (xii)
keep Holders’ Counsel  advised in writing as to the initiation and progress of any
registration under  Section 3 or Section 4 hereunder;  

     (xiii)
cooperate with each seller  of Registrable Securities and each underwriter participating
in the disposition  of such Registrable Securities and their respective counsel in
connection with  any filings required to be made with the NASD; and  

     (xiv)
take all other steps  reasonably necessary to effect the registration of the Registrable
Securities  contemplated hereby.  

     (b)
Seller Information. The  Company may require each seller of Registrable Securities as to
which any  registration is being effected to furnish, and such seller shall furnish, to
the  Company such information regarding the distribution of such securities as the
Company may from time to time reasonably request in writing.  

     (c)
Notice to Discontinue. Each  Designated Holder agrees that, upon receipt of any notice
from the Company of  the happening of any event of the kind described in Section 6(a)(v),
such  Designated Holder shall forthwith discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable  Securities
until such Designated Holder’s receipt of the copies of the  supplemented or amended
prospectus contemplated by Section 6(a)(v) and, if so  directed by the Company, such
Designated Holder shall deliver to the Company (at  the Company’s expense) all
copies, other than permanent file copies then in  such Designated Holder’s
possession, of the prospectus covering such  Registrable Securities which is current at
the time of receipt of such notice.  If the Company shall give any such notice, the
Company shall extend the period  during which such Registration Statement shall be
maintained effective pursuant  to this Agreement (including, without limitation, the
period referred to in  Section 6(a)(ii)) by the number of days during the period from and
including the  date of the giving of such notice pursuant to Section 6(a)(v) to and
including  the date when sellers of such Registrable Securities under such Registration
Statement shall have received the copies of the supplemented or amended  prospectus
contemplated by and meeting the requirements of Section 6(a)(v).  

 26

	

     (d)
Registration Expenses. The  Company shall pay all expenses arising from or incident to
its performance of,  or compliance with, this Agreement, including, without limitation,
(i)  Commission, stock exchange and NASD registration and filing fees, (ii) all fees  and
expenses incurred in complying with securities or “blue sky” laws  (including
reasonable fees, charges and disbursements of counsel to any  underwriter incurred in
connection with “blue sky” qualifications of  the Registrable Securities as may
be set forth in any underwriting agreement),  (iii) all printing, messenger and delivery
expenses, (iv) the fees, charges and  expenses of counsel to the Company and of its
independent public accountants and  any other accounting fees, charges and expenses
incurred by the Company  (including, without limitation, any expenses arising from any
“cold  comfort” letters or any special audits incident to or required by any
registration or qualification) and any legal fees, charges and expenses  incurred, in the
case of a Demand Registration, the Initiating Holders and (v)  any liability insurance or
other premiums for insurance obtained in connection  with any Demand Registration or
piggy-back registration thereon or Incidental  Registration pursuant to the terms of this
Agreement, regardless of whether such  Registration Statement is declared effective. All
of the expenses described in  the preceding sentence of this Section 6(d) are referred to
herein as  “Registration Expenses.” The Designated Holders of Registrable
Securities sold pursuant to a Registration Statement shall bear the expense of  any broker’s
commission or underwriter’s discount or commission  relating to registration and
sale of such Designated Holders’ Registrable  Securities and, subject to clause (iv)
above, shall bear the fees and expenses  of their own counsel.  

     7.
Indemnification; Contribution. 

     (a)
Indemnification by the  Company. The Company agrees to indemnify and hold harmless each
Designated  Holder, its partners, directors, officers, affiliates and each Person who
controls (within the meaning of Section 15 of the Securities Act) such  Designated Holder
from and against any and all losses, claims, damages,  liabilities and expenses
(including reasonable costs of investigation) (each, a  “Liability” and
collectively, “Liabilities”), arising out of  or based upon any untrue, or
allegedly untrue, statement of a material fact  contained in any Registration Statement,
prospectus or preliminary prospectus or  notification or offering circular (as amended or
supplemented if the Company  shall have furnished any amendments or supplements thereto)
or arising out of or  based upon 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 under the circumstances such statements were made, except insofar as
such Liability arises out of or is based upon any untrue statement or alleged  untrue
statement or omission or alleged omission contained in such Registration  Statement,
preliminary prospectus or final prospectus in reliance and in  conformity with
information concerning such Designated Holder furnished in  writing to the Company by
such Designated Holder expressly for use therein,  including, without limitation, the
information furnished to the Company pursuant  to Section 7(b). The Company shall also
provide customary indemnities to any  underwriters of the Registrable Securities, their
officers, directors and  employees and each Person who controls such underwriters (within
the meaning of  Section 15 of the Securities Act) to the same extent as provided above
with  respect to the indemnification of the Designated Holders of Registrable
Securities.  

 27

	

     (b)
Indemnification by Designated  Holders. In connection with any Registration Statement in
which a Designated  Holder is participating pursuant to Section 3 or Section 4 hereof,
each such  Designated Holder shall promptly furnish to the Company in writing such
information with respect to such Designated Holder as the Company may reasonably  request
or as may be required by law for use in connection with any such  Registration Statement
or prospectus and all information required to be  disclosed in order to make the
information previously furnished to the Company  by such Designated Holder not materially
misleading or necessary to cause such  Registration Statement not to omit a material fact
with respect to such  Designated Holder necessary in order to make the statements therein
not  misleading. Each Designated Holder agrees to indemnify and hold harmless the
Company, any underwriter retained by the Company and each Person who controls  the
Company or such underwriter retained by the Company and each Person who  controls the
Company or such underwriter (within the meaning of Section 15 of  the Securities Act) to
the same extent as the foregoing indemnity from the  Company to the Designated Holders,
but only if such statement or alleged  statement or omission or alleged omission was made
in reliance upon and in  conformity with information with respect to such Designated
Holder furnished in  writing to the Company by such Designated Holder expressly for use
in such  Registration Statement or prospectus, including, without limitation, the
information furnished to the Company pursuant to this Section 7(b); provided,  however,
that the total amount to be indemnified by such Designated Holder  pursuant to this
Section 7(b) shall be limited to the net proceeds (after  deducting the underwriters’ discounts
and commissions) received by such  Designated Holder in the offering to which the
Registration Statement or  prospectus relates.  

     (c)
Conduct of Indemnification  Proceedings. Any Person entitled to indemnification hereunder
(the  “Indemnified Party”) agrees to give prompt written notice to the
indemnifying party (the “Indemnifying Party”) after the receipt by the
Indemnified Part of any written notice of the commencement of any action, suit,
proceeding or investigation or threat thereof made in writing for which the  Indemnified
Party intends to claim indemnification or contribution pursuant to  this Agreement;
provided, however, that the failure so to notify the  Indemnifying Party shall not
relieve the Indemnifying Party of any Liability  that it may have to the Indemnified
Party hereunder (except to the extent that  the Indemnifying Party is materially
prejudiced or otherwise forfeits  substantive rights or defenses by reason of such
failure). If notice of  commencement of any such action is given to the Indemnifying
Party as above  provided, the Indemnifying Party shall be entitled to participate in and,
to the  extent it may wish, jointly with any other Indemnifying Party similarly
notified, to assume the defense of such action at its own expense, with counsel  chosen
by it and reasonably satisfactory to such Indemnified Party. The  Indemnified Party shall
have the right to employ separate counsel in any such  action and participate in the
defense thereof, but the fees and expenses of such  counsel shall be paid by the
Indemnified Party unless (i) the Indemnifying Party  agrees to pay the same, (ii) the
Indemnifying Party fails to assume the defense  of such action with counsel reasonably
satisfactory to the Indemnified Party or  (iii) the named parties to any such action
(including any impleaded parties)  include both the Indemnifying Party and the
Indemnified Party and such parties  have been advised by such counsel that either (x)
representation of such  Indemnified Party and the Indemnifying Party by the same counsel
would be  inappropriate under applicable standards of professional conduct or (y) there
may be one or more legal defenses available to the Indemnified Party which are  different
from or additional to those available to the Indemnifying Party. In  any of such cases,
the Indemnifying Party shall not have the right to assume the  defense of such action on
behalf of such Indemnified Party, it being understood,  however, that the Indemnifying
Party shall not be liable for the fees and  expenses of more than one separate firm of
attorneys (in addition to any local  counsel) for all Indemnified Parties. No
Indemnifying Party shall be liable for  any settlement entered into without its written
consent, which consent shall not  be unreasonably withheld. No Indemnifying Party shall,
without the consent of  such Indemnified Party, effect any settlement of any pending or
threatened  proceeding in respect of which such Indemnified Party is a party and
indemnity  has been sought hereunder by such Indemnified Party, unless such settlement
includes an unconditional release of such Indemnified Party from all liability  for
claims that are the subject matter of such proceeding.  

 28

	

     (d)
Contribution. If the  indemnification provided for in this Section 7 from the
Indemnifying Party is  unavailable to an Indemnified Party hereunder in respect of any
Liabilities  referred to herein, then the Indemnifying Party, in lieu of indemnifying
such  Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Liabilities in such proportion as is  appropriate
to reflect the relative fault of the Indemnifying Party and  Indemnified Party in
connection with the actions which resulted in such  Liabilities, as well as any other
relevant equitable considerations. The  relative faults of such Indemnifying Party and
Indemnified Party shall be  determined by reference to, among other things, whether any
action in question,  including any untrue or alleged untrue statement of a material fact
or omission  or alleged omission to state a material fact, has been made by, or relates
to  information supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information and opportunity  to
correct or prevent such action. The amount paid or payable by a party as a  result of the
Liabilities referred to above shall be deemed to include, subject  to the limitations set
forth in Section 7(a), 7(b) and 7(c), any legal or other  fees, charges or expenses
reasonably incurred by such party in connection with  any investigation or proceeding;
provided that the total amount to be  contributed by such Designated Holder shall be
limited to the net proceeds  (after deducting the underwriters’ discounts and
commissions) received by  such Designated Holder in the offering.  

     The
parties hereto agree that it  would not be just and equitable if contribution pursuant to
this Section 7(d)  were determined by pro rata allocation or by any other method of
allocation  which does not take account of the equitable considerations referred to in
the  immediately preceding paragraph. No Person guilty of fraudulent  misrepresentation
(within the meaning of Section 11(f) of the Securities Act)  shall be entitled to
contribution from any Person who was not guilty of such  fraudulent misrepresentation.  

 29

     8.
Rule 144. The Company covenants  that from and after the date hereof it shall (a) file
any reports required to be  filed by it under the Exchange Act and (b) take such further
action as each  Designated Holder may reasonably request (including providing any
information  necessary to comply with Rule 144 under the Securities Act), all to the
extent  required from time to time to enable such Designated Holder to sell Registration
Securities without registration under the Securities Act within the limitation  of the
exemptions provided by (i) Rule 144 under the Securities Act, as such  rule may be
amended from time to time, or Regulation S under the Securities Act  or (ii) any similar
rules or regulations hereafter adopted by the Commission.  The Company shall, upon the
request of any Designated Holder, deliver to such  Designated Holder a written statement
as to whether it has complied with such  requirements.  

