Document:

EXHIBIT 10.1

                   REORGANIZATION AND STOCK PURCHASE AGREEMENT

         This  REORGANIZATION  AND STOCK PURCHASE AGREEMENT dated as of December
11,  2003  (this  "Agreement")  is by and  between  10Charge,  Inc.,  a Delaware
corporation ("10Charge US" or the "Company"), 10Charge Kft., a company organized
under  the laws of  Hungary  ("10Charge  Hungary")  and the  equity  holders  of
10Charge Hungary listed on Schedule A hereto.

                                    RECITALS

A.       WHEREAS,  10Charge US desires to acquire directly or indirectly 100% of
the equity of 10Charge Hungary;

B.       WHEREAS,  the equity  holders  of  10Charge  Hungary  desire to acquire
equity in the Company in connection with the proposed acquisition;

C.       WHEREAS,  the parties hereto intend that the  transaction  contemplated
hereby shall be completed as a tax-free exchange of stock interests for purposes
of U.S. Federal tax laws.

         NOW,  THEREFORE,  the respective Boards of Directors of the Company and
10Charge Hungary deem it advisable and in the best interests of their respective
entities  and security  holders  that the Company  acquire 100% of the equity of
10Charge  Hungary,   in  accordance  with  the  terms  and  conditions  of  this
Reorganization and Stock Purchase Agreement.

1.       Closing Conditions of the Company.  As conditions to any Closing as set
forth herein, the Company shall undertake the following actions:

         (a) The Board of Directors of the Company (the  "Company  Board") shall
duly  approve  and  deliver to  10Charge  Hungary  resolutions  with  respect to
approving the transactions set forth herein.

         (b) The Company shall issue a total of 88,760,000 shares (the "10Charge
US Shares") of common stock, par value $.0001 per share, of the Company ("Common
Stock") to the equity holders of 10Charge Hungary (the "10Charge  Hungary Equity
Holders"),  to be  delivered  to such  10Charge  Hungary  Equity  Holders at the
Closing, in the amounts set forth on Schedule A annexed hereto.

2.       Closing Conditions of 10Charge Hungary. As conditions to the Closing as
set forth herein, 10Charge Hungary shall undertake the following actions:

         (a) The Board of  Directors  (or  similar  governing  body) of 10Charge
Hungary  shall  execute  and  deliver to  10Charge  US  resolutions  unanimously
approving the transactions set forth herein.

         (b) The equity holders of 10Charge Hungary shall execute and deliver to
10Charge US  resolutions  approving the  transactions  contemplated  hereby,  if
required.

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         (c) The equity holders of 10Charge Hungary shall deliver to 10Charge US
at Closing (i) evidence of the  transfer of  ownership of 10Charge  Hungary from
such holders to 10Charge US and (ii) an  instrument,  in the form annexed hereto
as Exhibit A, including a  representation  that the shares of Common Stock being
acquired as a result of the  transactions  contemplated  by this  Agreement  are
being acquired for  investment  purposes only and not with a view to, or sale in
connection  with, any  distribution  within the meaning of the Securities Act of
1933, as amended.

         (d) Upon execution  hereof,  10Charge Hungary shall prepare and deliver
business and financial information,  and financial statements as may be required
to be  included  in  filings  with the US  Securities  and  Exchange  Commission
("SEC"), in form and substance satisfactory to 10Charge US.

         (e) All third party consents to the  transactions  contemplated  herein
required to be obtained by 10Charge Hungary shall have been obtained.

3.       Additional Conditions to Closing.

         The parties' obligation to close the transactions set forth herein will
be subject to additional specified conditions precedent as follows:

         (a) the  representations  and warranties of 10Charge US as set forth in
Section 6 herein  shall  remain  accurate as of the Closing Date and no material
adverse  change in the  business  of  10Charge US not  previously  disclosed  to
10Charge Hungary shall have occurred;

         (b) the representations and warranties of 10Charge Hungary as set forth
in Section 7 herein shall remain accurate as of the Closing Date and no material
adverse change in the business of 10Charge  Hungary not previously  disclosed to
10Charge US shall have occurred;

         (c) all the  documents  necessary  to be filed  with  local,  state and
federal  authorities  (including the SEC), are prepared and appropriately  filed
with such  authorities  and all  approvals  required from such  authorities  are
granted;

4.       At the Closing.

         (a) At the  Closing,  10Charge US shall issue the 10Charge US Shares to
the 10Charge Hungary Equity Holders.

         (b) At the Closing,  all equity  securities of 10Charge  Hungary,  duly
endorsed for transfer, and the executed investor  representation letter for each
10Charge  Hungary Equity Holder in the form annexed hereto as Exhibit A shall be
delivered to 10Charge US.

         (c) In addition to the  documents  expressly  required  herein,  at the
Closing each party hereto shall deliver such further  instruments  and take such
further action as may reasonably be requested by any other party hereto in order
to carry out the intent and purposes of this Agreement.

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5.       Timing of  Closing.  The  consummation  of the  transactions  set forth
herein (the "Closing")  shall occur upon the  satisfaction of the conditions set
forth in this Agreement. The date of Closing (the "Closing Date") shall occur on
or before December 12, 2003.

6.       Representations  of 10Charge US. 10Charge US represents and warrants as
follows:

         (a) Ownership of Shares.  Upon issuance of the 10Charge US Shares,  the
10Charge  Hungary Equity Holders will become sole owners,  respectively,  of the
10Charge US Shares.  The 10Charge US Shares will be free from  claims,  liens or
other  encumbrances,  except as  provided  under  applicable  federal  and state
securities laws.

         (b) Fully paid and Nonassessable. The 10Charge US Shares, upon issuance
pursuant to this Agreement,  shall  constitute duly and validly issued shares of
10Charge US, and shall be fully paid and nonassessable.

         (c)  Organization  of  10Charge  US;  Authorization.  10Charge  US is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware with full corporate  power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution,  delivery and
performance  of this  Agreement  have  been  duly  authorized  by all  necessary
corporate  action of  10Charge  US and this  Agreement  constitutes  a valid and
binding obligation of 10Charge US, enforceable against it in accordance with its
terms,  except as may be  limited  by  bankruptcy,  insolvency,  reorganization,
moratorium or similar laws of general  application  relating to or affecting the
enforcement of rights  hereunder,  rights of creditors or general  principles of
equity (regardless of whether such  enforceability is considered in a proceeding
in equity or at law). 10Charge US has no subsidiaries.

         (d)  Capitalization.  The  authorized  capital  stock  of  10Charge  US
consists  of  200,000,000  shares  of  Common  Stock  and  20,000,000  shares of
preferred stock, par value $.0001. As of the date of this Agreement, 10Charge US
has  8,240,000  shares of Common Stock issued and  outstanding  and no shares of
preferred  stock  issued and  outstanding.  As of the Closing  Date,  all of the
issued and outstanding shares of Common Stock are validly issued, fully paid and
non-assessable  and,  there is not and as of the Closing  Date there will not be
outstanding any warrants, options or other agreements on the part of 10Charge US
obligating 10Charge US to issue any additional shares of its common or preferred
stock or any of its securities of any kind.

         (e) No  Conflict  as to  10Charge  US  and  Subsidiaries.  Neither  the
execution  and  delivery  of  this  Agreement  nor  the   consummation   of  the
transactions   contemplated  herein  will  (a)  violate  any  provision  of  the
certificate  of  incorporation  or by-laws (or other  governing  instrument)  of
10Charge US or (b) violate,  or be in conflict with, or constitute a default (or
an event  which,  with  notice  or lapse of time or  both,  would  constitute  a
default)  under,  or result in the termination of, or accelerate the performance
required  by,  or excuse  performance  by any  person of any of its  obligations
under,  or cause the  acceleration  of the  maturity  of any debt or  obligation
pursuant to, or result in the creation or imposition of any encumbrance upon any
property or assets of 10Charge US under, any material agreement or commitment to
which 10Charge US is a party or by which its property or assets is bound,  or to
which any of the  property or assets of  10Charge US is subject,  or (c) violate
any statute or law or any  judgment,  decree,  order,  regulation or rule of any
court or other  governmental  body applicable to 10Charge US except, in the case

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of violations, conflicts, defaults, terminations,  accelerations or encumbrances
described in clause (b) of this Section for such matters which are not likely to
have a  material  adverse  effect on the  business  or  financial  condition  of
10Charge US.

         (f) Consents and  Approvals of  Governmental  Authorities.  No consent,
approval or authorization of, or declaration,  filing or registration  with, any
governmental  body  is  required  to be  made  or  obtained  by  10Charge  US in
connection  with the  execution,  delivery and  performance of this Agreement by
10Charge US or the consummation of the sale of the 10Charge US Shares.

         (g) Other Consents. No consent of any person is required to be obtained
by 10Charge US to the execution,  delivery and  performance of this Agreement or
the consummation of the sale of the 10Charge US Shares.

         (h) Financial  Statements.  10Charge US has delivered or otherwise made
available to 10Charge Hungary the financial statements included with its filings
with  the SEC  (the  "10Charge  US  Financial  Statements").  Such  10Charge  US
Financial  Statements  and  notes  fairly  present  the  consolidated  financial
condition and results of operations  of 10Charge US as at the  respective  dates
thereof  and for  the  periods  therein  referred  to,  all in  accordance  with
generally  accepted United States  accounting  principles  consistently  applied
throughout  the periods  involved.  10Charge US has delivered or otherwise  made
available to 10Charge Hungary copies of all annual, quarterly and other periodic
reports filed by 10Charge US with the SEC in accordance with the Exchange Act.

         (i)  Title  to  Properties.  Except  as set  forth in the  10Charge  US
Financial Statements, 10Charge US does not own any assets.

         (j)  Litigation.  There is no  action,  suit,  inquiry,  proceeding  or
investigation by or before any Court or Governmental  body pending or threatened
in writing  against or involving  10Charge US which is likely to have a material
adverse effect on the business or financial condition of 10Charge US.

         (k) No  Material  Adverse  Change.  Since the date of the  10Charge  US
Financial  Statements,  there has not been any  material  adverse  change in the
business or  financial  condition  of 10Charge  US. The  10Charge US SEC filings
contain  all  material  information  with  respect  to the  business,  financial
condition and operations of 10Charge US.

         (l) Contracts and Commitments.  Except as set forth in its filings with
the SEC,  10Charge US is not a party to any  contract or  agreement,  including,
without  limitation,   any  leases,   employment   agreements,   confidentiality
agreements,  or other material agreement.  10Charge US has delivered to 10Charge
Hungary copies of any and all material  agreements,  arrangements,  contracts or
other matters relating to 10Charge US.

         (m)  Labor  Relations.  10Charge  US is not a party  to any  collective
bargaining agreement. 10Charge US does not have any employees.

