Document:

<PAGE>

Exhibit 10.49

                    THESE SECURITIES HAVE NOT BEEN REGISTERED
                  UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
                   OR ANY STATE SECURITIES ACT, AND MAY NOT BE
                   TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
                    ACTS OR PURSUANT TO AN OPINION OF COUNSEL
                      SATISFACTORY TO THE ISSUER THAT SUCH
                          REGISTRATION IS NOT REQUIRED.

                               WARRANT TO PURCHASE
                                  COMMON STOCK
                                 Series G No. 3

                            TRANS WORLD GAMING CORP.
                             (a Nevada corporation)

                             Dated: October 15, 1999

         THIS CERTIFIES that Geoffrey B. Baker (together with its successors
or permitted assigns, the "Holder") is entitled to purchase from Trans World
Gaming Corp., a Nevada corporation ("Company") up to 41,691 shares of the
Company's common stock, par value $.001 per share (the "Common Stock"), at a
purchase price of $.01 per share of Common Stock (the "Warrant Price"),
subject to adjustment as hereafter provided.

         This Warrant is issued pursuant to that certain Subscription
Agreement dated as of October 15, 1999 (the "Agreement"), between the Company
and the Holder.

         1.       EXERCISE OF THE WARRANT.

         The rights represented by this Warrant may be exercised at any time
on or before 5:00 p.m., New York time, on March 31, 2008, in whole or in part,
by (i) the surrender of this Warrant (with the purchase form at the end hereof
properly executed) at the principal executive office of the Company (or such
other office or agency of the Company as it may designate by notice in writing
to the Holder at the address of the Holder appearing on the books of the
Company); (ii) payment to the Company of the Warrant Price then in effect for
the number of shares of

                                    -1-

<PAGE>

Common Stock specified in the above-mentioned purchase form together with
applicable stock transfer taxes, if any; and (iii) delivery to the Company of
a duly executed agreement signed by the person(s) designated in the purchase
form to the effect that such person(s) agree(s) to be bound by the provisions
of Paragraph 5 and subparagraph (b), (c) and (d) of Paragraph 6 hereof. This
Warrant shall be deemed to have been exercised, in whole or in part to the
extent specified, immediately prior to the close of business on the date this
Warrant is surrendered and payment is made in accordance with the foregoing
provisions of this Paragraph 1, and the person or persons in whose name or
names the certificates for the Common Stock shall be issuable upon such
exercise shall become the Holder or Holders of record of such Common Stock at
that time and date. The Common Stock so purchased shall be delivered to the
Holder within a reasonable time, not exceeding ten (10) business days, after
the rights represented by this Warrant shall have been so exercised. If at any
time this Warrant is exercised as to less than the total number of shares for
which it may be exercised, and this Warrant shall not have expired, the
Company shall promptly issue to the Holder a new Warrant identical in form as
to this Warrant as to the remaining shares hereunder.

         2.       TRANSFER.

         Subject to the legend set forth at the top of the first page hereof,
this Warrant may be assigned in whole or in part by the Holder by (i)
completing and executing the form of assignment at the end hereof and (ii)
surrendering this Warrant with such duly completed and executed assignment
form for cancellation, accompanied by funds sufficient to pay any transfer
tax, at the office or agency of the Company referred to in Paragraph 9(b),
hereof; whereupon the Company shall issue, in the name or names specified by
the Holder (including the Holder) a new Warrant or Warrants of like tenor and
representing in the aggregate rights to purchase the same number of shares of
Common Stock as are then purchasable hereunder.

         3.       COVENANTS OF THE COMPANY.

                  (a) The Company covenants and agrees that all Common Stock
and Common Stock issuable upon exercise of this Warrant will, upon issuance,
be duly and validly issued, fully paid and nonassessable and no personal
liability will, for Company obligations, attach to the holder thereof by
reason of being such a holder, other than as set forth herein.

                  (b) The Company covenants and agrees that during the period
within which this Warrant may be exercised, the Company will at all times have
authorized and reserved a sufficient number of shares of Common Stock to
provide for the exercise of this Warrant.

         4.       NO RIGHTS OF STOCKHOLDER.

         This Warrant shall not entitle the Holder to any voting rights or
other rights as a stockholder of the Company, either at law or in equity, and
the rights of the Holder are limited to

                                    -2-

<PAGE>

those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein.

         5.       REGISTRATION.

                  (a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. Upon the written request of any combination of
the holders of Common Stock or of Warrants issued by the Company and
collectively exercisable into not less than 100,000 shares of Common Stock (as
such number may be adjusted under Paragraph 7), and on a one-time basis, the
Company shall file, within ninety (90) days after written request such
registration, and use its best efforts to cause to be declared effective
ninety (90) days thereafter, by the Securities and Exchange Commission, a
registration statement or post-effective amendment thereto as permitted under
the Securities Act of 1933, as amended (the "Act"), covering the sale by the
Holder of the Common Stock issuable upon exercise of this Warrant or any
portion hereof (the "Registerable Securities"). The Company shall supply
prospectuses in order to facilitate the public sale or other disposition of
the Registerable Securities, use its best efforts to register and qualify any
of the Registerable Securities for sale in such states as such Holder
reasonably designates and do any and all other acts and things which may be
necessary to enable such Holder to consummate the public sale of the
Registerable Securities, and furnish indemnification in the manner provided in
Paragraph 6 hereto. The Holder shall furnish information reasonably requested
by the Company in accordance with such post-effective amendments or
registration statements, including its intentions with respect thereto, and
shall furnish indemnification as set forth in Paragraph 6.

                  (b) The Company will maintain such registration statement or
post-effective amendment current and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until
shares owned by the Holder are eligible for sale without restriction under
Rule 144.

                  (c) The Company shall bear the entire cost and expense of
any registration of securities under Paragraph 5 hereof. Notwithstanding the
foregoing, any Holder whose Registerable Securities are included in any such
registration statement pursuant to this Paragraph 5 shall, however, bear the
fees of any counsel retained by him and any transfer taxes or underwriting
discounts or commissions applicable to the Registerable Securities sold by him
pursuant thereto.

                  (d)      In addition the Company shall:

                           (i) furnish to the Holder such numbers of copies of
a summary prospectus or other prospectus, including a preliminary prospectus
or any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such

                                    -3-

<PAGE>

other documents, as the Holder may reasonably request in order to facilitate
the public sale or other disposition of the securities owned by the Holder;

                           (ii) use its best efforts to register and qualify
the securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as the Holder shall
reasonably request, and do any and all other acts and things which may be
necessary or advisable to enable such Holder to consummate the public sale or
other disposition in such jurisdictions of the securities owned by such
Holder, except that the Company shall not for any such purpose be required to
qualify to do business as a foreign corporation in any jurisdiction wherein it
is not so qualified or to file therein any general consent to service of
process;

                           (iii) use its best efforts to list such securities
on any securities exchange on which any securities of the Company is then
listed, if the listing of such securities is then permitted under the rules of
such exchange;

                           (iv) enter into and perform its obligations under
an underwriting agreement, if the offering is an underwritten offering, in
usual and customary form, with the managing underwriter or underwriters of
such underwritten offering;

                           (v) notify the Holder of Registrable Securities
covered by such registration statement, at any time when a prospectus relating
thereto covered by such registration statement is required to be delivered
under the 1933 Act, of the happening of any event of which it has knowledge as
a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing; and

                           (vi) furnish, at the request of the Holder on the
date such Registrable Securities are delivered to the underwriters for sale
pursuant to such registration or, if such Registrable Securities are not being
sold through underwriters, on the date the registration statement with respect
to such Registrable Securities becomes effective, (i) an opinion, dated such
date, of the counsel representing the Company for the purpose of such
registration, addressed to the underwriters, if any, and to the Holder making
such request, covering such legal matters with respect to the registration in
respect of which such opinion is being given as the Holder of such Registrable
Securities may reasonably request and are customarily included in such an
opinion and (ii) letters, dated, respectively, (1) the effective date of the
registration statement and (2) the date such Registrable Securities are
delivered to the underwriters, if any, for sale pursuant to such registration,
from a firm of independent certified public accountants of recognized standing
selected by the Company, addressed to the underwriters, if any, and to the
Holder making such request, covering such financial, statistical and
accounting matters with respect to the registration in respect of which such
letters are being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such letters; and

                                    -4-

<PAGE>

                           (vii) take such other actions as shall be
reasonably requested by any Holder to facilitate the registration and sale of
the Registrable Securities.

         6.       INDEMNIFICATION.

                  (a) Whenever pursuant to Paragraph 5 a registration
statement relating to any Registerable Securities is filed under the Act,
amended or supplemented, the Company will indemnify and hold harmless each
Holder of the Registerable Securities covered by such registration statement,
amendment or supplement (such holder hereinafter referred to as the
Distributing Holder), each person, if any, who controls (within the meaning of
the Act) the Distributing Holder, and each officer, director, employee,
partner or agent of the Distributing Holder, and each underwriter (within the
meaning of the Act) of such securities and each person, if any, who controls
(within the meaning of the Act) any such underwriter and each officer,
director, employee, agent or partner of such underwriter against any losses,
claims, damages or liabilities joint or several, to which the Distributing
Holder, any such underwriter or any other person described above may become
subject under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any such registration statement or any preliminary prospectus or final
prospectus constituting a part thereof or any amendment or supplement thereto,
or arise out of or are based upon the omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading; and will reimburse the Distributing Holder and each such
underwriter or such other person for any legal or other expenses reasonably
incurred by the Distributing Holder, or underwriter or such other person, in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case (i) to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in said registration statement, said
preliminary prospectus, said final prospectus or said amendment or supplement
in reliance upon and in conformity with written information furnished by such
Distributing Holder, any other Distributing Holder or any such an underwriter
or any other such person for use in the preparation thereof, and (ii) such
losses, claims, damages or liabilities arise out of or are based upon any
actual or alleged untrue statement or omission made in or from any preliminary
prospectus, but corrected in the final prospectus, as amended or supplemented.

                  (b) Whenever pursuant to Paragraph 5 a registration
statement relating to the Registerable Securities is filed, amended or
supplemented under the Act, the Distributing Holder will indemnify and hold
harmless the Company and each underwriter, each of their respective directors,
each of their respective officers, employees, partners and agents thereto, and
each person, if any, who controls the Company (within the meaning of the Act)
against any losses, claims, damages or liabilities to which the Company or any
such director, officer, employees, partners and agents or controlling person
may become subject under the Act or otherwise, insofar

                                    -5-

<PAGE>

as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in any such registration statement or any preliminary
prospectus or final prospectus constituting a part thereof, or any amendment
or supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent that such untrue statement or
alleged untrue statement or omission was made in said registration statement,
said preliminary prospectus, said final prospectus or said amendment or
supplement in reliance upon and in conformity with written information
furnished by such Distributing Holder for use in the preparation thereof; and
will reimburse the Company or any such director, officer, employees, partners
and agents or controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action.

                  (c) Promptly after receipt by an indemnified party under
this Paragraph 6 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against any
indemnifying party, give the indemnifying party notice of the commencement
thereof; but the omission to so notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise
than under this Paragraph 6.

                  (d) In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnified party will be entitled to participate in, and , to
the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof with counsel reasonably
satisfactory to such indemnifying party, and after notice from the indemnified
party to such indemnifying party of its election to so assume the defense
thereof, the indemnifying party will not be liable to such indemnified party
under this Paragraph 6 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation.

         7.       ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SECURITIES.

                  (a) The Warrant Price shall be subject to adjustment from
time to time as follows:

                      (i)      In case the Company shall at any time after
                               the date hereof pay a dividend in shares of
                               Common Stock or make a distribution in shares
                               of Common Stock, then upon such dividend or
                               distribution the Warrant Price in effect
                               immediately prior to such dividend or
                               distribution shall forthwith be reduced to a
                               price determined by dividing:

                                    -6-

<PAGE>

                               (A)     an amount equal to the total number of
                                       shares of Common Stock outstanding
                                       immediately prior to such dividend or
                                       distribution multiplied by the Warrant
                                       Price in effect immediately prior to
                                       such dividend or distribution, by

                               (B)     the total number of shares of Common
                                       Stock outstanding immediately after
                                       such issuance or sale.

                  For the purposes of any computation to be made in accordance
with the provision of this clause (i), the following provisions shall be
applicable: Common Stock issuable by way of dividend or other distribution on
any stock of the Company shall be deemed to have been issued immediately after
the opening of business on the date following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution.

                      (ii)     In case the Company shall at any time subdivide
                               or combine the outstanding Common Stock, the
                               Warrant Price shall forthwith be
                               proportionately decreased in the case of
                               subdivision or increased in the case of
                               combination. Any such adjustment shall become
                               effective at the time such subdivision or
                               combination shall become effective.

                      (iii)    In case the Company shall at any time or from
                               time to time issue or sell shares of Common
                               Stock (or securities convertible into or
                               exchangeable for shares of Common Stock, or any
                               options, warrants or other rights to acquire
                               shares of Common Stock) at a price per share
                               less than the Market Price per share of Common
                               Stock (treating the price per share of any
                               security exchangeable or exercisable into
                               Common Stock as equal to (x) the sum of the
                               price for such security convertible,
                               exchangeable or exercisable into Common Stock
                               plus any additional consideration payable
                               (without regard to any anti-dilution
                               adjustments) upon the conversion, exchange or
                               exercise of such security into Common Stock
                               divided by (y) the number of shares of Common
                               Stock initially underlying such convertible,
                               exchangeable or exercisable security), other
                               than issuance or sales of Common Stock pursuant
                               to any employee benefit plan, then, and in each
                               such case, the number of shares of Common Stock
                               thereafter purchasable upon exercise of a
                               Warrant shall be determined by multiplying the
                               number of shares of Common Stock theretofore
                               purchasable upon exercise of each Warrant by a
                               fraction (A) the numerator of which shall be
                               the sum of the number of shares of Common Stock
                               outstanding on such date plus the number of
                               additional shares of Common Stock issued (or
                               the maximum number into which such convertible
                               or

                                    -7-

<PAGE>

                               exchangeable securities initially may convert
                               or exchange or for which such options, warrants
                               or other rights initially may be exercised) and
                               (B) the denominator of which shall be the sum
                               of the number of shares of Common Stock
                               outstanding on such date plus the number of
                               shares of Common Stock which the aggregate
                               consideration for the total number of such
                               additional shares of Common Stock so issued (or
                               into which such convertible or exchangeable
                               securities may convert or exchange or for which
                               such options, warrants or other rights may be
                               exercised plus the aggregate amount of any
                               additional consideration initially payable upon
                               conversion, exchange or exercise of such
                               security) would purchase at the Market Price
                               per share of Common Stock on such date. Such
                               adjustment shall be made whenever such shares,
                               securities, options, warrants or other rights
                               are issued, and shall become effective
                               retroactively immediately after the close of
                               business on the record date for the
                               determination of stockholders entitled to
                               receive such shares, securities, options,
                               warrants or other rights; PROVIDED, that the
                               determination as to whether an adjustment is
                               required to be made pursuant to this Section
                               7(a) shall only be made upon the issuance of
                               such shares or such convertible or exchangeable
                               securities, options, warrants or other rights,
                               and not upon the issuance of the security into
                               which such convertible or exchangeable security
                               converts or exchanges, or the security
                               underlying such option, warrant or other right.
                               Notwithstanding the foregoing, in the event of
                               such issuance or sale of Common Stock at a cash
                               price less than the Market Price, no such
                               adjustment under this Section 7(a) need be made
                               to the number of shares underlying the Warrant
                               unless such adjustment would require an
                               increase or decrease of at least 1% of the
                               number of shares underlying the Warrant. Any
                               lesser adjustment shall be carried forward and
                               shall be made at the time of and together with
                               the next subsequent adjustment which, together
                               with any adjustment or adjustments so carried
                               forward, shall amount to an increase or
                               decrease of at least 1% of number of shares
                               underlying the Warrant. For the purpose of this
                               Agreement, the term "Market Price" shall mean
                               (i) if the Common Stock is traded in the
                               over-the-counter market or on the National
                               Association of Securities Dealers, Inc.
                               Automated Quotations System ("NASDAQ"), the
                               average per share closing prices of the Common
                               Stock on the 20 consecutive trading days
                               immediately preceding the date in question as
                               reported by NASDAQ or an equivalent generally
                               accepted reporting service, or (ii) if the
                               Common Stock is traded on a national securities
                               exchange, the average for the 20

                                    -8-

<PAGE>

                               consecutive trading days immediately preceding
                               the date in question of the daily per share
                               closing prices of the Common Stock on the
                               principal stock exchange on which it is listed,
                               as the case may be. The closing price referred
                               to above shall be the last reported sales price
                               or in case no such reported sale takes place on
                               such day, the average of the reported closing
                               bid and asked prices, in either case on the
                               national securities exchange or automated
                               quotation system on which the Common Stock is
                               then listed. Whenever the number of shares of
                               Common Stock purchasable upon exercise of each
                               Warrant is adjusted, the Warrant Price for each
                               share of Common Stock payable upon exercise of
                               each Warrant shall be adjusted by multiplying
                               such Warrant Price immediately prior to such
                               adjustment by a fraction, the numerator of
                               which shall be the number of shares of Common
                               Stock purchasable upon the exercise of each
                               Warrant immediately prior to such adjustment
                               and the denominator of which shall be the
                               number of shares of Common Stock purchasable
                               immediately after such adjustment.

                      (iv)     Within a reasonable time after the close of each
                               quarterly fiscal period of the Company during
                               which the Warrant Price or number of shares
                               issuable upon exercise of this Warrant has been
                               adjusted as herein provided, the Company shall
                               deliver to the Holder a certificate signed by
                               the President or Vice President of the Company
                               and by the Treasurer or Assistant Treasurer or
                               the Secretary or an Assistant Secretary of the
                               Company, showing in detail the facts requiring
                               all such adjustments occurring during such
                               period and the Warrant Price after each such
                               adjustment.

                  (b) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in
Common Stock or by a subdivision of the outstanding Common Stock, then, from
and after the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise
of the Warrant shall be increased in proportion to such increase in
outstanding shares. In the event that the number of shares of Common Stock
outstanding is decreased by a combination of the outstanding Common Stock,
then, from and after the record date thereof, the number of shares of Common
Stock issuable upon the exercise of the Warrant shall be decreased in
proportion to such decrease in the outstanding shares of Common Stock.

                  (c) In case of any reorganization or reclassification of the
outstanding Common Stock (other than a change in par value, or from par value
to no par value, or as a result of a subdivision or combination), or in case
of any consolidation of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger in which the

                                    -9-

<PAGE>

Company is the continuing corporation and which does not result in any
reclassification of the outstanding Common Stock), or in case of any sale or
conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety, the holder of the Warrant then
outstanding shall thereafter have the right to purchase the kind and amount of
shares of common stock and other securities and property receivable upon such
reorganization, reclassification, consolidation, merger, sale or conveyance by
a holder of the number of shares of Common Stock which the holder of the
Warrant shall then be entitled to purchase; such adjustments shall apply with
respect to all such changes occurring between the date of this Warrant
Agreement and the date of exercise or expiration of the Warrant.

                  (d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or
for any other purpose, the Company shall provide the holder of the Warrant
with written notice of such intent not less than thirty (30) days prior to the
record date to determine holders of Common Stock entitled to receive such
distribution and the holder of this Warrant shall have until 5:00 p.m. EST on
the twentieth (20th) day following the actual receipt of such notice to elect
whether to exercise this Warrant in accordance with the terms herein. In the
event of proper election to exercise the Warrant, the holder of this Warrant
shall be deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he shall be entitled
to receive for the Warrant Price per Warrant, in addition to each share of
Common Stock, the amount of such distribution (or, at the option of the
Company, a sum equal to the value of any such assets at the time of such
distribution as determined by the Board of Directors of the Company in good
faith), which would have been payable to the holder had he been the holder of
record of the Common Stock receivable upon exercise of his Warrant on the
record date for the determination of those entitled to such distribution.

                  (e) In case of the dissolution, liquidation or winding-up of
the Company, all rights under the Warrant shall terminate on a date fixed by
the Company, such date to be no earlier than ten (10) days prior to the
effectiveness of such dissolution, liquidation or winding-up and not later
than five (5) days prior to such effectiveness. Notice of such termination of
purchase rights shall be given to the last registered holder of this Warrant,
as the same shall appear on the books of the Company, by registered mail at
least thirty (30) days prior to such termination date.