     9.
Miscellaneous. 

     (a)
Recapitalizations, Exchanges,  Etc. The provisions of this Agreement shall apply to the
full extent set forth  herein with respect to (i) the shares of Common Stock, (ii) any
and all shares  of voting common stock of the Company into which the shares of Common
Stock are  converted, exchanged or substituted in any recapitalization or other capital
reorganization by the Company and (iii) any and all equity securities of the  Company or
any successor or assign of the Company (whether by merger,  consolidation, sale of assets
or otherwise) which may be issued in respect of,  in conversion of, in exchange for or in
substitution of, the shares of Common  Stock and shall be appropriately adjusted for any
stock dividends, splits,  reverse splits, combinations, recapitalizations and the like
occurring after the  date hereof. The Company shall cause any successor or assign
(whether by merger,  consolidation, sale of assets or otherwise) to enter into a new
registration  rights agreement with the Designated Holders on terms substantially the
same as  this Agreement as a condition of any such transaction.  

     (b) No
Inconsistent Agreements.  The Company has not entered into and shall not enter into, any
agreement with  respect to its securities that is inconsistent with the rights granted to
the  Designated Holders in this Agreement or grant any additional registration rights  to
any Person or with respect to any securities which are not Registrable  Securities which
are prior in right to or inconsistent with the rights granted  in this Agreement, other
than agreements which were previously entered into or  which are entered into
simultaneously with this Agreement and in each case which  are set forth on Exhibit A
hereto.  

     (c)
Remedies. The Designated  Holders, in addition to being entitled to exercise all rights
granted by law,  including recovery of damages, shall be entitled to specific performance
of  their rights under this Agreement. The Company agrees that monetary damages  would
not be adequate compensation for any loss incurred by reason of a breach  by it of the
provisions of this Agreement and hereby agrees to waive in any  action for specific
performance the defense that a remedy at law would be  adequate.  

     (d)
Amendments and Waivers. Except  as otherwise provided herein, the provisions of this
Agreement may not be  amended, modified or supplemented, and waivers or consents to
departures from  the provisions hereof may not be given unless consented to in writing by
(i) the  Company and (ii) holders of Registrable Securities representing (after giving
effect to any adjustments) at least a majority of the aggregate number of  Registrable
Securities owned by all of the Designated Holders (but shall always  include DL Holdings
and Weichert as long as they hold any Registrable  Securities). Any such written consent
shall be binding upon the Company and all  of the Designated Holders.  

 30

	

     (e)
Notices. All notices, demands  and other communications provided for or permitted
hereunder shall be made in  writing and shall be made by registered or certified
first-class mail, return  receipt requested, telecopier, courier service or personal
delivery:  

					(i) 		 if to the Company:

Eos International, Inc.
888 Seventh Avenue
New York, New York 10106
Telecopy:   212-554-9873
Attention:  Peter A. Lund
Chairman

with a copy to:

Pitney, Hardin, Kipp & Szuch LLP
Park Avenue at Morris County
P.O. Box 1945
Morristown, New Jersey 07962
Telecopy:  973-966-1550
Attention:  Frank E. Lawatsch, Esq.

					(ii)  		 if
to DL Holdings, at its address as it

appears on the record books of the Company. 

with a copy to:

Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Telecopy:  (212) 757-3990
Attention:  Carl Reisner, Esq.

					(iii)  		 if
to Weichert, at its address as it appears
  on the record books of the Company. 

					(iv)  		 if to any other Designated Holder, at its
address as it appears on the record books of

the Company.
 

 31

	

All such notices, demands and other
communications shall be  deemed to have been duly given when delivered by hand, if
personally delivered;  when delivered by courier, if delivered by commercial courier
service; five (5)  Business Days after being deposited in the mail, postage prepaid, if
mailed; and  when receipt is mechanically acknowledged, if telecopied. Any party may by
notice given in accordance with this Section 9(e) designate another address or  Person
for receipt of notices hereunder.  

     (f)
Successors and Assigns; Third  Party Beneficiaries. This Agreement shall inure to the
benefit of and be binding  upon the successors and permitted assigns of the parties
hereto as hereinafter  provided. The Demand Registration rights contained in Section 3
hereof and the  incidental or “piggy-back” registration rights of the
Designated  Holders contained in Sections 3(b) and 4 hereof shall be, with respect to any
Warrant and Registrable Security, automatically transferred to any Person who is  the
transferee of such Warrant and Registrable Security. All of the obligations  of the
Company hereunder shall survive any such transfer. Except as provided in  Section 7, no
Person other than the parties hereto and their successors and  permitted assigns is
intended to be a beneficiary of this Agreement.  

     (g)
Counterparts. This Agreement  may be executed in any number of counterparts and by the
parties hereto in  separate counterparts, each of which when so executed shall be deemed
to be an  original and all of which taken together shall constitute one and the same
agreement.  

     (h)
Headings.  The headings in this  Agreement are for  convenience of reference only and
shall not limit or  otherwise affect the meaning hereof. 

     (i)
GOVERNING  LAW. THIS  AGREEMENT  SHALL BE GOVERNED BY AND  CONSTRUED IN ACCORDANCE  WITH
THE LAWS OF  THE  STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW
THEREOF.  

     (j)
Severability. If any one or  more of the provisions contained herein, or the application
thereof in any  circumstance, is held invalid, illegal or unenforceable in any respect
for any  reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions hereof shall not be in any way  impaired,
unless the provisions held invalid, illegal or unenforceable shall  substantially impair
the benefits of the remaining provisions hereof.  

     (k)
Rules of  Construction.  Unless the context  otherwise  requires,  references to sections
or subsections  refer to sections or subsections of this Agreement. 

     (l)
Entire Agreement. This  Agreement is intended by the parties as a final expression of
their agreement  and intended to be a complete and exclusive statement of the agreement
and  understanding of the parties hereto with respect to the subject matter contained
herein. There are no restrictions, promises, representations, warranties or  undertakings
with respect to the subject matter contained herein, other than  those set forth or
referred to herein. This Agreement supersedes all prior  agreements and understandings
among the parties with respect to such subject  matter.  

 32

	

     (m)
Further  Assurances.  Each of the parties shall execute such  documents and perform such
further acts as  may be reasonably required or desirable to carry out or to perform the
provisions of this Agreement. 

     (n)
Confidentiality. The Company  covenants and agrees with each Designated Holder that,
except as may be required  to be disclosed on the advice of counsel by applicable laws,
rules or  regulations, it will not (and will cause its officers, directors, shareholders,
employees, agents and representatives to not) disclose to any Person in any
circumstances (whether or not related to a financing by the Company) the terms,
conditions or provisions of the Warrants and this Agreement or the identity of  the
Designated Holders, without the prior written consent of the Designated  Holders.  

[Remainder of page
intentionally left blank] 

 33

	

     IN
WITNESS WHEREOF, the  undersigned have executed, or have caused to be executed, this
Registration  Rights Agreement on the date first written above.  

			EOS INTERNATIONAL, INC.

By: 
——————————————

Name:  Peter A. Lund
Title:  Chairman

			DL HOLDINGS I, LLC

By: 
——————————————

Name:  Dan Stern
Title:  Managing Member

			WEICHERT ENTERPRISE LLC

By: 
——————————————

Name:  Gerald Crotty
Title:  President

	

 34

	

1,384,615 Warrant Shares

THIS WARRANT AND ANY SECURITIES
ACQUIRED UPON THE EXERCISE OF  THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS  AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE OF
THE UNITED  STATES OR FOREIGN JURISDICTION. NEITHER THIS WARRANT, SUCH SECURITIES NOR ANY
INTEREST THEREIN MAY BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE AND FOREIGN SECURITIES LAWS OR  PURSUANT TO
AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH  ACT AND SUCH LAWS.  

_________________ 

EOS INTERNATIONAL, INC. 

_________________ 

AMENDED AND RESTATED
COMMON STOCK PURCHASE WARRANT 

__________________________________  

     This
certifies that, for good and  valuable consideration, EOS INTERNATIONAL, INC., a Delaware
corporation (the  “Company”), grants to WEICHERT ENTERPRISE LLC, a Delaware
limited  liability company (the “Warrantholder”), the right to subscribe for
and purchase from the Company, during the Exercise Period (as hereinafter  defined),
1,384,615 validly issued, fully paid and nonassessable shares, par  value $0.01, of
Common Stock of the Company (the “Warrant Shares”), at  the exercise price per
share of $0.25 per share (the “Exercise  Price”), all subject to the terms,
conditions and adjustments herein set  forth. Capitalized terms used herein shall have
the meanings ascribed to such  terms in Section 9 below.  

     1.
Warrant. This Amended and  Restated Common Stock Purchase Warrant (this “Warrant”)
is issued by  the Company contemporaneously with the Company’s issuance of a warrant
for  1,615,385 Warrant Shares (the “Other Warrant”) to DL Holdings I,  L.L.C.
(the “Other Warrantholder”) and is subject to the terms of the  Amended and
Restated Registration Rights Agreement, dated December __, 2002 (the  “Registration
Rights Agreement”), among the Company, the Warrantholder  and the Other
Warrantholder.  

     2.
Exercise of Warrant; Payment of Taxes. 

     
     2.1
Exercise  of  Warrant.  Subject to the terms and  conditions  set forth  herein,  this
Warrant may be exercised at any time, in whole or in part, by  the Warrantholder during
the Exercise Period by:  

     
          (a)
the surrender of this Warrant to the Company,  with a duly  executed  Exercise Form, and 

 35

	

     
          (b)
subject to Section  2.2 below,  the  delivery of payment of the  Company,  for the
account of the Company, by (i) cash, wire transfer,  certified or official bank
check or any other means approved by the Company, of  the aggregate Exercise Price in
lawful money of the United States of America or  (ii) the surrender of Series D
Preferred Stock of the Company (the  “Series D Preferred Stock”) valued at the
Redemption Price as  determined by the Certificate of Designations of the Series D
Preferred  Stock of the Company (the “Certificate of Designations”) on the date
surrendered to the Company or (iii) a combination of (i) and (ii);  provided,
however, that the Company reserves the right to refuse to accept  Series D Preferred
Stock as consideration for the exercise of the Warrant  if it would violate law or
violate the provisions of any agreement to which the  Company is a party.  

The Company agrees that the Warrant
Shares shall be deemed to be  issued to the Warrantholder as the record holder of such
Warrant Shares as of  the close of business on the date on which this Warrant shall have
been  surrendered and payment made for the Warrant Shares as aforesaid.  