         (n)  Compliance  with Law.  The  operations  of  10Charge  US have been
conducted  in  accordance  with  all  applicable  laws  and  regulations  of all
governmental bodies having jurisdiction over them, except for violations thereof

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which are not  likely to have a  material  adverse  effect  on the  business  or
financial  condition  of  10Charge  US, or which  would not require a payment by
10Charge US in excess of $50,000 in the aggregate, or which have been cured.

         (o) Tax  Matters.  10Charge  US (1) has  filed or shall  file  prior to
Closing all US federal,  state and other tax returns ("Tax Returns") required to
be filed  through the date hereof and will have paid or  contested in good faith
any tax due through the date hereof with respect to the time periods  covered by
such Tax  Returns  and shall  timely pay or contest in good faith any such taxes
required to be paid by it after the date hereof with respect to such Tax Returns
and (2) shall prepare and timely file all such Tax Returns  required to be filed
after the date hereof and  through  the Closing  Date and pay or contest in good
faith all taxes required to be paid by it with respect to the periods covered by
such Tax  Returns.  Any such Tax Return  filed or required to be filed after the
date  hereof  shall not reflect the  adoption of any new  accounting  methods or
conventions  or other  similar  items,  except  to the  extent  such  particular
reflection or adoption is required to comply with any law or regulation.

         (p)  Transactions  with  Directors and  Officers.  10Charge US does not
engage in  business  with any  person or  entity in which any of  10Charge  US's
directors or officers has a material equity interest.  No director or officer of
10Charge US owns any property, asset or right, which is material to the business
of 10Charge US.

         (q)  Borrowing  and  Guarantees.  10Charge  US (a)  does  not  have any
indebtedness  for  borrowed  money,  (b) is not lending or committed to lend any
money (except for advances to employees in the ordinary course of business), and
(c) is not a guarantor or surety with respect to the obligations of any person.

7.       Representations of 10Charge Hungary. 10Charge Hungary and each 10Charge
Hungary  Equity Holder,  hereby  jointly and severally  represent and warrant as
follows:

         (a)  Organization;   Authorization.   10Charge  Hungary  is  a  limited
liability  company duly organized,  validly  existing and in good standing under
the laws of Hungary  with full power and  authority  to execute and deliver this
Agreement and to perform its obligations hereunder. The execution,  delivery and
performance of this Agreement has been duly  authorized by all necessary  action
of  10Charge  Hungary  and  this  Agreement  constitutes  a  valid  and  binding
obligation,  enforceable  against 10Charge Hungary in accordance with its terms.
10Charge Hungary has no subsidiaries.

         (b)  Capitalization.  As  of  the  date  of  this  Agreement,  10Charge
Hungary's capitalization is equal to the aggregate amount set forth next to each
equity  holder's  name on Schedule A hereto.  No equity of 10Charge  Hungary has
been registered under foreign, state or federal securities laws. All outstanding
equity interests of 10Charge Hungary have been issued pursuant to an appropriate
exemption from the  registration  requirements of the Securities Act of 1933, as
amended ("Securities Act") and from all applicable registration  requirements of
the various U.S. states and foreign  jurisdictions.  As of the Closing Date, all
of the issued and outstanding  equity 10Charge Hungary is validly issued,  fully
paid and  non-assessable  and are free from all claims,  rights,  liens or other
encumbrances,  and there is not,  and as of the Closing  Date there will not be,
outstanding  any  warrants,  options,  other  convertible  securities  or  other
agreements on the part of 10Charge Hungary obligating it to issue any additional

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equity or other  securities  of any kind.  10Charge  Hungary  will not issue any
equity or other  securities from the date of this Agreement  through the Closing
Date.

         (c) No Conflict  as to 10Charge  Hungary.  Neither  the  execution  and
delivery of this Agreement nor the consummation of the transactions contemplated
herein will (a) violate  any  provision  of the  articles  of  incorporation  or
organization  of 10Charge  Hungary or (b) violate,  or be in conflict  with,  or
constitute a default (or an event  which,  with notice or lapse of time or both,
would  constitute  a  default)  under,  or  result  in the  termination  of,  or
accelerate the performance  required by, or excuse  performance by any person of
any of its obligations  under, or cause the  acceleration of the maturity of any
debt or  obligation  pursuant to, or result in the creation or imposition of any
encumbrance  upon any property or assets of 10Charge Hungary under, any material
agreement or commitment to which 10Charge Hungary are a party or by which any of
their respective property or assets is bound, or to which any of the property or
assets of  10Charge  Hungary is subject or (c) violate any statute or law or any
judgment,  decree, order,  regulation or rule of any court or other governmental
body  applicable  to  10Charge  Hungary  except,  in  the  case  of  violations,
conflicts,  defaults,  terminations,  accelerations or encumbrances described in
clause  (b) of this  Section  for such  matters  which are not  likely to have a
material  adverse  effect on the  business or  financial  condition  of 10Charge
Hungary, taken as a whole.

         (d) Consents and  Approvals of  Governmental  Authorities.  No consent,
approval or authorization of, or declaration,  filing or registration  with, any
governmental  body is required  to be made or  obtained  by 10Charge  Hungary in
connection  with the  execution,  delivery and  performance of this Agreement by
10Charge Hungary or the consummation of the transactions contemplated herein.

         (e) Other Consents. No consent of any person is required to be obtained
by 10Charge Hungary to the execution, delivery and performance of this Agreement
or the consummation of the transactions  contemplated herein, including, but not
limited to, consents from parties to leases or other  agreements or commitments,
except for any consent which the failure to obtain would not be likely to have a
material  adverse  effect on the  business and  financial  condition of 10Charge
Hungary.

         (f) Title to  Properties.  10Charge  Hungary  owns all of its  material
properties  and assets they purport to own (real,  personal and mixed,  tangible
and intangible),  including, without limitation, all the material properties and
assets reflected in 10Charge Hungary's  Financial  Statements (as defined below)
and all the material  properties and assets  purchased or otherwise  acquired by
10Charge Hungary since the date of 10Charge Hungary's Financial Statements.  All
properties and assets reflected in 10Charge Hungary's  Financial  Statements are
free and clear of all  material  encumbrances  and are not,  in the case of real
property,  subject to any material  rights of way,  building  use  restrictions,
exceptions,  variances,  reservations  or limitations  of any nature  whatsoever
except,  with  respect to all such  properties  and  assets,  (a)  mortgages  or
security interests shown on 10Charge Hungary'  Financial  Statements as securing
specified liabilities or obligations, with respect to which no default (or event
which, with notice or lapse of time or both, would constitute a default) exists,

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(b) mortgages or security  interests incurred in connection with the purchase of
property or assets  after the date of  10Charge  Hungary'  Financial  Statements
(such  mortgages and security  interests being limited to the property or assets
so acquired),  with respect to which no default (or event which,  with notice or
lapse  of time or both,  would  constitute  a  default)  exists,  (c) as to real
property,  (i) imperfections of title, if any, none of which materially detracts
from the value or impairs the use of the property  subject  thereto,  or impairs
the  operations of 10Charge  Hungary and (ii) zoning laws that do not impair the
present or anticipated use of the property  subject  thereto,  and (d) liens for
current taxes not yet due. The properties and assets of 10Charge Hungary include
all rights,  properties and other assets necessary to permit 10Charge Hungary to
conduct their respective  businesses in all material respects in the same manner
as it is conducted on the date of this Agreement.

         (g) Financial  Statements.  10Charge Hungary's financial statements and
notes  previously  delivered  to 10Charge US (the  "10Charge  Hungary  Financial
Statements")  fairly present the  consolidated  financial  condition of 10Charge
Hungary as at the respective  dates thereof and for the periods therein referred
to, all in accordance with generally accepted accounting principles consistently
applied  throughout  the  periods  involved,  except  as set  forth in the notes
thereto,  and shall be utilizable in any SEC filing in compliance  with Rule 310
of Regulation S-B promulgated under the Securities Act.

         (h) Buildings, Plants and Equipment. The buildings,  plants, structures
and material items of equipment and other  personal  property owned or leased by
10Charge  Hungary  are in all  respects  material to the  business or  financial
condition of 10Charge Hungary, taken as a whole, in good operating condition and
repair  (ordinary  wear and tear excepted) and are adequate in all such respects
for the  purposes  for which  they are being  used.  10Charge  Hungary  have not
received  notification  that  any of them  are in  violation  of any  applicable
building,  zoning,  anti-pollution,  health,  safety or other law,  ordinance or
regulation  in  respect  of  their  buildings,  plants  or  structures  or their
operations,  which violation is likely to have a material  adverse effect on the
business or financial  condition of 10Charge Hungary,  taken as a whole or which
would  require a payment  by  10Charge  Hungary  in  excess  of  $50,000  in the
aggregate, and which has not been cured.

         (i) No Condemnation or Expropriation. Neither the whole nor any portion
of the property or  leaseholds  owned or held by 10Charge  Hungary is subject to
any governmental decree or order to be sold or is being condemned,  expropriated
or  otherwise  taken by any  governmental  body or other  person with or without
payment  of  compensation  therefor,  which  action is likely to have a material
adverse effect on the business or financial condition of 10Charge Hungary.

         (j)  Litigation.  There is no  action,  suit,  inquiry,  proceeding  or
investigation by or before any court or governmental  body pending or threatened
in  writing  against or  involving  10Charge  Hungary  which is likely to have a
material  adverse  effect on the  business or  financial  condition  of 10Charge
Hungary, taken as whole, or which would require a payment by 10Charge Hungary in
excess of $50,000 in the aggregate or which questions or challenges the validity
of this  Agreement.  10Charge  Hungary is not subject to any judgment,  order or
decree  that is likely to have a  material  adverse  effect on its  business  or
financial  condition,  or which would  require a payment by 10Charge  Hungary in
excess of $50,000 in the aggregate.

         (k) No Material  Adverse Change.  Since the date of 10Charge  Hungary's
Financial  Statements,  there has not been any  material  adverse  change in the
business or financial  condition of 10Charge  Hungary taken as a whole,  nor has
10Charge Hungary incurred any material indebtedness.

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         (l) Contracts and Commitments. 10Charge Hungary is not a party to any:

                  1. Contract or agreement  (other than purchase or sales orders
         entered  into  in  the  ordinary  course  of  business)  involving  any
         liability  of more  than  $50,000  and not  cancelable  by it  (without
         liability  to it) within 60 days.  10Charge  Hungary has  delivered  to
         10Charge US copies of any and all  material  agreements,  arrangements,
         contracts or other matters relating to 10Charge Hungary.

                  2. Lease of personal property involving annual rental payments
         in excess of $50,000 and not cancelable by it (without liability to it)
         within 90 days;

                  3. Employee bonus, stock option or stock purchase, performance
         unit, profit-sharing, pension, savings, retirement, health, deferred or
         incentive  compensation,  insurance or other material  employee benefit
         plan (as  defined in Section  2(3) of ERISA) or program  for any of the
         employees, former employees or retired employees of 10Charge Hungary;

                  4.  Commitment,   contract  or  agreement  that  is  currently
         expected  by the  management  of  10Charge  Hungary  to  result  in any
         material loss upon completion or performance thereof;

                  5. Contract,  agreement or commitment, that is material to the
         business  of  10Charge  Hungary,  with any  officer,  employee,  agent,
         consultant,  advisor,  salesman,  sales  representative,   value  added
         reseller, distributor or dealer; or

                  6.  employment  agreement  or  other  similar  agreement  that
         contains any severance or termination pay, liabilities or obligations.