                  (f) In case the Company shall, at any time prior to the
expiration of this Warrant and prior to the exercise thereof, offer to the
holders of its Common Stock any rights to subscribe for additional shares of
any class of the Company, then the Company shall give written notice thereof
to the last registered holder hereof not less than thirty (30) days prior to
the date on which the books of the Company are closed or a record date is
fixed for the determination of the stockholders entitled to such subscription
rights. Such notice shall specify the date as to which

                                     -10-

<PAGE>

the books shall be closed or record date fixed with respect to such offer of
subscription and the right of the holder hereof to participate in such offer
of subscription shall terminate if this Warrant shall not be exercised on or
before the date of such closing of the books or such record date.

                  (g) Any adjustment pursuant to the aforesaid provisions
shall be made on the basis of the number of shares of Common Stock which the
holder thereof would have been entitled to acquire by the exercise of the
Warrant immediately prior to the event giving rise to such adjustment.

                  (h) Irrespective of any adjustment in the Warrant Price or
the number or kind of shares purchasable upon exercise of this Warrant,
Warrants previously or hereafter issued may continue to express the same price
and number and kind of shares as are stated in this Warrant.

                  (i) The Company shall retain a firm of independent public
accountants (who may be any such firm regularly employed by the Company) to
make any computation required under this Section.

                  (j) If at any time, as a result of an adjustment made
pursuant to this Paragraph 7, the Holder of this Warrant shall become entitled
to purchase any securities other than shares of Common Stock, thereafter the
number of such securities so purchasable upon exercise of each Warrant and the
Warrant Price for such shares shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Common Stock.

         8.       FRACTIONAL SHARES.

         The Company shall not be required to issue fractions of shares of
Common Stock on the exercise of this Warrant; provided, however, that if a
Holder exercises all the Warrants held of record by such Holder, the
fractional interests shall be eliminated by rounding any fraction up to the
nearest whole number of shares, if the fraction is equal to or greater than
 .5, and down if the fraction is less than .5.

         9.       MISCELLANEOUS.

                  (a) This Warrant shall be governed by and in accordance with
the laws of the State of New York.

                  (b) All notices, requests, consents and other communications
hereunder shall be made in writing and shall be deemed to have been duly made
when delivered, or mailed by registered or certified mail, return receipt
requested: (i) if to a Holder, to the address of such Holder as shown on the
books of the Company, or (ii) if to the Company, One Penn Plaza, Suite 1503,
New York, NY 10119.

                                     -11-

<PAGE>

                  (c) All the covenants and provisions of this Warrant by or
for the benefit of the Company and the Holders inure to the benefit of their
respective successors and assigns hereunder.

                  (d) Nothing in this Warrant other than Section 6 shall be
construed to give to any person or corporation other than the Company and the
registered Holder or Holders, any legal or equitable right, and this Warrant
is for the sole and exclusive benefit of the Company and the Holder or Holders.

                  IN WITNESS WHEREOF, Trans World Gaming Corp. has caused this
Warrant to be signed by its duly authorized officer and this Warrant to be
dated October 15, 1999.

                                                TRANS WORLD GAMING CORP.

                                                By:
                                                    ----------------------
                                                Its:
                                                    ----------------------

                                     -12-

<PAGE>

                                     FORM OF
                               NOTICE OF EXERCISE

                      (To be executed upon partial or full
                  exercise of the Warrants represented hereby)

The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").

The undersigned herewith makes payment therefore in the amount of $
____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of
Common Stock issuable upon exercise of all Warrants represented by such
Warrant Certificate (or if a new or replacement Warrant is otherwise to be
provided pursuant to the Warrant Certificate), that a new or replacement
Warrant Certificate of like tenor for the number of Warrants not being
exercised (and not being surrendered) hereunder be issued in the name of and
delivered to the undersigned, whose address is __________________________.

Dated: __________ .

                                               --------------------------------
                                               (Signature of Registered Holder)

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

                                     -13-

<PAGE>

                    THESE SECURITIES HAVE NOT BEEN REGISTERED
                  UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
                   OR ANY STATE SECURITIES ACT, AND MAY NOT BE
                   TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
                    ACTS OR PURSUANT TO AN OPINION OF COUNSEL
                      SATISFACTORY TO THE ISSUER THAT SUCH
                          REGISTRATION IS NOT REQUIRED.

                               WARRANT TO PURCHASE
                                  COMMON STOCK
                                 Series G No. 4

                            TRANS WORLD GAMING CORP.
                             (a Nevada corporation)

                             Dated: October 15, 1999

         THIS CERTIFIES that Julio E. Heurtematte Jr. (together with its
successors or permitted assigns, the "Holder") is entitled to purchase from
Trans World Gaming Corp., a Nevada corporation ("Company") up to 41,691 shares
of the Company's common stock, par value $.001 per share (the "Common Stock"),
at a purchase price of $.01 per share of Common Stock (the "Warrant Price"),
subject to adjustment as hereafter provided.

         This Warrant is issued pursuant to that certain Subscription
Agreement dated as of October 15, 1999 (the "Agreement"), between the Company
and the Holder.

         1.       EXERCISE OF THE WARRANT.

         The rights represented by this Warrant may be exercised at any time
on or before 5:00 p.m., New York time, on March 31, 2008, in whole or in part,
by (i) the surrender of this Warrant (with the purchase form at the end hereof
properly executed) at the principal executive office of the Company (or such
other office or agency of the Company as it may designate by notice in writing
to the Holder at the address of the Holder appearing on the books of the
Company); (ii) payment to the Company of the Warrant Price then in effect for
the number of shares of

                                     -1-

<PAGE>

Common Stock specified in the above-mentioned purchase form together with
applicable stock transfer taxes, if any; and (iii) delivery to the Company of
a duly executed agreement signed by the person(s) designated in the purchase
form to the effect that such person(s) agree(s) to be bound by the provisions
of Paragraph 5 and subparagraph (b), (c) and (d) of Paragraph 6 hereof. This
Warrant shall be deemed to have been exercised, in whole or in part to the
extent specified, immediately prior to the close of business on the date this
Warrant is surrendered and payment is made in accordance with the foregoing
provisions of this Paragraph 1, and the person or persons in whose name or
names the certificates for the Common Stock shall be issuable upon such
exercise shall become the Holder or Holders of record of such Common Stock at
that time and date. The Common Stock so purchased shall be delivered to the
Holder within a reasonable time, not exceeding ten (10) business days, after
the rights represented by this Warrant shall have been so exercised. If at any
time this Warrant is exercised as to less than the total number of shares for
which it may be exercised, and this Warrant shall not have expired, the
Company shall promptly issue to the Holder a new Warrant identical in form as
to this Warrant as to the remaining shares hereunder.

         2.       TRANSFER.

         Subject to the legend set forth at the top of the first page hereof,
this Warrant may be assigned in whole or in part by the Holder by (i)
completing and executing the form of assignment at the end hereof and (ii)
surrendering this Warrant with such duly completed and executed assignment
form for cancellation, accompanied by funds sufficient to pay any transfer
tax, at the office or agency of the Company referred to in Paragraph 9(b),
hereof; whereupon the Company shall issue, in the name or names specified by
the Holder (including the Holder) a new Warrant or Warrants of like tenor and
representing in the aggregate rights to purchase the same number of shares of
Common Stock as are then purchasable hereunder.

         3.       COVENANTS OF THE COMPANY.

                  (a) The Company covenants and agrees that all Common Stock
and Common Stock issuable upon exercise of this Warrant will, upon issuance,
be duly and validly issued, fully paid and nonassessable and no personal
liability will, for Company obligations, attach to the holder thereof by
reason of being such a holder, other than as set forth herein.

                  (b) The Company covenants and agrees that during the period
within which this Warrant may be exercised, the Company will at all times have
authorized and reserved a sufficient number of shares of Common Stock to
provide for the exercise of this Warrant.

         4.       NO RIGHTS OF STOCKHOLDER.

         This Warrant shall not entitle the Holder to any voting rights or
other rights as a stockholder of the Company, either at law or in equity, and
the rights of the Holder are limited to

                                     -2-

<PAGE>

those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein.

         5.       REGISTRATION.

                  (a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. Upon the written request of any combination of
the holders of Common Stock or of Warrants issued by the Company and
collectively exercisable into not less than 100,000 shares of Common Stock (as
such number may be adjusted under Paragraph 7), and on a one-time basis, the
Company shall file, within ninety (90) days after written request such
registration, and use its best efforts to cause to be declared effective
ninety (90) days thereafter, by the Securities and Exchange Commission, a
registration statement or post-effective amendment thereto as permitted under
the Securities Act of 1933, as amended (the "Act"), covering the sale by the
Holder of the Common Stock issuable upon exercise of this Warrant or any
portion hereof (the "Registerable Securities"). The Company shall supply
prospectuses in order to facilitate the public sale or other disposition of
the Registerable Securities, use its best efforts to register and qualify any
of the Registerable Securities for sale in such states as such Holder
reasonably designates and do any and all other acts and things which may be
necessary to enable such Holder to consummate the public sale of the
Registerable Securities, and furnish indemnification in the manner provided in
Paragraph 6 hereto. The Holder shall furnish information reasonably requested
by the Company in accordance with such post-effective amendments or
registration statements, including its intentions with respect thereto, and
shall furnish indemnification as set forth in Paragraph 6.

                  (b) The Company will maintain such registration statement or
post-effective amendment current and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until
shares owned by the Holder are eligible for sale without restriction under
Rule 144.

                  (c) The Company shall bear the entire cost and expense of
any registration of securities under Paragraph 5 hereof. Notwithstanding the
foregoing, any Holder whose Registerable Securities are included in any such
registration statement pursuant to this Paragraph 5 shall, however, bear the
fees of any counsel retained by him and any transfer taxes or underwriting
discounts or commissions applicable to the Registerable Securities sold by him
pursuant thereto.

                  (d)      In addition the Company shall:

                           (i) furnish to the Holder such numbers of copies of
a summary prospectus or other prospectus, including a preliminary prospectus
or any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such

                                     -3-

<PAGE>

other documents, as the Holder may reasonably request in order to facilitate
the public sale or other disposition of the securities owned by the Holder;

                           (ii) use its best efforts to register and qualify
the securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as the Holder shall
reasonably request, and do any and all other acts and things which may be
necessary or advisable to enable such Holder to consummate the public sale or
other disposition in such jurisdictions of the securities owned by such
Holder, except that the Company shall not for any such purpose be required to
qualify to do business as a foreign corporation in any jurisdiction wherein it
is not so qualified or to file therein any general consent to service of
process;

                           (iii) use its best efforts to list such securities
on any securities exchange on which any securities of the Company is then
listed, if the listing of such securities is then permitted under the rules of
such exchange;

                           (iv) enter into and perform its obligations under
an underwriting agreement, if the offering is an underwritten offering, in
usual and customary form, with the managing underwriter or underwriters of
such underwritten offering;

                           (v) notify the Holder of Registrable Securities
covered by such registration statement, at any time when a prospectus relating
thereto covered by such registration statement is required to be delivered
under the 1933 Act, of the happening of any event of which it has knowledge as
a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing; and

                           (vi) furnish, at the request of the Holder on the
date such Registrable Securities are delivered to the underwriters for sale
pursuant to such registration or, if such Registrable Securities are not being
sold through underwriters, on the date the registration statement with respect
to such Registrable Securities becomes effective, (i) an opinion, dated such
date, of the counsel representing the Company for the purpose of such
registration, addressed to the underwriters, if any, and to the Holder making
such request, covering such legal matters with respect to the registration in
respect of which such opinion is being given as the Holder of such Registrable
Securities may reasonably request and are customarily included in such an
opinion and (ii) letters, dated, respectively, (1) the effective date of the
registration statement and (2) the date such Registrable Securities are
delivered to the underwriters, if any, for sale pursuant to such registration,
from a firm of independent certified public accountants of recognized standing
selected by the Company, addressed to the underwriters, if any, and to the
Holder making such request, covering such financial, statistical and
accounting matters with respect to the registration in respect of which such
letters are being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such letters; and

                                     -4-

<PAGE>

                           (vii) take such other actions as shall be
reasonably requested by any Holder to facilitate the registration and sale of
the Registrable Securities.

         6.       INDEMNIFICATION.

                  (a) Whenever pursuant to Paragraph 5 a registration
statement relating to any Registerable Securities is filed under the Act,
amended or supplemented, the Company will indemnify and hold harmless each
Holder of the Registerable Securities covered by such registration statement,
amendment or supplement (such holder hereinafter referred to as the
Distributing Holder), each person, if any, who controls (within the meaning of
the Act) the Distributing Holder, and each officer, director, employee,
partner or agent of the Distributing Holder, and each underwriter (within the
meaning of the Act) of such securities and each person, if any, who controls
(within the meaning of the Act) any such underwriter and each officer,
director, employee, agent or partner of such underwriter against any losses,
claims, damages or liabilities joint or several, to which the Distributing
Holder, any such underwriter or any other person described above may become
subject under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any such registration statement or any preliminary prospectus or final
prospectus constituting a part thereof or any amendment or supplement thereto,
or arise out of or are based upon the omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading; and will reimburse the Distributing Holder and each such
underwriter or such other person for any legal or other expenses reasonably
incurred by the Distributing Holder, or underwriter or such other person, in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case (i) to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in said registration statement, said
preliminary prospectus, said final prospectus or said amendment or supplement
in reliance upon and in conformity with written information furnished by such
Distributing Holder, any other Distributing Holder or any such an underwriter
or any other such person for use in the preparation thereof, and (ii) such
losses, claims, damages or liabilities arise out of or are based upon any
actual or alleged untrue statement or omission made in or from any preliminary
prospectus, but corrected in the final prospectus, as amended or supplemented.

                  (b) Whenever pursuant to Paragraph 5 a registration
statement relating to the Registerable Securities is filed, amended or
supplemented under the Act, the Distributing Holder will indemnify and hold
harmless the Company and each underwriter, each of their respective directors,
each of their respective officers, employees, partners and agents thereto, and
each person, if any, who controls the Company (within the meaning of the Act)
against any losses, claims, damages or liabilities to which the Company or any
such director, officer, employees, partners and agents or controlling person
may become subject under the Act or otherwise, insofar

                                     -5-

<PAGE>

as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in any such registration statement or any preliminary
prospectus or final prospectus constituting a part thereof, or any amendment
or supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent that such untrue statement or
alleged untrue statement or omission was made in said registration statement,
said preliminary prospectus, said final prospectus or said amendment or
supplement in reliance upon and in conformity with written information
furnished by such Distributing Holder for use in the preparation thereof; and
will reimburse the Company or any such director, officer, employees, partners
and agents or controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action.

                  (c) Promptly after receipt by an indemnified party under
this Paragraph 6 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against any
indemnifying party, give the indemnifying party notice of the commencement
thereof; but the omission to so notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise
than under this Paragraph 6.

                  (d) In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnified party will be entitled to participate in, and, to
the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof with counsel reasonably
satisfactory to such indemnifying party, and after notice from the indemnified
party to such indemnifying party of its election to so assume the defense
thereof, the indemnifying party will not be liable to such indemnified party
under this Paragraph 6 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation.

         7.       ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SECURITIES.

                  (a) The Warrant Price shall be subject to adjustment from
time to time as follows:

                      (i)      In case the Company shall at any time after the
                               date hereof pay a dividend in shares of Common
                               Stock or make a distribution in shares of
                               Common Stock, then upon such dividend or
                               distribution the Warrant Price in effect
                               immediately prior to such dividend or
                               distribution shall forthwith be reduced to a
                               price determined by dividing:

                                    -6-

<PAGE>

                               (A)     an amount equal to the total number of
                                       shares of Common Stock outstanding
                                       immediately prior to such dividend or
                                       distribution multiplied by the Warrant
                                       Price in effect immediately prior to
                                       such dividend or distribution, by

                               (B)     the total number of shares of Common
                                       Stock outstanding immediately after such
                                       issuance or sale.

                  For the purposes of any computation to be made in accordance
with the provision of this clause (i), the following provisions shall be
applicable: Common Stock issuable by way of dividend or other distribution on
any stock of the Company shall be deemed to have been issued immediately after
the opening of business on the date following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution.

                      (ii)     In case the Company shall at any time subdivide
                               or combine the outstanding Common Stock, the
                               Warrant Price shall forthwith be
                               proportionately decreased in the case of
                               subdivision or increased in the case of
                               combination. Any such adjustment shall become
                               effective at the time such subdivision or
                               combination shall become effective.

                      (iii)    In case the Company shall at any time or from
                               time to time issue or sell shares of Common
                               Stock (or securities convertible into or
                               exchangeable for shares of Common Stock, or any
                               options, warrants or other rights to acquire
                               shares of Common Stock) at a price per share
                               less than the Market Price per share of Common
                               Stock (treating the price per share of any
                               security exchangeable or exercisable into
                               Common Stock as equal to (x) the sum of the
                               price for such security convertible,
                               exchangeable or exercisable into Common Stock
                               plus any additional consideration payable
                               (without regard to any anti-dilution
                               adjustments) upon the conversion, exchange or
                               exercise of such security into Common Stock
                               divided by (y) the number of shares of Common
                               Stock initially underlying such convertible,
                               exchangeable or exercisable security), other
                               than issuance or sales of Common Stock pursuant
                               to any employee benefit plan, then, and in each
                               such case, the number of shares of Common Stock
                               thereafter purchasable upon exercise of a
                               Warrant shall be determined by multiplying the
                               number of shares of Common Stock theretofore
                               purchasable upon exercise of each Warrant by a
                               fraction (A) the numerator of which shall be
                               the sum of the number of shares of Common Stock
                               outstanding on such date plus the number of
                               additional shares of Common Stock issued (or
                               the maximum number into which such convertible
                               or

                                    -7-

<PAGE>

                               exchangeable securities initially may convert
                               or exchange or for which such options, warrants
                               or other rights initially may be exercised) and
                               (B) the denominator of which shall be the sum
                               of the number of shares of Common Stock
                               outstanding on such date plus the number of
                               shares of Common Stock which the aggregate
                               consideration for the total number of such
                               additional shares of Common Stock so issued (or
                               into which such convertible or exchangeable
                               securities may convert or exchange or for which
                               such options, warrants or other rights may be
                               exercised plus the aggregate amount of any
                               additional consideration initially payable upon
                               conversion, exchange or exercise of such
                               security) would purchase at the Market Price
                               per share of Common Stock on such date. Such
                               adjustment shall be made whenever such shares,
                               securities, options, warrants or other rights
                               are issued, and shall become effective
                               retroactively immediately after the close of
                               business on the record date for the
                               determination of stockholders entitled to
                               receive such shares, securities, options,
                               warrants or other rights; PROVIDED, that the
                               determination as to whether an adjustment is
                               required to be made pursuant to this Section
                               7(a) shall only be made upon the issuance of
                               such shares or such convertible or exchangeable
                               securities, options, warrants or other rights,
                               and not upon the issuance of the security into
                               which such convertible or exchangeable security
                               converts or exchanges, or the security
                               underlying such option, warrant or other right.
                               Notwithstanding the foregoing, in the event of
                               such issuance or sale of Common Stock at a cash
                               price less than the Market Price, no such
                               adjustment under this Section 7(a) need be made
                               to the number of shares underlying the Warrant
                               unless such adjustment would require an
                               increase or decrease of at least 1% of the
                               number of shares underlying the Warrant. Any
                               lesser adjustment shall be carried forward and
                               shall be made at the time of and together with
                               the next subsequent adjustment which, together
                               with any adjustment or adjustments so carried
                               forward, shall amount to an increase or
                               decrease of at least 1% of number of shares
                               underlying the Warrant. For the purpose of this
                               Agreement, the term "Market Price" shall mean
                               (i) if the Common Stock is traded in the
                               over-the-counter market or on the National
                               Association of Securities Dealers, Inc.
                               Automated Quotations System ("NASDAQ"), the
                               average per share closing prices of the Common
                               Stock on the 20 consecutive trading days
                               immediately preceding the date in question as
                               reported by NASDAQ or an equivalent generally
                               accepted reporting service, or (ii) if the
                               Common Stock is traded on a national securities
                               exchange, the average for the 20

                                    -8-

<PAGE>

                               consecutive trading days immediately preceding
                               the date in question of the daily per share
                               closing prices of the Common Stock on the
                               principal stock exchange on which it is listed,
                               as the case may be. The closing price referred
                               to above shall be the last reported sales price
                               or in case no such reported sale takes place on
                               such day, the average of the reported closing
                               bid and asked prices, in either case on the
                               national securities exchange or automated
                               quotation system on which the Common Stock is
                               then listed. Whenever the number of shares of
                               Common Stock purchasable upon exercise of each
                               Warrant is adjusted, the Warrant Price for each
                               share of Common Stock payable upon exercise of
                               each Warrant shall be adjusted by multiplying
                               such Warrant Price immediately prior to such
                               adjustment by a fraction, the numerator of
                               which shall be the number of shares of Common
                               Stock purchasable upon the exercise of each
                               Warrant immediately prior to such adjustment
                               and the denominator of which shall be the
                               number of shares of Common Stock purchasable
                               immediately after such adjustment.

