Document:

SECURITIES PURCHASE AGREEMENT

         THIS SECURITIES  PURCHASE AGREEMENT (this  "Agreement"),  is made as of
March 23,  2000,  by and  between  Sales  Online  Direct,  Inc.,  a  corporation
organized  under the laws of the State of Delaware,  U.S.A.,  with  headquarters
located at 4 Brussels Street, Worcester, Massachusetts 01610 (the "Company") and
Augustine Fund,  L.P., an Illinois  limited  partnership  with its  headquarters
located at 141 West Jackson Boulevard,  Suite 2181, Chicago, Illinois 60604 (the
"Buyer").

                                    RECITALS

         A.  The  Company  and the  Buyer  are  executing  and  delivering  this
Agreement in reliance upon the exemption from securities  registration  afforded
by the provisions of Regulation D ("Regulation  D") as promulgated by the United
States  Securities and Exchange  Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 Act") and Section 4(2) under the 1933 Act;

         B. The Buyer  desires to  purchase  from the  Company,  and the Company
desires to sell to the Buyer,  for the amounts and upon the terms and conditions
stated in this  Agreement,  in a closing (the  "Closing")  as herein  described,
certain of the  Company's  convertible  notes as listed and described in Recital
B(i) immediately  below, and certain warrants as listed and described in Recital
B(ii) below.

      (i)   The Company's Series A Eight Percent (8%) Convertible Note, the form
            of which is attached hereto as Exhibit A (the "Notes"), which may be
            converted  into  common  stock of the  Company,  $.001 par value per
            share ("Common  Stock"),  upon the terms and  conditions  hereof and
            upon the terms and  conditions of the Notes.  The purchase price for
            the Notes  sold  pursuant  to this  Agreement  shall be as stated in
            Section 1(a) below.  The total aggregate face amount of the Notes to
            be issued and sold by the  Company at the  Closing is Three  Million
            and no/100 United States Dollars ($3,000,000.00),  all in accordance
            with the terms of this Agreement and of the Notes.

      (ii)  As additional  consideration  for Buyer's  purchase of the Notes,  a
            warrant (the  "Warrants") to purchase 300,000 shares of Common Stock
            at a purchase  price per share equal to one hundred  twenty  percent
            (120%) of the lowest of the closing bid prices for the Common  Stock
            during the five (5) trading days prior to the Closing Date  (defined
            below),  which  Warrants must be exercised,  if at all, on or before
            March 31, 2005.  The  Warrants  shall be  substantially  in the form
            attached hereto as Exhibit B.

          The Common  Stock into  which the Notes may (in accordance  with their
terms)  be  convertible  shall  be  collectively   referred  to  herein  as  the
"Conversion Shares." Certain shares of Common Stock may (at the Company's option
as  described  in the Notes) be issued to the Buyer in payment of interest  (the
"Interest  Shares").  The Common Stock  received  upon  exercise of the Warrants
shall be referred to as the "Warrant Shares." The Notes, the Conversion  Shares,

<PAGE>

the  Interest  Shares  (if any),  the  Warrants  and the  Warrant  Shares may be
collectively referred to herein as the "Securities."

         C. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration  Rights Agreement
(the  "Registration  Rights  Agreement")  substantially in the form of Exhibit C
attached  hereto  pursuant to which the  Company  has agreed to provide  certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.

                                   AGREEMENTS

         NOW, THEREFORE, in consideration of their respective promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby  acknowledged by the parties,  the Company and the Buyer hereby
agree as follows:

         1.       PURCHASE AND SALE OF SECURITIES.

         a. Purchase.  The Buyer hereby agrees to purchase from the Company, and
the Company agrees to sell to the Buyer,  $3,000,000.00  in aggregate  principal
amount of Notes at the Closing.  The purchase price (the  "Purchase  Price") for
the Notes purchased at the Closing shall be $3,000,000.00.