         All  such  contracts  and  agreements  are in full  force  and  effect.
10Charge  Hungary is not in breach or  violation  of, or in default  under,  any
agreement,  instrument,  indenture, deed of trust, commitment, contract or other
obligation of any type to which it is a party or is or may be bound that relates
to its  business or to which any of its assets or  properties  is  subject,  the
effect of which  breach,  violation  or  default  is likely  to  materially  and
adversely affect the business or financial condition of 10Charge Hungary.

         (m) Labor Relations.  10Charge Hungary is not a party to any collective
bargaining  agreement.  Except  for any  matter  which is not  likely  to have a
material  adverse  effect on the  business or  financial  condition  of 10Charge
Hungary,  (a)  10Charge  Hungary  is in  compliance  with  all  applicable  laws
respecting  employment  and  employment  practices,   terms  and  conditions  of
employment  and wages and hours,  and  10Charge  Hungary  is not  engaged in any
unfair labor practice,  (b) there is no unfair labor practice  complaint against
10Charge  Hungary  pending before the National Labor  Relations Board or similar
foreign government agency,  (c) there is no labor strike,  dispute,  slowdown or
stoppage  actually  pending  or  threatened  against  10Charge  Hungary,  (d) no
representation question exists respecting the employees of 10Charge Hungary, (e)
10Charge  Hungary has not experienced  any strike,  work stoppage or other labor
difficulty,  and (f) no collective bargaining agreement relating to employees of
any of 10Charge Hungary is currently being negotiated.

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         (n) Employee  Benefit Plans.  No material  employee  pension or welfare
benefit plans  covering  employees of 10Charge  Hungary is (1) a  multi-employer
plan as defined  in Section  3(37) of ERISA,  or (2) a defined  benefit  plan as
defined in Section 3(35) of ERISA; any listed individual account pension plan is
duly  qualified as tax exempt under the  applicable  sections of the Code,  each
listed benefit plan and related funding arrangement, if any, has been maintained
in all material  respects in  compliance  with its terms and the  provisions  of
ERISA and the Code.

         (o) Compliance  with Law. The operations of 10Charge  Hungary have been
conducted  in  accordance  with  all  applicable  laws  and  regulations  of all
governmental bodies having jurisdiction over them, except for violations thereof
which are not  likely to have a  material  adverse  effect  on the  business  or
financial  condition of 10Charge Hungary or which would not require a payment by
10Charge  Hungary  in excess of  $50,000  in the  aggregate,  or which have been
cured. 10Charge Hungary has not received notification of any asserted present or
past  failure  by any of  them  to  comply  with  any  such  applicable  laws or
regulations.  10Charge  Hungary has all material  licenses,  permits,  orders or
approvals  from  the  governmental  bodies  required  for the  conduct  of their
businesses,  and are not in material  violation of any such  licenses,  permits,
orders and approvals.  All such licenses,  permits,  orders and approvals are in
full force and effect, and no suspension or cancellation of any thereof has been
threatened.

         (p) Tax Matters.  10Charge Hungary (1) has filed or shall file prior to
Closing  all Tax Returns  required to be filed  through the date hereof and will
have paid any tax due through the date hereof with  respect to the time  periods
covered by such Tax Returns and shall  timely pay any such taxes  required to be
paid by it after the date hereof with  respect to such Tax Returns and (2) shall
prepare and timely file all such Tax Returns required to be filed after the date
hereof and through the Closing Date and pay all taxes  required to be paid by it
with  respect to the periods  covered by such Tax  Returns.  Any such Tax Return
filed or required  to be filed  after the date hereof  shall not reflect any new
elections or the adoption of any new accounting  methods or conventions or other
similar items,  except to the extent such  particular  reflection or adoption is
required  to  comply  with  any law or  regulation.  There is no  action,  suit,
proceeding,  investigation,  audit,  claim,  demand,  deficiency  or  additional
assessment in progress, pending or threatened against or with respect to any tax
attributable  to  10Charge  Hungary or its  assets or  operations.  All  amounts
required to be withheld as of the Closing Date for taxes or otherwise  have been
withheld and paid when due to the appropriate  agency or authority.  There shall
be  delivered  or made  available to 10Charge US at or prior to Closing true and
complete  copies of all income tax returns (or with respect to  consolidated  or
combined  returns,  the portion thereof) and any other tax returns  requested by
10Charge US as may be relevant to 10Charge  Hungary or its assets or  operations
for any and all periods.

         (q)  Environmental  Matters.  At all  times  prior to the date  hereof,
10Charge  Hungary  has  complied  in  all  material   respects  with  applicable
environmental  laws, orders,  regulations,  rules and ordinances relating to its
business,  properties  and assets,  the violation of which would have a material
adverse  effect on the  business or financial  condition of 10Charge  Hungary or
which would  require a payment by  10Charge  Hungary in excess of $50,000 in the
aggregate,  and which  have been duly  adopted,  imposed or  promulgated  by any
legislative,  executive,  administrative  or  judicial  body or  officer  of any
governmental agency. The environmental licenses, permits and authorizations that

                                       9
<PAGE>

are material to the operations of 10Charge Hungary are in full force and effect.

         (r) Absence of Certain Commercial Practices.  10Charge Hungary has not,
directly or  indirectly,  paid or delivered any fee,  commission or other sum of
money  or  item  of  property,  however  characterized,  to any  finder,  agent,
government  official or other party,  in the United States or any other country,
which is in any manner related to its business or operations,  which it knows or
has reason to believe to have been  illegal  under any  federal,  state or local
laws of the United States or any other country having jurisdiction; and 10Charge
Hungary has not participated,  directly or indirectly,  in any boycotts or other
similar  practices  affecting  any of  its  actual  or  potential  customers  in
violation of any applicable law or regulation.

         (s)  Proprietary  Rights.  10 Charge  Hungary  owns or possesses or has
adequate  licenses or other rights to use,  and has taken all action  reasonably
necessary to protect,  all intellectual  property  necessary for its business as
now  conducted  and as  proposed  to be  conducted  without,  to the best of its
knowledge,  any conflict with or infringement of the rights of others. A list of
all intellectual property of 10Charge Hungary has been delivered to 10Charge US.
There are no outstanding options, licenses or agreements of any kind relating to
the  foregoing,  nor is  10Charge  Hungary  bound by or a party to any  options,
licenses or agreements of any kind with respect to the intellectual  property of
any other person or entity. 10Charge Hungary has not received any communications
alleging that it has violated,  or by conducting its business would violate, any
of the  intellectual  property  rights of any other  person  or  entity,  nor is
10Charge  Hungary aware of any basis for the foregoing.  10Charge Hungary is not
aware that any of its employees or contractors  are obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or  subject  to any  judgment,  decree or order of any  court or  administrative
agency,  that would  interfere with the use of such  employee's or  contractor's
best efforts to promote its interests,  or that would conflict with the business
of 10Charge Hungary as presently conducted.

         (t) Borrowing and Guarantees.  10Charge Hungary (a) has no indebtedness
for borrowed  money,  (b) is not lending or committed to lend any money  (except
for advances to  employees  in the ordinary  course of business and as otherwise
previously  disclosed in writing to 10Charge  US), and (c) is not a guarantor or
surety with respect to the obligations of any person.

         (u) Qualification  and  Registration.  10Charge Hungary is qualified or
licensed as foreign  corporations in all  jurisdictions  where their  respective
business or  ownership  of assets so  requires,  except  where the failure to be
qualified  or  licensed  would  not  have  a  material  adverse  effect  on  its
businesses.  The  business  of  10Charge  Hungary  does  not  require  it  to be
registered as an investment  company or  investment  adviser,  as such terms are
defined under the Investment Company Act of 1940 and the Investment Advisers Act
of 1940, each as amended.

         (v)  Marketability  of  Title.  Except  as  provided  for  in  10Charge
Hungary's  Financial  Statements,  10Charge Hungary has, and on the Closing Date
will  have,  good and  marketable  title to all of their  respective  furniture,
fixtures,  equipment  and  other  assets  as set  forth  in  10Charge  Hungary's
Financial  Statements,  and such assets are owned free and clear of all security

                                       10
<PAGE>

interests,  pledges,  liens,  restrictions  and  encumbrances  of every kind and
nature.

         (w) Payments and Distributions.  Through the Closing Date there will be
(i) no bonuses or extraordinary compensation to any of the officers,  directors,
members,  managers or stockholders of 10Charge Hungary, (ii) no loans made to or
any other transactions with any of the officers, directors, members, managers or
stockholders  of  10Charge  Hungary  or their  families  (except  as  previously
disclosed  in  writing  to  10Charge  US),  and  (iii)  no  dividends  or  other
distributions declared or paid by 10Charge Hungary.

         (x) Related  Party  Transactions.  10Charge  Hungary does not engage in
business  with any person or entity in which any of its  officers,  directors or
other  affiliates  have a material  equity  interest.  No  affiliate of 10Charge
Hungary owns any property,  asset or right, which is material to the business of
10Charge  Hungary.  There are,  and on the Closing Date there will be, no loans,
leases  or  other  Contracts   outstanding  between  10Charge  Hungary  and  any
affiliate,  other  than such  Contracts  as have been  approved  in  writing  by
10Charge US.

         (y) Insurance. 10Charge Hungary has, and on the Closing Date will have,
maintained  casualty and liability  policies and other  insurance  policies with
respect to its  businesses  which are  appropriate  and customary for businesses
similar in size,  industry and risk  profile,  including  but not limited to the
insurance relating to its intellectual  property.  Copies of all of the policies
of insurance  and bonds  presently  in force with  respect to 10Charge  Hungary,
including without limitation those covering  properties,  buildings,  machinery,
equipment,  worker's compensation,  officers and directors and public liability,
have been  delivered to 10Charge US. All such  insurance is  outstanding  and in
full force and effect, with all premiums thereon duly paid, and 10Charge Hungary
has not received any notice of cancellation of any such policies.

         (z) Since its inception,  10Charge Hungary has, and on the Closing Date
will have, in all material  respects  operated its  businesses and conducted its
affairs in compliance with all applicable laws,  rules and  regulations,  except
where the  failure to so comply did not have and would not be expected to have a
material adverse effect on their respective businesses or property.