     
     2.2
Conversion Right. 

     
          (a)
In lieu of the payment of the  aggregate  Exercise  Price,  the  Warrantholder shall have
the right (but not the obligation), to require the  Company to convert this Warrant, in
whole or in part, into shares of Common  Stock (the “Conversion Right”) as
provided for in this Section 2.2.  Upon exercise of the Conversion Right, the Company
shall deliver to the  Warrantholder (without payment by the Warrantholder of any of the
Exercise  Price) in accordance with Section 2.1(b) that number of shares of Common Stock
equal to the quotient obtained by dividing (i) the value of the Warrant or  portion
thereof at the time the Conversion Right is exercised (determined by  subtracting the
aggregate Exercise Price at the time of the exercise of the  Conversion Right from the
aggregate Current Market Price for the shares of  Common Stock issuable upon exercise of
the Warrant at the time of the exercise  of the Conversion Right) by (ii) the Current
Market Price of one share of Common  Stock at the time of the exercise of the Conversion
Right.  

     
          (b)
The  Conversion  Right may be exercised by the  Warrantholder  on any Business Day prior
to the end of the Exercise Period by surrender of this  Warrant to the Company, with a
duly executed Exercise Form with the conversion  section completed, exercising the
Conversion Right and specifying the total  number of shares of Common Stock that the
Warrantholder will be issued pursuant  to such conversion.  

     
     2.3
Warrant  Shares  Certificate.  A stock  certificate  or  certificates  for the Warrant
Shares specified in the Exercise Form shall be delivered to the  Warrantholder within
five (5) Business Days after receipt of the Exercise Form  by the Company and, if the
Conversion Right is not exercised, the payment by the  Warrantholder of the aggregate
Exercise Price. If this Warrant shall have been  exercised only in part, the Company
shall, at the time of delivery of the stock  certificate or certificates, deliver to the
Warrantholder a new Warrant  evidencing the right to purchase the remaining Warrant
Shares, which new Warrant  shall in all other respects be identical with this Warrant.  

     
     2.4
Payment  of  Taxes.  The  Company  will pay all  documentary  stamp or other  issuance
taxes, if any, attributable to the issuance of Warrant Shares  upon the exercise of this
Warrant; provided, however, that the Company shall not  be required to pay any tax or
taxes which may be payable in respect of any  transfer involved in the issue or delivery
of any Warrants or Warrant  certificates or Warrant Shares in a name other than that of
the them  Warrantholder as reflected upon the books of the Company.  

 36

	

     3.
Restrictions on Transfer; Restrictive Legends. 

     
     3.1
This Warrant and the Warrant Shares may not be offered, sold, transferred,  pledged or
otherwise disposed of, in whole or in part, to any Person other  than in accordance with
applicable federal and state securities laws.  

     
     3.2
Except as otherwise  permitted by this Section 3, each Warrant (and Warrant  issued in
substitution for any Warrant pursuant to Section 6) shall be  stamped or otherwise
imprinted with a legend in substantially the form as set  forth on the cover of this
Warrant. Notwithstanding the foregoing, the  Warrantholder may require the Company to
issue a Warrant or a certificate for  Warrant Shares, in each case without a legend, if
either (i) such Warrant or  such Warrant Shares, as the case may be, have been registered
for resale under  the Securities Act, (ii) the Warrantholder has delivered to Company an
opinion  of legal counsel (from a firm reasonably satisfactory to the Company) which
opinion shall be addressed to the Company and be reasonably satisfactory in form  and
substance to the Company’s counsel, to the effect that such  registration is not
required with respect to such Warrant or such Warrant  Shares, as the case may be or
(iii) such Warrant or Warrant Shares may be sold  pursuant to Rule 144 (or any successor
provision then in effect) under the  Securities Act.  

     4.
Reservation and Registration of Shares.  The Company covenants and agrees as follows: 

     
     (a)
All Warrant  Shares that are issued upon the exercise of this  Warrant  shall, upon
issuance, be validly issued, not subject to any preemptive  rights, and be free from all
taxes, liens, security interest, charges, and other  encumbrances with respect to the
issuance thereof, other than taxes in respect  of any transfer occurring
contemporaneously with such issue.  

     
     (b)
The Company shall at all times have  authorized  and reserved,  and shall keep available
and free from preemptive rights, a sufficient number  of shares of Common Stock to
provide for the exercise of the rights represented  by this Warrant.  

     
     (c)
The Company shall not, by amendment of its  Certificate  of  Incorporation  or through
any reorganization, transfer of assets, spin-off,  consolidation, merger, dissolution,
issue or sale of securities or any other  action or inaction, seek to avoid the
observance or performance of any of the  terms of this Warrant, and shall at all times in
good faith assist in performing  and giving effect to the terms hereof and in the taking
of all such actions as  may be necessary or appropriate in order to protect the rights of
the  Warrantholder against dilution or other impairment.  

     5.
Anti-dilution  Adjustment.  The Exercise  Price and the number of Warrant Shares to be
received  upon exercise of this Warrant shall be subject to adjustment as follows: 

 37

	

     
     5.1
Dividend,  Subdivision,  Combination or Reclassification of Common Stock. In the event
that the Company shall at any time or from time to time, after  the issuance of this
Warrant but prior to the exercise hereof, (w) make a  dividend or distribution on the
outstanding shares of Common Stock payable in  Capital Stock, (x) subdivide the
outstanding shares of Common Stock into a  larger number of shares, (y) combine the
outstanding shares of Common Stock into  a smaller number of shares or (z) issue any
shares of its Capital Stock in a  reclassification of the Common Stock (other than any
such event for which an  adjustment is made pursuant to another clause of this Section
5), then, and in  each such case, (A) the aggregate number of Warrant Shares for which
this  Warrant is exercisable (the “Warrant Share Number”) immediately prior  to
such event shall be adjusted (and any other appropriate actions shall be  taken by the
Company) so that the Warrantholder shall be entitled to receive  upon exercise of this
Warrant the number of shares of Common Stock or other  securities of the Company that it
would have owned or would have been entitled  to receive upon or by reason of any of the
events described above, had this  Warrant been exercised immediately prior to the
occurrence of such event and (B)  the Exercise Price payable upon the exercise of this
Warrant shall be adjusted  by multiplying such Exercise Price immediately prior to such
adjustment by a  fraction, the numerator of which shall be the number of Warrant Shares
issuable  upon the exercise of this Warrant immediately prior to such adjustment, and the
denominator of which shall be the number of Warrant Shares issuable immediately
thereafter. An adjustment made pursuant to this Section 5.1 shall become  effective
retroactively (x) in the case of any such dividend or distribution, to  a date
immediately following the close of business on the record date for the  determination of
holders of shares of Common Stock entitled to receive such  dividend or distribution or
(y) in the case of any such subdivision, combination  or reclassification, to the close
of business on the day upon which such  corporate action becomes effective.  

     
     5.2
Issuance of Common Stock or Common Stock Equivalents Below Exercise Price or the Fair
Market Value. 

     
          (a)
Except in the  circumstances  contemplated  by  Section  5.1,  if the  Company shall at
any time from time to time, after the issuance of this  Warrant but prior to the exercise
hereof, issue or sell (such issuance or sale,  a “New Issuance”) any shares of
Common Stock or Common Stock  Equivalent (which, for purposes hereof, shall include any
security issued as  part of a “PIPES” financing) at a price per share of Common
Stock (the  “New Issue Price”) that is less than the Exercise Price or the Fair
Market Value then in effect as the record date or Issue Date (as defined below),  as the
case may be (the “Relevant Date”) (treating the price per share  of Common
Stock, in the case of the issuance of any Common Stock Equivalent, as  equal to (x) the
sum of the price for such Common Stock Equivalent plus any  additional consideration
payable (without regard to any anti-dilution  adjustments) upon the conversion, exchange
or exercise of such Common Stock  Equivalent divided by (y) the number of shares of
Common Stock initially  underlying such Common Stock Equivalent), other than (i) issuances
or sales  for which an adjustment is made pursuant to another subsection of this Section
5  and (ii) issuances in connection with an Excluded Transaction, then, and in each  such
case, (A) the Exercise Price then in effect shall be adjusted to equal to  the new Issue
Price and (B) the Warrant Share Number shall be increased to equal  the product of (i)
the aggregate number of Warrant Shares for which this Warrant  is exercisable immediately
prior to the New Issuance multiplied by (ii) a  fraction, the numerator of which shall be
the Exercise Price in effect on the  day immediately prior to the Relevant Date and the
denominator of which shall be  the Exercise Price in effect immediately after such
adjustment.  

 38

	

Such adjustment shall be made
whenever such shares of Common  Stock or Common Stock Equivalent are issued, and shall
become effective  retroactively (x) in the case of an issuance to the stockholders of the
Company,  as such, to a date immediately following the close of business on the records
date for the determination of shareholders entitled to receive such shares of  Common
Stock or Common Stock Equivalents and (y) in all other cases, on the date  (the “Issue
Date”) of such issuance; provided, however, that the  determination as to whether an
adjustment is required to be made pursuant to  this Section 5.2 shall be made only upon
the issuance of such shares of Common  Stock or Common Stock Equivalents, and not upon
the issuance of any security  into which the Common Stock Equivalents convert, exchange
or may be exercised.  

     
          (b)
In case at any time any  shares of Common  Stock or Common  Stock  Equivalents or any
rights or options to purchase any shares of Common  consideration received therefor shall
be deemed to be the amount received by the  Company therefor, without deduction therefrom
of any expense incurred or any  underwriting commissions or concessions or discounts paid
or allowed by the  Company in connection therewith, as determined mutually by the Board
of  Directors and the Majority Warrantholders or, if the Board of Directors and the
Majority Warrantholders shall fail to agree, at the Company’s expense by an
appraiser chosen by the Board of Directors and reasonably acceptable to the  Majority
Warrantholders.  

     
          (c)
If any Common Stock  Equivalents  (or any portions  thereof)  which shall have given rise
to an adjustment pursuant to this Section 5.2 shall  have expired or terminated without
the exercise thereof and/or if by reason of  the terms of such Common Stock Equivalents
there shall have been an increase or  increases, with the passage of time or otherwise,
in the price payable upon the  exercise or conversion thereof, then the Exercise Price
hereunder shall be  readjusted (but to no greater extent than originally adjusted) in
order to (i)  eliminate from the computation any additional shares of Common Stock
corresponding to such Common Stock Equivalents as shall have expired or  terminated, (ii)
treat the additional shares of Common Stock, if any, actually  issued or issuable
pursuant to the previous exercise of such Common Stock  Equivalents as having been issued
for the consideration actually received and  receivable therefor and (iii) treat any of
such Common Stock Equivalents which  remain outstanding as being subject to exercise or
conversion on the basis of  such exercise or conversion price as shall be in effect at
the time.  