                      (iv)     Within a reasonable time after the close of each
                               quarterly fiscal period of the Company during
                               which the Warrant Price or number of shares
                               issuable upon exercise of this Warrant has been
                               adjusted as herein provided, the Company shall
                               deliver to the Holder a certificate signed by
                               the President or Vice President of the Company
                               and by the Treasurer or Assistant Treasurer or
                               the Secretary or an Assistant Secretary of the
                               Company, showing in detail the facts requiring
                               all such adjustments occurring during such
                               period and the Warrant Price after each such
                               adjustment.

                  (b) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in
Common Stock or by a subdivision of the outstanding Common Stock, then, from
and after the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise
of the Warrant shall be increased in proportion to such increase in
outstanding shares. In the event that the number of shares of Common Stock
outstanding is decreased by a combination of the outstanding Common Stock,
then, from and after the record date thereof, the number of shares of Common
Stock issuable upon the exercise of the Warrant shall be decreased in
proportion to such decrease in the outstanding shares of Common Stock.

                  (c) In case of any reorganization or reclassification of the
outstanding Common Stock (other than a change in par value, or from par value
to no par value, or as a result of a subdivision or combination), or in case
of any consolidation of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger in which the

                                    -9-

<PAGE>

Company is the continuing corporation and which does not result in any
reclassification of the outstanding Common Stock), or in case of any sale or
conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety, the holder of the Warrant then
outstanding shall thereafter have the right to purchase the kind and amount of
shares of common stock and other securities and property receivable upon such
reorganization, reclassification, consolidation, merger, sale or conveyance by
a holder of the number of shares of Common Stock which the holder of the
Warrant shall then be entitled to purchase; such adjustments shall apply with
respect to all such changes occurring between the date of this Warrant
Agreement and the date of exercise or expiration of the Warrant.

                  (d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or
for any other purpose, the Company shall provide the holder of the Warrant
with written notice of such intent not less than thirty (30) days prior to the
record date to determine holders of Common Stock entitled to receive such
distribution and the holder of this Warrant shall have until 5:00 p.m. EST on
the twentieth (20th) day following the actual receipt of such notice to elect
whether to exercise this Warrant in accordance with the terms herein. In the
event of proper election to exercise the Warrant, the holder of this Warrant
shall be deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he shall be entitled
to receive for the Warrant Price per Warrant, in addition to each share of
Common Stock, the amount of such distribution (or, at the option of the
Company, a sum equal to the value of any such assets at the time of such
distribution as determined by the Board of Directors of the Company in good
faith), which would have been payable to the holder had he been the holder of
record of the Common Stock receivable upon exercise of his Warrant on the
record date for the determination of those entitled to such distribution.

                  (e) In case of the dissolution, liquidation or winding-up of
the Company, all rights under the Warrant shall terminate on a date fixed by
the Company, such date to be no earlier than ten (10) days prior to the
effectiveness of such dissolution, liquidation or winding-up and not later
than five (5) days prior to such effectiveness. Notice of such termination of
purchase rights shall be given to the last registered holder of this Warrant,
as the same shall appear on the books of the Company, by registered mail at
least thirty (30) days prior to such termination date.

                  (f) In case the Company shall, at any time prior to the
expiration of this Warrant and prior to the exercise thereof, offer to the
holders of its Common Stock any rights to subscribe for additional shares of
any class of the Company, then the Company shall give written notice thereof
to the last registered holder hereof not less than thirty (30) days prior to
the date on which the books of the Company are closed or a record date is
fixed for the determination of the stockholders entitled to such subscription
rights. Such notice shall specify the date as to which

                                   -10-

<PAGE>

the books shall be closed or record date fixed with respect to such offer of
subscription and the right of the holder hereof to participate in such offer
of subscription shall terminate if this Warrant shall not be exercised on or
before the date of such closing of the books or such record date.

                  (g) Any adjustment pursuant to the aforesaid provisions
shall be made on the basis of the number of shares of Common Stock which the
holder thereof would have been entitled to acquire by the exercise of the
Warrant immediately prior to the event giving rise to such adjustment.

                  (h) Irrespective of any adjustment in the Warrant Price or
the number or kind of shares purchasable upon exercise of this Warrant,
Warrants previously or hereafter issued may continue to express the same price
and number and kind of shares as are stated in this Warrant.

                  (i) The Company shall retain a firm of independent public
accountants (who may be any such firm regularly employed by the Company) to
make any computation required under this Section.

                  (j) If at any time, as a result of an adjustment made
pursuant to this Paragraph 7, the Holder of this Warrant shall become entitled
to purchase any securities other than shares of Common Stock, thereafter the
number of such securities so purchasable upon exercise of each Warrant and the
Warrant Price for such shares shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Common Stock.

         8.       FRACTIONAL SHARES.

         The Company shall not be required to issue fractions of shares of
Common Stock on the exercise of this Warrant; provided, however, that if a
Holder exercises all the Warrants held of record by such Holder, the
fractional interests shall be eliminated by rounding any fraction up to the
nearest whole number of shares, if the fraction is equal to or greater than
 .5, and down if the fraction is less than .5.

         9.       MISCELLANEOUS.

                  (a) This Warrant shall be governed by and in accordance with
the laws of the State of New York.

                  (b) All notices, requests, consents and other communications
hereunder shall be made in writing and shall be deemed to have been duly made
when delivered, or mailed by registered or certified mail, return receipt
requested: (i) if to a Holder, to the address of such Holder as shown on the
books of the Company, or (ii) if to the Company, One Penn Plaza, Suite 1503,
New York, NY 10119.

                                   -11-

<PAGE>

                  (c) All the covenants and provisions of this Warrant by or
for the benefit of the Company and the Holders inure to the benefit of their
respective successors and assigns hereunder.

                  (d) Nothing in this Warrant other than Section 6 shall be
construed to give to any person or corporation other than the Company and the
registered Holder or Holders, any legal or equitable right, and this Warrant
is for the sole and exclusive benefit of the Company and the Holder or Holders.

                  IN WITNESS WHEREOF, Trans World Gaming Corp. has caused this
Warrant to be signed by its duly authorized officer and this Warrant to be
dated October 15, 1999.

                                                   TRANS WORLD GAMING CORP.

                                                   By:
                                                       --------------------
                                                   Its:
                                                       --------------------

                                   -12-

<PAGE>

                                     FORM OF
                               NOTICE OF EXERCISE

                      (To be executed upon partial or full
                  exercise of the Warrants represented hereby)

The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").

The undersigned herewith makes payment therefore in the amount of $
____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of
Common Stock issuable upon exercise of all Warrants represented by such
Warrant Certificate (or if a new or replacement Warrant is otherwise to be
provided pursuant to the Warrant Certificate), that a new or replacement
Warrant Certificate of like tenor for the number of Warrants not being
exercised (and not being surrendered) hereunder be issued in the name of and
delivered to the undersigned, whose address is __________________________.

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

                                               -----------------------------
                                               (Signature of Registered Holder)

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

                                   -13-

<PAGE>

                    THESE SECURITIES HAVE NOT BEEN REGISTERED
                  UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
                   OR ANY STATE SECURITIES ACT, AND MAY NOT BE
                   TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
                    ACTS OR PURSUANT TO AN OPINION OF COUNSEL
                      SATISFACTORY TO THE ISSUER THAT SUCH
                          REGISTRATION IS NOT REQUIRED.

                               WARRANT TO PURCHASE
                                  COMMON STOCK
                                 Series G No. 2

                            TRANS WORLD GAMING CORP.
                             (a Nevada corporation)

                             Dated: October 15, 1999

         THIS CERTIFIES that Malcolm M.B. Sterrett (together with its
successors or permitted assigns, the "Holder") is entitled to purchase from
Trans World Gaming Corp., a Nevada corporation ("Company") up to 41,691 shares
of the Company's common stock, par value $.001 per share (the "Common Stock"),
at a purchase price of $.01 per share of Common Stock (the "Warrant Price"),
subject to adjustment as hereafter provided.

         This Warrant is issued pursuant to that certain Subscription
Agreement dated as of October 15, 1999 (the "Agreement"), between the Company
and the Holder.

         1.       EXERCISE OF THE WARRANT.

         The rights represented by this Warrant may be exercised at any time
on or before 5:00 p.m., New York time, on March 31, 2008, in whole or in part,
by (i) the surrender of this Warrant (with the purchase form at the end hereof
properly executed) at the principal executive office of the Company (or such
other office or agency of the Company as it may designate by notice in writing
to the Holder at the address of the Holder appearing on the books of the
Company); (ii) payment to the Company of the Warrant Price then in effect for
the number of shares of

                                    -1-

<PAGE>

Common Stock specified in the above-mentioned purchase form together with
applicable stock transfer taxes, if any; and (iii) delivery to the Company of
a duly executed agreement signed by the person(s) designated in the purchase
form to the effect that such person(s) agree(s) to be bound by the provisions
of Paragraph 5 and subparagraph (b), (c) and (d) of Paragraph 6 hereof. This
Warrant shall be deemed to have been exercised, in whole or in part to the
extent specified, immediately prior to the close of business on the date this
Warrant is surrendered and payment is made in accordance with the foregoing
provisions of this Paragraph 1, and the person or persons in whose name or
names the certificates for the Common Stock shall be issuable upon such
exercise shall become the Holder or Holders of record of such Common Stock at
that time and date. The Common Stock so purchased shall be delivered to the
Holder within a reasonable time, not exceeding ten (10) business days, after
the rights represented by this Warrant shall have been so exercised. If at any
time this Warrant is exercised as to less than the total number of shares for
which it may be exercised, and this Warrant shall not have expired, the
Company shall promptly issue to the Holder a new Warrant identical in form as
to this Warrant as to the remaining shares hereunder.

         2.       TRANSFER.

         Subject to the legend set forth at the top of the first page hereof,
this Warrant may be assigned in whole or in part by the Holder by (i)
completing and executing the form of assignment at the end hereof and (ii)
surrendering this Warrant with such duly completed and executed assignment
form for cancellation, accompanied by funds sufficient to pay any transfer
tax, at the office or agency of the Company referred to in Paragraph 9(b),
hereof; whereupon the Company shall issue, in the name or names specified by
the Holder (including the Holder) a new Warrant or Warrants of like tenor and
representing in the aggregate rights to purchase the same number of shares of
Common Stock as are then purchasable hereunder.

         3.       COVENANTS OF THE COMPANY.

                  (a) The Company covenants and agrees that all Common Stock
and Common Stock issuable upon exercise of this Warrant will, upon issuance,
be duly and validly issued, fully paid and nonassessable and no personal
liability will, for Company obligations, attach to the holder thereof by
reason of being such a holder, other than as set forth herein.

                  (b) The Company covenants and agrees that during the period
within which this Warrant may be exercised, the Company will at all times have
authorized and reserved a sufficient number of shares of Common Stock to
provide for the exercise of this Warrant.

         4.       NO RIGHTS OF STOCKHOLDER.

         This Warrant shall not entitle the Holder to any voting rights or
other rights as a stockholder of the Company, either at law or in equity, and
the rights of the Holder are limited to

                                    -2-

<PAGE>

those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein.

         5.       REGISTRATION.

                  (a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. Upon the written request of any combination of
the holders of Common Stock or of Warrants issued by the Company and
collectively exercisable into not less than 100,000 shares of Common Stock (as
such number may be adjusted under Paragraph 7), and on a one-time basis, the
Company shall file, within ninety (90) days after written request such
registration, and use its best efforts to cause to be declared effective
ninety (90) days thereafter, by the Securities and Exchange Commission, a
registration statement or post-effective amendment thereto as permitted under
the Securities Act of 1933, as amended (the "Act"), covering the sale by the
Holder of the Common Stock issuable upon exercise of this Warrant or any
portion hereof (the "Registerable Securities"). The Company shall supply
prospectuses in order to facilitate the public sale or other disposition of
the Registerable Securities, use its best efforts to register and qualify any
of the Registerable Securities for sale in such states as such Holder
reasonably designates and do any and all other acts and things which may be
necessary to enable such Holder to consummate the public sale of the
Registerable Securities, and furnish indemnification in the manner provided in
Paragraph 6 hereto. The Holder shall furnish information reasonably requested
by the Company in accordance with such post-effective amendments or
registration statements, including its intentions with respect thereto, and
shall furnish indemnification as set forth in Paragraph 6.

                  (b) The Company will maintain such registration statement or
post-effective amendment current and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until
shares owned by the Holder are eligible for sale without restriction under
Rule 144.

                  (c) The Company shall bear the entire cost and expense of
any registration of securities under Paragraph 5 hereof. Notwithstanding the
foregoing, any Holder whose Registerable Securities are included in any such
registration statement pursuant to this Paragraph 5 shall, however, bear the
fees of any counsel retained by him and any transfer taxes or underwriting
discounts or commissions applicable to the Registerable Securities sold by him
pursuant thereto.

                  (d)      In addition the Company shall:

                           (i) furnish to the Holder such numbers of copies of
a summary prospectus or other prospectus, including a preliminary prospectus
or any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such

                                    -3-

<PAGE>

other documents, as the Holder may reasonably request in order to facilitate
the public sale or other disposition of the securities owned by the Holder;

                           (ii) use its best efforts to register and qualify
the securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as the Holder shall
reasonably request, and do any and all other acts and things which may be
necessary or advisable to enable such Holder to consummate the public sale or
other disposition in such jurisdictions of the securities owned by such
Holder, except that the Company shall not for any such purpose be required to
qualify to do business as a foreign corporation in any jurisdiction wherein it
is not so qualified or to file therein any general consent to service of
process;

                           (iii) use its best efforts to list such securities
on any securities exchange on which any securities of the Company is then
listed, if the listing of such securities is then permitted under the rules of
such exchange;

                           (iv) enter into and perform its obligations under
an underwriting agreement, if the offering is an underwritten offering, in
usual and customary form, with the managing underwriter or underwriters of
such underwritten offering;

                           (v) notify the Holder of Registrable Securities
covered by such registration statement, at any time when a prospectus relating
thereto covered by such registration statement is required to be delivered
under the 1933 Act, of the happening of any event of which it has knowledge as
a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing; and

                           (vi) furnish, at the request of the Holder on the
date such Registrable Securities are delivered to the underwriters for sale
pursuant to such registration or, if such Registrable Securities are not being
sold through underwriters, on the date the registration statement with respect
to such Registrable Securities becomes effective, (i) an opinion, dated such
date, of the counsel representing the Company for the purpose of such
registration, addressed to the underwriters, if any, and to the Holder making
such request, covering such legal matters with respect to the registration in
respect of which such opinion is being given as the Holder of such Registrable
Securities may reasonably request and are customarily included in such an
opinion and (ii) letters, dated, respectively, (1) the effective date of the
registration statement and (2) the date such Registrable Securities are
delivered to the underwriters, if any, for sale pursuant to such registration,
from a firm of independent certified public accountants of recognized standing
selected by the Company, addressed to the underwriters, if any, and to the
Holder making such request, covering such financial, statistical and
accounting matters with respect to the registration in respect of which such
letters are being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such letters; and

                                    -4-

<PAGE>

                           (vii) take such other actions as shall be
reasonably requested by any Holder to facilitate the registration and sale of
the Registrable Securities.

         6.       INDEMNIFICATION.

                  (a) Whenever pursuant to Paragraph 5 a registration
statement relating to any Registerable Securities is filed under the Act,
amended or supplemented, the Company will indemnify and hold harmless each
Holder of the Registerable Securities covered by such registration statement,
amendment or supplement (such holder hereinafter referred to as the
Distributing Holder), each person, if any, who controls (within the meaning of
the Act) the Distributing Holder, and each officer, director, employee,
partner or agent of the Distributing Holder, and each underwriter (within the
meaning of the Act) of such securities and each person, if any, who controls
(within the meaning of the Act) any such underwriter and each officer,
director, employee, agent or partner of such underwriter against any losses,
claims, damages or liabilities joint or several, to which the Distributing
Holder, any such underwriter or any other person described above may become
subject under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any such registration statement or any preliminary prospectus or final
prospectus constituting a part thereof or any amendment or supplement thereto,
or arise out of or are based upon the omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading; and will reimburse the Distributing Holder and each such
underwriter or such other person for any legal or other expenses reasonably
incurred by the Distributing Holder, or underwriter or such other person, in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case (i) to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in said registration statement, said
preliminary prospectus, said final prospectus or said amendment or supplement
in reliance upon and in conformity with written information furnished by such
Distributing Holder, any other Distributing Holder or any such an underwriter
or any other such person for use in the preparation thereof, and (ii) such
losses, claims, damages or liabilities arise out of or are based upon any
actual or alleged untrue statement or omission made in or from any preliminary
prospectus, but corrected in the final prospectus, as amended or supplemented.

                  (b) Whenever pursuant to Paragraph 5 a registration
statement relating to the Registerable Securities is filed, amended or
supplemented under the Act, the Distributing Holder will indemnify and hold
harmless the Company and each underwriter, each of their respective directors,
each of their respective officers, employees, partners and agents thereto, and
each person, if any, who controls the Company (within the meaning of the Act)
against any losses, claims, damages or liabilities to which the Company or any
such director, officer, employees, partners and agents or controlling person
may become subject under the Act or otherwise, insofar

                                    -5-

<PAGE>

as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in any such registration statement or any preliminary
prospectus or final prospectus constituting a part thereof, or any amendment
or supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent that such untrue statement or
alleged untrue statement or omission was made in said registration statement,
said preliminary prospectus, said final prospectus or said amendment or
supplement in reliance upon and in conformity with written information
furnished by such Distributing Holder for use in the preparation thereof; and
will reimburse the Company or any such director, officer, employees, partners
and agents or controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action.

                  (c) Promptly after receipt by an indemnified party under
this Paragraph 6 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against any
indemnifying party, give the indemnifying party notice of the commencement
thereof; but the omission to so notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise
than under this Paragraph 6.

                  (d) In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnified party will be entitled to participate in, and , to
the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof with counsel reasonably
satisfactory to such indemnifying party, and after notice from the indemnified
party to such indemnifying party of its election to so assume the defense
thereof, the indemnifying party will not be liable to such indemnified party
under this Paragraph 6 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation.

         7.       ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SECURITIES.

                  (a) The Warrant Price shall be subject to adjustment from
time to time as follows:

                      (i)      In case the Company shall at any time after the
                               date hereof pay a dividend in shares of Common
                               Stock or make a distribution in shares of
                               Common Stock, then upon such dividend or
                               distribution the Warrant Price in effect
                               immediately prior to such dividend or
                               distribution shall forthwith be reduced to a
                               price determined by dividing:

                                    -6-

<PAGE>

                               (A)     an amount equal to the total number of
                                       shares of Common Stock outstanding
                                       immediately prior to such dividend or
                                       distribution multiplied by the Warrant
                                       Price in effect immediately prior to
                                       such dividend or distribution, by

                               (B)     the total number of shares of Common
                                       Stock outstanding immediately after
                                       such issuance or sale.

                  For the purposes of any computation to be made in accordance
with the provision of this clause (i), the following provisions shall be
applicable: Common Stock issuable by way of dividend or other distribution on
any stock of the Company shall be deemed to have been issued immediately after
the opening of business on the date following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution.

                      (ii)     In case the Company shall at any time subdivide
                               or combine the outstanding Common Stock, the
                               Warrant Price shall forthwith be
                               proportionately decreased in the case of
                               subdivision or increased in the case of
                               combination. Any such adjustment shall become
                               effective at the time such subdivision or
                               combination shall become effective.