         (aa) During the past five (5) year period none of 10Charge Hungary, nor
any of its officers or directors,  nor any person intended upon  consummation of
the  transactions  contemplated  herein to  become an  officer  or  director  of
10Charge US or any successor entity or subsidiary, has been the subject of:

                  1. a petition under the Federal  bankruptcy  laws or any other
         insolvency or moratorium law or has a receiver, fiscal agent or similar
         officer  been  appointed  by a court for the  business  or  property of
         10Charge  Hungary or such person,  or any partnership in which 10Charge
         Hungary or any such person was a general partner at or within two years
         before  the  time  of  such  filing,  or any  corporation  or  business
         association  of  which  10Charge  Hungary  or any  such  person  was an
         executive  officer  at or  within  two  years  before  the time of such
         filing;

                                       11
<PAGE>

                  2. a conviction in a criminal proceeding or a named subject of
         a pending criminal  proceeding  (excluding  traffic violations which do
         not  relate  to  driving  while   intoxicated   or  driving  under  the
         influence);

                  3. any order,  judgment or decree, not subsequently  reversed,
         suspended  or  vacated,   of  any  court  of  competent   jurisdiction,
         permanently  or  temporarily  enjoining  10Charge  Hungary  or any such
         person from, or otherwise limiting, the following activities:

                           (i)   acting  as  a  futures   commission   merchant,
                  introducing broker, commodity trading advisor,  commodity pool
                  operator,  floor broker,  leverage transaction  merchant,  any
                  other person regulated by the United States Commodity  Futures
                  Trading  Commission  or an  associated  person  of  any of the
                  foregoing, or as an investment adviser, underwriter, broker or
                  dealer in securities,  or as an affiliated person, director or
                  employee of any  investment  company,  bank,  savings and loan
                  association or insurance company, or engaging in or continuing
                  any conduct or practice in connection with such activity;

                           (ii) engaging in any type of business practice; or

                           (iii) engaging in any activity in connection with the
                  purchase or sale of any security or commodity or in connection
                  with any violation of Federal,  state or other securities laws
                  or commodities laws;

                  4. any order,  judgment or decree, not subsequently  reversed,
         suspended or vacated, of any Federal, state or local authority barring,
         suspending  or  otherwise  limiting  for more than 60 days the right of
         10Charge Hungary or any such person to engage in any activity described
         in  the  preceding  sub-paragraph,  or to be  associated  with  persons
         engaged in any such activity;

                  5. a finding by a court of competent  jurisdiction  in a civil
         action or by the SEC to have violated any securities law, regulation or
         decree and the  judgment in such civil action or finding by the SEC has
         not been subsequently reversed, suspended or vacated; or

                  6. a finding by a court of competent  jurisdiction  in a civil
         action or by the Commodity Futures Trading  Commission to have violated
         any federal  commodities  law, and the judgment in such civil action or
         finding  by the  Commodity  Futures  Trading  Commission  has not  been
         subsequently reversed, suspended or vacated.

         (bb) 10Charge Hungary does not have any pension plan, profit sharing or
similar employee benefit plan.

         (cc) None of the  information  supplied  or to be  supplied by or about
10Charge  Hungary for inclusion or incorporation by reference in any information
supplied to holders of Common Stock  concerning  the  transactions  contemplated
herein  contains any untrue  statement of a material  fact or omits to state any
material  fact  required to be stated  therein or necessary in order to make the

                                       12
<PAGE>

statements therein, in light of the circumstances under which they are made, not
misleading.

8.       Further Assurances of Title.

         As and when requested by 10Charge US, 10Charge Hungary,  as applicable,
shall execute and deliver, or cause to be executed and delivered, all such deeds
and  instruments  and will take or cause to be taken all such further  action as
10Charge US may deem  necessary  or desirable in order to vest in and confirm to
10Charge US, as applicable,  title to and possession of the property acquired by
10Charge US by reason or as a result of the  transactions  contemplated  hereby,
and otherwise to carry out the intent and purposes hereof,  and the officers and
directors  of  10Charge  US are fully  authorized  in the name of 10Charge US or
otherwise to take any and all such action.

9.       Notices.

         Any notice which any of the parties hereto may desire to serve upon any
of the other parties hereto shall be in writing and shall be conclusively deemed
to have been received by the party at its address,  if mailed,  postage prepaid,
United  States mail,  registered,  return  receipt  requested,  to the following
addresses:

If to 10Charge US:                          2080 Pilisjaszfalu
                                            Erdoalja u 12
                                            Hungary
                                            Facsimile No.: +36 (1) 2253373
                                            Attention: Attila Reisz, President

with a copy to:                             Feldman Weinstein LLP
                                            420 Lexington Avenue
                                            Suite 2620
                                            New York, NY 10170
                                            Facsimile No.: (212) 997-4242
                                            Attention: David N. Feldman, Esq.

If to 10Charge Hungary:                     1173 Budapest
                                            508 Utca 23
                                            Hungary
                                            Facsimile No.: +36 (1) 392-2773
                                            Attention: Jozsef Marinka Toth,
                                            General Manager

with a copy to:                             Kardos, Peto, Torocsik
                                            Address: Szeged Beke utca 5, Hungary
                                            Attention: Zsolt Peto

If to a 10Charge Hungary Equity Holder:     to the address of such equity
                                            holder listed on Schedule A.

                                       13
<PAGE>

10.      Miscellaneous.

         This  Agreement  shall be binding  upon and inure to the benefit of the
heirs, personal  representatives and successors and assigns of the parties. This
Agreement  shall be construed  and enforced in  accordance  with the laws of the
State of Delaware. This Agreement may be signed in one or more counterparts, all
of which taken together  shall  constitute an entire  agreement.  This Agreement
sets forth the entire  agreement and  understanding  of the parties  hereto with
respect  to the  transactions  contemplated  hereby,  and  supersedes  all prior
agreements,  arrangements  and  understandings  related  to the  subject  matter
hereof.  No  understanding,   promise,   inducement,   statement  of  intention,
representation,  warranty,  covenant or condition,  written or oral,  express or
implied,  whether  by statute or  otherwise,  has been made by any party  hereto
which is not embodied in this Agreement or the written statements, certificates,
or  other  documents  delivered  pursuant  hereto  or  in  connection  with  the
transactions  contemplated  hereby,  and no  party  hereto  shall be bound by or
liable  for  any  alleged   understanding,   promise,   inducement,   statement,
representation,  warranty,  covenant or  condition  not so set forth.  Except as
otherwise specifically set forth herein, each party will bear its own attorneys,
brokers,  investment  bankers,  agents, and finders employed by, such party. The
parties will indemnify each other against any claims, costs, losses, expenses or
liabilities  arising  from any claim  for  commissions,  finder's  fees or other
compensation in connection with the transactions  contemplated  herein which may
be asserted by any person based on any agreement or  arrangement  for payment by
the other  party.  Should any action be  commenced  between  the parties to this
Agreement  concerning  the matters set forth in this  Agreement or the right and
duties of either in relation thereto,  the prevailing party in such action shall
be entitled, in addition to such other relief as may be granted, to a reasonable
sum as and  for its  attorney's  fees  and  costs.  All of the  representations,
covenants and warranties  contained in this Agreement  (including all statements
contained in any  certificate or other  instrument  delivered by or on behalf of
10Charge  US or  10Charge  Hungary  pursuant  hereto or in  connection  with the
transactions contemplated hereby), shall survive the Closing for a period of two
(2) years from the Closing  Date.  The  provisions  of this  Agreement  shall be
severable,  so  that  the  unenforceability,  validity  or  legality  of any one
provision  shall not affect the  enforceability,  validity  or  legality  of the
remaining provisions hereof. This Agreement shall be deemed to have been drafted
jointly by the parties hereto,  and no inference or  interpretation  against any
party  shall be made  solely by virtue of such party  allegedly  having been the
draftsperson of this Agreement.

         11. Confidential Information.  Each of 10Charge US and 10Charge Hungary
hereby  acknowledges  and agrees that all  information  disclosed  to each other
whether  written or oral,  relating  to the  other's  business  activities,  its
customer names,  addresses,  all operating  plans,  information  relating to its
existing  services,  new or envisioned  products or services and the development
thereof,  scientific,  engineering,  or  technical  information  relating to the
others business, marketing or product promotional material, including brochures,
product literature, plan sheets, and any and all reports generated to customers,
with  regard  to  customers,  unpublished  list of  names,  and all  information
relating to order  processing,  pricing,  cost and  quotations,  and any and all
information relating to relationships with customers, is considered confidential
information,  and is  proprietary  to, and is considered  the  invaluable  trade
secret of such party  (collectively  "Confidential  Information").  Confidential
information  provided  hereunder  shall not  include  information  which must be

                                       14
<PAGE>

permitted to be disclosed in order to ensure that the transactions  contemplated
hereby do not  constitute  a "tax  shelter" as defined by the  Internal  Revenue
Service. The parties (and each employee, representative, or other agent thereof)
may disclose to any and all persons,  without  limitation  of any kind,  the tax
treatment  and tax  structure of the  transaction  and all materials of any kind
(including  opinions  or other tax  analyses)  that are  provided to the parties
relating to such tax treatment and tax structure.

         The  parties  hereto  agree  that any  disclosure  of any  Confidential
Information by any party hereto, its employees,  or representatives  shall cause
immediate,  substantial,  and irreparable harm and loss to the other. Each party
understands that the other desires to keep such Confidential  Information in the
strictest  confidence,  and that such party's agreement to do so is a continuing
condition  of the receipt and  possession  of  Confidential  Information,  and a
material  provision of this  Agreement,  and a condition  that shall survive the
termination of this Agreement.  Consequently,  each party shall use Confidential
Information  for the sole  purpose of  performing  its  obligations  as provided
herein.

12.      Public  Announcement. The parties shall  make  no  public  announcement
concerning  this  Agreement,  their  discussions or any other letters,  memos or
other agreements  between the parties relating to this Agreement until such time
as they agree to the contents of a mutually  satisfactory  press release,  which
they intend to release on the date of execution of this Agreement. Either of the
parties,  but  only  after  reasonable  consultation  with the  other,  may make
disclosure if required under applicable law.

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

                                    10CHARGE, INC.

                                    By:
                                        ----------------------------------------
                                    Name: Attila Reisz
                                    Title: President and CEO

                                    10CHARGE KFT.

                                    By:
                                        ----------------------------------------
                                    Name: Jozsef Marinka Toth
                                    Title: Managing Director

                                    10 CHARGE KFT. EQUITY HOLDERS:

                                    --------------------------------------------
                                    Attila Reisz

                                       15
<PAGE>

                                    --------------------------------------------
                                    Jozsef Marinka Toth

                                    [SIGNATURE PAGE CONTINUED]

                                    --------------------------------------------
                                    Victor Rozsnyay

                                    --------------------------------------------
                                    Laszlo Gero

                                    --------------------------------------------
                                    Agnes Verebelyi

                                    --------------------------------------------
                                    Erno Duda

                                    --------------------------------------------
                                    Henri Edouard Russenberger

                                    --------------------------------------------
                                    Zoltan Fauszt

                                    --------------------------------------------
                                    Eva Majus

                                    --------------------------------------------
                                    Laszlo Kollar

                                       16Exhibit 10.1
                               EXCHANGE AGREEMENT

                  THIS EXCHANGE AGREEMENT (this "Agreement"), dated as of August
___, 2003, is entered into by and between UNIVEC, INC., a Delaware corporation
(the "Company"), and THE SHAAR FUND, LTD. (the "Holder" or the "Buyer").