     
     5.3
Certain  Distributions.  In case the  Company  shall at any time or from time to time,
after the issuance of this Warrant but prior to the exercise  hereof, distribute to all
holders of shares of Common Stock (including any such  distribution made as a rights
offering or in connection with a merger or  consolidation in which the Company is the
resulting or surviving Person and  shares of Common Stock are not changed or exchanged)
cash, evidences of  indebtedness of the Company or another issuer, securities of the
Company or  another issuer or other assets (excluding dividends or distributions payable
in  shares of Common Stock for which adjustment is made under Section 5.1) or rights  or
warrants to subscribe for or purchase any of the foregoing, then, and in each  such case,
(A) the Exercise Price then in effect shall be adjusted (and any  other appropriate
actions shall be taken by the Company) by being multiplied by  the Exercise Price in
effect prior to the date of distribution by a fraction (i)  the numerator of which shall
be such Current Market Price of Common Stock  immediately prior to the date of
distribution less the then fair market value  (as determined by the Board of Directors in
the exercise of their fiduciary  duties) of the portion of the cash, evidences of
indebtedness, securities or  other assets so distributed or of such rights or warrants
applicable to one  share of Common Stock and (ii) the denominator of which shall be the
Current  Market Price of the Common Stock immediately prior to the date of distribution
(but such fraction shall not be greater than one) and (B) the number of Warrant  Shares
issuable hereunder shall be increased by being multiplied by a fraction  (i) the
numerator of which shall be the distribution of such cash, evidences of  indebtedness,
securities, other assets or rights or warrants and (ii) the  denominator of which shall
be the Current Market Price of one share of Common  Stock immediately prior to such
record date less the fair market value (as  determined by the Board of Directors in the
exercise of their fiduciary duties)  of the portion of such cash, evidences of
indebtedness, securities, other assets  or rights or warrants so distributed. Such
adjustment shall be made whenever any  such distribution is made and shall become
effective retroactively to a date  immediately following the close of business on the
record date for the  determination of stockholders entitled to receive such distribution.  

 39

     
     5.4
Other  Changes.  In case the  Company  at any time or from  time to  time,  after  the
issuance of this Warrant but prior to the exercise hereof, shall  take any action
affecting its Common Stock similar to or having an effect  similar to any of the actions
described in any of Sections 5.1, 5.2, 5.3 or 5.8  (but not including any action
described in any such Section) and the Board of  Directors in good faith determines that
it would be equitable in the  circumstances to adjust the Exercise Period and number of
Warrant Shares  issuable hereunder as a result of such action, then, and in each such
case, the  Exercise Price and number of Warrant Shares issuable hereunder shall be
adjusted  in such manner and at such times as the Board of Directors in good faith
determines would be equitable in the circumstances (such determination to be  evidenced
in a resolution, a certified copy of which shall be mailed to the  Warrantholder).  

     
     5.5
No Adjustment;  Par Value Minimum.  Notwithstanding  anything  herein to the contrary, no
adjustment under this Section 5 need be made to the Exercise  Price or number of Warrant
Shares issuable hereunder if the Company receives  written notice from the Warrantholder
that no such adjustment is required.  Notwithstanding any other provision of this
Warrant, the Exercise Price shall  not be adjusted below the par value of a share of
Common Stock.  

     
     5.6
Abandonment.  If the  Company  shall  take a record  of the  holders  of shares of its
Common Stock for the purpose of entitling them to receive a  dividend or other
distribution, and shall thereafter and before the distribution  to stockholders thereof
legally abandon its plan to pay or deliver such dividend  or distribution, then no
adjustment in the Exercise Price or number of Warrant  Shares issuable hereunder shall be
required by reason of the taking of such  record.  

     
     5.7
Certificate  as to  Adjustments.  Upon any  adjustment in the Exercise Price or number of
Warrant Shares issuable hereunder, the Company shall within a  reasonable period (not to
exceed ten (10) days) following any of the foregoing  transactions deliver to the
Warrantholder a certificate, signed by (i) the Chief  Executive Officer of the Company
and (ii) the Chief Financial Officer of the  Company, setting forth in reasonable detail
the event requiring the adjustment  and the method by which such adjustment was
calculated and specifying the  adjusted Exercise Price and number of Warrant Shares
issuable hereunder then in  effect following such adjustment.  

 40

	

     
     5.8
Spin-off, Reorganization, Reclassification, Merger or Sale Transaction. 

     
          (a)
In case of any  spin-off  by the  Company of  another  Person  (the  "Spin-off
Entity) at any time after the issuance of this Warrant but prior  to the exercise hereof,
the Company shall issue to the Warrantholder a new  warrant, in form and substance
satisfactory to the Company and the Majority  Warrantholders, entitling the Warrantholder
to purchase, at the exercise price  determined by the Board of Directors and reasonably
acceptable to the Majority  Warrantholders, the number of shares of common stock or other
proprietary  interest in the Spin-off Entity that the Warrantholder would have owned had
the  Warrantholder, immediately prior to such spin-off, exercised this Warrant.  

     
          (b)
In case of any capital  reorganization,  reclassification,  Sale  Transaction, merger or
consolidation (other than a Sale Transaction or a  merger or consolidation of the Company
in which the Company is the surviving  corporation and there has been no change in the
terms of the Common Stock) of  the Company or other change of outstanding shares of
Common Stock (other than a  change in par value, or from par value to no par value, or
from no par value to  par value) (each, a “Transaction”) at any time after the
issuance of  this Warrant but prior to the exercise hereof, the Company shall execute and
deliver to the Warrantholder at least twenty (20) Business Days prior to  effecting such
Transaction a certificate stating that the Warrantholder shall  have the right thereafter
to exercise this Warrant for the kind and amount of  shares of stock or other securities,
property or cash receivable upon such  Transaction by a holder of the number of shares of
Common Stock pursuant to the  Certificate of Incorporation of the Company into which this
Warrant could have  been exercised immediately prior to such Transaction, and provision
shall be  made therefor in the agreement, if any, relating to such Transaction. The
provisions of this Section 5.2 and any equivalent thereof in any such  certificate
similarly shall apply to successive transactions.  

     
     5.9
Notices.  In case at any time or from time to time: 

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

     
          (b)
the  Company  shall  authorize  the  granting  to the holders of shares of its Common
Stock rights or warrants to subscribe for or purchase any  shares of Capital Stock or any
other rights or warrants;  

     
          (c)
there shall occur a spin-off Transaction; or 

     
          (d)
the  Company  shall take any other  action  that  would  require a vote of the  Company's
stockholders; 

 41

	

then the Company shall mail to the
Warrantholder, as promptly as possible  but in any event at least ten (10) days prior to
the applicable date hereinafter  specified, a notice stating (A) the date on which a
record is to be taken for  the purpose of such vote or dividend, distribution or granting
of rights or  warrants or, if a record is not to be taken, the date as of which the
holders of  Common Stock of record to be entitled to such dividend, distribution or
granting  of rights or warrants are to be determined, or (B) the date on which such
spin-off Transaction is expected to become effective and the date as of which it  is
expected that holders of Common Stock of record shall be entitled to exchange  their
Common Stock for shares of stock or other securities or property or cash  deliverable
upon such spin-off Transaction. Notwithstanding the foregoing, in  the case of any event
to which Section 5.8 is applicable, the Company shall also  deliver the certificate
described in such Section 5.8 to the Warrantholder at  least ten (10) Business Days prior
to effecting such reorganization or  reclassification as aforesaid.  

     6.
Loss or Destruction of Warrant.  Subject to the terms and conditions hereof, upon receipt
by the Company of  evidence reasonably satisfactory to it of the loss, theft, destruction
or  mutilation of this Warrant and, in the case of loss, theft or destruction, of  such
bond or indemnification as the Company may reasonably require, and, in the  case of such
mutilation, upon surrender and cancellation of this Warrant, the  Company will execute
and deliver a new Warrant of like tenor.  

     7.
Ownership of 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  written 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.  

     8.
Amendments.  Any  provision of this Warrant may be amended and the  observance  thereof
waived  only with the written consent of the Company and the Warrantholder. 

     9.
Definitions.  As used herein,  unless the context otherwise requires,  the following
terms have  the following respective meanings: 

     “Board
of Directors” means the Board of Directors of the Company.  

     “Business
Day” means any  day other than a Saturday, Sunday or other day on which commercial
banks in the  State of York are authorized or required by law or executive order to
close.  

     “Capital
Stock” means,  with respect to any Person, any and all shares, interests,
participations,  rights in, or other equivalent (however designated and whether voting or
non-voting) of such Person’s capital stock and any and all rights, warrants  or
options exchangeable for or convertible into such capital stock (but  excluding any debt
security whether or not it is exchangeable for or convertible  into such capital stock).  

     “Common
Stock” means the  Common Stock, par value $0.01 per share, of the Company.  

 42

	

     “Common
Stock  Equivalent” means any security or obligation other than Company’s
Series E Junior Convertible Preferred Stock which is by its terms convertible  into or
exercisable into shares of Common Stock, including, without limitation,  any option,
warrant or other subscription or purchase right with respect to  Common Stock.  

     “Company” has
the  meaning set forth in the first paragraph of this Warrant.  

     “Conversion
Rights” has  the meaning set forth in Section 2.2(a) of this Warrant.  

     “Current
Market Price” means, as of the date of determination, (a) the average of the daily
Market  Price under clause (a), (b) or (c) of the definition thereof of the Common Stock
during the immediately preceding thirty (30) trading days ending on such date,  and (b)
if the Common Stock is not then listed or admitted to trading on any  national securities
exchange or quoted in the over-the-counter market, then the  Market Price under clause
(d) of the definition thereof on such date.  

     “Excluded
Transaction” means (a) any issuance or grant (“award”) of shares of stock,
restricted stock or options to purchase shares of Common Stock as compensation,  or as a
pre-employment award, to employees, officers, directors or consultants  of the Company or
of any Subsidiary of the Company, provided that if at the time  of such award the number
of shares of Common Stock awarded and the number of  shares of Common Stock issuable upon
exercise of the stock option awarded, when  combined with all other shares of Common
Stock issued or issuable pursuant to  awards made pursuant to this clause (a) during the
Exercise Period (i.e.,  excluding the Lund and Regal management awards and other awards
existing on the  date hereof) exceeds 5% of the fully diluted shares of Common Stock
outstanding  on the date of such award, then the new award shall not be deemed an
Excluded  Transaction, (b) any issuance of Warrant Shares, (c) any issuance of securities
as part of the consideration in a merger or consolidation of the Company in  which the
Company is the surviving corporation and there has been no change in  the terms of the
Common Stock, (d) the issuance of up to 27,000,000 shares of  Common Stock by the Company
to acquire IFS of New Jersey, Inc. (including shares  of Common Stock issued upon
mandatory conversion of the Series E Junior  Convertible Preferred Stock of the Company),
(e) the issuance of up to  16,000,000 shares of Common Stock to investors in a private
placement pursuant  to subscription agreements on or before the date hereof, (f) the
issuance of up  to 900,000 shares of Common Stock by the Company to Allen & Company
Incorporated in partial satisfaction of its fee in connection with the issuance  referred
to in clause (e) above, (g) the issuance of any shares of the  Company’s Series E
Junior Convertible Preferred Stock in connection with  the Company’s acquisition of
IFS of New Jersey, Inc., and (h) the  issuance of any “Equity Securities” (as
defined in Section 7 of the  Certificate of Designations) of the Company, the proceeds of
which are used to  the extent required or permitted by Section 7 of the Certificate
of  Designations.  