                      (iii)    In case the Company shall at any time or from
                               time to time issue or sell shares of Common
                               Stock (or securities convertible into or
                               exchangeable for shares of Common Stock, or any
                               options, warrants or other rights to acquire
                               shares of Common Stock) at a price per share
                               less than the Market Price per share of Common
                               Stock (treating the price per share of any
                               security exchangeable or exercisable into
                               Common Stock as equal to (x) the sum of the
                               price for such security convertible,
                               exchangeable or exercisable into Common Stock
                               plus any additional consideration payable
                               (without regard to any anti-dilution
                               adjustments) upon the conversion, exchange or
                               exercise of such security into Common Stock
                               divided by (y) the number of shares of Common
                               Stock initially underlying such convertible,
                               exchangeable or exercisable security), other
                               than issuance or sales of Common Stock pursuant
                               to any employee benefit plan, then, and in each
                               such case, the number of shares of Common Stock
                               thereafter purchasable upon exercise of a
                               Warrant shall be determined by multiplying the
                               number of shares of Common Stock theretofore
                               purchasable upon exercise of each Warrant by a
                               fraction (A) the numerator of which shall be
                               the sum of the number of shares of Common Stock
                               outstanding on such date plus the number of
                               additional shares of Common Stock issued (or
                               the maximum number into which such convertible
                               or

                                    -7-

<PAGE>

                               exchangeable securities initially may convert
                               or exchange or for which such options, warrants
                               or other rights initially may be exercised) and
                               (B) the denominator of which shall be the sum
                               of the number of shares of Common Stock
                               outstanding on such date plus the number of
                               shares of Common Stock which the aggregate
                               consideration for the total number of such
                               additional shares of Common Stock so issued (or
                               into which such convertible or exchangeable
                               securities may convert or exchange or for which
                               such options, warrants or other rights may be
                               exercised plus the aggregate amount of any
                               additional consideration initially payable upon
                               conversion, exchange or exercise of such
                               security) would purchase at the Market Price
                               per share of Common Stock on such date. Such
                               adjustment shall be made whenever such shares,
                               securities, options, warrants or other rights
                               are issued, and shall become effective
                               retroactively immediately after the close of
                               business on the record date for the
                               determination of stockholders entitled to
                               receive such shares, securities, options,
                               warrants or other rights; PROVIDED, that the
                               determination as to whether an adjustment is
                               required to be made pursuant to this Section
                               7(a) shall only be made upon the issuance of
                               such shares or such convertible or exchangeable
                               securities, options, warrants or other rights,
                               and not upon the issuance of the security into
                               which such convertible or exchangeable security
                               converts or exchanges, or the security
                               underlying such option, warrant or other right.
                               Notwithstanding the foregoing, in the event of
                               such issuance or sale of Common Stock at a cash
                               price less than the Market Price, no such
                               adjustment under this Section 7(a) need be made
                               to the number of shares underlying the Warrant
                               unless such adjustment would require an
                               increase or decrease of at least 1% of the
                               number of shares underlying the Warrant. Any
                               lesser adjustment shall be carried forward and
                               shall be made at the time of and together with
                               the next subsequent adjustment which, together
                               with any adjustment or adjustments so carried
                               forward, shall amount to an increase or
                               decrease of at least 1% of number of shares
                               underlying the Warrant. For the purpose of this
                               Agreement, the term "Market Price" shall mean
                               (i) if the Common Stock is traded in the
                               over-the-counter market or on the National
                               Association of Securities Dealers, Inc.
                               Automated Quotations System ("NASDAQ"), the
                               average per share closing prices of the Common
                               Stock on the 20 consecutive trading days
                               immediately preceding the date in question as
                               reported by NASDAQ or an equivalent generally
                               accepted reporting service, or (ii) if the
                               Common Stock is traded on a national securities
                               exchange, the average for the 20

                                    -8-

<PAGE>

                               consecutive trading days immediately preceding
                               the date in question of the daily per share
                               closing prices of the Common Stock on the
                               principal stock exchange on which it is listed,
                               as the case may be. The closing price referred
                               to above shall be the last reported sales price
                               or in case no such reported sale takes place on
                               such day, the average of the reported closing
                               bid and asked prices, in either case on the
                               national securities exchange or automated
                               quotation system on which the Common Stock is
                               then listed. Whenever the number of shares of
                               Common Stock purchasable upon exercise of each
                               Warrant is adjusted, the Warrant Price for each
                               share of Common Stock payable upon exercise of
                               each Warrant shall be adjusted by multiplying
                               such Warrant Price immediately prior to such
                               adjustment by a fraction, the numerator of
                               which shall be the number of shares of Common
                               Stock purchasable upon the exercise of each
                               Warrant immediately prior to such adjustment
                               and the denominator of which shall be the
                               number of shares of Common Stock purchasable
                               immediately after such adjustment.

                      (iv)     Within a reasonable time after the close of each
                               quarterly fiscal period of the Company during
                               which the Warrant Price or number of shares
                               issuable upon exercise of this Warrant has been
                               adjusted as herein provided, the Company shall
                               deliver to the Holder a certificate signed by
                               the President or Vice President of the Company
                               and by the Treasurer or Assistant Treasurer or
                               the Secretary or an Assistant Secretary of the
                               Company, showing in detail the facts requiring
                               all such adjustments occurring during such
                               period and the Warrant Price after each such
                               adjustment.

                  (b) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in
Common Stock or by a subdivision of the outstanding Common Stock, then, from
and after the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise
of the Warrant shall be increased in proportion to such increase in
outstanding shares. In the event that the number of shares of Common Stock
outstanding is decreased by a combination of the outstanding Common Stock,
then, from and after the record date thereof, the number of shares of Common
Stock issuable upon the exercise of the Warrant shall be decreased in
proportion to such decrease in the outstanding shares of Common Stock.

                  (c) In case of any reorganization or reclassification of the
outstanding Common Stock (other than a change in par value, or from par value
to no par value, or as a result of a subdivision or combination), or in case
of any consolidation of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger in which the

                                    -9-

<PAGE>

Company is the continuing corporation and which does not result in any
reclassification of the outstanding Common Stock), or in case of any sale or
conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety, the holder of the Warrant then
outstanding shall thereafter have the right to purchase the kind and amount of
shares of common stock and other securities and property receivable upon such
reorganization, reclassification, consolidation, merger, sale or conveyance by
a holder of the number of shares of Common Stock which the holder of the
Warrant shall then be entitled to purchase; such adjustments shall apply with
respect to all such changes occurring between the date of this Warrant
Agreement and the date of exercise or expiration of the Warrant.

                  (d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or
for any other purpose, the Company shall provide the holder of the Warrant
with written notice of such intent not less than thirty (30) days prior to the
record date to determine holders of Common Stock entitled to receive such
distribution and the holder of this Warrant shall have until 5:00 p.m. EST on
the twentieth (20th) day following the actual receipt of such notice to elect
whether to exercise this Warrant in accordance with the terms herein. In the
event of proper election to exercise the Warrant, the holder of this Warrant
shall be deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he shall be entitled
to receive for the Warrant Price per Warrant, in addition to each share of
Common Stock, the amount of such distribution (or, at the option of the
Company, a sum equal to the value of any such assets at the time of such
distribution as determined by the Board of Directors of the Company in good
faith), which would have been payable to the holder had he been the holder of
record of the Common Stock receivable upon exercise of his Warrant on the
record date for the determination of those entitled to such distribution.

                  (e) In case of the dissolution, liquidation or winding-up of
the Company, all rights under the Warrant shall terminate on a date fixed by
the Company, such date to be no earlier than ten (10) days prior to the
effectiveness of such dissolution, liquidation or winding-up and not later
than five (5) days prior to such effectiveness. Notice of such termination of
purchase rights shall be given to the last registered holder of this Warrant,
as the same shall appear on the books of the Company, by registered mail at
least thirty (30) days prior to such termination date.

                  (f) In case the Company shall, at any time prior to the
expiration of this Warrant and prior to the exercise thereof, offer to the
holders of its Common Stock any rights to subscribe for additional shares of
any class of the Company, then the Company shall give written notice thereof
to the last registered holder hereof not less than thirty (30) days prior to
the date on which the books of the Company are closed or a record date is
fixed for the determination of the stockholders entitled to such subscription
rights. Such notice shall specify the date as to which

                                     -10-

<PAGE>

the books shall be closed or record date fixed with respect to such offer of
subscription and the right of the holder hereof to participate in such offer
of subscription shall terminate if this Warrant shall not be exercised on or
before the date of such closing of the books or such record date.

                  (g) Any adjustment pursuant to the aforesaid provisions
shall be made on the basis of the number of shares of Common Stock which the
holder thereof would have been entitled to acquire by the exercise of the
Warrant immediately prior to the event giving rise to such adjustment.

                  (h) Irrespective of any adjustment in the Warrant Price or
the number or kind of shares purchasable upon exercise of this Warrant,
Warrants previously or hereafter issued may continue to express the same price
and number and kind of shares as are stated in this Warrant.

                  (i) The Company shall retain a firm of independent public
accountants (who may be any such firm regularly employed by the Company) to
make any computation required under this Section.

                  (j) If at any time, as a result of an adjustment made
pursuant to this Paragraph 7, the Holder of this Warrant shall become entitled
to purchase any securities other than shares of Common Stock, thereafter the
number of such securities so purchasable upon exercise of each Warrant and the
Warrant Price for such shares shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Common Stock.

         8.       FRACTIONAL SHARES.

         The Company shall not be required to issue fractions of shares of
Common Stock on the exercise of this Warrant; provided, however, that if a
Holder exercises all the Warrants held of record by such Holder, the
fractional interests shall be eliminated by rounding any fraction up to the
nearest whole number of shares, if the fraction is equal to or greater than
 .5, and down if the fraction is less than .5.

         9.       MISCELLANEOUS.

                  (a) This Warrant shall be governed by and in accordance with
the laws of the State of New York.

                  (b) All notices, requests, consents and other communications
hereunder shall be made in writing and shall be deemed to have been duly made
when delivered, or mailed by registered or certified mail, return receipt
requested: (i) if to a Holder, to the address of such Holder as shown on the
books of the Company, or (ii) if to the Company, One Penn Plaza, Suite 1503,
New York, NY 10119.

                                     -11-

<PAGE>

                  (c) All the covenants and provisions of this Warrant by or
for the benefit of the Company and the Holders inure to the benefit of their
respective successors and assigns hereunder.

                  (d) Nothing in this Warrant other than Section 6 shall be
construed to give to any person or corporation other than the Company and the
registered Holder or Holders, any legal or equitable right, and this Warrant
is for the sole and exclusive benefit of the Company and the Holder or Holders.

                  IN WITNESS WHEREOF, Trans World Gaming Corp. has caused this
Warrant to be signed by its duly authorized officer and this Warrant to be
dated October 15, 1999.

                                            TRANS WORLD GAMING CORP.

                                            By:
                                                -----------------------------
                                            Its:
                                                -----------------------------

                                     -12-

<PAGE>

                                     FORM OF
                               NOTICE OF EXERCISE

                      (To be executed upon partial or full
                  exercise of the Warrants represented hereby)

The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").

The undersigned herewith makes payment therefore in the amount of $
____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of
Common Stock issuable upon exercise of all Warrants represented by such
Warrant Certificate (or if a new or replacement Warrant is otherwise to be
provided pursuant to the Warrant Certificate), that a new or replacement
Warrant Certificate of like tenor for the number of Warrants not being
exercised (and not being surrendered) hereunder be issued in the name of and
delivered to the undersigned, whose address is __________________________.

Dated: __________.

                                              --------------------------------
                                              (Signature of Registered Holder)

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

                                     -13-

<PAGE>

                    THESE SECURITIES HAVE NOT BEEN REGISTERED
                  UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
                   OR ANY STATE SECURITIES ACT, AND MAY NOT BE
                   TRANSFERRED WITHOUT REGISTRATION UNDER SUCH
                    ACTS OR PURSUANT TO AN OPINION OF COUNSEL
                      SATISFACTORY TO THE ISSUER THAT SUCH
                          REGISTRATION IS NOT REQUIRED.

                               WARRANT TO PURCHASE
                                  COMMON STOCK
                                 Series G No. 1

                            TRANS WORLD GAMING CORP.
                             (a Nevada corporation)

                             Dated: October 15, 1999

         THIS CERTIFIES that Value Partners, Ltd. (together with its
successors or permitted assigns, the "Holder") is entitled to purchase from
Trans World Gaming Corp., a Nevada corporation ("Company") up to 1,125,655
shares of the Company's common stock, par value $.001 per share (the "Common
Stock"), at a purchase price of $.01 per share of Common Stock (the "Warrant
Price"), subject to adjustment as hereafter provided.

         This Warrant is issued pursuant to that certain Subscription
Agreement dated as of October 15, 1999 (the "Agreement"), between the Company
and the Holder.

         1.       EXERCISE OF THE WARRANT.

         The rights represented by this Warrant may be exercised at any time
on or before 5:00 p.m., New York time, on March 31, 2008, in whole or in part,
by (i) the surrender of this Warrant (with the purchase form at the end hereof
properly executed) at the principal executive office of the Company (or such
other office or agency of the Company as it may designate by notice in writing
to the Holder at the address of the Holder appearing on the books of the
Company); (ii) payment to the Company of the Warrant Price then in effect for
the number of shares of

                                      -1-

<PAGE>

Common Stock specified in the above-mentioned purchase form together with
applicable stock transfer taxes, if any; and (iii) delivery to the Company of
a duly executed agreement signed by the person(s) designated in the purchase
form to the effect that such person(s) agree(s) to be bound by the provisions
of Paragraph 5 and subparagraph (b), (c) and (d) of Paragraph 6 hereof. This
Warrant shall be deemed to have been exercised, in whole or in part to the
extent specified, immediately prior to the close of business on the date this
Warrant is surrendered and payment is made in accordance with the foregoing
provisions of this Paragraph 1, and the person or persons in whose name or
names the certificates for the Common Stock shall be issuable upon such
exercise shall become the Holder or Holders of record of such Common Stock at
that time and date. The Common Stock so purchased shall be delivered to the
Holder within a reasonable time, not exceeding ten (10) business days, after
the rights represented by this Warrant shall have been so exercised. If at any
time this Warrant is exercised as to less than the total number of shares for
which it may be exercised, and this Warrant shall not have expired, the
Company shall promptly issue to the Holder a new Warrant identical in form as
to this Warrant as to the remaining shares hereunder.

         2.       TRANSFER.

         Subject to the legend set forth at the top of the first page hereof,
this Warrant may be assigned in whole or in part by the Holder by (i)
completing and executing the form of assignment at the end hereof and (ii)
surrendering this Warrant with such duly completed and executed assignment
form for cancellation, accompanied by funds sufficient to pay any transfer
tax, at the office or agency of the Company referred to in Paragraph 9(b),
hereof; whereupon the Company shall issue, in the name or names specified by
the Holder (including the Holder) a new Warrant or Warrants of like tenor and
representing in the aggregate rights to purchase the same number of shares of
Common Stock as are then purchasable hereunder.

         3.       COVENANTS OF THE COMPANY.

                  (a) The Company covenants and agrees that all Common Stock
and Common Stock issuable upon exercise of this Warrant will, upon issuance,
be duly and validly issued, fully paid and nonassessable and no personal
liability will, for Company obligations, attach to the holder thereof by
reason of being such a holder, other than as set forth herein.

                  (b) The Company covenants and agrees that during the period
within which this Warrant may be exercised, the Company will at all times have
authorized and reserved a sufficient number of shares of Common Stock to
provide for the exercise of this Warrant.

         4.       NO RIGHTS OF STOCKHOLDER.

         This Warrant shall not entitle the Holder to any voting rights or
other rights as a stockholder of the Company, either at law or in equity, and
the rights of the Holder are limited to

                                      -2-

<PAGE>

those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein.

         5.       REGISTRATION.

                  (a) The Holder shall have the right to have the shares of
Common Stock underlying this Warrant registered as part of the next public
offering of the Common Stock. Upon the written request of any combination of
the holders of Common Stock or of Warrants issued by the Company and
collectively exercisable into not less than 100,000 shares of Common Stock (as
such number may be adjusted under Paragraph 7), and on a one-time basis, the
Company shall file, within ninety (90) days after written request such
registration, and use its best efforts to cause to be declared effective
ninety (90) days thereafter, by the Securities and Exchange Commission, a
registration statement or post-effective amendment thereto as permitted under
the Securities Act of 1933, as amended (the "Act"), covering the sale by the
Holder of the Common Stock issuable upon exercise of this Warrant or any
portion hereof (the "Registerable Securities"). The Company shall supply
prospectuses in order to facilitate the public sale or other disposition of
the Registerable Securities, use its best efforts to register and qualify any
of the Registerable Securities for sale in such states as such Holder
reasonably designates and do any and all other acts and things which may be
necessary to enable such Holder to consummate the public sale of the
Registerable Securities, and furnish indemnification in the manner provided in
Paragraph 6 hereto. The Holder shall furnish information reasonably requested
by the Company in accordance with such post-effective amendments or
registration statements, including its intentions with respect thereto, and
shall furnish indemnification as set forth in Paragraph 6.

                  (b) The Company will maintain such registration statement or
post-effective amendment current and effective under the Act until two years
following the expiration of the exercisability of this Warrant, or until
shares owned by the Holder are eligible for sale without restriction under
Rule 144.

                  (c) The Company shall bear the entire cost and expense of
any registration of securities under Paragraph 5 hereof. Notwithstanding the
foregoing, any Holder whose Registerable Securities are included in any such
registration statement pursuant to this Paragraph 5 shall, however, bear the
fees of any counsel retained by him and any transfer taxes or underwriting
discounts or commissions applicable to the Registerable Securities sold by him
pursuant thereto.

                  (d)      In addition the Company shall:

                           (i) furnish to the Holder such numbers of copies of
a summary prospectus or other prospectus, including a preliminary prospectus
or any amendment or supplement to any prospectus, in conformity with the
requirements of the 1933 Act, and such

                                      -3-

<PAGE>

other documents, as the Holder may reasonably request in order to facilitate
the public sale or other disposition of the securities owned by the Holder;

                           (ii) use its best efforts to register and qualify
the securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as the Holder shall
reasonably request, and do any and all other acts and things which may be
necessary or advisable to enable such Holder to consummate the public sale or
other disposition in such jurisdictions of the securities owned by such
Holder, except that the Company shall not for any such purpose be required to
qualify to do business as a foreign corporation in any jurisdiction wherein it
is not so qualified or to file therein any general consent to service of
process;

                           (iii) use its best efforts to list such securities
on any securities exchange on which any securities of the Company is then
listed, if the listing of such securities is then permitted under the rules of
such exchange;

                           (iv) enter into and perform its obligations under
an underwriting agreement, if the offering is an underwritten offering, in
usual and customary form, with the managing underwriter or underwriters of
such underwritten offering;

                           (v) notify the Holder of Registrable Securities
covered by such registration statement, at any time when a prospectus relating
thereto covered by such registration statement is required to be delivered
under the 1933 Act, of the happening of any event of which it has knowledge as
a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing; and

                           (vi) furnish, at the request of the Holder on the
date such Registrable Securities are delivered to the underwriters for sale
pursuant to such registration or, if such Registrable Securities are not being
sold through underwriters, on the date the registration statement with respect
to such Registrable Securities becomes effective, (i) an opinion, dated such
date, of the counsel representing the Company for the purpose of such
registration, addressed to the underwriters, if any, and to the Holder making
such request, covering such legal matters with respect to the registration in
respect of which such opinion is being given as the Holder of such Registrable
Securities may reasonably request and are customarily included in such an
opinion and (ii) letters, dated, respectively, (1) the effective date of the
registration statement and (2) the date such Registrable Securities are
delivered to the underwriters, if any, for sale pursuant to such registration,
from a firm of independent certified public accountants of recognized standing
selected by the Company, addressed to the underwriters, if any, and to the
Holder making such request, covering such financial, statistical and
accounting matters with respect to the registration in respect of which such
letters are being given as the Holder of such Registrable Securities may
reasonably request and are customarily included in such letters; and

                                      -4-

<PAGE>

                           (vii) take such other actions as shall be
reasonably requested by any Holder to facilitate the registration and sale of
the Registrable Securities.

         6.       INDEMNIFICATION.

                  (a) Whenever pursuant to Paragraph 5 a registration
statement relating to any Registerable Securities is filed under the Act,
amended or supplemented, the Company will indemnify and hold harmless each
Holder of the Registerable Securities covered by such registration statement,
amendment or supplement (such holder hereinafter referred to as the
Distributing Holder), each person, if any, who controls (within the meaning of
the Act) the Distributing Holder, and each officer, director, employee,
partner or agent of the Distributing Holder, and each underwriter (within the
meaning of the Act) of such securities and each person, if any, who controls
(within the meaning of the Act) any such underwriter and each officer,
director, employee, agent or partner of such underwriter against any losses,
claims, damages or liabilities joint or several, to which the Distributing
Holder, any such underwriter or any other person described above may become
subject under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any such registration statement or any preliminary prospectus or final
prospectus constituting a part thereof or any amendment or supplement thereto,
or arise out of or are based upon the omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading; and will reimburse the Distributing Holder and each such
underwriter or such other person for any legal or other expenses reasonably
incurred by the Distributing Holder, or underwriter or such other person, in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case (i) to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in said registration statement, said
preliminary prospectus, said final prospectus or said amendment or supplement
in reliance upon and in conformity with written information furnished by such
Distributing Holder, any other Distributing Holder or any such an underwriter
or any other such person for use in the preparation thereof, and (ii) such
losses, claims, damages or liabilities arise out of or are based upon any
actual or alleged untrue statement or omission made in or from any preliminary
prospectus, but corrected in the final prospectus, as amended or supplemented.