                              W I T N E S S E T H:

                  WHEREAS, the Company and the Buyer are executing and
delivering this Agreement in accordance with and in reliance upon the exemption
from securities registration afforded, inter alia, by Section 3 (a) (9) of the
Securities Act of 1933, as amended (the "1933 Act"); and

                  WHEREAS, the Buyer is the record and beneficial owner of the
following shares of the specified series of the Company's Preferred Stock (i)
122 shares of the Series B 5% Convertible Preferred Stock, par value $0.001 per
share, of the Company (the "Series B Shares"), with accrued unpaid dividends
through the date hereof (the liquidation preference and accrued dividends on the
Series B Shares, the "Series B Amount"); and (ii) 250 shares of the Series C 5%
Convertible Preferred Stock, par value $0.001 per share, of the Company (the
"Series C Shares"), with accrued unpaid dividends through the date hereof (the
liquidation preference and accrued dividends on the Series C Shares, the "Series
C Amount"); each of the Series B Shares and Series C Shares (collectively, the
"Preferred Shares") was acquired and fully paid for more than two years prior to
the date hereof, and the Buyer desires to exchange the Preferred Shares
(including all accrued dividends thereon and the accrued but unpaid dividends,
if any, on any previously converted shares of Preferred Shares; collectively,
the "Exchanged Shares") for the Buyer's purchase of the Purchased Shares (as
defined below), and the Company is willing to accept the Exchanged Shares as
such consideration for the Purchased Shares; and

                  WHEREAS, the Buyer wishes to acquire from the Company in
exchange for the Exchanged Shares and the Company desires to deliver to the
Buyer in exchange for the Exchanged Shares, upon the terms and subject to the
conditions of this Agreement, 522 shares of the Series E 5% Convertible
Preferred Stock, par value $0.001 per share, of the Company (the "Series E
Stock"), which shares are convertible into shares (the "Conversion Shares,"
which term includes any shares issued in payment of dividends on the Series E
Stock as provided in the Certificate of Designations, defined below) of Common
Stock of the Company (the "Common Stock") in accordance with the terms of the
Certificate of Designations.

                  NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

                  1. AGREEMENT TO PURCHASE; CONSIDERATION; CERTAIN DEFINITIONS.

                  a. Purchase. The Buyer hereby agrees to purchase from the
Company, and the Company hereby agrees to sell to the Buyer, the number of
shares of Series E Stock (the "Purchased Shares") specified on the Buyer's
signature page to this Agreement in exchange for the Exchanged Shares. No other
consideration shall be due from the Buyer to the Company for the Purchased
Shares.

                  b. Certain Definitions. As used herein, each of the following
terms has the meaning set forth below, unless the context otherwise requires:

                  (i) "Buyer Control Person" means each director, executive
officer, promoter, and such other Persons as may be deemed in control of the
Buyer pursuant to Section 15 of the 1933 Act or Section 20 of the 1934
Securities Exchange Act of 1934, as amended (the "1934 Act").

                                       1

<PAGE>

                  (ii) "Certificate of Designations" means the Certificate of
Designations for the Series E Stock, substantially in the form annexed hereto as
Annex I.

                  (iii) "Certificates" means the Current Certificates and the
Exchanged Certificates, or either of them, as the context may require.

                  (iv)     "Closing Date" means the date of the closing of the
purchase and sale of the Purchased  Shares,  as provided herein.

                  (v) "Company Control Person" means each director, executive
officer, promoter, and such other Persons as may be deemed in control of the
Company pursuant to Section 15 of the 1933 Act or Section 20 of the 1934 Act.

                  (vi) "Current Certificates" means the stock certificates
representing the Purchased Shares duly executed by the Company and issued in the
name of the Buyer on the Closing Date.

                  (vii) "Exchanged Certificates" means the stock certificates
representing the Exchanged Shares being returned to the Company for
cancellation.

                  (viii) "Last Audited Date" means December 31, 2002.

                  (ix) "Material Adverse Effect" means an event or combination
of events, which individually or in the aggregate, would reasonably be expected
to (w) adversely affect the legality, validity or enforceability of any of the
Transaction Agreements, (x) have or result in a material adverse effect on the
results of operations, assets, prospects, or condition (financial or otherwise)
of the Company and it subsidiaries, taken as a whole, or (y) adversely impair
the Company's authority or ability to perform fully on a timely basis its
obligations under any of the Transaction Agreements or the transactions
contemplated thereby; provided, that "Material Adverse Effect" shall not be
deemed to include the impact of: (a) changes in the laws of government rules and
regulations relating to the Company's business and the industry in which it
operates as of the date hereof, or interpretations thereof by courts or
governmental authorities promulgated or announced after the date hereof, (b)
changes promulgated after the date hereof in GAAP or regulatory accounting
principles, including those promulgated by the accounting staff of the SEC,
generally applicable to other entities engaged in businesses similar to that of
the Company as of the date hereof, (c) acts and omissions of the Company taken
with the prior informed consent of all other Persons who are a party to this
Agreement in contemplation of the transactions contemplated hereby, and (d) the
transactions contemplated by this Agreement and the other Transaction
Agreements.

                  (x) "Person" means any living person or any entity, such as,
but not necessarily limited to, a corporation, partnership or trust.

                  (xi) "Principal Market" means the OTC Bulletin Board.

                  (xii) "Reporting Service" means Bloomberg LP or if that
service is not then reporting the relevant information regarding the Common
Stock, a comparable reporting service of national reputation selected by the
Buyer and reasonably acceptable to the Company.

                  (xiii) "Securities" means the Purchased Shares and the
Conversion Shares.

                  (xiv) "Trading Day" shall mean any day during which the
Principal Market shall be open for business.

                  (xv) "Transaction Agreements" means this Agreement and the
Certificate of Designations.

                  c. Delivery of Certificates. The Buyer and the Company shall
exchange the Exchanged Shares for the Purchased Shares by delivering the
relevant Certificates to the other on the Closing Date.

                                       2

<PAGE>

                  2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO
INFORMATION; INDEPENDENT INVESTIGATION.

                  Except as otherwise provided herein, the Buyer represents and
warrants to, and covenants and agrees with, the Company as follows:

                  a. The Buyer is the beneficial owner of the Exchanged Shares.

                  b. The Buyer understands and agrees that it may not offer,
sell, transfer, pledge, hypothecate or otherwise dispose of any of the
Securities unless such Securities are registered under the 1933 Act or an
exemption from such registration is available.

                  c. The Buyer further understands that the Securities are being
offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and the Buyer's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Securities hereunder.

                  d. The Buyer and its advisors, if any, have been furnished
with or have been given access to all materials relating to the business,
finances and operations of the Company and materials relating to the offer and
sale of the Securities which have been requested by the Buyer, including Annex
II hereto. The Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received complete and
satisfactory answers to any such inquiries. Without limiting the generality of
the foregoing, the Lender has also had the opportunity to obtain and to review
the Company's filings on EDGAR listed on Annex III hereto (the documents listed
on such Annex III, to the extent available on EDGAR or otherwise provided to the
Lender as indicated on said Annex III, collectively, the "Company's SEC
Documents").

                  e. The Buyer understands that its investment in the Securities
involves a high degree of risk.

                  f. The Buyer hereby represents that, in connection with its
purchase of the Securities, it has not relied on any statement or representation
by the Company or its officers, directors and employees or any of its attorneys
or agents, except as specifically set forth herein.

                  3. COMPANY REPRESENTATIONS, ETC. Except as provided in Annex
II hereto or in the Company's SEC Documents or as otherwise provided herein, the
Company represents and warrants to the Buyer, as of the date hereof and as of
the Closing Date, that,

                  a. Concerning the Securities. As of the Closing Date, the
Securities shall have been duly authorized by all necessary corporate action on
the part of the Company, and, when issued and delivered against payment therefor
as contemplated by the Transaction Agreements, will be duly and validly issued,
fully paid and non-assessable and will not subject the holder thereof to
personal liability solely by reason of being such holder. No shareholder of the
Company is entitled to any preemptive rights with respect to the sale of the
Securities contemplated by the Transaction Agreements. No party has a currently
exercisable right of first refusal to which the Company is a party or to which
the Company or any Company Control Person is aware that would be applicable to
any or all of the transactions contemplated by the Transaction Agreements.

                  b. Status. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power to own its properties and to carry on its
business as now being conducted as described in the Company's SEC Documents. The
Company is duly qualified as a foreign corporation to do business and is in good
standing in each jurisdiction where the nature of the business conducted or
property owned by it makes such qualification necessary, other than those
jurisdictions in which the failure to so qualify would not have a Material
Adverse Effect. The Company has registered its stock under, and is obligated to
file reports pursuant to, Section 12 of the 1934 Act. The Common Stock is listed
and quoted on the Principal Market.

                                       3

<PAGE>

                  c. Authorized Shares. As of the Closing Date, immediately
before giving effect to the transactions contemplated by the Transaction
Agreements, (i) the authorized capital stock of the Company consists of (x)
75,000,000 shares of Common Stock, par value $.001 per share, of which
33,616,095 are outstanding and (y) 4,995,500 shares of preferred stock, of which
104,663 are outstanding (including, in addition to the 122 Series B Shares and
the 250 Series C Shares, 124 shares of Series A 8% Convertible Preferred Stock,
for which the Company has received a notice of conversion into 4,009,000 shares
of Common Stock, and 104,167 shares of Series D 5% Convertible Preferred Stock)
and (ii) all issued and outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable. The Company
has sufficient authorized and unissued shares of Common Stock as may be
necessary to effect the issuance of the Securities, including the Conversion
Shares.

                  d. Exchange Agreement. This Agreement and the transactions
contemplated thereby have been duly and validly authorized by the Company. This
Agreement has been duly executed and delivered by the Company. This Agreement
is, and the other Transaction Agreements, when executed and delivered by the
Company, will be, valid and binding agreements of the Company enforceable in
accordance with their respective terms, except in all cases to the extent that
(i) enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting the enforcement of
creditors' rights and remedies generally, (ii) the availability of the equitable
remedy of specific performance and injunctive relief is subject to the
discretion of the court before which the proceedings may be brought, and (iii)
the enforceability of the provisions hereof relating to indemnification and
contribution may be limited by applicable federal, state or other securities
laws or the public policy underlying such laws.