     “Exercise
Form” means an  Exercise Form in the form annexed hereto as Exhibit A.  

     “Exercise
Period” means  the period from December __, 2002 to December __, 2007.  

 43

	

     “Exercise
Price” has the  meaning set forth in the first paragraph of this Warrant.  

     “Fair
Market Value” means on any date of determination with respect to any shares of
Common Stock,  an amount equal to the product of (i) the fair market value on such date
of the  consolidated net worth of the Company, as determined in good faith by the Board
of Directors and (ii) the percentage such shares of Common Stock represent of  all the
then outstanding shares of Common Stock.  

     “Issue
Date” has the  meaning set forth in Section 5.2 of this Warrant.  

     “Market
Price” means, as  of the date of determination, (a) if the Common Stock is listed on
a national  securities exchange, the closing price per share of Common Stock on such date
published in The Wall Street Journal (National Edition) or, if no such closing  price on
such date is published in The Wall Street Journal (National Edition),  the average of the
closing bid and asked prices on such date, as officially  reported on the principal
national securities exchange on which the Common Stock  is then listed or admitted to
trading; or (b) if the Common Stock is not then  listed or admitted to trading on any
national securities exchange but is  designated as a national market system security by
the National Association of  Securities Dealers, Inc., the last trading price of the
Common Stock on such  date; or (c) if there shall have been no trading on such date or if
the Common  Stock is not designated as a national market system security by the National
Association of Securities Dealers, Inc., the average of the reported closing bid  and
asked prices of the Common Stock on such date as shown by the National  Market System of
the National Association of Securities Dealers, Inc. Automated  Quotations System and
reported by any member firm of the New York Stock Exchange  selected by the Company; or
(d) if none of (a), (b) or (c) is applicable, a  market price per share determined
mutually by the Board of Directors and the  Majority Warrantholders or, if the Board of
Directors and the Majority  Warrantholder shall fail to agree, at the Company’s
expense by an appraiser  chosen by the Board of Directors and reasonably acceptable to
the Majority  Warrantholders. Any determination of the Market Price by an appraiser shall
be  based on a valuation of the Company as an entirety without regard to any  discount
for minority interest or disparate voting rights among classes of  capital stock.  

     “Majority
Warrantholders” means the holders of a majority of Warrant Shares issuable  upon
exercise in full of both the Warrant and the Other Warrant assuming the  exercise of all
such warrants.  

     “Person” means
any  individual, firm, corporation, partnership, limited liability company, trust,
incorporated or unincorporated association, joint venture, joint stock company,
governmental body or other entity of any kind.  

     “New
Issuance” has the  meaning set forth in Section 5.2 of this Warrant.  

     “New
Issue Price” has  the meaning set forth in Section 5.2 of this Warrant.  

     “Relevant
Date” has the  meaning set forth in Section 5.2 of this Warrant.  

 45

	

     “Sale
Transaction” shall  mean (a)(i) the merger or consolidation of the Company into or
with one or more  Persons, (ii) the merger or consolidation of one or more Persons into
or with  the Company or (iii) a tender offer or other business combination if, in the
case of (i), (ii) or (iii), the stockholders of the Company prior to such merger  or
consolidation do not retain at least a majority of the voting power of the  surviving
Person or (b) the voluntary sale, conveyance, exchange or transfer to  another Person of
(i) the voting Capital Stock of the Company if, after such  sale, conveyance, exchange or
transfer do not retain at least a majority of the  voting power of the Company or (ii)
all or substantially all of the assets of  the Company.  

     “Securities
Act” means  the Securities Act of 1933, as amended, and the rules and regulations of
the  Securities and Exchange Commission thereunder.  

     “Spin-off
Entity” has  the meaning set forth in Section 5.8 of this Warrant.  

     “Transaction” has
the meaning  set forth in Section 5.8 of this Warrant.  

     “Warrant
Shares” has the  meaning set forth in the first paragraph of this Warrant.  

     “Warrant
Share Number” has the meaning set forth in Section 5.1 of this Warrant.  

     “Warrantholder” has
the  meaning set forth in first paragraph of this Warrant.  

     10.
Miscellaneous. 

     
     10.1
Entire Agreement.  This Warrant and the Registration  Rights Agreement  constitute the
entire agreement between the Company and the Warrantholder with  respect to this Warrant
and supersedes all prior agreements and understanding  with respect to the subject matter
of this Warrant.  

     
     10.2
Binding  Effect;  Benefits.  This  Warrant  shall inure to the benefit of and shall be
binding upon the Company and the Warrantholder and their  respective permitted successors
and assigns. Nothing in this Warrant, expressed  or implied, is intended to or shall
confer on any person other than the Company  and the Warrantholder, or their respective
permitted successors or assigns, any  rights, remedies, obligations or liabilities under
or by reason of this Warrant.  

     
     10.3
Headings.  The  heading in this  Warrant are for  convenience  of  reference  only and
shall not limit or otherwise affect the meaning of this Warrant. 

     
     10.4
Notices.  All  notices,  demands and other  communications  provided  for or permitted
hereunder shall be made in writing and shall be by registered or  certified first-class
mail, return receipt requested, telecopier, courier,  service or personal delivery:  

 45

	

					(a) 		 if to the Company:

Eos International, Inc.
888 Seventh Avenue
New York, New York 10106
Telecopy: 212-554-9873
Attention:  James M. Cascino,

          
     Chief Executive Officer

with a copy to:

Pitney, Hardin, Kipp & Szuch LLP
Park Avenue at Morris County
P.O. Box 1945
Morristown, New Jersey 07962
Telecopy:  973-966-1550
Attention:  Frank E. Lawatsch

					(b)  		 if
to the Warrantholder, at its address as it appears

on the record books of the Company.

with a copy to:

Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Telecopy:  (212) 757-3990
Attention:  Carl Reisner

	

     All
such notices, demands and  other communications shall be deemed to have been duly given
when delivered by  hand, if personally delivered; when delivered by courier, if delivered
by  commercial courier service, five (5) Business Days after being deposited in the
mail, postage prepaid, if mailed; and when receipt is mechanically acknowledged,  if
telecopied. Any party may by notice given in accordance with this Section  10.4
designated another address or Person for receipt of notices hereunder.  

     
     10.5
Severability.  Any  term  or  provision  of  this  Warrant  which  is  invalid  or
unenforceable in any jurisdiction shall, as to such  jurisdiction, be ineffective to the
extent of such invalidity or  unenforceability without rendering invalid or unenforceable
the terms and  provisions of this Warrant or affecting the validity or enforceability of
any  terms or provisions of this Warrant in any other jurisdiction.  

     
     10.6
Governing  Law. This Warrant  shall be governed by and  construed in  accordance  with
the laws of the State of Delaware without regard to the conflict of law principle thereof. 

 46

	

     
     10.7
No Rights or Liabilities as Stockholders.  Nothing  contained in this Warrant shall be
determined as conferring upon the Warrantholder any rights as a  stockholder of the
Company or as imposing any liabilities on the Warrantholder  to purchase any securities
whether such liabilities are asserted by the Company  or by creditors or stockholders of
the Company as otherwise.  

[Remainder of this page
intentionally left blank] 

 47

	

     IN
WITNESS WHEREOF, the Company  has caused this Warrant to be signed by its duly authorized
officer.  

			EOS INTERNATIONAL INC.

By: 
——————————————

Peter A. Lund
Chairman

	

Dated:  December __, 2002 

	

Exhibit A

EXERCISE FORM

(To be executed upon
exercise of this Warrant) 

     The
undersigned hereby irrevocably  elects to exercise the right, represented by this
Warrant, to purchase [insert  number] shares of Common Stock and herewith tenders payment
for such shares to  the order of the Company in the amount of $[insert number] [hereby
exercises its  Conversion Rights] in accordance with the terms of this Warrant. The
undersigned  requests that a certificate for such Warrant Shares be registered in the
name of  the undersigned and that such certificates be delivered to the  undersigned’s
address below.  

     The
undersigned represents that it  is acquiring such shares for its own account for
investment and not with a view  to or for sale in connection with any distribution
thereof (subject, however, to  any requirement of law that the disposition thereof shall
at all times be within  its control).  

			Signature:———————

			

——————————————

(Print Name)

			

——————————————

(Street Address)

			

——————————————

(City)     (State)(Zip Code)

	

1,615,385
Warrant Shares 

     THIS
WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF  THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS  AMENDED (THE “ACT”), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED  STATES OR FOREIGN JURISDICTION. NEITHER THIS
WARRANT, SUCH SECURITIES NOR ANY  INTEREST THEREIN MAY BE TRANSFERRED EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION  STATEMENT UNDER SUCH ACT AND APPLICABLE STATE AND FOREIGN
SECURITIES LAWS OR  PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH  ACT AND SUCH LAWS.  

_________________ 

EOS INTERNATIONAL, INC. 

_________________ 

AMENDED AND RESTATED COMMON STOCK PURCHASE WARRANT

     This
certifies that, for good and  valuable consideration, EOS INTERNATIONAL, INC., a Delaware
corporation (the  “Company”), grants to DL HOLDINGS I, LLC a Delaware limited
liability  company (the “Warrantholder”), the right to subscribe for and
purchase  from the Company, during the Exercise Period (as hereinafter defined),
1,615,385  validly issued, fully paid and nonassessable shares, par value $0.01, of
Common  Stock of the Company (the “Warrant Shares”), at the exercise price per
share of $0.25 per share (the “Exercise Price”), all subject to the  terms,
conditions and adjustments herein set forth. Capitalized terms used  herein shall have
the meanings ascribed to such terms in Section 9 below.  