         b. The Closing.  The date of the Closing (the "Closing  Date") shall be
March 24, 2000. The Purchase Price for the Notes being  purchased at the Closing
shall be  delivered  to the Escrow  Agent (as  defined  in the Escrow  Agreement
substantially in the form of Exhibit D attached hereto (the "Escrow Agreement"))
on behalf of the Company on or before the Closing Date. On or before the Closing
Date,  the Company shall deliver the original Notes and Warrants (or a facsimile
of the signature pages thereof, with the originals to follow via express courier
within one (1)  business  day) being  purchased  at the  Closing,  duly  issued,
authorized and executed by the authorized  officers on behalf of the Company, to
the Escrow Agent (as defined in the Escrow Agreement) on behalf of the Buyer.

         c. Form of  Payment.  The Buyer  shall pay the  Purchase  Price for the
Securities  purchased at the Closing by wire transfer of  immediately  available
funds in United  States  Dollars,  to be  deposited  into the Escrow  Account as
defined in the Escrow  Agreement,  against  delivery to the Escrow Agent of duly
executed  Notes and  Warrants  being  purchased  by the Buyer  hereunder at such
Closing.  The Escrow  Agent shall be  responsible  for  delivery of the Purchase
Price to the Company and the Notes and Warrants to the Buyer in accordance  with
the terms of the Escrow Agreement and with the instructions of the said parties.

         2.       BUYER'S REPRESENTATIONS AND WARRANTIES.

         The Buyer understands,  agrees with, and represents and warrants to the
Company with respect to its purchase hereunder, that:

                                      -2-

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         a.  Investment  Purposes;  Compliance  With  1933  Act.  The  Buyer  is
purchasing the Securities for its own account for investment only and not with a
view towards,  or in connection  with, the public sale or distribution  thereof,
except  pursuant  to  sales  registered  under or  exempt  from the 1933 Act and
applicable state securities laws. The Buyer is not purchasing the Securities for
the purpose of covering short sale positions in the Common Stock  established on
or prior to the  Closing  Date.  The Buyer  agrees to offer,  sell or  otherwise
transfer the Securities only (i) in accordance with the terms of this Agreement,
the Notes and the Warrants,  as  applicable,  and (ii) pursuant to  registration
under the 1933 Act or to an exemption from  registration  under the 1933 Act and
any other applicable  securities laws. The Buyer does not by its representations
contained in this Section 2(a) agree to hold the  Securities  for any minimum or
other  specific term and reserves the right to dispose of the  Securities at any
time pursuant to a  registration  statement or in  accordance  with an exemption
from registration under the 1933 Act, in all cases in accordance with applicable
state and federal  securities  laws.  The Buyer  understands  that it shall be a
condition to the issuance of the Conversion  Shares,  the Warrant Shares and the
Interest Shares (if any) that the Conversion  Shares, the Warrant Shares and the
Interest Shares (if any) be and are subject to the  representations set forth in
this Section 2(a).

         b. Accredited Investor Status. The Buyer is an "accredited investor" as
that  term is  defined  in Rule  501 (a) of  Regulation  D. The  Buyer  has such
knowledge and experience in financial and business matters that it is capable of
evaluating  the  merits  and  risks  of an  investment  made  pursuant  to  this
Agreement.  The Buyer is aware that it may be required to bear the economic risk
of an  investment  made pursuant to this  Agreement for an indefinite  period of
time, and is able to bear such risk for an indefinite period.

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

         d. Information. The Buyer and its advisors, if any, have been furnished
with all  materials  relating to the  business,  finances and  operations of the
Company and materials relating to the offer and sale of the Securities that have
been  requested  by the Buyer.  The Buyer and its  advisors,  if any,  have been
afforded the  opportunity  to ask all such questions of the Company as they have
in their discretion deemed advisable.  The Buyer understands that its investment
in the  Securities  involves a high  degree of risk.  The Buyer has sought  such
accounting,  legal and tax  advice  as it has  considered  necessary  to make an
informed  investment  decision with respect to the  investment  made pursuant to
this Agreement.

         e. No Government  Review.  The Buyer  understands that no United States
federal  or state  agency or any other  government  or  governmental  agency has