                  e. Non-contravention. The execution and delivery of this
Agreement and the other Transaction Agreements by the Company, the issuance of
the Securities, and the consummation by the Company of the other transactions
contemplated by the Transaction Agreements do not and will not conflict with or
result in a breach by the Company of any of the terms or provisions of, or
constitute a default under (i) the certificate of incorporation or other charter
document and by-laws of the Company, each as currently in effect, (ii) any
material indenture, mortgage, deed of trust, or other material agreement or
instrument to which the Company is a party or by which it or any of its
properties or assets are bound, including any listing agreement for the Common
Stock except as herein set forth, or (iii) to its knowledge, any existing
applicable law, rule, or regulation or any applicable decree, judgment, or order
of any court, United States federal or state regulatory body, administrative
agency, or other governmental body having jurisdiction over the Company or any
of its respective properties or assets; except that the foregoing representation
shall not apply in each case to the extent such conflict, breach or default
would not have a Material Adverse Effect.

                  f. Approvals. Assuming the accuracy of the Buyer's
representations in Section 2 hereof, no authorization, approval or consent of
any court, governmental body, regulatory agency, self-regulatory organization,
stock exchange or market or the shareholders of the Company is required to be
obtained by the Company for the issuance and sale of the Securities to the Buyer
as contemplated by this Agreement, except such authorizations, approvals and
consents that have been obtained or for which the failure to obtain such would
not, individually or in the aggregate, have a Material Adverse Effect.

                  g. Filings. As of their respective filing dates, none of the
Company's SEC Documents contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements made therein in light of the circumstances under which they
were made, not misleading (except any statements or omissions therein which were
corrected or otherwise disclosed or updated in a filing of any of the subsequent
Company's SEC Documents).

                  h. Absence of Certain Changes. Since the Last Audited Date,
there has been no Material Adverse Effect. Since the Last Audited Date, except
as provided in the Company's SEC Documents, the Company has not (i) incurred or
become subject to any material liabilities (absolute or contingent) except
liabilities incurred in the ordinary course of business consistent with past
practices; (ii) discharged or satisfied any material lien or encumbrance or paid
any material obligation or liability (absolute or contingent), other than
current liabilities paid in the ordinary course of business consistent with past
practices; (iii) declared or made any payment or distribution of cash or other

                                       4

<PAGE>

property to shareholders with respect to its capital stock, or purchased or
redeemed, or made any agreements to purchase or redeem, any shares of its
capital stock; (iv) sold, assigned or transferred any other tangible assets, or
canceled any debts or claims, except in the ordinary course of business
consistent with past practices; (v) suffered any substantial losses or waived
any rights of material value, whether or not in the ordinary course of business,
or suffered the loss of any material amount of existing business; (vi) made any
changes in employee compensation, except in the ordinary course of business
consistent with past practices; or (vii) experienced any material problems with
labor or management in connection with the terms and conditions of their
employment.

                  i. Full Disclosure. There is no fact known to the Company
(other than general economic conditions known to the public generally) that has
not been disclosed in writing to the Buyer that (i) would reasonably be expected
to materially and adversely affect the ability of the Company to perform its
obligations pursuant to this Agreement or any of the other Transaction
Agreements, or (ii) would reasonably be expected to materially and adversely
affect the value of the rights granted to the Buyer in the Transaction
Agreements.

                  j. Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public board or
body pending or, to the knowledge of the Company, threatened against or
affecting the Company before or by any governmental authority or nongovernmental
department, commission, board, bureau, agency or instrumentality or any other
Person to which the Company is a party or of which the Company is otherwise
aware, wherein an unfavorable decision, ruling or finding would have a Material
Adverse Effect. The Company is not aware of any valid basis for any such claim
that (either individually or in the aggregate with all other such events and
circumstances) could reasonably be expected to have a Material Adverse Effect.
There are no outstanding or unsatisfied judgments, orders, decrees, writs,
injunctions or stipulations to which the Company is a party or by which it or
any of its properties is bound, that involve the transaction contemplated herein
or that, alone or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

                  k. Absence of Events of Default. Except as set forth in
Section 3(e) hereof, no Event of Default (or its equivalent term), as defined in
the respective agreement to which the Company is a party, and no event which,
with the giving of notice or the passage of time or both, would become an Event
of Default (or its equivalent term) (as so defined in such agreement), has
occurred and is continuing, which would have a Material Adverse Effect.

                  l. No Undisclosed Liabilities or Events. Since the Last
Audited Date, the Company has incurred no liabilities or obligations other than
(x) those disclosed in the Transaction Agreements or the Company's SEC
Documents, (y) those incurred in the ordinary course of the Company's business,
or (z) which individually or in the aggregate, do not or would not have a
Material Adverse Effect. No event or circumstances has occurred or exists with
respect to the Company or its properties, business, operations, condition
(financial or otherwise), or results of operations, which, under applicable law,
rule or regulation, requires public disclosure or announcement prior to the date
hereof by the Company but which has not been so publicly announced or disclosed.
There are no proposals currently under consideration or currently anticipated to
be under consideration by the Board of Directors or the executive officers of
the Company which proposal would (i) change the certificate of incorporation or
other charter document or by-laws of the Company, each as currently in effect,
with or without shareholder approval, which change would reduce or otherwise
adversely affect the rights and powers of the shareholders of the Common Stock
or (ii) materially or substantially change the business, assets or capital of
the Company, including its interests in subsidiaries.

                  m. Fees to Brokers, Finders and Others. The Company has taken
no action which would give rise to any claim by any person for brokerage
commission, finder's fees or similar payments by Buyer or the Company relating
to this Agreement or the transactions contemplated hereby.

                  n. Dilution. The number of Conversion Shares issuable upon
conversion of the Series E Shares (including, but not limited to, the
circumstance wherein the trading price of the Common Stock declines prior to the
conversion of the Series E Stock and/or the effects of adjustments to the terms
thereof contemplated by the Transaction Agreements) may have a dilutive effect
on the ownership interests of the other shareholders (and Persons having the
right to become shareholders) of the Company. The board of directors of the
Company has concluded, in its good faith business judgment, that such issuance
is in the best interests of the Company. The Company specifically acknowledges

                                       5

<PAGE>

that its obligation to issue the Shares upon conversion of the Series E Shares
consistent with and in accordance with the terms of the Transaction Agreements
is binding upon the Company and enforceable regardless of the dilution such
issuance may have on the ownership interests of other shareholders of the
Company, and the Company will honor every duly given Notice of Conversion (as
defined in the Certificate of Designations) relating to the conversion of the
Series E Stock, unless the Company is subject to an injunction (which injunction
was not sought by the Company) prohibiting the Company from doing so. Nothing in
the foregoing provisions of this Section 3(n) shall be deemed to restrict the
Company's rights under the Transaction Agreements.

                  4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

                  a. Certificate of Designations. The Company covenants and
agrees that, prior to the Closing Date, the Company will have obtained all
necessary corporate authorization to file the Certificate of Designations and
will have filed the Certificate of Designations in the State of Delaware and in
any other jurisdiction where such filing is necessary. The Company will provide
to the Buyer evidence of such filing, in form satisfactory to the Buyer on or
before the Closing Date.

                  b. Rule 144 Sales. (i) The Company hereby represents to and
covenants and agrees with the Buyer that, subject only to the Rule 144(k)
Condition (as defined below) being satisfied as of the date the Buyer proposes
to sell any of the Conversion Shares under said Rule 144(k) (each such date a
"Rule 144(k) Sale Date"), the Buyer may, at any time on or after the Closing
Date, sell the Conversion Shares pursuant to Rule 144 ("Rule 144") promulgated
by the Securities and Exchange Commission under the Securities Act of 1933, as
amended, without any volume or other restrictions, under Rule 144(k),. The term
"Rule 144(k) Condition" means that, as of the relevant Rule 144(k) Sale Date,
the Buyer is not, and for a period of three months immediately prior to such
date has not been, an affiliate (as that term is used in Rule 144(k)) of the
Company. Notwithstanding the foregoing, the Buyer has agreed to the provisions
of Section 4(j) hereof.

                  (ii) In furtherance of the foregoing, and not in limitation
thereof, at the request of the Buyer, the Company will give its transfer agent
irrevocable instructions to the effect that, upon the transfer agent's receipt
from the Buyer and/or the Company of an opinion of counsel issued by Company
counsel or, if not given by Company counsel, other counsel acceptable to the
Company (for which purposes it is agreed that Krieger & Prager LLP shall be
deemed acceptable counsel; provided, however, that the Company agrees to pay the
legal fees of such other counsel for such opinion) that, the Conversion Shares
may be sold pursuant to the provisions of Rule 144, even in the absence of an
effective registration statement, the transfer agent is to effect the transfer
of the Conversion Shares and issue to the buyer(s) or transferee(s) thereof one
or more stock certificates representing the transferred Conversion Shares
without any restrictive legend and without recording any restrictions on the
transferability of such shares on the transfer agent's books and records (except
to the extent any such legend or restriction results from facts other than the
identity of the Buyer, as the seller or transferor thereof, or the status of the
Conversion Shares while held by the Buyer). If the transfer agent reasonably
requires any additional documentation at the time of the transfer, the Company
shall deliver or cause to be delivered all such reasonable additional
documentation within the control of the Company (the Company's officers,
directors, agents and counsel being deemed within such control for purposes of
this provision) as may be necessary to effectuate the issuance of an unlegended
certificate.

                  c. Filings. The Company undertakes and agrees to make all
necessary filings in connection with the sale of the Securities to the Buyer
under any United States laws and regulations applicable to the Company, or by
any domestic securities exchange or trading market, and to provide a copy
thereof to the Buyer promptly after such filing.

                  d. Reporting Status. So long as the Buyer beneficially owns
any of the Securities, and such Securities are not then registered under an
effective registration statement, the Company shall file all reports required to
be filed with the SEC pursuant to Section 13 or 15(d) of the 1934 Act, shall
take all commercially reasonable action under its control to ensure that
adequate current public information with respect to the Company, as required in
accordance with Rule 144(c)(2) of the 1933 Act, is publicly available. So long
as the Buyer beneficially owns any of the Securities, the Company shall not
terminate its status as an issuer required to file reports under the 1934 Act
even if the 1934 Act or the rules and regulations thereunder would permit such
termination. The Company will take all commercially reasonable action under its

                                       6

<PAGE>

control to obtain and to continue the listing and trading of its Common Stock
(including, without limitation, all Securities) on the Principal Market.

                  e. Certain Agreements. The Company covenants and agrees that,
without the prior written consent of the Buyer in each instance, which consent
may be withheld in the Buyer's sole discretion for any reason or for no reason
whatsoever, as long as the Buyer holds any shares of the Series E Stock, (i) the
Company will not create another series of preferred stock which has or purports
to have seniority over or parity with the shares of the Series E Stock and (ii)
will not issue shares of Series E Stock to any other party.

                  f. Late Delivery of Conversion Shares. The Company understands
that a delay in the issuance of the Conversion Shares beyond the Delivery Date
(as defined in the Certificate of Designations) could result in economic loss to
the Buyer. As compensation to the Buyer for such loss, the Company agrees to pay
late payments to the Buyer for late issuance of Conversion Shares upon
Conversion (as defined in the Certificate of Designations) in accordance with
the following schedule (where "No. Business Days Late" refers to the number of
business days which is beyond two (2) business days after the Delivery Date):1