                  (b) Whenever pursuant to Paragraph 5 a registration
statement relating to the Registerable Securities is filed, amended or
supplemented under the Act, the Distributing Holder will indemnify and hold
harmless the Company and each underwriter, each of their respective directors,
each of their respective officers, employees, partners and agents thereto, and
each person, if any, who controls the Company (within the meaning of the Act)
against any losses, claims, damages or liabilities to which the Company or any
such director, officer, employees, partners and agents or controlling person
may become subject under the Act or otherwise, insofar

                                      -5-

<PAGE>

as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in any such registration statement or any preliminary
prospectus or final prospectus constituting a part thereof, or any amendment
or supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent that such untrue statement or
alleged untrue statement or omission was made in said registration statement,
said preliminary prospectus, said final prospectus or said amendment or
supplement in reliance upon and in conformity with written information
furnished by such Distributing Holder for use in the preparation thereof; and
will reimburse the Company or any such director, officer, employees, partners
and agents or controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action.

                  (c) Promptly after receipt by an indemnified party under
this Paragraph 6 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against any
indemnifying party, give the indemnifying party notice of the commencement
thereof; but the omission to so notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise
than under this Paragraph 6.

                  (d) In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnified party will be entitled to participate in, and, to
the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof with counsel reasonably
satisfactory to such indemnifying party, and after notice from the indemnified
party to such indemnifying party of its election to so assume the defense
thereof, the indemnifying party will not be liable to such indemnified party
under this Paragraph 6 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation.

         7.       ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SECURITIES.

                  (a) The Warrant Price shall be subject to adjustment from
time to time as follows:

                           (i)     In case the Company shall at any time after
                                   the date hereof pay a dividend in shares of
                                   Common Stock or make a distribution in
                                   shares of Common Stock, then upon such
                                   dividend or distribution the Warrant Price
                                   in effect immediately prior to such dividend
                                   or distribution shall forthwith be reduced
                                   to a price determined by dividing:

                                      -6-

<PAGE>

                                   (A)     an amount equal to the total number
                                           of shares of Common Stock
                                           outstanding immediately prior to
                                           such dividend or distribution
                                           multiplied by the Warrant Price in
                                           effect immediately prior to such
                                           dividend or distribution, by

                                   (B)     the total number of shares of Common
                                           Stock outstanding immediately after
                                           such issuance or sale.

                  For the purposes of any computation to be made in accordance
with the provision of this clause (i), the following provisions shall be
applicable: Common Stock issuable by way of dividend or other distribution on
any stock of the Company shall be deemed to have been issued immediately after
the opening of business on the date following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution.

                           (ii)    In case the Company shall at any time
                                   subdivide or combine the outstanding Common
                                   Stock, the Warrant Price shall forthwith be
                                   proportionately decreased in the case of
                                   subdivision or increased in the case of
                                   combination. Any such adjustment shall
                                   become effective at the time such
                                   subdivision or combination shall become
                                   effective.

                           (iii)   In case the Company shall at any time or
                                   from time to time issue or sell shares of
                                   Common Stock (or securities convertible into
                                   or exchangeable for shares of Common Stock,
                                   or any options, warrants or other rights to
                                   acquire shares of Common Stock) at a price
                                   per share less than the Market Price per
                                   share of Common Stock (treating the price
                                   per share of any security exchangeable or
                                   exercisable into Common Stock as equal to
                                   (x) the sum of the price for such security
                                   convertible, exchangeable or exercisable
                                   into Common Stock plus any additional
                                   consideration payable (without regard to any
                                   anti-dilution adjustments) upon the
                                   conversion, exchange or exercise of such
                                   security into Common Stock divided by (y)
                                   the number of shares of Common Stock
                                   initially underlying such convertible,
                                   exchangeable or exercisable security), other
                                   than issuance or sales of Common Stock
                                   pursuant to any employee benefit plan, then,
                                   and in each such case, the number of shares
                                   of Common Stock thereafter purchasable upon
                                   exercise of a Warrant shall be determined by
                                   multiplying the number of shares of Common
                                   Stock theretofore purchasable upon exercise
                                   of each Warrant by a fraction (A) the
                                   numerator of which shall be the sum of the
                                   number of shares of Common Stock outstanding
                                   on such date plus the number of additional
                                   shares of Common Stock issued (or the
                                   maximum number into which such convertible
                                   or

                                      -7-

<PAGE>

                                   exchangeable securities initially may
                                   convert or exchange or for which such
                                   options, warrants or other rights initially
                                   may be exercised) and (B) the denominator
                                   of which shall be the sum of the number of
                                   shares of Common Stock outstanding on such
                                   date plus the number of shares of Common
                                   Stock which the aggregate consideration for
                                   the total number of such additional shares
                                   of Common Stock so issued (or into which
                                   such convertible or exchangeable securities
                                   may convert or exchange or for which such
                                   options, warrants or other rights may be
                                   exercised plus the aggregate amount of any
                                   additional consideration initially payable
                                   upon conversion, exchange or exercise of
                                   such security) would purchase at the Market
                                   Price per share of Common Stock on such
                                   date. Such adjustment shall be made
                                   whenever such shares, securities, options,
                                   warrants or other rights are issued, and
                                   shall become effective retroactively
                                   immediately after the close of business on
                                   the record date for the determination of
                                   stockholders entitled to receive such
                                   shares, securities, options, warrants or
                                   other rights; PROVIDED, that the
                                   determination as to whether an adjustment
                                   is required to be made pursuant to this
                                   Section 7(a) shall only be made upon the
                                   issuance of such shares or such convertible
                                   or exchangeable securities, options,
                                   warrants or other rights, and not upon the
                                   issuance of the security into which such
                                   convertible or exchangeable security
                                   converts or exchanges, or the security
                                   underlying such option, warrant or other
                                   right. Notwithstanding the foregoing, in
                                   the event of such issuance or sale of
                                   Common Stock at a cash price less than the
                                   Market Price, no such adjustment under this
                                   Section 7(a) need be made to the number of
                                   shares underlying the Warrant unless such
                                   adjustment would require an increase or
                                   decrease of at least 1% of the number of
                                   shares underlying the Warrant. Any lesser
                                   adjustment shall be carried forward and
                                   shall be made at the time of and together
                                   with the next subsequent adjustment which,
                                   together with any adjustment or adjustments
                                   so carried forward, shall amount to an
                                   increase or decrease of at least 1% of
                                   number of shares underlying the Warrant.
                                   For the purpose of this Agreement, the term
                                   "Market Price" shall mean (i) if the Common
                                   Stock is traded in the over-the-counter
                                   market or on the National Association of
                                   Securities Dealers, Inc. Automated
                                   Quotations System ("NASDAQ"), the average
                                   per share closing prices of the Common
                                   Stock on the 20 consecutive trading days
                                   immediately preceding the date in question
                                   as reported by NASDAQ or an equivalent
                                   generally accepted reporting service, or
                                   (ii) if the Common Stock is traded on a
                                   national securities exchange, the average
                                   for the 20

                                      -8-

<PAGE>

                                   consecutive trading days immediately
                                   preceding the date in question of the daily
                                   per share closing prices of the Common
                                   Stock on the principal stock exchange on
                                   which it is listed, as the case may be. The
                                   closing price referred to above shall be
                                   the last reported sales price or in case no
                                   such reported sale takes place on such day,
                                   the average of the reported closing bid and
                                   asked prices, in either case on the
                                   national securities exchange or automated
                                   quotation system on which the Common Stock
                                   is then listed. Whenever the number of
                                   shares of Common Stock purchasable upon
                                   exercise of each Warrant is adjusted, the
                                   Warrant Price for each share of Common
                                   Stock payable upon exercise of each Warrant
                                   shall be adjusted by multiplying such
                                   Warrant Price immediately prior to such
                                   adjustment by a fraction, the numerator of
                                   which shall be the number of shares of
                                   Common Stock purchasable upon the exercise
                                   of each Warrant immediately prior to such
                                   adjustment and the denominator of which
                                   shall be the number of shares of Common
                                   Stock purchasable immediately after such
                                   adjustment.

                           (iv)    Within a reasonable time after the close of
                                   each quarterly fiscal period of the Company
                                   during which the Warrant Price or number of
                                   shares issuable upon exercise of this
                                   Warrant has been adjusted as herein
                                   provided, the Company shall deliver to the
                                   Holder a certificate signed by the President
                                   or Vice President of the Company and by the
                                   Treasurer or Assistant Treasurer or the
                                   Secretary or an Assistant Secretary of the
                                   Company, showing in detail the facts
                                   requiring all such adjustments occurring
                                   during such period and the Warrant Price
                                   after each such adjustment.

                  (b) In the event that the number of outstanding shares of
Common Stock is increased by a stock dividend or distribution payable in
Common Stock or by a subdivision of the outstanding Common Stock, then, from
and after the record date thereof, by reason of such dividend, distribution or
subdivision, the number of shares of Common Stock issuable upon the exercise
of the Warrant shall be increased in proportion to such increase in
outstanding shares. In the event that the number of shares of Common Stock
outstanding is decreased by a combination of the outstanding Common Stock,
then, from and after the record date thereof, the number of shares of Common
Stock issuable upon the exercise of the Warrant shall be decreased in
proportion to such decrease in the outstanding shares of Common Stock.

                  (c) In case of any reorganization or reclassification of the
outstanding Common Stock (other than a change in par value, or from par value
to no par value, or as a result of a subdivision or combination), or in case
of any consolidation of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger in which the

                                      -9-

<PAGE>

Company is the continuing corporation and which does not result in any
reclassification of the outstanding Common Stock), or in case of any sale or
conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety, the holder of the Warrant then
outstanding shall thereafter have the right to purchase the kind and amount of
shares of common stock and other securities and property receivable upon such
reorganization, reclassification, consolidation, merger, sale or conveyance by
a holder of the number of shares of Common Stock which the holder of the
Warrant shall then be entitled to purchase; such adjustments shall apply with
respect to all such changes occurring between the date of this Warrant
Agreement and the date of exercise or expiration of the Warrant.

                  (d) Subject to the provisions of this Section, in case the
Company shall, at any time prior to the exercise of the Warrant, desire to
declare a dividend or make any distribution of its assets to holders of its
Common Stock, whether as a liquidating or a partial liquidating dividend or
for any other purpose, the Company shall provide the holder of the Warrant
with written notice of such intent not less than thirty (30) days prior to the
record date to determine holders of Common Stock entitled to receive such
distribution and the holder of this Warrant shall have until 5:00 p.m. EST on
the twentieth (20th) day following the actual receipt of such notice to elect
whether to exercise this Warrant in accordance with the terms herein. In the
event of proper election to exercise the Warrant, the holder of this Warrant
shall be deemed to be a holder of Common Stock as of the record date for such
distribution. Should the holder of the Warrant elect to exercise his Warrant
within 20 days after the record date for the determination of those holders of
Common Stock entitled to such dividend or distribution, he shall be entitled
to receive for the Warrant Price per Warrant, in addition to each share of
Common Stock, the amount of such distribution (or, at the option of the
Company, a sum equal to the value of any such assets at the time of such
distribution as determined by the Board of Directors of the Company in good
faith), which would have been payable to the holder had he been the holder of
record of the Common Stock receivable upon exercise of his Warrant on the
record date for the determination of those entitled to such distribution.

                  (e) In case of the dissolution, liquidation or winding-up of
the Company, all rights under the Warrant shall terminate on a date fixed by
the Company, such date to be no earlier than ten (10) days prior to the
effectiveness of such dissolution, liquidation or winding-up and not later
than five (5) days prior to such effectiveness. Notice of such termination of
purchase rights shall be given to the last registered holder of this Warrant,
as the same shall appear on the books of the Company, by registered mail at
least thirty (30) days prior to such termination date.

                  (f) In case the Company shall, at any time prior to the
expiration of this Warrant and prior to the exercise thereof, offer to the
holders of its Common Stock any rights to subscribe for additional shares of
any class of the Company, then the Company shall give written notice thereof
to the last registered holder hereof not less than thirty (30) days prior to
the date on which the books of the Company are closed or a record date is
fixed for the determination of the stockholders entitled to such subscription
rights. Such notice shall specify the date as to which

                                     -10-

<PAGE>

the books shall be closed or record date fixed with respect to such offer of
subscription and the right of the holder hereof to participate in such offer
of subscription shall terminate if this Warrant shall not be exercised on or
before the date of such closing of the books or such record date.

                  (g) Any adjustment pursuant to the aforesaid provisions
shall be made on the basis of the number of shares of Common Stock which the
holder thereof would have been entitled to acquire by the exercise of the
Warrant immediately prior to the event giving rise to such adjustment.

                  (h) Irrespective of any adjustment in the Warrant Price or
the number or kind of shares purchasable upon exercise of this Warrant,
Warrants previously or hereafter issued may continue to express the same price
and number and kind of shares as are stated in this Warrant.

                  (i) The Company shall retain a firm of independent public
accountants (who may be any such firm regularly employed by the Company) to
make any computation required under this Section.

                  (j) If at any time, as a result of an adjustment made
pursuant to this Paragraph 7, the Holder of this Warrant shall become entitled
to purchase any securities other than shares of Common Stock, thereafter the
number of such securities so purchasable upon exercise of each Warrant and the
Warrant Price for such shares shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Common Stock.

         8.       FRACTIONAL SHARES.

         The Company shall not be required to issue fractions of shares of
Common Stock on the exercise of this Warrant; provided, however, that if a
Holder exercises all the Warrants held of record by such Holder, the
fractional interests shall be eliminated by rounding any fraction up to the
nearest whole number of shares, if the fraction is equal to or greater than
 .5, and down if the fraction is less than .5.

         9.       MISCELLANEOUS.

                  (a) This Warrant shall be governed by and in accordance with
the laws of the State of New York.

                  (b) All notices, requests, consents and other communications
hereunder shall be made in writing and shall be deemed to have been duly made
when delivered, or mailed by registered or certified mail, return receipt
requested: (i) if to a Holder, to the address of such Holder as shown on the
books of the Company, or (ii) if to the Company, One Penn Plaza, Suite 1503,
New York, NY 10119.

                                     -11-

<PAGE>

                  (c) All the covenants and provisions of this Warrant by or
for the benefit of the Company and the Holders inure to the benefit of their
respective successors and assigns hereunder.

                  (d) Nothing in this Warrant other than Section 6 shall be
construed to give to any person or corporation other than the Company and the
registered Holder or Holders, any legal or equitable right, and this Warrant
is for the sole and exclusive benefit of the Company and the Holder or Holders.

                  IN WITNESS WHEREOF, Trans World Gaming Corp. has caused this
Warrant to be signed by its duly authorized officer and this Warrant to be dated
October 15, 1999.

                                               TRANS WORLD GAMING CORP.

                                               By:
                                                   --------------------------
                                               Its:
                                                   --------------------------

                                     -12-

<PAGE>

                                     FORM OF
                               NOTICE OF EXERCISE

                      (To be executed upon partial or full
                  exercise of the Warrants represented hereby)

The undersigned registered Holder of the Warrants represented by the attached
Warrant Certificate irrevocably exercises such Warrant for and purchases
______________________ (___________) shares of Common Stock of Trans World
Gaming Corp. (the "Company").

The undersigned herewith makes payment therefore in the amount of $
____________, consisting of $ ____________ by wire transfer or certified or
cashiers' check at a price of $_____ per share and requests that a certificate
(or certificates) in denominations of ______________ (___________) shares of
Common Stock of the Company hereby purchased be issued in the name of and
delivered to the undersigned or such designee of the undersigned and, if such
shares of Common Stock (together with any shares issued upon exercise of other
Warrants or replacement Warrants) shall not include all of the shares of
Common Stock issuable upon exercise of all Warrants represented by such
Warrant Certificate (or if a new or replacement Warrant is otherwise to be
provided pursuant to the Warrant Certificate), that a new or replacement
Warrant Certificate of like tenor for the number of Warrants not being
exercised (and not being surrendered) hereunder be issued in the name of and
delivered to the undersigned, whose address is __________________________.

Dated: __________.

                                             --------------------------------
                                             (Signature of Registered Holder)

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

                                     -13-<PAGE>

                                   EXHIBIT 4.1

                                 VALENTIS, INC.
                            SHARE PURCHASE AGREEMENT

This SHARE PURCHASE AGREEMENT (this "Agreement"), is made and entered into as of
April 6, 2000, by and among VALENTIS, INC., a Delaware corporation (the
"Company"), and the purchasers listed on Schedule A attached hereto
(collectively, the "Purchasers" and individually, a "Purchaser").

1.       AUTHORIZATION OF SALE OF THE SHARES

         Subject to the terms and conditions of this Agreement, the Company has
authorized the sale of up to 3,000,000 shares (the "Shares") of common stock,
par value $0.001 per share (the "Common Stock"), of the Company.

2.       AGREEMENT TO SELL AND PURCHASE THE SHARES

         2.1      PURCHASE AND SALE

         Subject to the terms and conditions of this Agreement, each Purchaser
severally agrees to purchase, and the Company agrees to sell and issue to each
Purchaser, at the Closing (as defined below) that number of Shares set forth
opposite such Purchaser's name on Schedule A attached hereto.

         2.2      PURCHASE PRICE

         The purchase price of each Share (the "Per Share Price") shall be
$10.00. The Company will not sell (i) Shares at a price per share of less than
$10.00, or (ii) options, warrants or any other securities that can be converted
into, or otherwise exchanged for, shares of the Company's common stock at a
conversion or exercise price per share less than $10.00 for ninety (90) days
after the Closing Date (as defined below) without adjusting the Per Share Price
hereunder accordingly.

3.       DELIVERY OF THE SHARES AT THE CLOSING

         (a) The completion of the purchase and sale of the Shares (the
"Closing") shall occur at the offices of Cooley Godward LLP, counsel to the
Company, at 3175 Hanover Street, Palo Alto, California at 9:00 a.m. local time
on April 13, 2000 or such other time and date as may be agreed by the parties
(the "Closing Date").

         (b) At the Closing, the Company shall authorize its transfer agent (the
"Transfer Agent") to issue to each Purchaser one or more stock certificates
registered in the name of such Purchaser, or in such nominee name(s) as
designated by such Purchaser in writing, representing the number of Shares set
forth in Section 2 above and bearing an appropriate legend referring to the fact
that the Shares were sold in reliance upon the exemption from registration
provided by Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act"), and Rule 506 under the Securities Act. The Company will
deliver certificates representing the number of Shares set forth in Section 2
(the "Certificates") against delivery of payment for the Shares by the
Purchasers. Prior to the Purchasers' delivery of payment for the Shares, the
Company will deliver via facsimile a copy of the Certificates to be delivered
upon Closing to the office of the Purchasers (at the fax number indicated on the
signature pages attached hereto).

         (c) The Company's obligation to complete the purchase and sale of the
Shares shall be subject to the following conditions, any one or more of which
may be waived by the Company:

                  (i) receipt by the Company from stockholders holding rights to
require the Company to register the sale of any securities owned by such holder
in the Registration Statement (as defined below) of waivers of such rights
(including the waiver of any notice requirements related to such rights);

                  (ii) receipt by the Company of same-day funds in the full
amount of the purchase price for the Shares being purchased under this
Agreement; and

                  (iii) the accuracy in all material respects of the
representations and warranties made by the Purchasers and the fulfillment in all
material respects of those undertakings of the Purchasers to be fulfilled before
the Closing.

<PAGE>

         (d) The Purchasers' obligations to accept delivery of such stock
certificates and to pay for the Shares evidenced by the certificates shall be
subject to the following conditions, any one or more of which may be waived by a
Purchaser with respect to such Purchaser's obligation:

                  (i) the representations and warranties made by the Company in
this Agreement shall be accurate in all material respects and the undertakings
of the Company shall have been fulfilled in all material respects on or before
the Closing;

                  (ii) the Company shall have delivered to the Purchasers a
certificate executed by the chairman of the board or president and the chief
financial or accounting officer of the Company, dated the Closing Date, in form
and substance reasonably satisfactory to the Purchasers, to the effect that the
representations and warranties of the Company set forth in Section 4 hereof are
true and correct in all material respects as of the date of this Agreement and
as of the Closing Date, and that the Company has complied with all the
agreements and satisfied all the conditions in this Agreement on its part to be
performed or satisfied on or before the Closing Date; and

                  (iii) the Company shall have delivered to Purchasers a legal
opinion in substantially the form attached hereto as Exhibit A.