     1.
Warrant. This Amended and  Restated Common Stock Purchase Warrant (this “Warrant”)
is issued by  the Company contemporaneously with the Company’s issuance of a warrant
for  1,384,615 Warrant Shares (the “Other Warrant”) to Weichert Enterprise
LLC. (the “Other Warrantholder”) and is subject to the terms of the  Amended
and Restated Registration Rights Agreement, dated December __, 2002 (the  “Registration
Rights Agreement”), among the Company, the Warrantholder  and the Other
Warrantholder.  

     2.
Exercise of Warrant; Payment of Taxes. 

     
     2.1
Exercise  of  Warrant.  Subject to the terms and  conditions  set forth  herein,  this
Warrant may be exercised at any time, in whole or in part, by  the Warrantholder during
the Exercise Period by:  

     
          (a)
the surrender of this Warrant to the Company,  with a duly  executed  Exercise Form, and 

 50

	

     
          (b)
subject to Section  2.2 below,  the  delivery of payment of the  Company,  for the
account of the Company, by (i) cash, wire transfer,  certified or official bank
check or any other means approved by the Company, of  the aggregate Exercise Price in
lawful money of the United States of America or  (ii) the surrender of Series D
Preferred Stock of the Company (the  “Series D Preferred Stock”) valued at the
Redemption Price as  determined by the Certificate of Designations of the Series D
Preferred  Stock of the Company (the “Certificate of Designations”) on the date
surrendered to the Company or (iii) a combination of (i) and (ii);  provided,
however, that the Company reserves the right to refuse to accept  Series D Preferred
Stock as consideration for the exercise of the Warrant  if it would violate law or
violate the provisions of any agreement to which the  Company is a party.  

The Company agrees that the Warrant Shares shall be deemed to be
issued to the Warrantholder as the record holder of such Warrant Shares as of
the close of business on the date on which this Warrant shall have been
surrendered and payment made for the Warrant Shares as aforesaid. 

     
     2.2
Conversion Right. 

     
          (a)
In lieu of the payment of the  aggregate  Exercise  Price,  the  Warrantholder shall have
the right (but not the obligation), to require the  Company to convert this Warrant, in
whole or in part, into shares of Common  Stock (the “Conversion Right”) as
provided for in this Section 2.2.  Upon exercise of the Conversion Right, the Company
shall deliver to the  Warrantholder (without payment by the Warrantholder of any of the
Exercise  Price) in accordance with Section 2.1(b) that number of shares of Common Stock
equal to the quotient obtained by dividing (i) the value of the Warrant or  portion
thereof at the time the Conversion Right is exercised (determined by  subtracting the
aggregate Exercise Price at the time of the exercise of the  Conversion Right from the
aggregate Current Market Price for the shares of  Common Stock issuable upon exercise of
the Warrant at the time of the exercise  of the Conversion Right) by (ii) the Current
Market Price of one share of Common  Stock at the time of the exercise of the Conversion
Right.  

     
          (b)
The  Conversion  Right may be exercised by the  Warrantholder  on any Business Day prior
to the end of the Exercise Period by surrender of this  Warrant to the Company, with a
duly executed Exercise Form with the conversion  section completed, exercising the
Conversion Right and specifying the total  number of shares of Common Stock that the
Warrantholder will be issued pursuant  to such conversion.  

     
     2.3
Warrant  Shares  Certificate.  A stock  certificate  or  certificates  for the Warrant
Shares specified in the Exercise Form shall be delivered to the  Warrantholder within
five (5) Business Days after receipt of the Exercise Form  by the Company and, if the
Conversion Right is not exercised, the payment by the  Warrantholder of the aggregate
Exercise Price. If this Warrant shall have been  exercised only in part, the Company
shall, at the time of delivery of the stock  certificate or certificates, deliver to the
Warrantholder a new Warrant  evidencing the right to purchase the remaining Warrant
Shares, which new Warrant  shall in all other respects be identical with this Warrant.  

     
     2.4
Payment  of  Taxes.  The  Company  will pay all  documentary  stamp or other  issuance
taxes, if any, attributable to the issuance of Warrant Shares  upon the exercise of this
Warrant; provided, however, that the Company shall not  be required to pay any tax or
taxes which may be payable in respect of any  transfer involved in the issue or delivery
of any Warrants or Warrant  certificates or Warrant Shares in a name other than that of
the them  Warrantholder as reflected upon the books of the Company.  

 51

	

     3.
Restrictions on Transfer; Restrictive Legends. 

     
     3.1
This Warrant and the Warrant Shares may not be offered, sold, transferred,  pledged or
otherwise disposed of, in whole or in part, to any Person other  than in accordance with
applicable federal and state securities laws.  

     
     3.2
Except as otherwise  permitted by this Section 3, each Warrant (and Warrant  issued in
substitution for any Warrant pursuant to Section 6) shall be  stamped or otherwise
imprinted with a legend in substantially the form as set  forth on the cover of this
Warrant. Notwithstanding the foregoing, the  Warrantholder may require the Company to
issue a Warrant or a certificate for  Warrant Shares, in each case without a legend, if
either (i) such Warrant or  such Warrant Shares, as the case may be, have been registered
for resale under  the Securities Act, (ii) the Warrantholder has delivered to Company an
opinion  of legal counsel (from a firm reasonably satisfactory to the Company) which
opinion shall be addressed to the Company and be reasonably satisfactory in form  and
substance to the Company’s counsel, to the effect that such  registration is not
required with respect to such Warrant or such Warrant  Shares, as the case may be or
(iii) such Warrant or Warrant Shares may be sold  pursuant to Rule 144 (or any successor
provision then in effect) under the  Securities Act.  

     4.
Reservation and Registration of Shares.  The Company covenants and agrees as follows: 

     
     (a)
All Warrant  Shares that are issued upon the exercise of this  Warrant  shall, upon
issuance, be validly issued, not subject to any preemptive  rights, and be free from all
taxes, liens, security interest, charges, and other  encumbrances with respect to the
issuance thereof, other than taxes in respect  of any transfer occurring
contemporaneously with such issue.  

     
     (b)
The Company shall at all times have  authorized  and reserved,  and shall keep available
and free from preemptive rights, a sufficient number  of shares of Common Stock to
provide for the exercise of the rights represented  by this Warrant.  

     
     (c)
The Company shall not, by amendment of its  Certificate  of  Incorporation  or through
any reorganization, transfer of assets, spin-off,  consolidation, merger, dissolution,
issue or sale of securities or any other  action or inaction, seek to avoid the
observance or performance of any of the  terms of this Warrant, and shall at all times in
good faith assist in performing  and giving effect to the terms hereof and in the taking
of all such actions as  may be necessary or appropriate in order to protect the rights of
the  Warrantholder against dilution or other impairment.  

 523

	

     5.
Anti-dilution  Adjustment.  The Exercise  Price and the number of Warrant Shares to be
received  upon exercise of this Warrant shall be subject to adjustment as follows: 

     
     5.1
Dividend,  Subdivision,  Combination or Reclassification of Common Stock. In the event
that the Company shall at any time or from time to time, after  the issuance of this
Warrant but prior to the exercise hereof, (w) make a  dividend or distribution on the
outstanding shares of Common Stock payable in  Capital Stock, (x) subdivide the
outstanding shares of Common Stock into a  larger number of shares, (y) combine the
outstanding shares of Common Stock into  a smaller number of shares or (z) issue any
shares of its Capital Stock in a  reclassification of the Common Stock (other than any
such event for which an  adjustment is made pursuant to another clause of this Section
5), then, and in  each such case, (A) the aggregate number of Warrant Shares for which
this  Warrant is exercisable (the “Warrant Share Number”) immediately prior  to
such event shall be adjusted (and any other appropriate actions shall be  taken by the
Company) so that the Warrantholder shall be entitled to receive  upon exercise of this
Warrant the number of shares of Common Stock or other  securities of the Company that it
would have owned or would have been entitled  to receive upon or by reason of any of the
events described above, had this  Warrant been exercised immediately prior to the
occurrence of such event and (B)  the Exercise Price payable upon the exercise of this
Warrant shall be adjusted  by multiplying such Exercise Price immediately prior to such
adjustment by a  fraction, the numerator of which shall be the number of Warrant Shares
issuable  upon the exercise of this Warrant immediately prior to such adjustment, and the
denominator of which shall be the number of Warrant Shares issuable immediately
thereafter. An adjustment made pursuant to this Section 5.1 shall become  effective
retroactively (x) in the case of any such dividend or distribution, to  a date
immediately following the close of business on the record date for the  determination of
holders of shares of Common Stock entitled to receive such  dividend or distribution or
(y) in the case of any such subdivision, combination  or reclassification, to the close
of business on the day upon which such  corporate action becomes effective.  

     
     5.2
Issuance of Common Stock or Common Stock Equivalents Below Exercise Price or the Fair
Market Value. 

     
          (a)
Except in the  circumstances  contemplated  by  Section  5.1,  if the  Company shall at
any time from time to time, after the issuance of this  Warrant but prior to the exercise
hereof, issue or sell (such issuance or sale,  a “New Issuance”) any shares of
Common Stock or Common Stock  Equivalent (which, for purposes hereof, shall include any
security issued as  part of a “PIPES” financing) at a price per share of Common
Stock (the  “New Issue Price”) that is less than the Exercise Price or the Fair
Market Value then in effect as the record date or Issue Date (as defined below),  as the
case may be (the “Relevant Date”) (treating the price per share  of Common
Stock, in the case of the issuance of any Common Stock Equivalent, as  equal to (x) the
sum of the price for such Common Stock Equivalent plus any  additional consideration
payable (without regard to any anti-dilution  adjustments) upon the conversion, exchange
or exercise of such Common Stock  Equivalent divided by (y) the number of shares of
Common Stock initially  underlying such Common Stock Equivalent), other than (i) issuances
or sales  for which an adjustment is made pursuant to another subsection of this Section
5  and (ii) issuances in connection with an Excluded Transaction, then, and in each  such
case, (A) the Exercise Price then in effect shall be adjusted to equal to  the new Issue
Price and (B) the Warrant Share Number shall be increased to equal  the product of (i)
the aggregate number of Warrant Shares for which this Warrant  is exercisable immediately
prior to the New Issuance multiplied by (ii) a  fraction, the numerator of which shall be
the Exercise Price in effect on the  day immediately prior to the Relevant Date and the
denominator of which shall be  the Exercise Price in effect immediately after such
adjustment.  

 53

	

Such adjustment shall be made
whenever such shares of Common  Stock or Common Stock Equivalent are issued, and shall
become effective  retroactively (x) in the case of an issuance to the stockholders of the
Company,  as such, to a date immediately following the close of business on the records
date for the determination of shareholders entitled to receive such shares of  Common
Stock or Common Stock Equivalents and (y) in all other cases, on the date  (the “Issue
Date”) of such issuance; provided, however, that the  determination as to whether an
adjustment is required to be made pursuant to  this Section 5.2 shall be made only upon
the issuance of such shares of Common  Stock or Common Stock Equivalents, and not upon
the issuance of any security  into which the Common Stock Equivalents convert, exchange
or may be exercised.  