                   [Balance of page intentionally left blank]

                                     Late Payment For Each $10,000
                                              of Stated Value or          No.
                                                                        ------
Business Days Late                      Dividends Being Converted
-----------------------------------------------------------------
       1                                       $100
       2                                       $200
       3                                       $300
       4                                       $400
       5                                       $500
       6                                       $600
       7                                       $700
       8                                       $800
       9                                       $900
       10                                      $1,000
      >10                                      $1,000 +$200 for each
                                               Business Day Late beyond
                                               10 days

The Company shall pay any payments incurred under this Section in immediately
available funds upon demand as the Buyer's exclusive remedy (other than the
following provisions of this Section 4(f) and the provisions of the immediately
following Section 4(g) of this Agreement) for such delay. Furthermore, in
addition to any other remedies which may be available to the Buyer, in the event
that the Company fails for any reason to effect delivery of such shares of
Common Stock by close of business on the Delivery Date, the Buyer will be
entitled to revoke the relevant Notice of Conversion by delivering a notice to
such effect to the Company, whereupon the Company and the Buyer shall each be
-------------------------
1 Example:  Notice of  Conversion  is  delivered on Monday,  December 1, 2003.
The  Delivery  Date would be Thursday,  December 4 (the third  business day
after such  delivery).  If the  certificate  is delivered by Monday  December 8
(2 business days after the Delivery Date),  no payment under this provision is
due. If the  certificates  are delivered on December 9, that is 1 "Business Day
Late" in the table below; if delivered on December 16, that 6 "Business Days
Late" in the table.

                                       7

<PAGE>

restored to their respective positions immediately prior to delivery of such
Notice of Conversion; provided, however, that an amount equal to any payments
contemplated by this Section 4(f) which have accrued through the date of such
revocation notice shall remain due and owing to the Buyer notwithstanding such
revocation.

                  g. Buy-In Adjustment. If, by the relevant Delivery Date, the
Company fails for any reason to deliver the Conversion Shares to be issued upon
conversion of the Series E Stock and after such Delivery Date, the holder of the
Series E Stock being converted (a "Converting Holder") purchases, in an
arm's-length open market transaction or otherwise, shares of Common Stock (the
"Covering Shares") in order to make delivery in satisfaction of a sale of Common
Stock by the Converting Holder (the "Sold Shares"), which delivery such
Converting Holder anticipated to make using the Shares to be issued upon such
conversion (a "Buy-In"), the Converting Holder shall have the right, to require
the Company to pay to the Converting Holder, in addition to and not in lieu of
the amounts due under Section 4(f) hereof, the Buy-In Adjustment Amount (as
defined below). The "Buy-In Adjustment Amount" is the amount equal to the
excess, if any, of (x) the Converting Holder's total purchase price (including
brokerage commissions, if any) for the Covering Shares over (y) the net proceeds
(after brokerage commissions, if any) received by the Converting Holder from the
sale of the Sold Shares. The Company shall pay the Buy-In Adjustment Amount to
the Converting Holder in immediately available funds immediately upon demand by
the Converting Holder.2

                  h. DWAC Issuance. In lieu of delivering physical certificates
representing the Common Stock issuable upon conversion, provided the Company's
transfer agent is participating in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer program, upon request of the Holder and its
compliance with the provisions contained in this paragraph, so long as the
certificates therefor do not bear a legend and the Holder thereof is not
obligated to return such certificate for the placement of a legend thereon, the
Company shall use its best efforts to cause its transfer agent to electronically
transmit the Common Stock issuable upon conversion to the Holder by crediting
the account of Holder's Broker with DTC through its Deposit Withdrawal Agent
Commission system.

                  i. Conversion after Bankruptcy. The holder of any Series E
Stock shall be entitled to exercise its conversion privilege with respect to
such Series E Stock notwithstanding the commencement of any case under 11 U.S.C.
ss.101 et seq. (the "Bankruptcy Code"). In the event the Company is a debtor
under the Bankruptcy Code, the Company hereby waives, to the fullest extent
permitted, any rights to relief it may have under 11 U.S.C. ss.362 in respect of
such holder's conversion privilege. The Company hereby waives, to the fullest
extent permitted, any rights to relief it may have under 11 U.S.C. ss.362 in
respect of the conversion of the Series E Stock. The Company agrees, without
cost or expense to such holder, to take or to consent to any and all action
necessary to effectuate relief under 11 U.S.C. ss.362.

                  j. Limitation on Sales.

                  (i) Any provision in this Agreement or in the Certificate of
Designations to the contrary notwithstanding, the Buyer hereby agrees that,
provided (i) the Company is not in default of its obligations under this
Agreement, any of the other Transaction Agreements, or any other agreement
between the Company and the Buyer or instrument issued by the Company to the
Buyer (collectively "Buyer Agreements"), and (ii) the Company has not made a
material misrepresentation or omitted to make a representation of material fact
herein or in any other Buyer Agreement, the Buyer will not sell Conversion
Shares (including for such purposes shares issued in payment of dividends on the
Series E Stock) during the Lock Up Period in excess of the Lock Up Amount (as
those terms are defined below).

                  (ii) The term "Lock Up Period" means the period commencing on
the Closing Date and continuing through and including the Trading Day
immediately preceding the first anniversary of the Closing Date.

------------------------
2  By way of illustration and not in limitation of the foregoing, if the
Converting Holder purchases shares of Common Stock having a total purchase price
(including brokerage commissions) of $11,000 to cover a Buy-In with respect to
shares of Common Stock it sold for net proceeds of $10,000, the Buy-In
Adjustment Amount which Company will be required to pay to the Converting Holder
will be $1,000.

                                       8

<PAGE>

                  (iii) The term "Lock Up Amount" means the amount, which when
added to all other Conversion Shares sold by the Buyer during the three months
immediately preceding the date of sale, does not exceed the greater of (x) one
percent (1%) of the outstanding shares of Common Stock of the Company as of the
date of such sale (and for such purposes the outstanding shares shall be deemed
to be the higher of the number of shares stated as being outstanding in the most
recent SEC filing made by the Company and available on EDGAR or the number of
shares outstanding identified to the Buyer or its representatives, advisors or
counsel by an executive officer of the Company, counsel to the Company or the
Company's transfer agent) or (ii) the Average Weekly Volume (as that term is
defined below). The term "Average Weekly Volume" means, (i) the total reported
volume of trading, as reported by the Reporting Service, for the Company's
Common Stock on all securities exchanges for the last twenty (20) Trading Days
ending on the Friday immediately preceding the date of sale, divided by (ii)
four (4).

                  5. TRANSFER AGENT INSTRUCTIONS.

                  a. The Company acknowledges that the Securities will be issued
free of any restrictive legend or stop transfer restrictions. The Company will
not issue any instruction to its transfer agent restricting the transfer of the
Securities. The Company warrants that no contrary instruction has been or will
be given by the Company to the transfer agent and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement. Nothing in this Section shall affect
in any way the Buyer's obligations and agreement to comply with all applicable
securities laws upon resale of the Securities. If the Buyer provides the Company
with an opinion of counsel reasonably satisfactory to the Company that
registration of a resale by the Buyer of any of the Securities is not required
under the 1933 Act, the Company shall take all steps necessary or appropriate to
ensure that the Company shall permit the transfer of the Securities and promptly
instruct the Company's transfer agent to issue one or more certificates for
Common Stock without legend in such name and in such denominations as specified
by the Buyer.

                  b. The Company will authorize its transfer agent to give
information relating to the Company directly to the Buyer or the Buyer's
representatives upon the request of the Buyer or any such representative, to the
extent such information relates to (i) the status of shares of Common Stock
issued or claimed to be issued to the Buyer in connection with a Notice of
Conversion, or (ii) the number of outstanding shares of Common Stock of all
shareholders as of a current or other specified date. On the Closing Date, the
Company will provide the Buyer with a copy of the authorization so given to the
transfer agent.

                  6. CLOSING DATE.

                  a. The Closing Date shall be August ___, 2003 or such other
date agreed by the parties, provided, that each of the conditions contemplated
by Sections 7 and 8 hereof shall have either been satisfied or been waived by
the party in whose favor such conditions run.

                  b. The closing shall occur on the relevant Closing Date at the
offices of the Krieger & Prager LLP and shall take place no later than 3:00
P.M., New York time, on such day or such other time as is mutually agreed upon
by the Company and the Buyer.

                  7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

                  The Buyer understands that the Company's obligation to sell
the Purchased Shares to the Buyer pursuant to this Agreement on the Closing Date
is conditioned upon:

                  a. The execution and delivery of this Agreement by the Buyer
on or prior to the Closing Date;

                  b. Delivery by the Buyer of the Exchanged Certificates (or a
lost certificate affidavit with respect to the Exchanged Certificates); and

                  c. The accuracy on the Closing Date of the representations and
warranties of the Buyer contained in this Agreement, each as if made on such
date (unless another date is specified therein).

                                       9

<PAGE>

                  8. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.

                  The Company understands that the Buyer's obligation to
purchase the Purchased Shares on the Closing Date is conditioned upon:

                  a. The execution and delivery of this Agreement and the other
Transaction Agreements by the Company on or before the Closing Date;

                  b. The approval of the listing of the Conversion Shares on the
Principal Market (a copy of which will be provided to the Buyer);

                  c. Delivery by the Company of the Current Certificates in
accordance with this Agreement;

                  d. On the Closing Date, the Buyer shall have received an
opinion of counsel for the Company, dated the Closing Date, in form, scope and
substance reasonably satisfactory to the Buyer, substantially to the effect set
forth in Annex IV attached hereto;

                  e. The accuracy in all material respects on the Closing Date
of the representations and warranties of the Company contained in this
Agreement, each as if made on such date (unless another date is specified
therein);

                  f. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained.