                  (iv) the Company shall have obtained gross proceeds of at
least $15 million from the sale of the Shares at the Closing.

         (e) Each Purchaser's obligations under this Agreement are expressly not
conditioned on the purchase by any or all of the other Purchasers of the Shares
that they have agreed to purchase from the Company under this Agreement.

4.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         Except as set forth on the Schedule of Exceptions attached hereto as
Exhibit B, the Company hereby represents and warrants to the Purchasers as
follows (which representations and warranties shall be deemed to apply, where
appropriate, to each subsidiary of the Company):

         4.1      ORGANIZATION AND QUALIFICATION

         The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware. The
Company has the corporate power and authority to own, lease and operate its
properties and to conduct its business as currently conducted and to enter into
and perform its obligations under this Agreement. The Company is duly qualified
as a foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure to so qualify would not, singly or in the aggregate, have a material
adverse effect on the condition, financial or otherwise, or the earnings,
assets, business affairs or business prospects of the Company.

         4.2      CAPITALIZATION

         (a) The authorized capital stock of the Company consists of 45,000,000
shares of Common Stock and 10,000,000 shares of Preferred Stock.

         (b) As of February 29, 2000, the issued and outstanding capital stock
of the Company consists of 27,024,456 shares of Common Stock. The shares of
issued and outstanding capital stock of the Company have been duly authorized
and validly issued, are fully paid and nonassessable and have not been issued in
violation of or are not otherwise subject to any preemptive or other similar
rights.

         (c) The Company has reserved 3,500,000 shares of Common Stock for
issuance upon the exercise of stock options granted or available for future
grant under the Company's 1997 Equity Incentive Plan, 1998 Non-Employee
Directors' Stock Option Plan and 1997 Employee Stock Purchase Plan (together,
the "Valentis Plans"). In addition, in connection with the Company's merger with
GeneMedicine, Inc. in March 1999, the Company assumed options to purchase
1,500,000 shares of Common Stock pursuant to GeneMedicine, Inc.'s stock option
plans (together with the Valentis Plans, the "Company Plans"). Under the Company
Plans, options to purchase 2,305,218 shares of Common Stock have been granted
and are outstanding and 1,321,119 are available for grant.

         (d) The Company has reserved 28,969 shares of Common Stock for issuance
upon the exercise of outstanding warrants to purchase Common Stock.

         With the exception of the foregoing, there are no outstanding
subscriptions, options, warrants, convertible or

<PAGE>

exchangeable securities or other rights granted to or by the Company to purchase
shares of Common Stock or other securities of the Company and there are no
commitments, plans or arrangements to issue any shares of Common Stock or any
security convertible into or exchangeable for Common Stock.

         4.3      ISSUANCE, SALE AND DELIVERY OF THE SHARES

         (a) The Shares have been duly authorized for issuance and sale to the
Purchasers pursuant to this Agreement and, when issued and delivered by the
Company pursuant to this Agreement against payment of the consideration set
forth in this Agreement, will be validly issued and fully paid and nonassessable
and free and clear of all pledges, liens and encumbrances. The certificates
evidencing the Shares are in due and proper form under Delaware law.

         (b) The issuance of the Shares is not subject to preemptive or other
similar rights. No further approval or authority of the shareholders or the
Board of Directors of the Company will be required for the issuance and sale of
the Shares to be sold by the Company as contemplated in this Agreement.

         (c) Subject to the accuracy of the Purchasers' representations and
warranties in Section 5 of this Agreement, the offer, sale, and issuance of the
Shares in conformity with the terms of this Agreement constitute transactions
exempt from the registration requirements of Section 5 of the Securities Act and
from the registration or qualification requirements of the laws of any
applicable state or United States jurisdiction.

         4.4      FINANCIAL STATEMENTS

         The financial statements included (as exhibits or otherwise) in the
Company Documents (as defined below) present fairly the financial position of
the Company as of the dates indicated and the results of their operations for
the periods specified. Except as otherwise stated in such Company Documents,
such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis, and any supporting
schedules included with the financial statements present fairly the information
stated in the financial statements. The financial and statistical data set forth
in the Company Documents were prepared on an accounting basis consistent with
such financial statements.

         4.5      NO MATERIAL CHANGE

         Since December 31, 1999,

         (a) there has been no material adverse change or any development
involving a prospective material adverse change in or affecting the condition,
financial or otherwise, or in the earnings, assets, business affairs or business
prospects of the Company, whether or not arising in the ordinary course of
business;

         (b) there have been no transactions entered into by the Company other
than those in the ordinary course of business, which are material with respect
to the Company; and

         (c) there has been no dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock.

         The Company has no material contingent obligations.

         4.6      ENVIRONMENTAL

         Except as would not, singly or in the aggregate, reasonably be expected
to have a material adverse effect on the condition, financial or otherwise, or
the earnings, assets, business affairs or business prospects of the Company,

         (a) the Company is in compliance with all applicable Environmental Laws
(as defined below);

         (b) the Company has all permits, authorizations and approvals required
under any applicable Environmental Laws and is in compliance with the
requirements of such permits authorizations and approvals;

         (c) there are no pending or, to the best knowledge of the Company,
threatened Environmental Claims (as defined below) against the Company; and

         (d) under applicable law, there are no circumstances with respect to
any property or operations of the Company that are reasonably likely to form the
basis of an Environmental Claim against the Company.

         For purposes of this Agreement, the following terms shall have the
following meanings: "Environmental Law" means

<PAGE>

any United States (or other applicable jurisdiction's) Federal, state, local or
municipal statute, law, rule, regulation, ordinance, code, policy or rule of
common law and any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent decree or judgment, relating to
the environment, health, safety or any chemical, material or substance, exposure
to which is prohibited, limited or regulated by any governmental authority.
"Environmental Claims" means any and all administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of noncompliance
or violation, investigations or proceedings relating in any way to any
Environmental Law.

         4.7      NO DEFAULTS

         The Company is not in violation of its certificate of incorporation or
bylaws or in material default in the performance or observance of any
obligation, agreement, covenant or condition contained in any material contract,
indenture, mortgage, loan agreement, deed, trust, note, lease, sublease, voting
agreement, voting trust, or other instrument or material agreement to which the
Company is a party or by which it may be bound, or to which any of the property
or assets of the Company is subject.

         4.8      LABOR MATTERS

         No labor dispute with the employees of the Company exists or, to the
best knowledge of the Company, is imminent.

         4.9      NO ACTIONS

         There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company which,
singly or in the aggregate, might result in any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company, or which, singly or in the aggregate, might
materially and adversely affect the properties or assets thereof or which might
materially and adversely affect the consummation of this Agreement, nor, to the
best knowledge of the Company, is there any reasonable basis therefor. The
Company is not in default with respect to any judgment, order or decree of any
court or governmental agency or instrumentality which, singly or in the
aggregate, would have a material adverse effect on the assets, properties or
business of the Company.

         4.10     INTELLECTUAL PROPERTY

         (a) The Company, to the best of its knowledge in the course of diligent
inquiry, owns or is licensed to use all patents, patent applications,
inventions, trademarks, trade names, applications for registration of
trademarks, service marks, service mark applications, copyrights, know-how,
manufacturing processes, formulae, trade secrets, licenses and rights in any
thereof and any other intangible property and assets that are material to the
business of the Company as now conducted and as proposed to be conducted (in
this Agreement called the "Proprietary Rights"), or is seeking, or will seek, to
obtain rights to use such Proprietary Rights that are material to the business
of the Company as proposed to be conducted.

         (b) The Company does not have any knowledge of, and the Company has not
given or received any notice of, any pending conflicts with or infringement of
the rights of others with respect to any Proprietary Rights or with respect to
any license of Proprietary Rights which are material to the business of the
Company.

         (c) No action, suit, arbitration, or legal, administrative or other
proceeding, or investigation is pending, or, to the best knowledge of the
Company, threatened, which involves any Proprietary Rights, nor, to the best
knowledge of the Company, is there any reasonable basis therefor.

         (d) The Company is not subject to any judgment, order, writ, injunction
or decree of any court or any Federal, state, local, foreign or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or any arbitrator, and has not entered into or is not a
party to any contract which restricts or impairs the use of any such Proprietary
Rights in a manner which would have a material adverse effect on the use of any
of the Proprietary Rights.

         (e) The Company has not received written notice of any pending conflict
with or infringement upon such third-party proprietary rights.

         (f) The Company has not entered into any consent, indemnification,
forbearance to sue or settlement agreement with respect to Proprietary Rights
other than in the ordinary course of business. No claims have been asserted by
any person with respect to the validity of the Company's ownership or right to
use the Proprietary Rights and, to the best knowledge of the Company, there is
no reasonable basis for any such claim to be successful.

         (g) The Company has complied, in all material respects, with its
obligations relating to the protection of the Proprietary Rights which are
material to the business of the Company used pursuant to licenses.

<PAGE>

         (h) To the best knowledge of the Company, no person is infringing on or
violating the Proprietary Rights.

         4.11     PERMITS

         The Company possesses and is operating in compliance with all material
licenses, certificates, consents, authorities, approvals and permits from all
state, federal, foreign and other regulatory agencies or bodies necessary to
conduct the businesses now operated by it, and the Company has not received any
notice of proceedings relating to the revocation or modification of any such
permit or any circumstance which would lead it to believe that such proceedings
are reasonably likely which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and adversely affect
the condition, financial or otherwise, or the earnings, assets, business affairs
or business prospects of the Company.

         4.12     DUE EXECUTION, DELIVERY AND PERFORMANCE

         (a) This Agreement has been duly executed and delivered by the Company
and constitutes a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as rights to indemnity
and contribution under this Agreement may be limited by Federal or state
securities laws or the public policy underlying such laws.

         (b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated in this Agreement and the
fulfillment of the terms of this Agreement have been duly authorized by all
necessary corporate action and will not conflict with or constitute a breach of,
or default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant to, any
contract, indenture, mortgage, loan agreement, deed, trust, note, lease,
sublease, voting agreement, voting trust or other instrument or agreement to
which the Company is a party or by which it may be bound, or to which any of the
property or assets of the Company is subject, and will not trigger anti-dilution
rights or other rights to acquire additional equity securities of the Company,
nor will such action result in any violation of the provisions of the articles
of incorporation or bylaws of the Company or any applicable statute, law, rule,
regulation, ordinance, decision, directive or order.

         4.13     PROPERTIES

         The Company has good and marketable title to its properties, free and
clear of all material security interests, mortgages, pledges, liens, charges,
encumbrances and claims of record. The properties of the Company are, in the
aggregate, in good repair (reasonable wear and tear excepted), and suitable for
their respective uses. Any real property held under lease by the Company is held
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the conduct of the business of the Company.
The Company owns or leases all such properties as are necessary to its business
or operations as now conducted.

         4.14     COMPLIANCE

         The Company has conducted and is conducting its business in compliance
with all applicable Federal, state, local and foreign statutes, laws, rules,
regulations, ordinances, codes, decisions, decrees, directives and orders,
except where the failure to do so would not, singly or in the aggregate, have a
material adverse effect on the condition, financial or otherwise, or on the
earnings, assets, business affairs or business prospects of the Company.

         4.15     SECURITY MEASURES

         The Company takes security measures designed to enable the Company to
assert trade secret protection in its non-patented technology.

         4.16     CONTRIBUTIONS

         To the best of the Company's knowledge, neither the Company nor any
employee or agent of the Company has made any payment of funds of the Company or
received or retained any funds in violation of any law, rule or regulation.

         4.17     USE OF PROCEEDS; INVESTMENT COMPANY

         The Company intends to use the proceeds from the sale of the Shares for
working capital and other general corporate purposes. The Company is not now,
and after the sale of the Shares under this Agreement and under all other
agreements and the application of the net proceeds from the sale of the Shares
described in the proceeding sentence will not be, an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.

         4.18     PRIOR OFFERINGS

         All offers and sales of capital stock of the Company before the date of
this Agreement were at all relevant times duly

<PAGE>

registered or exempt from the registration requirements of the Securities Act
and were duly registered or subject to an available exemption from the
registration requirements of the applicable state securities or Blue Sky laws.

         4.19     TAXES

         The Company has filed all material tax returns required to be filed,
which returns are true and correct in all material respects, and the Company is
not in default in the payment of any taxes, including penalties and interest,
assessments, fees and other charges, shown thereon due or otherwise assessed,
other than those being contested in good faith and for which adequate reserves
have been provided or those currently payable without interest which were
payable pursuant to said returns or any assessments with respect thereto.

         4.20     OTHER GOVERNMENTAL PROCEEDINGS

         To the Company's knowledge, there are no rulemaking or similar
proceedings before The United States Food and Drug Administration or comparable
Federal, state, local or foreign government bodies that involve or affect the
Company, which, if the subject of an action unfavorable to the Company, could
involve a prospective material adverse change in or effect on the condition,
financial or otherwise, or in the earnings, assets, business affairs or business
prospects of the Company.

         4.21     NON-COMPETITION AGREEMENTS

         To the knowledge of the Company, any full-time employee who has entered
into any non-competition, non-disclosure, confidentiality or other similar
agreement with any party other than the Company is neither in violation of nor
is expected to be in violation of that agreement as a result of the business
currently conducted or expected to be conducted by the Company or such person's
performance of his or her obligations to the Company. The Company has not
received written notice that any consultant or scientific advisor of the Company
is in violation of any non-competition, non-disclosure, confidentiality or
similar agreement.

         4.22     TRANSFER TAXES

         On the Closing Date, all stock transfer or other taxes (other than
income taxes) that are required to be paid in connection with the sale and
transfer of the Shares to be sold to the Purchasers under this Agreement will
be, or will have been, fully paid or provided for by the Company and all laws
imposing such taxes will be or will have been fully complied with.

         4.23     INSURANCE

         The Company maintains insurance of the type and in the amount that the
Company reasonably believes is adequate for its business, including, but not
limited to, insurance covering all real and personal property owned or leased by
the Company against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against by similarly situated companies, all of which
insurance is in full force and effect.

         4.24     GOVERNMENTAL CONSENTS

         No registration, authorization, approval, qualification or consent of
any court or governmental authority or agency is necessary in connection with
the execution and delivery of this Agreement or the offering, issuance or sale
of the Shares under this Agreement.

         4.25     SECURITIES AND EXCHANGE COMMISSION FILINGS

         The Company has timely filed with the Securities and Exchange
Commission (the "Commission") all documents required to be filed by the Company
under the Exchange Act of 1934, as amended (the "Exchange Act.")

         4.26     ADDITIONAL INFORMATION

         The Company represents and warrants that the information contained in
the following documents (the "Company Documents"), which will be provided to
Purchaser before the Closing, is or will be true and correct in all material
respects as of their respective final dates:

         (a) the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1999;

         (b) the Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended September 30, 1999 and December 31, 1999;

         (c) the Company's Proxy Statement for its 1999 Annual Meeting of
Shareholders; and

<PAGE>

         (d) all other documents, if any, filed by the Company with the
Commission since June 30, 1999 pursuant to the reporting requirements of the
Securities Exchange Act.

         4.27     CONTRACTS

         The contracts described in the Company Documents or incorporated by
reference therein are in full force and effect on the date hereof, except for
contracts the termination or expiration of which would not, singly or in the
aggregate, have a material adverse effect on the business, properties or assets
of the Company. Neither the Company nor, to the best knowledge of the Company,
any other party is in material breach of or default under any such contracts.

5.       REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS

         5.1      SECURITIES LAW REPRESENTATIONS AND WARRANTIES

         Each Purchaser represents, warrants and covenants to the Company as
follows:

         (a) The Purchaser is knowledgeable, sophisticated and experienced in
making, and is qualified to make, decisions with respect to investments in
shares representing an investment decision like that involved in the purchase of
the Shares, including investments in securities issued by the Company, and has
requested, received, reviewed and considered all information it deems relevant
in making an informed decision to purchase the Shares.

         (b) The Purchaser is acquiring the number of Shares set forth in
Section 2 above in the ordinary course of its business and for its own account
for investment (as defined for purposes of the Hart-Scott-Rodino Antitrust
Improvement Act of 1976 and the regulations thereunder) only, and has no present
intention of distributing any of the Shares nor any arrangement or understanding
with any other persons regarding the distribution of such Shares within the
meaning of Section 2(11) of the Securities Act, other than as contemplated in
Section 7 of this Agreement.

         (c) The Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Shares except in compliance
with the Securities Act and the Rules and Regulations.

         (d) The Purchaser has completed or caused to be completed the Stock
Certificate Questionnaire and the Registration Statement Questionnaire, attached
to this Agreement as Appendices I and II, for use in preparation of the
Registration Statement (as defined in Section 7.3 below), and the answers to the
Questionnaires are true and correct as of the date of this Agreement and will be
true and correct as of the effective date of the Registration Statement;
provided that the Purchasers shall be entitled to update such information by
providing notice thereof to the Company before the effective date of such
Registration Statement.

         (e) The Purchaser has, in connection with its decision to purchase the
number of Shares set forth in Section 2 above, relied solely upon the Company
Documents and the representations and warranties of the Company contained in
this Agreement.

         (f) The Purchaser is an "accredited investor" within the meaning of
Rule 501 of Regulation D promulgated under the Securities Act and has completed
and returned the Investor Questionnaire previously provided by the Company.

         5.2      RESALES OF SHARES

         (a) The Purchaser hereby covenants with the Company not to make any
sale of the Shares without satisfying the requirements of the Securities Act and
the Rules and Regulations, including, in the event of any resale under the
Registration Statement, the prospectus delivery requirements under the
Securities Act, and the Purchaser acknowledges and agrees that such Shares are
not transferable on the books of the Company pursuant to a resale under the
Registration Statement unless the certificate submitted to the transfer agent
evidencing the Shares is accompanied by a separate officer's certificate

                 (i) in the form of Appendix III to this Agreement;

                 (ii) executed by an officer of, or other authorized person
designated by, the Purchaser; and

                 (iii) to the effect that (A) the Shares have been sold in
accordance with the Registration Statement and (B) the requirement of
delivering a current prospectus has been satisfied.

         (b) The Purchaser acknowledges that there may occasionally be times
when the Company determines the use of the prospectus forming a part of the
Registration Statement (the "Prospectus," as further defined in Section 7.3.1
below) should be suspended until such time as an amendment or supplement to the
Registration Statement or the Prospectus has been filed by the

<PAGE>

Company and any such amendment to the Registration Statement is declared
effective by the Commission, or until such time as the Company has filed an
appropriate report with the Commission pursuant to the Exchange Act. The
Purchaser hereby covenants that it will not sell any Shares pursuant to the
Prospectus during the period commencing at the time at which the Company gives
the Purchaser written notice of the suspension of the use of the Prospectus and
ending at the time the Company gives the Purchaser written notice that the
Purchaser may thereafter effect sales pursuant to the Prospectus. The Company
may, upon written notice to the Purchasers, suspend the use of the Prospectus
for up to two 20 (twenty) day periods in any 365-day period based on the
reasonable determination of the Company's Board of Directors that there is a
significant business purpose for such determination, such as pending corporate
developments, public filings with the SEC or similar events. The Company shall
in no event be required to disclose the business purpose for which it has
suspended the use of the Prospectus if the Company determines in its good faith
judgment that the business purpose should remain confidential.

         (c) The Purchaser further covenants to notify the Company promptly of
the sale of any of its Shares, other than sales pursuant to a Registration
Statement contemplated in Section 7 of this Agreement or sales upon termination
of the transfer restrictions pursuant to Section 7.4 of this Agreement.

         5.3      DUE EXECUTION, DELIVERY AND PERFORMANCE

         (a) This Agreement has been duly executed and delivered by the
Purchaser and constitutes a valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, except as rights
to indemnity and contribution under this Agreement may be limited by Federal or
state securities laws or the public policy underlying such laws.

         (b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated in this Agreement and the
fulfillment of the terms of this Agreement have been duly authorized by all
necessary corporate action and will not conflict with or constitute a breach of,
or default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Purchaser pursuant to, any
contract, indenture, mortgage, loan agreement, deed, trust, note, lease,
sublease, voting agreement, voting trust or other instrument or agreement to
which the Purchaser is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Purchaser is subject, nor will such
action result in any violation of the provisions of the charter or bylaws of the
Purchaser or any applicable statute, law, rule, regulation, ordinance, decision,
directive or order.