     
          (b)
In case at any time any  shares of Common  Stock or Common  Stock  Equivalents or any
rights or options to purchase any shares of Common  consideration received therefor shall
be deemed to be the amount received by the  Company therefor, without deduction therefrom
of any expense incurred or any  underwriting commissions or concessions or discounts paid
or allowed by the  Company in connection therewith, as determined mutually by the Board
of  Directors and the Majority Warrantholders or, if the Board of Directors and the
Majority Warrantholders shall fail to agree, at the Company’s expense by an
appraiser chosen by the Board of Directors and reasonably acceptable to the  Majority
Warrantholders.  

     
          (c)
If any Common Stock  Equivalents  (or any portions  thereof)  which shall have given rise
to an adjustment pursuant to this Section 5.2 shall  have expired or terminated without
the exercise thereof and/or if by reason of  the terms of such Common Stock Equivalents
there shall have been an increase or  increases, with the passage of time or otherwise,
in the price payable upon the  exercise or conversion thereof, then the Exercise Price
hereunder shall be  readjusted (but to no greater extent than originally adjusted) in
order to (i)  eliminate from the computation any additional shares of Common Stock
corresponding to such Common Stock Equivalents as shall have expired or  terminated, (ii)
treat the additional shares of Common Stock, if any, actually  issued or issuable
pursuant to the previous exercise of such Common Stock  Equivalents as having been issued
for the consideration actually received and  receivable therefor and (iii) treat any of
such Common Stock Equivalents which  remain outstanding as being subject to exercise or
conversion on the basis of  such exercise or conversion price as shall be in effect at
the time.  

     
     5.3
Certain  Distributions.  In case the  Company  shall at any time or from time to time,
after the issuance of this Warrant but prior to the exercise  hereof, distribute to all
holders of shares of Common Stock (including any such  distribution made as a rights
offering or in connection with a merger or  consolidation in which the Company is the
resulting or surviving Person and  shares of Common Stock are not changed or exchanged)
cash, evidences of  indebtedness of the Company or another issuer, securities of the
Company or  another issuer or other assets (excluding dividends or distributions payable
in  shares of Common Stock for which adjustment is made under Section 5.1) or rights  or
warrants to subscribe for or purchase any of the foregoing, then, and in each  such case,
(A) the Exercise Price then in effect shall be adjusted (and any  other appropriate
actions shall be taken by the Company) by being multiplied by  the Exercise Price in
effect prior to the date of distribution by a fraction (i)  the numerator of which shall
be such Current Market Price of Common Stock  immediately prior to the date of
distribution less the then fair market value  (as determined by the Board of Directors in
the exercise of their fiduciary  duties) of the portion of the cash, evidences of
indebtedness, securities or  other assets so distributed or of such rights or warrants
applicable to one  share of Common Stock and (ii) the denominator of which shall be the
Current  Market Price of the Common Stock immediately prior to the date of distribution
(but such fraction shall not be greater than one) and (B) the number of Warrant  Shares
issuable hereunder shall be increased by being multiplied by a fraction  (i) the
numerator of which shall be the distribution of such cash, evidences of  indebtedness,
securities, other assets or rights or warrants and (ii) the  denominator of which shall
be the Current Market Price of one share of Common  Stock immediately prior to such
record date less the fair market value (as  determined by the Board of Directors in the
exercise of their fiduciary duties)  of the portion of such cash, evidences of
indebtedness, securities, other assets  or rights or warrants so distributed. Such
adjustment shall be made whenever any  such distribution is made and shall become
effective retroactively to a date  immediately following the close of business on the
record date for the  determination of stockholders entitled to receive such distribution.  

 54

	

     
     5.4
Other  Changes.  In case the  Company  at any time or from  time to  time,  after  the
issuance of this Warrant but prior to the exercise hereof, shall  take any action
affecting its Common Stock similar to or having an effect  similar to any of the actions
described in any of Sections 5.1, 5.2, 5.3 or 5.8  (but not including any action
described in any such Section) and the Board of  Directors in good faith determines that
it would be equitable in the  circumstances to adjust the Exercise Period and number of
Warrant Shares  issuable hereunder as a result of such action, then, and in each such
case, the  Exercise Price and number of Warrant Shares issuable hereunder shall be
adjusted  in such manner and at such times as the Board of Directors in good faith
determines would be equitable in the circumstances (such determination to be  evidenced
in a resolution, a certified copy of which shall be mailed to the  Warrantholder).  

     
     5.5
No Adjustment;  Par Value Minimum.  Notwithstanding  anything  herein to the contrary, no
adjustment under this Section 5 need be made to the Exercise  Price or number of Warrant
Shares issuable hereunder if the Company receives  written notice from the Warrantholder
that no such adjustment is required.  Notwithstanding any other provision of this
Warrant, the Exercise Price shall  not be adjusted below the par value of a share of
Common Stock.  

     
     5.6
Abandonment.  If the  Company  shall  take a record  of the  holders  of shares of its
Common Stock for the purpose of entitling them to receive a  dividend or other
distribution, and shall thereafter and before the distribution  to stockholders thereof
legally abandon its plan to pay or deliver such dividend  or distribution, then no
adjustment in the Exercise Price or number of Warrant  Shares issuable hereunder shall be
required by reason of the taking of such  record.  

     
     5.7
Certificate  as to  Adjustments.  Upon any  adjustment in the Exercise Price or number of
Warrant Shares issuable hereunder, the Company shall within a  reasonable period (not to
exceed ten (10) days) following any of the foregoing  transactions deliver to the
Warrantholder a certificate, signed by (i) the Chief  Executive Officer of the Company
and (ii) the Chief Financial Officer of the  Company, setting forth in reasonable detail
the event requiring the adjustment  and the method by which such adjustment was
calculated and specifying the  adjusted Exercise Price and number of Warrant Shares
issuable hereunder then in  effect following such adjustment.  

 55

	

     
     5.8
Spin-off, Reorganization, Reclassification, Merger or Sale Transaction. 

     
          (a)
In case of any  spin-off  by the  Company of  another  Person  (the  "Spin-off
Entity) at any time after the issuance of this Warrant but prior  to the exercise hereof,
the Company shall issue to the Warrantholder a new  warrant, in form and substance
satisfactory to the Company and the Majority  Warrantholders, entitling the Warrantholder
to purchase, at the exercise price  determined by the Board of Directors and reasonably
acceptable to the Majority  Warrantholders, the number of shares of common stock or other
proprietary  interest in the Spin-off Entity that the Warrantholder would have owned had
the  Warrantholder, immediately prior to such spin-off, exercised this Warrant.  

     
          (b)
In case of any capital  reorganization,  reclassification,  Sale  Transaction, merger or
consolidation (other than a Sale Transaction or a  merger or consolidation of the Company
in which the Company is the surviving  corporation and there has been no change in the
terms of the Common Stock) of  the Company or other change of outstanding shares of
Common Stock (other than a  change in par value, or from par value to no par value, or
from no par value to  par value) (each, a “Transaction”) at any time after the
issuance of  this Warrant but prior to the exercise hereof, the Company shall execute and
deliver to the Warrantholder at least twenty (20) Business Days prior to  effecting such
Transaction a certificate stating that the Warrantholder shall  have the right thereafter
to exercise this Warrant for the kind and amount of  shares of stock or other securities,
property or cash receivable upon such  Transaction by a holder of the number of shares of
Common Stock pursuant to the  Certificate of Incorporation of the Company into which this
Warrant could have  been exercised immediately prior to such Transaction, and provision
shall be  made therefor in the agreement, if any, relating to such Transaction. The
provisions of this Section 5.2 and any equivalent thereof in any such  certificate
similarly shall apply to successive transactions.  

     
     5.9
Notices.  In case at any time or from time to time: 

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

     
          (b)
the  Company  shall  authorize  the  granting  to the holders of shares of its Common
Stock rights or warrants to subscribe for or purchase any  shares of Capital Stock or any
other rights or warrants;  

     
          (c)
there shall occur a spin-off Transaction; or 

     
          (d)
the  Company  shall take any other  action  that  would  require a vote of the  Company's
stockholders; 

 56

	

then the Company shall mail to the
Warrantholder, as promptly as possible  but in any event at least ten (10) days prior to
the applicable date hereinafter  specified, a notice stating (A) the date on which a
record is to be taken for  the purpose of such vote or dividend, distribution or granting
of rights or  warrants or, if a record is not to be taken, the date as of which the
holders of  Common Stock of record to be entitled to such dividend, distribution or
granting  of rights or warrants are to be determined, or (B) the date on which such
spin-off Transaction is expected to become effective and the date as of which it  is
expected that holders of Common Stock of record shall be entitled to exchange  their
Common Stock for shares of stock or other securities or property or cash  deliverable
upon such spin-off Transaction. Notwithstanding the foregoing, in  the case of any event
to which Section 5.8 is applicable, the Company shall also  deliver the certificate
described in such Section 5.8 to the Warrantholder at  least ten (10) Business Days prior
to effecting such reorganization or  reclassification as aforesaid.  

     6.
Loss or Destruction of Warrant.  Subject to the terms and conditions hereof, upon receipt
by the Company of  evidence reasonably satisfactory to it of the loss, theft, destruction
or  mutilation of this Warrant and, in the case of loss, theft or destruction, of  such
bond or indemnification as the Company may reasonably require, and, in the  case of such
mutilation, upon surrender and cancellation of this Warrant, the  Company will execute
and deliver a new Warrant of like tenor.  

     7.
Ownership of 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  written 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.  

     8.
Amendments.  Any  provision of this Warrant may be amended and the  observance  thereof
waived  only with the written consent of the Company and the Warrantholder. 

     9.
Definitions.  As used herein,  unless the context otherwise requires,  the following
terms have  the following respective meanings: 

     “Board
of Directors” means the Board of Directors of the Company.  

     “Business
Day” means any  day other than a Saturday, Sunday or other day on which commercial
banks in the  State of York are authorized or required by law or executive order to
close.  

     “Capital
Stock” means,  with respect to any Person, any and all shares, interests,
participations,  rights in, or other equivalent (however designated and whether voting or
non-voting) of such Person’s capital stock and any and all rights, warrants  or
options exchangeable for or convertible into such capital stock (but  excluding any debt
security whether or not it is exchangeable for or convertible  into such capital stock).  

     “Common
Stock” means the  Common Stock, par value $0.01 per share, of the Company.  

 57

	

     “Common
Stock  Equivalent” means any security or obligation other than Company’s
Series E Junior Convertible Preferred Stock which is by its terms convertible  into or
exercisable into shares of Common Stock, including, without limitation,  any option,
warrant or other subscription or purchase right with respect to  Common Stock.  