                  9. INDEMNIFICATION.

                  a. The Company agrees to indemnify and hold harmless Buyer and
its officers, directors, shareholders, employees, affiliates, advisors,
administrators, representatives, and agents, and each Buyer Control Person
(collectively, "Covered Buyers") from and against any losses, claims, damages,
liabilities or expenses (including reasonable attorneys' fees) incurred
(collectively, "Damages"), jointly or severally, and any action in respect
thereof to which a Covered Buyer becomes subject to, resulting from, arising out
of or relating to any misrepresentation, breach of warranty or nonfulfillment of
or failure to perform any covenant or agreement on the part of Company contained
in this Agreement, as such Damages are incurred, except to the extent such
Damages result primarily from Buyer's failure to perform any covenant or
agreement contained in this Agreement or Buyer's or any other Covered Buyer's
gross negligence, recklessness or bad faith in performing its obligations under
this Agreement.

                  b. If

         (x) the Buyer becomes involved in any capacity in any action,
         proceeding or investigation brought by any shareholder of the Company,
         in connection with or as a result of the consummation of the
         transactions contemplated by this Agreement or the other Transaction
         Agreements, or if the Buyer is impleaded in any such action, proceeding
         or investigation by any Person, or

         (y) the Buyer becomes involved in any capacity in any action,
         proceeding or investigation brought by the SEC, any self-regulatory
         organization or other body having jurisdiction, against or involving
         the Company or in connection with or as a result of the consummation of
         the transactions contemplated by this Agreement or the other
         Transaction Agreements, or if the Buyer is impleaded in any such
         action, proceeding or investigation by any Person,

then in any such case, the Company hereby agrees to indemnify, defend and hold
harmless the Buyer from and against and in respect of all losses, claims,
liabilities, damages or expenses resulting from, imposed upon or incurred by the
Buyer, directly or indirectly, and reimburse such Buyer for its reasonable legal
and other expenses (including the cost of any investigation and preparation)
incurred in connection therewith, as such expenses are incurred. The

                                       10

<PAGE>

indemnification and reimbursement obligations of the Company under this
paragraph shall be in addition to any liability which the Company may otherwise
have, shall extend upon the same terms and conditions to any Covered Buyer who
are actually named in such action, proceeding or investigation, and shall be
binding upon and inure to the benefit of any successors, assigns, heirs and
personal representatives of the Company, the Buyer, any such Covered Buyer. The
Company also agrees that no Covered Buyer shall have any liability to the
Company or any Person asserting claims on behalf of or in right of the Company
in connection with or as a result of the consummation of this Agreement or the
other Transaction Agreements, except as provided in or contemplated by this
Agreement.

                  c. The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar rights of the indemnified party
against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to.

                  10. RELEASES.

                  a. Subject to the provisions of Section 10(d) hereof,
immediately upon consummation of this Agreement and the transactions
contemplated hereby,

         (i) each of the Securities Purchase Agreement, dated as of July 27,
         1998, between the Company and the Buyer, the Registration Rights
         Agreement, dated as of July 27, 1998, each as heretofore amended, and
         each of the agreements (and any amendments thereof) ancillary to each
         of them, and

         (ii) each of the Securities Purchase Agreement, dated as of February 8,
         1999, between the Company and the Buyer, the Registration Rights
         Agreement, dated as of February 8, 1999, each as heretofore amended,
         and each of the agreements (and any amendments thereof) ancillary to
         each of them

shall terminate and be of no further force and effect, and the parties shall
have no continuing obligations under of said prior agreements.

                  b. Subject to the provisions of Section 10(d) hereof, the
Company (for itself and on behalf of each of its officers, directors,
shareholders, employees, affiliates and representatives; collectively the
"Company Group Members") hereby releases and forever discharges the Buyer and
each of the other Covered Buyers and their respective successors and assigns,
successors in interest and nominees (collectively, the "Buyer Group Members")
from and with respect to any and all claims, demands or causes of action
whatsoever, in law or in equity, fixed or contingent, whether known or unknown
and whether asserted or not, which the Company may have had, may now have or may
hereafter acquire with respect to any matters whatsoever, arising or relating to
actions taken or omitted at any time from the beginning of the world through and
including the Closing Date, including with respect to any transactions or
relating to or arising from any prior purchase agreement, registration rights
agreement or any other document or agreement between the Company and the Buyer
or either one of them in favor of the other and executed prior to the Closing
Date (howsoever denominated, collectively, the "Prior Agreements"). The Company
also fully waives any offsets it may have with respect to the amounts owed under
the Prior Agreements. In addition, the Company represents, warrants and
covenants that it has not, and as of the Closing Date it will not have, sold,
assigned, transferred or otherwise conveyed to any other person or entity all or
any portion of its rights, claims, demands, actions or causes of action herein
released.

                  c. Subject to the provisions of Section 10(d) hereof, the
Buyer (for itself and on behalf of each of the Buyer Group Members) hereby
releases and forever discharges the Company and each of the other Company Group
Members from and with respect to any and all claims, demands or causes of action
whatsoever, in law or in equity, fixed or contingent, whether known or unknown
and whether asserted or not, which the Buyer may have had, may now have or may
hereafter acquire with respect to any matters whatsoever, arising or relating to
actions taken or omitted at any time from the beginning of the world through and
including the Closing Date, with respect to the Prior Agreements; provided,
however, that the foregoing release shall not apply with respect to any claims
relating to any indemnity obligations of any Company Group Member in favor of
any one or more Buyer Group Members that are referred to in or contemplated by
the Prior Agreements. The Buyer also fully waives any offsets it may have with
respect to the amounts owed under the Prior Agreements. In addition, the Buyer
represents, warrants and covenants that it has not, and as of the Closing Date

                                       11

<PAGE>

it will not have, sold, assigned, transferred or otherwise conveyed to any other
person or entity all or any portion of its rights, claims, demands, actions or
causes of action herein released.

                  d. The releases in the preceding paragraphs of this Section 10
(i) are effective only on the consummation of the transactions contemplated by
this Agreement and (ii) do not apply to any claims arising out of this
Agreement, the other Transaction Agreements or any other agreements entered into
between the Company and the Buyer on or after the date hereof.

                  11. JURY TRIAL WAIVER. The Company and the Buyer hereby waive
a trial by jury in any action, proceeding or counterclaim brought by either of
the Parties hereto against the other in respect of any matter arising out of or
in connection with the Transaction Agreements.

                  12. GOVERNING LAW; MISCELLANEOUS.

                  a. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York without regard to the
principles of conflicts of law. Each of the Company and the Buyer hereby submits
to the exclusive jurisdiction of the United States Federal and the state courts
located in New York County, New York with respect to any dispute arising under
any of the Transaction Agreements, or the transactions contemplated hereby or
thereby and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on forum non conveniens, to the
bringing of any such proceeding in such jurisdictions. To the extent determined
by such court, the Company shall reimburse the Buyer for any reasonable legal
fees and disbursements incurred by the Buyer in enforcement of or protection of
any of its rights under any of the Transaction Agreements.

                  b. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.

                  c. This Agreement shall inure to the benefit of and be binding
upon the successors and permitted assigns of each of the parties hereto.

                  d. All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.

                  e. A facsimile transmission of this signed Agreement shall be
legal and binding on all parties hereto.

                  f. This Agreement may be signed in one or more counterparts,
each of which shall be deemed an original.

                  g. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.

                  h. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.

                  i. This Agreement may be amended only by an instrument in
writing signed by the party to be charged with enforcement thereof.

                  j. In no event, except as specifically contemplated by the
terms of any of the Transaction Agreements, shall either party be liable under
any of the Transaction Agreements or otherwise for any consequential,
incidental, indirect, punitive or special damages of any nature whatsoever
(including, without limitation, any damages arising out of or in connection with
any loss of profit, loss of business or anticipatory profits), even if the other
party has been advised of the likelihood of such damages occurring to the
non-defaulting party. The provisions of this Section 12(j) shall not limit the

                                       12

<PAGE>

direct obligations of either party to the other party pursuant to a specific
provision of any of the Transaction Agreements.

                  k. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.

                  l. The language of this Agreement shall, in any and all cases,
for any and all purposes, and in any and all circumstances be construed as a
whole, according to its fair meaning, not strictly for or against the Company or
the Buyer, and with no regard whatsoever to the identity or status of any person
or persons who drafted all or any part of this Agreement.

                  13. NOTICES. Any notice required or permitted hereunder shall
be given in writing (unless otherwise specified herein) and shall be deemed
effectively given on the earliest of

                           (a) the date delivered, if delivered by personal
                  delivery as against written receipt therefor or by confirmed
                  facsimile transmission,

                           (b) the seventh business day after deposit, postage
                  prepaid, in the United States Postal Service by registered or
                  certified mail, or

                           (c) the third business day after mailing by
                  international express courier, with delivery costs and fees
                  prepaid,

in each case, addressed to each of the other parties entitled to notice at the
following addresses (or at such other addresses as such party may designate by
ten (10) days' advance written notice similarly given to each of the other
parties hereto):

COMPANY:                   UNIVEC, Inc.
                           10 E. Baltimore Street
                           Suite 1404
                           Baltimore, MD 21202
                           ATTN: David Dalton
                           Telephone No.: (410) 347-9959
                           Telecopier No.: (410) 347-1542

with a copy to:            Jack Becker, Esq.
                           Snow Becker Krauss P.C.
                           605 Third Avenue, 25th Fl
                           New York, NY 10158
                           Telephone No.: (212) 687-3860
                           Telecopier No.: (212) 949-7052

BUYER:                     The Shaar Fund, Ltd.
                           c/o Levinson Capital Management
                           350 Fifth Avenue
                           Suite 2210
                           New York, NY 10118
                           Attn: Sam Levinson
                          Telephone No.: (212) 244-3577
                          Telecopier No.: (914) 395-0059

                                       13
<PAGE>

with a copy to:            Krieger & Prager LLP
                           39 Broadway
                           Suite 1440
                           New York, NY 10006
                           Attn: Ronald Nussbaum, Esq.
                           New York, New York 10016
                           Telephone No.: (212) 363-2900
                           Telecopier No.  (212) 363-2999

                  14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's
and the Buyer's representations and warranties herein shall survive the
execution and delivery of this Agreement and the delivery of the Certificates
until third anniversary of the Closing Date, and shall inure to the benefit of
the Buyer and the Company and their respective successors and assigns.

                   [BALANCE OF PAGE INTENTIONALLY LEFT BLANK]

                                       14

<PAGE>

         IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer
and the Company as of the date first above written.

PURCHASED SHARES:  522

                                   UNIVEC, INC.

                                   By:      _________________________________
                                            Name:
                                            Title:

                                   THE SHAAR FUND, LTD.
                                   By: InterCaribbean Services Ltd.
                                   Director

                                   By:      _________________________________
                                            Name:
                                            Title:

                                       15

<PAGE>

         ANNEX I           CERTIFICATE OF DESIGNATIONS

         ANNEX II          COMPANY DISCLOSURE MATERIALS

         ANNEX III         COMPANY'S SEC DOCUMENTS

         ANNEX IV          FORM OF OPINION OF COUNSEL

                                       16
<PAGE>

                                    ANNEX II
                                       TO
                               EXCHANGE AGREEMENT

                               COMPANY DISCLOSURE
                               ------------------

                                      None

                                       17
<PAGE>

                                    ANNEX III
                                       TO
                               EXCHANGE AGREEMENT

                             COMPANY'S SEC DOCUMENTS

1. See attached schedule of documents available on EDGAR.

2. Other: NONE

                          Documents Available on EDGAR
                          ----------------------------

Annual Report on Form 10-KSB for the fiscal year ended December 31, 2002, filed
on May 15, 2003

Quarterly Report on Form 10-QSB filed on May 16, 2003

Definitive Proxy Statement on Schedule 14A filed on August 7, 2003

                                       18

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