6.       SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.

         Notwithstanding any investigation made by any party to this Agreement,
all covenants, agreements, representations and warranties made by the Company
and the Purchasers in this Agreement and in the certificates for the Shares
delivered pursuant to this Agreement shall survive the execution of this
Agreement, the delivery to the Purchasers of the Shares being purchased and the
payment therefor.

7.       FORM D FILING; REGISTRATION; COMPLIANCE WITH THE SECURITIES ACT;
         COVENANTS

         7.1      FORM D FILING; REGISTRATION OF SHARES

                  7.1.1    REGISTRATION STATEMENT; EXPENSES

         The Company shall:

         (a) file in a timely manner a Form D relating to the sale of the Shares
under this Agreement, pursuant to Securities and Exchange Commission Regulation
D.

         (b) as soon as practicable after the Closing Date, but in no event
later than the 45th day following the Closing Date, prepare and file with the
Commission a Registration Statement on Form S-3 (or, if the Company is
ineligible to use Form S-3, then on Form S-1) relating to the sale of the Shares
by the Purchasers from time to time on the Nasdaq National Market (or the
facilities of any national securities exchange on which the Company's Common
Stock is then traded) or in privately negotiated transactions (the "Registration
Statement");

         (c) provide to Purchasers any information required to permit the sale
of the Shares under rule 144A of the Securities Act;

         (d) subject to receipt of necessary information from the Purchasers,
use its best efforts to cause the Commission to notify the Company of the
Commission's willingness to declare the Registration Statement effective on or
before July 28, 2000;

         (e) notify Purchasers promptly upon the Registration Statement being
declared effective by the Commission;

<PAGE>

         (f) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the Prospectus (as defined in
Section 7.3.1 below) and take such other action, if any, as may be necessary to
keep the Registration Statement effective until the earlier of (i) two years
after the effective date of the Registration Statement, (ii) the date on which
the Shares may be resold by the Purchasers without registration or without
regard to any volume limitations by reason of Rule 144(k) under the Securities
Act or any other rule of similar effect or (iii) all of the Shares have been
sold pursuant to the Registration Statement or Rule 144(k) under the Securities
Act or any other rule of similar effect;

         (g) promptly furnish to the Purchasers with respect to the Shares
registered under the Registration Statement such reasonable number of copies of
the Prospectus, including any supplements to or amendments of the Prospectus, in
order to facilitate the public sale or other disposition of all or any of the
Shares by the Purchasers;

         (h) during the period when copies of the Prospectus are required to be
delivered under the Securities Act or the Exchange Act, will file all documents
required to be filed with the Commission pursuant to Section 13, 14 or 15 of the
Exchange Act within the time periods required by the Exchange Act and the rules
and regulations promulgated thereunder;

         (i) file documents required of the Company for customary Blue Sky
clearance in all states requiring Blue Sky clearance; PROVIDED, HOWEVER, that
the Company shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is not now so qualified or
has not so consented; and

         (j) bear all expenses in connection with the procedures in paragraphs
(a) through (f) of this Section 7.1.1 and the registration of the Shares
pursuant to the Registration Statement, including fees and expenses of up to
$15,000 of one counsel for the Purchasers, but not including any fees and
expenses of any other advisers to the Purchasers or brokerage fees and
commissions incurred by the Purchasers.

                  7.1.2    DELAY IN EFFECTIVENESS OF REGISTRATION STATEMENT

         In the event that the Registration Statement is not declared effective
by July 28, 2000, the Company shall pay to each Purchaser liquidated damages in
an amount equal to 0.25% of the total purchase price of the Shares purchased by
such Purchaser pursuant to this Agreement for each week after July 28, 2000 that
the Registration Statement is not declared effective.

         7.2      TRANSFER OF SHARES AFTER REGISTRATION

         Each Purchaser agrees that it will not effect any disposition of the
Shares or its right to purchase the Shares that would constitute a sale within
the meaning of the Securities Act, except as contemplated in the Registration
Statement referred to in Section 7.1 or as otherwise permitted by law, and that
it will promptly notify the Company of any changes in the information set forth
in the Registration Statement regarding the Purchaser or its plan of
distribution.

         7.3      INDEMNIFICATION

         For the purpose of this Section 7.3, the term "Registration Statement"
shall include any preliminary or final prospectus, exhibit, supplement or
amendment included in or relating to the Registration Statement referred to in
Section 7.1.

                  7.3.1    INDEMNIFICATION BY THE COMPANY

         The Company agrees to indemnify and hold harmless each of the
Purchasers and each person, if any, who controls any Purchaser within the
meaning of the Securities Act, against any losses, claims, damages, liabilities
or expenses, joint or several, to which such Purchasers or such controlling
person may become subject, under the Securities Act, the Exchange Act, or any
other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Company, which consent shall not be
unreasonably withheld), insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, including the Prospectus,
financial statements and schedules, and all other documents filed as a part
thereof, as amended at the time of effectiveness of the Registration Statement,
including any information deemed to be a part thereof as of the time of
effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rule 434,
of the Rules and Regulations, or the Prospectus, in the form first filed with
the Commission pursuant to Rule 424(b) of the Regulations, or filed as part of
the Registration Statement at the time of effectiveness if no Rule 424(b) filing
is required (the "Prospectus"), or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state in any of
them a material fact required to be stated therein or necessary to make the
statements in any of them, in light of the circumstances under which they were
made, not misleading, or arise out of or are based in whole or in part on any
inaccuracy in the representations and warranties of the Company contained in
this Agreement, or any failure of the Company to perform its obligations under
this Agreement or under law, and will reimburse each Purchaser and each such
controlling person for any legal and other expenses as such expenses are
reasonably incurred by such Purchaser or such controlling person in connection
with investigating, defending, settling, compromising or paying any such

<PAGE>

loss, claim, damage, liability, expense or action; PROVIDED, HOWEVER, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage, liability or expense arises out of or is based upon (i) an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, the Prospectus or any amendment or supplement of the
Registration Statement or Prospectus in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Purchaser
expressly for use in the Registration Statement or the Prospectus, or (ii) the
failure of such Purchaser to comply with the covenants and agreements contained
in Sections 5.2 or 7.2 of this Agreement respecting resale of the Shares, or
(iii) the inaccuracy of any representations made by such Purchaser in this
Agreement or (iv) any untrue statement or omission of a material fact required
to make such statement not misleading in any Prospectus that is corrected in any
subsequent Prospectus that was delivered to the Purchaser before the pertinent
sale or sales by the Purchaser.

                  7.3.2    INDEMNIFICATION BY THE PURCHASER

         Each Purchaser will severally and not jointly indemnify and hold
harmless the Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of the Securities Act, against any losses, claims, damages,
liabilities or expenses to which the Company, each of its directors, each of its
officers who signed the Registration Statement or controlling person may become
subject, under the Securities Act, the Exchange Act, or any other federal or
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Purchaser, which consent shall not be unreasonably withheld)
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof as contemplated below) arise out of or are based upon (i) any
failure on the part of such Purchaser to comply with the covenants and
agreements contained in Sections 5.2 or 7.2 of this Agreement respecting the
sale of the Shares or (ii) the inaccuracy of any representation made by such
Purchaser in this Agreement or (iii) any untrue or alleged untrue statement of
any material fact contained in the Registration Statement, the Prospectus, or
any amendment or supplement to the Registration Statement or Prospectus, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Purchaser expressly
for use therein; PROVIDED, HOWEVER, that the Purchaser shall not be liable for
any such untrue or alleged untrue statement or omission or alleged omission of
which the Purchaser has delivered to the Company in writing a correction before
the occurrence of the transaction from which such loss was incurred, and the
Purchaser will reimburse the Company, each of its directors, each of its
officers who signed the Registration Statement or controlling person for any
legal and other expense reasonably incurred by the Company, each of its
directors, each of its officers who signed the Registration Statement or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action.

                  7.3.3    INDEMNIFICATION PROCEDURE

         (a) Promptly after receipt by an indemnified party under this Section
7.3 of notice of the threat or commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party under this Section 7.3, promptly notify the indemnifying party in writing
of the claim; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party for
contribution or otherwise under the indemnity agreement contained in this
Section 7.3 or to the extent it is not prejudiced as a result of such failure.

         (b) In case any such action is brought against any indemnified party
and such indemnified party seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to participate in,
and, to the extent that it may wish, jointly with all other indemnifying parties
similarly notified, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; PROVIDED, HOWEVER, if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be a
conflict between the positions of the indemnifying party and the indemnified
party in conducting the defense of any such action or that there may be legal
defenses available to it or other indemnified parties that are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 7.3 for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless:

                  (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate counsel,
approved by such indemnifying party representing all of the indemnified parties
who are parties to such action) or

<PAGE>

                  (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of action, in each
of which cases the reasonable fees and expenses of counsel shall be at the
expense of the indemnifying party. Notwithstanding the provisions of this
Section 7.3, the Purchaser shall not be liable for any indemnification
obligation under this Agreement in excess of the amount of gross proceeds
received by the Purchaser from the sale of the Shares.

                  7.3.4    CONTRIBUTION

         If the indemnification provided for in this Section 7.3 is required by
its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under this Section 7.3 in
respect to any losses, claims, damages, liabilities or expenses referred to in
this Agreement, then each applicable indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to in this Agreement

         (a) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Purchaser from the placement of Common
Stock or

         (b) if the allocation provided by clause (a) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (a) above but the relative fault of the
Company and the Purchaser in connection with the statements or omissions or
inaccuracies in the representations and warranties in this Agreement that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations.

         The respective relative benefits received by the Company on the one
hand and each Purchaser on the other shall be deemed to be in the same
proportion as the amount paid by such Purchaser to the Company pursuant to this
Agreement for the Shares purchased by such Purchaser that were sold pursuant to
the Registration Statement bears to the difference (the "Difference") between
the amount such Purchaser paid for the Shares that were sold pursuant to the
Registration Statement and the amount received by such Purchaser from such sale.
The relative fault of the Company and each Purchaser shall be determined by
reference to, among other things, whether the untrue or alleged statement of a
material fact or the omission or alleged omission to state a material fact or
the inaccurate or the alleged inaccurate representation or warranty relates to
information supplied by the Company or by such Purchaser and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 7.3.3, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim. The
provisions set forth in Section 7.3.3 with respect to the notice of the threat
or commencement of any threat or action shall apply if a claim for contribution
is to be made under this Section 7.3.4; PROVIDED, HOWEVER, that no additional
notice shall be required with respect to any threat or action for which notice
has been given under Section 7.3 for purposes of indemnification. The Company
and each Purchaser agree that it would not be just and equitable if contribution
pursuant to this Section 7.3 were determined solely by pro rata allocation (even
if the Purchaser were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to in this paragraph. Notwithstanding the provisions of this Section
7.3, no Purchaser shall be required to contribute any amount in excess of the
amount by which the Difference exceeds the amount of any damages that such
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Purchasers' obligations to contribute pursuant
to this Section 7.3 are several and not joint.

         7.4      TERMINATION OF CONDITIONS AND OBLIGATIONS

         The restrictions imposed by Section 5 or this Section 7 upon the
transferability of the Shares shall cease and terminate as to any particular
number of the Shares upon the passage of two years from the effective date of
the Registration Statement covering the Shares or at such time as an opinion of
counsel satisfactory in form and substance to the Company shall have been
rendered to the effect that such conditions are not necessary in order to comply
with the Securities Act.

         7.5      INFORMATION AVAILABLE

         So long as the Registration Statement is effective covering the resale
of Shares owned by any Purchaser, the Company will furnish to such Purchaser:

         (a) as soon as practicable after available (but in the case of the
Company's Annual Report to Shareholders, within 120 days after the end of each
fiscal year of the Company), one copy of

                  (i) its Annual Report to Shareholders (which Annual Report
shall contain financial statements audited in accordance with generally accepted
accounting principles by a national firm of certified public accountants);

<PAGE>

                  (ii) if not included in substance in the Annual Report to
Shareholders, its Annual Report on Form 10-K;

                  (iii) if not included in substance in its Quarterly Reports to
Shareholders, its quarterly reports on Form 10-Q; and

                  (iv) a full copy of the particular Registration Statement
covering the Shares (the foregoing, in each case, excluding exhibits);

         (b) upon the request of the Purchaser, a reasonable number of copies of
the Prospectus to supply to any other party requiring the Prospectus.

         7.6      RULE 144 INFORMATION

         For two years after the date of this Agreement, the Company shall file
all reports required to be filed by it under the Securities Act, the Rules and
Regulations and the Exchange Act and shall take such further action to the
extent required to enable the Purchasers to sell the Shares pursuant to Rule 144
under the Securities Act (as such rule may be amended from time to time).

         7.7      STOCK OPTION MATTERS

         The Company shall, within thirty (30) days of the Closing Date, adopt
such amendments to the Company Plans and the Company's By-laws to provide that:

         (a) the exercise price of any and all option grants made under the
Company Plans, or pursuant to other arrangements or agreements, shall be equal
to, or in excess of, the fair market value of the Company's common stock on the
date of grant; and

         (b) the Company shall not, without the prior written consent of its
stockholders, adopt any plan providing for decreases in the exercise price of
stock option grants made under the Company Plans, or pursuant to other
arrangements or agreements.

              7.7.2    STOCK OPTION PRICING.

8.       BROKER'S FEE

         The Purchasers acknowledge that the Company intends to pay to Chase
Securities, Inc., the placement agent, a fee in respect of the sale of the
Shares to certain of the Purchasers. Each of the parties to this Agreement
hereby represents that, on the basis of any actions and agreements by it, there
are no other brokers or finders entitled to compensation in connection with the
sale of the Shares to the Purchasers.

9.       NOTICES

         All notices, requests, consents and other communications under this
Agreement shall be in writing, shall be mailed by first-class registered or
certified airmail, confirmed facsimile or nationally recognized overnight
express courier postage prepaid, and shall be delivered as addressed as follows:

         (a) if to the Company, to:

                  Valentis, Inc.
                  863A Mitten Road
                  Burlingame, CA 94010
                  Attention: Benjamin F. McGraw

<PAGE>

                  with a copy to:

                  Cooley Godward
                  Five Palo Alto Square
                  3000 El Camino Real
                  Palo Alto, CA 94306-2155
                  Attention: Alan C. Mendelson

or to such other person at such other place as the Company shall designate to
the Purchaser in writing; and

         (b) if to a Purchaser, at its address as set forth on the signature
page to this Agreement, or at such other address or addresses as may have been
furnished to the Company in writing.

         Such notice shall be deemed effectively given upon confirmation of
receipt by facsimile, one business day after deposit with such overnight courier
or three days after deposit of such registered or certified airmail with the
U.S. Postal Service, as applicable.

10.      MODIFICATION; AMENDMENT

         This Agreement may not be modified or amended except pursuant to an
instrument in writing signed by the Company and the Purchasers of a majority of
the Shares sold pursuant to this Agreement.

11.      TERMINATION

This Agreement may be terminated as to any Purchaser, at the option of such
Purchaser, if the Closing has not occurred on or before thirty (30) days from
the date of this Agreement.

12.      EXPENSES

         Each party to this Agreement shall pay its own fees and expenses
incident to the negotiation, preparation and execution of this Agreement and
related documents (including legal and accounting fees and expenses).

13.      HEADINGS

The headings of the various sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement.

14.      SEVERABILITY

         If any provision contained in this Agreement should be held to be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained in this Agreement shall not
in any way be affected or impaired thereby.

15.      GOVERNING LAW

         This Agreement shall be governed by and construed in accordance with
the laws of the state of Delaware and the federal law of the United States of
America.

16.      NO CONFLICTS OF INTEREST.

         The Company represents, warrants and covenants that, to the best of its
knowledge, no officer or employee of the State of Wisconsin Investment Board has
or will receive, directly or indirectly, a personal interest in the Company or
its property or anything of substantial economic value for his or her private
benefit from the Company, or anyone acting on its behalf, in connection with the
investment made pursuant to this Agreement.

17.      COUNTERPARTS

         This Agreement may be executed in two or more counterparts, each of
which shall constitute an original, but all of which, when taken together, shall
constitute but one instrument, and shall become effective when one or more
counterparts have been signed by each party to this Agreement and delivered to
the other parties.

                            [Signature pages follow]

<PAGE>

         IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

                                 VALENTIS, INC.

                                 By:      /s/ Bennet Weintraub
                                          ---------------------------
                                 Name:    Bennet Weintraub
                                          ---------------------------
                                 Its:     CFO, VP Finance
                                          ---------------------------

                                 VALENTIS, INC.
                            SHARE PURCHASE AGREEMENT
                                 SIGNATURE PAGE

<PAGE>

         IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

                                 STATE OF WISCONSIN INVESTMENT BOARD

                                 By:               /s/ John F. Nelson
                                                   -----------------------------
                                 Name:             John F. Nelson
                                                   -----------------------------
                                 Title:            Investment Director
                                                   -----------------------------
                                 Address:

                                                   121 E. Wilson Street
                                                   -----------------------------
                                                   Madison, WI 53702
                                                   -----------------------------
                                 Facsimile:        608-266-2436
                                                   -----------------------------

                                 VALENTIS, INC.
                            SHARE PURCHASE AGREEMENT
                                 SIGNATURE PAGE

<PAGE>

         IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

                    BSI - SA - LUGANO - SWITZERLAND

                    By:               /s/ B. Ripamonti     /s/ A. De Angelis
                                      ------------------------------------------
                    Name:             B. Ripamonti          A. De Angelis
                                      ------------------------------------------
                    Title:            Vice President        First Vice President
                                      ------------------------------------------
                    Address:

                                      Via Magatti 2
                                      ------------------------------------------
                                      6900 Lugano
                                      ------------------------------------------
                                      Switzerland
                                      ------------------------------------------
                    Facsimile:        +41-91-809-4346
                                      ------------------------------------------

         P.S. ABOUT OUR COMPANY NAME, PLEASE SEE THE ATTACHED DECLARATION.

                                 VALENTIS, INC.
                            SHARE PURCHASE AGREEMENT
                                 SIGNATURE PAGE
<PAGE>

         IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

                                 COMPANIA INTERNACIONAL FINANCIERA

                                 By:               /s/ Yomi Rodrig
                                                   -----------------------------
                                 Name:             Yomi Rodrig
                                                   -----------------------------
                                 Title:
                                                   -----------------------------
                                 Address:          c/o Back Office Solutions
                                                   -----------------------------
                                                   31 Boulevard Helvetique
                                                   -----------------------------
                                                   CH - 1244 Geneve 3
                                                   -----------------------------
                                                   Switzerland
                                                   -----------------------------
                                 Facsimile:        +41-22- 707-0589
                                                   -----------------------------

                                 VALENTIS, INC.
                            SHARE PURCHASE AGREEMENT
                                 SIGNATURE PAGE
<PAGE>

         IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

                                 BANCA INTERMOBILIARE DI INVESTIMENTI E GESTIONI

                                 By:               /s/ Pietro D'Aqui
                                                   -----------------------------
                                 Name:             Pietro D'Aqui
                                                   -----------------------------
                                 Title:            Chief Executive Officer
                                                   -----------------------------
                                 Address:

                                                   Via Gransei No. 7
                                                   -----------------------------
                                                   70121 Torino
                                                   -----------------------------
                                                   Italy
                                                   -----------------------------
                                 Facsimile:        +33-011-516-2618
                                                   -----------------------------

                                 VALENTIS, INC.
                            SHARE PURCHASE AGREEMENT
                                 SIGNATURE PAGE
<PAGE>

         IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

                                 PURCHASERS:

                                 BAYSTAR CAPITAL, LP

                                 By:               /s/ Steven Lamar
                                                   -----------------------------
                                 Name:             Steven Lamar
                                                   -----------------------------
                                 Title:            Managing Partner
                                                   -----------------------------
                                 Address:
                                                   425 Market Street, 22nd Floor
                                                   -----------------------------
                                                   San Francisco, CA 94105
                                                   -----------------------------
                                 FACSIMILE:        415-512-6488
                                                   -----------------------------

                                 VALENTIS, INC.
                            SHARE PURCHASE AGREEMENT
                                 SIGNATURE PAGE
<PAGE>

         IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

                                 PURCHASERS:

                                 BAYSTAR INTERNATIONAL LTD

                                 By:               /s/ Steven Lamar
                                                   -----------------------------
                                 Name:             Steven Lamar
                                                   -----------------------------
                                 Title:            Managing Partner
                                                   -----------------------------
                                 Address:
                                                   425 Market Street, 22nd Floor
                                                   -----------------------------
                                                   San Francisco, CA 94105
                                                   -----------------------------
                                 Facsimile:        415-512-6488
                                                   -----------------------------

                                 VALENTIS, INC.
                            SHARE PURCHASE AGREEMENT
                                 SIGNATURE PAGE
<PAGE>

          IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

                                 PARK PLACE CAPITAL
                                 on behalf of Leonardo Capital Fund Limited

                                 By:               /s/ G. Ciardi
                                                   -----------------------------
                                 Name:             Mr. G. Ciardi
                                                   -----------------------------
                                 Title:            M. Director
                                                   -----------------------------
                                 Address:

                                                   25 St. James Street
                                                   -----------------------------
                                                   London SW1 A1HA
                                                   -----------------------------
                                                   England
                                                   -----------------------------
                                 Facsimile:        +44-971-930-0415
                                                   -----------------------------

                                 VALENTIS, INC.
                            SHARE PURCHASE AGREEMENT
                                 SIGNATURE PAGE
<PAGE>

         IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

                                 FRAMLINGTON ASSET MANAGEMENT FOR
                                 MUNDER HEALTHCARE FUND

                                 By:               /s/ Bill Kennedy
                                                   -----------------------------
                                 Name:             Bill Kennedy
                                                   -----------------------------
                                 Title:            Treasury Manager
                                                   -----------------------------
                                 Address:

                                                   155 Bishopsgate
                                                   -----------------------------
                                                   London, EC2M 3XJ
                                                   -----------------------------
                                                   England
                                                   -----------------------------
                                 Facsimile:        +44-171-330-6525
                                                   -----------------------------

                                 For the purchase of 120,000 shares

                                 VALENTIS, INC.
                            SHARE PURCHASE AGREEMENT
                                 SIGNATURE PAGE
<PAGE>

IN WITNESS WHEREOF, the parties to this Agreement have caused this Agreement to
be executed by their duly authorized representatives as of the day and year
first above written.