     “Company” has
the  meaning set forth in the first paragraph of this Warrant.  

     “Conversion
Rights” has  the meaning set forth in Section 2.2(a) of this Warrant.  

     “Current
Market Price” means, as of the date of determination, (a) the average of the daily
Market  Price under clause (a), (b) or (c) of the definition thereof of the Common Stock
during the immediately preceding thirty (30) trading days ending on such date,  and (b)
if the Common Stock is not then listed or admitted to trading on any  national securities
exchange or quoted in the over-the-counter market, then the  Market Price under clause
(d) of the definition thereof on such date.  

     “Excluded
Transaction” means (a) any issuance or grant (“award”) of shares of stock,
restricted stock or options to purchase shares of Common Stock as compensation,  or as a
pre-employment award, to employees, officers, directors or consultants  of the Company or
of any Subsidiary of the Company, provided that if at the time  of such award the number
of shares of Common Stock awarded and the number of  shares of Common Stock issuable upon
exercise of the stock option awarded, when  combined with all other shares of Common
Stock issued or issuable pursuant to  awards made pursuant to this clause (a) during the
Exercise Period (i.e.,  excluding the Lund and Regal management awards and other awards
existing on the  date hereof) exceeds 5% of the fully diluted shares of Common Stock
outstanding  on the date of such award, then the new award shall not be deemed an
Excluded  Transaction, (b) any issuance of Warrant Shares, (c) any issuance of securities
as part of the consideration in a merger or consolidation of the Company in  which the
Company is the surviving corporation and there has been no change in  the terms of the
Common Stock, (d) the issuance of up to 27,000,000 shares of  Common Stock by the Company
to acquire IFS of New Jersey, Inc. (including shares  of Common Stock issued upon
mandatory conversion of the Series E Junior  Convertible Preferred Stock of the Company),
(e) the issuance of up to  16,000,000 shares of Common Stock to investors in a private
placement pursuant  to subscription agreements on or before the date hereof, (f) the
issuance of up  to 900,000 shares of Common Stock by the Company to Allen & Company
Incorporated in partial satisfaction of its fee in connection with the issuance  referred
to in clause (e) above, (g) the issuance of any shares of the  Company’s Series E
Junior Convertible Preferred Stock in connection with  the Company’s acquisition of
IFS of New Jersey, Inc., and (h) the  issuance of any “Equity Securities” (as
defined in Section 7 of the  Certificate of Designations) of the Company, the proceeds of
which are used to  the extent required or permitted by Section 7 of the Certificate
of  Designations.  

     “Exercise
Form” means an  Exercise Form in the form annexed hereto as Exhibit A.  

     “Exercise
Period” means  the period from December __, 2002 to December __, 2007.  

 58

	

     “Exercise
Price” has the  meaning set forth in the first paragraph of this Warrant.  

     “Fair
Market Value” means on any date of determination with respect to any shares of
Common Stock,  an amount equal to the product of (i) the fair market value on such date
of the  consolidated net worth of the Company, as determined in good faith by the Board
of Directors and (ii) the percentage such shares of Common Stock represent of  all the
then outstanding shares of Common Stock.  

     “Issue
Date” has the  meaning set forth in Section 5.2 of this Warrant.  

     “Market
Price” means, as  of the date of determination, (a) if the Common Stock is listed on
a national  securities exchange, the closing price per share of Common Stock on such date
published in The Wall Street Journal (National Edition) or, if no such closing  price on
such date is published in The Wall Street Journal (National Edition),  the average of the
closing bid and asked prices on such date, as officially  reported on the principal
national securities exchange on which the Common Stock  is then listed or admitted to
trading; or (b) if the Common Stock is not then  listed or admitted to trading on any
national securities exchange but is  designated as a national market system security by
the National Association of  Securities Dealers, Inc., the last trading price of the
Common Stock on such  date; or (c) if there shall have been no trading on such date or if
the Common  Stock is not designated as a national market system security by the National
Association of Securities Dealers, Inc., the average of the reported closing bid  and
asked prices of the Common Stock on such date as shown by the National  Market System of
the National Association of Securities Dealers, Inc. Automated  Quotations System and
reported by any member firm of the New York Stock Exchange  selected by the Company; or
(d) if none of (a), (b) or (c) is applicable, a  market price per share determined
mutually by the Board of Directors and the  Majority Warrantholders or, if the Board of
Directors and the Majority  Warrantholder shall fail to agree, at the Company’s
expense by an appraiser  chosen by the Board of Directors and reasonably acceptable to
the Majority  Warrantholders. Any determination of the Market Price by an appraiser shall
be  based on a valuation of the Company as an entirety without regard to any  discount
for minority interest or disparate voting rights among classes of  capital stock.  

     “Majority
Warrantholders” means the holders of a majority of Warrant Shares issuable  upon
exercise in full of both the Warrant and the Other Warrant assuming the  exercise of all
such warrants.  

     “Person” means
any  individual, firm, corporation, partnership, limited liability company, trust,
incorporated or unincorporated association, joint venture, joint stock company,
governmental body or other entity of any kind.  

     “New
Issuance” has the  meaning set forth in Section 5.2 of this Warrant.  

     “New
Issue Price” has  the meaning set forth in Section 5.2 of this Warrant.  

     “Relevant
Date” has the  meaning set forth in Section 5.2 of this Warrant.  

 59

	

     “Sale
Transaction” shall  mean (a)(i) the merger or consolidation of the Company into or
with one or more  Persons, (ii) the merger or consolidation of one or more Persons into
or with  the Company or (iii) a tender offer or other business combination if, in the
case of (i), (ii) or (iii), the stockholders of the Company prior to such merger  or
consolidation do not retain at least a majority of the voting power of the  surviving
Person or (b) the voluntary sale, conveyance, exchange or transfer to  another Person of
(i) the voting Capital Stock of the Company if, after such  sale, conveyance, exchange or
transfer do not retain at least a majority of the  voting power of the Company or (ii)
all or substantially all of the assets of  the Company.  

     “Securities
Act” means  the Securities Act of 1933, as amended, and the rules and regulations of
the  Securities and Exchange Commission thereunder.  

     “Spin-off
Entity” has  the meaning set forth in Section 5.8 of this Warrant.  

     “Transaction” has
the meaning  set forth in Section 5.8 of this Warrant.  

     “Warrant
Shares” has the  meaning set forth in the first paragraph of this Warrant.  

     “Warrant
Share Number” has the meaning set forth in Section 5.1 of this Warrant.  

     “Warrantholder” has
the  meaning set forth in first paragraph of this Warrant.  

     10.
Miscellaneous. 

     
     10.1
Entire Agreement.  This Warrant and the Registration  Rights Agreement  constitute the
entire agreement between the Company and the Warrantholder with  respect to this Warrant
and supersedes all prior agreements and understanding  with respect to the subject matter
of this Warrant.  

     
     10.2
Binding  Effect;  Benefits.  This  Warrant  shall inure to the benefit of and shall be
binding upon the Company and the Warrantholder and their  respective permitted successors
and assigns. Nothing in this Warrant, expressed  or implied, is intended to or shall
confer on any person other than the Company  and the Warrantholder, or their respective
permitted successors or assigns, any  rights, remedies, obligations or liabilities under
or by reason of this Warrant.  

     
     10.3
Headings.  The  heading in this  Warrant are for  convenience  of  reference  only and
shall not limit or otherwise affect the meaning of this Warrant. 

     
     10.4
Notices.  All  notices,  demands and other  communications  provided  for or permitted
hereunder shall be made in writing and shall be by registered or  certified first-class
mail, return receipt requested, telecopier, courier,  service or personal delivery:  

60 

	

					(a) 		 if to the Company:

Eos International, Inc.
888 Seventh Avenue
New York, New York 10106
Telecopy: 212-554-9873
Attention:  James M. Cascino,

          
     Chief Executive Officer

with a copy to:

Pitney, Hardin, Kipp & Szuch LLP
Park Avenue at Morris County
P.O. Box 1945
Morristown, New Jersey 07962
Telecopy:  973-966-1550
Attention:  Frank E. Lawatsch

					(b)  		 if
to the Warrantholder, at its address as it appears

on the record books of the Company.

with a copy to:

Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Telecopy:  (212) 757-3990
Attention:  Carl Reisner

	

     All
such notices, demands and  other communications shall be deemed to have been duly given
when delivered by  hand, if personally delivered; when delivered by courier, if delivered
by  commercial courier service, five (5) Business Days after being deposited in the
mail, postage prepaid, if mailed; and when receipt is mechanically acknowledged,  if
telecopied. Any party may by notice given in accordance with this Section  10.4
designated another address or Person for receipt of notices hereunder.  

     
     10.5
Severability.  Any  term  or  provision  of  this  Warrant  which  is  invalid  or
unenforceable in any jurisdiction shall, as to such  jurisdiction, be ineffective to the
extent of such invalidity or  unenforceability without rendering invalid or unenforceable
the terms and  provisions of this Warrant or affecting the validity or enforceability of
any  terms or provisions of this Warrant in any other jurisdiction.  

     
               10.6
Governing  Law. This Warrant  shall be governed by and  construed in  accordance  with
the laws of the State of Delaware without regard to the conflict of law principle thereof. 

     
     10.7
No Rights or Liabilities as Stockholders.  Nothing  contained in this Warrant shall be
determined as conferring upon the Warrantholder any rights as a  stockholder of the
Company or as imposing any liabilities on the Warrantholder  to purchase any securities
whether such liabilities are asserted by the Company  or by creditors or stockholders of
the Company as otherwise.  

[Remainder of this page
intentionally left blank] 

 62

	

     IN
WITNESS WHEREOF, the Company  has caused this Warrant to be signed by its duly authorized
officer.  

			EOS INTERNATIONAL INC.

By: 
——————————————

Peter A. Lund
Chairman

Dated:  December __, 2002 

	

Exhibit A

EXERCISE FORM

(To be executed upon
exercise of this Warrant) 

     The
undersigned hereby irrevocably  elects to exercise the right, represented by this
Warrant, to purchase [insert  number] shares of Common Stock and herewith tenders payment
for such shares to  the order of the Company in the amount of $[insert number] [hereby
exercises its  Conversion Rights] in accordance with the terms of this Warrant. The
undersigned  requests that a certificate for such Warrant Shares be registered in the
name of  the undersigned and that such certificates be delivered to the  undersigned’s
address below.  

     The
undersigned represents that it  is acquiring such shares for its own account for
investment and not with a view  to or for sale in connection with any distribution
thereof (subject, however, to  any requirement of law that the disposition thereof shall
at all times be within  its control).  

	Dated:		Signature:———————

			

——————————————

(Print Name)

			

——————————————

(Street Address)

			

——————————————

(City)     (State)(Zip Code)

_________________

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