                                 MERLIN BIOMED, L.P.

                                 Signature:        /s/ Norman Schleifer
                                                   -----------------------------
                                 Name:             Norman Schleifer
                                                   -----------------------------
                                 Title:            CFO
                                                   -----------------------------
                                 Address:

                                                   230 Park Avenue
                                                   -----------------------------
                                                   Suite 928
                                                   -----------------------------
                                                   New York, NY 10169
                                                   -----------------------------
                                 Facsimile:        646-227-5201
                                                   -----------------------------

                                 VALENTIS, INC.
                            SHARE PURCHASE AGREEMENT
                                 SIGNATURE PAGE
<PAGE>

         IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

                                 MERLIN BIOMED INT'L LTD

                                 Signature:        /s/ Norman Schleifer
                                                   -----------------------------
                                 Name:             Norman Schleifer
                                                   -----------------------------
                                 Title:            CFO
                                                   -----------------------------
                                 Address:

                                                   230 Park Avenue
                                                   -----------------------------
                                                   Suite 928
                                                   -----------------------------
                                                   New York, NY 10169
                                                   -----------------------------
                                 Facsimile:        646-227-5201
                                                   -----------------------------

                                 VALENTIS, INC.
                            SHARE PURCHASE AGREEMENT
                                 SIGNATURE PAGE
<PAGE>

         IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

                                 FINSBURY TECHNOLOGY TRUST PLC

                                 By:               /s/ Illegible
                                                   -----------------------------
                                 Name:             For and on behalf of
                                                   -----------------------------
                                                   Rea Brothers Limited
                                                   -----------------------------
                                 Title:            Secretary
                                                   -----------------------------
                                 Address:

                                                   12 Appold Street
                                                   -----------------------------
                                                   London EC2A 2AW
                                                   -----------------------------
                                                   England
                                                   -----------------------------
                                 Facsimile:        +44-207-377-6458
                                                   -----------------------------

                                 VALENTIS, INC.
                            SHARE PURCHASE AGREEMENT
                                 SIGNATURE PAGE
<PAGE>

         IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

                                 FINSBURY LIFE SCIENCES INVESTMENT TRUST PLC

                                 By:               /s/ Illegible
                                                   -----------------------------
                                 Name:             For and on behalf of
                                                   -----------------------------
                                                   Rea Brothers Limited
                                                   -----------------------------
                                 Title:            Secretary
                                                   -----------------------------
                                 Address:

                                                   12 Appold Street
                                                   -----------------------------
                                                   London EC2A 2AW
                                                   -----------------------------
                                                   England
                                                   -----------------------------
                                 Facsimile:        +44-207-377-6458
                                                   -----------------------------

                                 VALENTIS, INC.
                            SHARE PURCHASE AGREEMENT
                                 SIGNATURE PAGE
<PAGE>

         IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

                                 AL-BANK AL-SAUDI AL-ALAMI LTD

                                 By:               /s/ Anne Marieke Ezendam
                                                   -----------------------------
                                 Name:             Anne Marieke Ezendam
                                                   -----------------------------
                                 Title:            Healthcare Analyst
                                                   -----------------------------
                                 Address:

                                                   One Knightsbridge
                                                   -----------------------------
                                                   London SW1X 7XS
                                                   -----------------------------
                                                   England
                                                   -----------------------------
                                 Facsimile:        +44-207-259-3340
                                                   -----------------------------

                                 VALENTIS, INC.
                            SHARE PURCHASE AGREEMENT
                                 SIGNATURE PAGE
<PAGE>

         IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

                                 WERNER LIVING TRUST DATED 6/4/91

                                 Signature:        /s/ Thomas Werner
                                                   -----------------------------
                                 Name:             Thomas Werner
                                                   -----------------------------
                                 Title:            Trustee
                                                   -----------------------------
                                 Address:

                                                   3110 Main Street, Suite 300
                                                   -----------------------------
                                                   Santa Monica, CA 90405
                                                   -----------------------------
                                 Facsimile:        310-392-3541
                                                   -----------------------------
                                 Shares Purchased: 27,500

                                 VALENTIS, INC.
                            SHARE PURCHASE AGREEMENT
                                 SIGNATURE PAGE
<PAGE>

         IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

                                 UNITED OAK, INC.

                                 Signature:        /s/ Paul D. Wachter
                                                   -----------------------------
                                 Name:             Paul D. Wachter
                                                   -----------------------------
                                 Title:            Vice President
                                                   -----------------------------
                                 Address:

                                                   3110 Main Street, Suite 300
                                                   -----------------------------
                                                   Santa Monica, CA 90405
                                                   -----------------------------
                                 Facsimile:        310-392-3541
                                                   -----------------------------
                                 Shares Purchased: 27,500

                                 VALENTIS, INC.
                            SHARE PURCHASE AGREEMENT
                                 SIGNATURE PAGE
<PAGE>

         IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

                                 JEAN GOUTAL

                                 Signature:        /s/ Jean Goutal
                                                   -----------------------------
                                 Address:

                                                   3110 Main Street, Suite 300
                                                   -----------------------------
                                                   Santa Monica, CA 90405
                                                   -----------------------------
                                 Facsimile:        310-392-3541
                                                   -----------------------------
                                 Shares Purchased: 6,000

                                 VALENTIS, INC.
                            SHARE PURCHASE AGREEMENT
                                 SIGNATURE PAGE
<PAGE>

          IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

                                 WACHTER FAMILY TRUST

                                 Signature:        /s/ Paul D. Wachter
                                                   -----------------------------
                                 Title:            Trustee
                                                   -----------------------------
                                 Address:

                                                   3110 Main Street, Suite 300
                                                   -----------------------------
                                                   Santa Monica, CA 90405
                                                   -----------------------------
                                 Facsimile:        310-392-3541
                                                   -----------------------------
                                 Shares Purchased: 6,000

                                 VALENTIS, INC.
                            SHARE PURCHASE AGREEMENT
                                 SIGNATURE PAGE
<PAGE>

          IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

                                 DAVID CAPELL

                                 Signature:        /s/ David Capell
                                                   -----------------------------
                                 Address:

                                                   3110 Main Street, Suite 300
                                                   -----------------------------
                                                   Santa Monica, CA 90405
                                                   -----------------------------
                                 Facsimile:        310-392-3541
                                                   -----------------------------
                                 Shares Purchased: 4,000

                                 VALENTIS, INC.
                            SHARE PURCHASE AGREEMENT
                                 SIGNATURE PAGE
<PAGE>

         IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

                                 GREGORY ALEXANDER

                                 Signature:        /s/ Gregory Alexander
                                                   -----------------------------
                                 Address:

                                                   3110 Main Street, Suite 300
                                                   -----------------------------
                                                   Santa Monica, CA 90405
                                                   -----------------------------
                                 Facsimile:        310-392-3541
                                                   -----------------------------
                                 Shares Purchased: 4,000

                                 VALENTIS, INC.
                            SHARE PURCHASE AGREEMENT
                                 SIGNATURE PAGE
<PAGE>

                                   SCHEDULE A

                                   PURCHASERS

<TABLE>
<CAPTION>

PURCHASER                                          NUMBER OF SHARES    PURCHASE PRICE
---------------------------------------------      ----------------    --------------
<S>                                                  <C>                <C>
BayStar Capital LP                                     120,000          $  1,200,000
BayStar International LTD                               80,000          $     80,000
Lares & Co. (Trustee and Custodial Agent for           120,000          $  1,200,000
Munder Healtcare Fund) (Framlington Asset
Management)
Gregory Alexander (Main Street Advisors)                 4,000          $     40,000
Jean Goutal (Main Street Advisors)                       6,000          $     60,000
United Oak, Inc. (Main Street Advisors)                 27,500          $    275,000
Wachter Family Trust Dated 3/1/96, Paul                  6,000          $     60,000
Wachter, Trustee (Main Street Advisors)
Werner Living Trust Dated 6/4/91, Thomas                27,500          $    275,000
Werner, Trustee (Main Street Advisors)
David Capell (Main Street Advisors)                      4,000          $     40,000
Merlin BioMed L.P.                                      60,000          $    600,000
Merlin BioMed Int'l, Ltd                                60,000          $    600,000
Hare & Co. (Custodian for Finsbury Technology           25,609          $    256,090
Trust PLC) (Reabourne Limited)
Hare & Co. (Custodian for Finsbury Life                 34,391          $    343,910
Sciences Investment Trust PLC) (Reabourne
Limited)
Al-Bank Al-Saudi Al-Alami Ltd (Saudi                    20,000          $    200,000
International Bank)
Compania Internacional Financiera SA                   200,000          $  2,000,000
Banca Intermobiliare de Investimenti e Gestioni        200,000          $  2,000,000
State of Wisconsin Investment Board                   500,0001          $  5,000,000
BSI SA - Lugano - Switzerland (Banca della             300,000          $  3,000,000
Svizzera Italiana)
Leonardo Capital Fund (Park Place Capital)             120,000          $  1,200,000
TOTAL:                                               1,915,000          $ 19,150,000
</TABLE>

----------
(1) To be issued in two Certificates (in 400,000 and 100,000 denominations).

                                       1.
<PAGE>

                                    EXHIBIT A

April ___, 2000

To the Purchasers of
Common Stock of Valentis, Inc.
listed on Exhibit A attached hereto

Ladies and Gentlemen:

We have acted as counsel for Valentis, Inc., a Delaware corporation (the
"Company"), in connection with the issuance and sale to you of 1,915,000 shares
of the Company's Common Stock (the "Shares") pursuant to the Share Purchase
Agreement dated as of April 6, 2000 between the Company and each of the
Purchasers listed on Exhibit A hereto (the "Agreement"). We are rendering this
opinion pursuant to Section 3(d)(iii) of the Agreement. Except as otherwise
defined herein, capitalized terms used but not defined herein have the
respective meanings given to them in the Agreement.

In connection with this opinion, we have examined and relied upon the
representations and warranties as to factual matters contained in and made
pursuant to the Agreement by the various parties and originals or copies
certified to our satisfaction, of such records, documents, certificates,
opinions, memoranda and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below. Where we render
an opinion "to the best of our knowledge" or concerning an item "known to us" or
our opinion otherwise refers to our knowledge, it is based solely upon (i) an
inquiry of attorneys within this firm who perform legal services for the
Company, (ii) receipt of a certificate executed by an officer of the Company
covering such matters, and (iii) such other investigation, if any, that we
specifically set forth herein.

In rendering this opinion, we have assumed: the genuineness and authenticity of
all signatures on original documents; the authenticity of all documents
submitted to us as originals; the conformity to originals of all documents
submitted to us as copies; the accuracy, completeness and authenticity of
certificates of public officials; and the due authorization, execution and
delivery of all documents (except the due authorization, execution and delivery
by the Company of the Agreement), where authorization, execution and delivery
are prerequisites to the effectiveness of such documents. We have also assumed:
that all individuals executing and delivering documents had the legal capacity
to so execute and deliver; that you have received all documents you were to
receive under the Agreement; that the Agreement is an obligation binding upon
you; and, that you have filed any required California franchise or income tax
returns and have paid any required California franchise or income taxes. In
rendering this opinion we have also assumed that there are no extrinsic
agreements or understandings among the parties to the Agreement that would
modify or interpret the terms of the Agreement or the respective rights or
obligations of the parties thereunder.

Our opinion is expressed only with respect to the federal laws of the United
States of America, the laws of the State of California and the General
Corporation Law of the State of Delaware. We express no opinion as to whether
the laws of any particular jurisdiction apply, and no opinion to the extent that
the laws of any jurisdiction other than those identified above are applicable to
the subject matter hereof. We are not rendering any opinion as to compliance
with any antifraud law, rule or regulation relating to securities, or to the
sale or issuance thereof.

On the basis of the foregoing, in reliance thereon and with the foregoing
qualifications, we are of the opinion that:

1.   The Company has been duly incorporated and is validly existing in good
standing under the laws of the State of Delaware. The Company is qualified to do
business as a foreign corporation and is in good standing in the State of
California. The Company has the requisite corporate power to own or lease its
property and assets and to conduct its business as currently conducted.

2.   The Agreement has been duly authorized by all necessary corporate action on
the part of the Company and has been duly executed and delivered on behalf of
the Company and constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, arrangement,
moratorium and other laws of general applicability relating to or affecting
creditors' rights, (ii) as limited by equitable principles generally and
limitations on the availability of equitable remedies, whether such
enforceability is considered in a proceeding in equity or at law, and (iii) as
to those provisions of Section 7.3 of such Agreement relating to indemnity or
contribution.

3.   The Shares have been duly authorized and when issued, delivered and paid
for in accordance with the terms of the Agreement, will be validly issued, fully
paid and nonassessable.

                                       1.

<PAGE>

4.   Except as set forth in the Agreement, to our knowledge there is no action,
proceeding or investigation pending or overtly threatened in writing against the
Company which could reasonably be anticipated to result, either individually or
in the aggregate, in any material adverse change in the assets, financial
condition or operations of the Company.

5.   The offer and sale of the Shares by the Company to the Purchasers is exempt
from the registration requirements of the Securities Act of 1933, as amended,
subject to timely filing of a Form D pursuant to Securities and Exchange
Commission Regulation D.

6.   The execution and delivery of the Agreement by the Company and the
consummation of the sale of the Shares by the Company as contemplated therein do
not violate any provisions of the Company's Certificate of Incorporation or
By-laws.

7.   All consents, approvals, authorizations, or orders of, and filings,
registrations and qualifications with any regulatory authority or governmental
body in the United States required for the issuance by the Company of the Shares
as contemplated by the Agreements, have been made or obtained, except for (i)
the filing of a Form D pursuant to Securities and Exchange Commission Regulation
D, and (ii) the filing of a Form D with the Securities Commissioners of the
following states: California, New Jersey and Wisconsin.

This opinion is intended solely for your benefit and is not to be made available
to or be relied upon by any other person, firm, or entity without our prior
written consent.

Very truly yours,

By:_________________________
      Alan C. Mendelson

                                       2.
<PAGE>

                                    EXHIBIT B

                             SCHEDULE OF EXCEPTIONS

In connection with that certain Share Purchase Agreement dated as of April 6,
2000 by and among Valentis, Inc. (the "Company") and the persons and entities
listed on the Schedule A attached thereto (the "Agreement"), the Company hereby
delivers this Schedule of Exceptions to the Company's representations and
warranties given in the Agreement. The section numbers in this Schedule of
Exceptions correspond to the section numbers in the Agreement; PROVIDED,
HOWEVER, that any information disclosed herein under any section number shall be
deemed to be disclosed and incorporated in any other section of the Agreement
where such disclosure would be appropriate. Disclosure of any information or
document herein is not a statement or admission that it is material or required
to be disclosed herein. References to any document do not purport to be complete
and are qualified in their entirety by the document itself. Capitalized terms
used but not defined herein shall have the same meanings given them in the
Agreement.

4.1      ORGANIZATION AND QUALIFICATION

         The Company has one wholly owned subsidiary, PolyMASC Pharmaceuticals
plc, which is incorporated in England and Wales.

4.9      NO ACTIONS

         Prior to its merger with the Company in March 1999 (the "Merger"),
GeneMedicine, Inc., a Delaware corporation ("GeneMedicine"), entered into an
exclusive license agreement with Vanderbilt University ("Vanderbilt") for
Vanderbilt's European Patent # 452457B1 (the "Vanderbilt Patent"), covering the
systemic delivery of genes using cationic lipids. Prior to the closing of the
Merger, the Company (then known as Megabios Corp.) filed an opposition to the
Vanderbilt Patent. Transgene S.A. ("Transgene") also filed an opposition to the
Vanderbilt Patent. Since the closing of the Merger, no activity has occurred in
these opposition proceedings. The Company, which assumed GeneMedicine's license
to the Vanderbilt Patent upon completion of the Merger, is currently in the
process of renegotiating such license with Vanderbilt. Upon completion of these
negotiations, the Company intends to withdraw its opposition to the Vanderbilt
Patent and expects to assume defense of the Vanderbilt Patent against Transgene.

4.10     INTELLECTUAL PROPERTY

         (b)      See 4.9 above.

         (c)      See 4.9 above.

         (e)      See 4.9 above.

                                       1.
<PAGE>

                                   APPENDIX I

                                 VALENTIS, INC.

                         STOCK CERTIFICATE QUESTIONNAIRE

         Pursuant to Section 3 of the Agreement, please provide us with the
following information:

1.       The exact name that your Shares are to be registered in (this is the
         name that will appear on your stock certificate(s)). You may use a
         nominee name if appropriate:

         ----------------------------------

2.       The relationship between the Purchaser of the Shares and the Registered
         Holder listed in response to item 1 above:

         ----------------------------------

3.       The mailing address of the Registered Holder listed in response to item
         1 above:

         ----------------------------------
         ----------------------------------
         ----------------------------------
         ----------------------------------

4.       The Social Security Number or Tax Identification Number of the
         Registered Holder listed in response to item 1 above:

         ----------------------------------

                                       1.
<PAGE>

                                   APPENDIX II

                                 VALENTIS, INC.

                      REGISTRATION STATEMENT QUESTIONNAIRE

         In connection with the preparation of the Registration Statement,
please provide us with the following information:

1.       Pursuant to the "Selling Shareholder" section of the Registration
         Statement, please state your or your organization's name exactly as it
         should appear in the Registration Statement:

         -------------------------------------------------------

2.       Please provide the number of shares that you or your organization will
         own immediately after Closing, including those Shares purchased by you
         or your organization pursuant to this Purchase Agreement and those
         shares purchased by you or your organization through other
         transactions:
                      ---------------------------------------------
3.       Have you or your organization had any position, office or other
         material relationship within the past three years with the Company or
         its affiliates?

                  _____ Yes         _____ No

         If yes, please indicate the nature of any such relationships below:

         -------------------------------------------------------
         -------------------------------------------------------
         -------------------------------------------------------
         -------------------------------------------------------

                                       1.

<PAGE>

                                  APPENDIX III

                   PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE

         The undersigned, an officer of, or other person duly authorized by

--------------------------------------------------------------------------------
              [fill in official name of individual or institution]

hereby certifies that he/she/it is the Purchaser of the shares evidenced by the
attached certificate, and as such, sold such shares on ________________, 200__
in accordance with Registration Statement number 333-________________, and
complied with the requirement of delivering a current prospectus in connection
with such sale.

PRINT OR TYPE:

Name of Purchaser (Individual or Institution):

--------------------------------------------------------------------------------

Name of Individual representing Purchaser (if an Institution)

--------------------------------------------------------------------------------

Title of Individual representing Purchaser (if an Institution):

--------------------------------------------------------------------------------

SIGNATURE:

Individual Purchaser or Individual representing Purchaser:

--------------------------------------------------------------------------------

                                       1.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00010-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00010-of-00352.parquet"}]]