                                      -3-
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approved or made any  recommendation  or  endorsement  of the  Securities or the
fairness or  suitability  of the  investment  in the  Securities,  nor have such
authorities  passed  upon  or  endorsed  the  merits  of  the  offering  of  the
Securities.

         f.  Transfer  or  Resale.  The Buyer  understands  that:  (i) except as
provided in the Registration Rights Agreement,  the Securities have not been and
are not being  registered  under the 1933 Act or any state  securities laws, and
may not be offered for sale,  sold,  assigned or  transferred  unless either (a)
subsequently  registered thereunder or (b) the Buyer shall have delivered to the
Company an opinion by counsel reasonably  satisfactory to the Company,  in form,
scope and substance  reasonably  satisfactory to the Company, to the effect that
the  securities to be sold,  assigned or  transferred  may be sold,  assigned or
transferred  pursuant to an exemption from such  registration,  (ii) any sale of
such  securities made in reliance on Rule 144 as amended (or any applicable rule
which  operates  to replace  said Rule),  promulgated  under the 1933 Act ("Rule
144") may be made only in accordance with the terms of Rule 144 and further,  if
Rule 144 is not applicable, any resale of such securities under circumstances in
which the seller (or the person  though  whom the sale is made) may be deemed to
be an  underwriter  (as  that  term is  defined  in the 1933  Act)  may  require
compliance  with  some  other  exemption  under  the 1933 Act or the  rules  and
regulations  of the SEC thereunder and  applicable  state  securities  laws, and
(iii)  neither  the  Company  nor any other  person is under any  obligation  to
register such securities  under the 1933 Act or any state  securities laws or to
comply with the terms and conditions of any exemption  thereunder (in each case,
other than pursuant to this Agreement or the Registration Rights Agreement).

         g. Legend.  The Buyer  understands  that the Notes,  the Warrants,  and
until such time as the  Conversion  Shares,  the Warrant Shares and the Interest
Shares  (if  any)  (collectively,   the  "Registrable  Securities"),  have  been
registered  under  the  1933  Act as  contemplated  by the  Registration  Rights
Agreement,  the stock certificates  representing the Registrable Securities will
bear a restrictive legend (the "Legend") in substantially the following form:

THE SECURITIES  REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933,  AS AMENDED  (THE  "ACT"),  OR  APPLICABLE  STATE  SECURITIES  LAWS
(COLLECTIVELY, THE "LAWS"). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED  FOR SALE,  SOLD,  TRANSFERRED  OR ASSIGNED IN THE ABSENCE OF
EITHER (I) AN EFFECTIVE  REGISTRATION  STATEMENT  FOR THE  SECURITIES  UNDER THE
LAWS,  OR (II) AN OPINION OF COUNSEL  PROVIDED TO THE ISSUER IN FORM,  SUBSTANCE
AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER TO THE EFFECT THAT REGISTRATION IS
NOT REQUIRED  UNDER THE LAWS DUE TO AN AVAILABLE  EXCEPTION TO OR EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE LAWS.

         The Legend  shall be removed  and the Company  will issue  certificates
without  the Legend to the  holder of the  applicable  Notes or any  Registrable
Securities upon which the Legend is stamped, in accordance with Section 5(b).

                                      -4-
<PAGE>

         h. Authorization;  Enforcement. This Agreement, the Registration Rights
Agreement  and the  Escrow  Agreement  have  been duly and  validly  authorized,
executed  and  delivered  by the Buyer and are each and  collectively  valid and
binding  agreements of the Buyer  enforceable  in  accordance  with their terms,
subject as to enforceability to general  principles of equity and to bankruptcy,
insolvency,  moratorium,  and other similar laws  affecting the  enforcement  of
creditors' rights generally.

         i. No  Brokers.  The Buyer has taken no action  that would give rise to
any claim by any  person for  brokerage  commissions,  finder's  fees or similar
payments  relating to this Agreement and the transactions  contemplated  hereby,
other than with  respect to its  dealings  with  Delano  Group  Securities.  The
Company  and the Buyer  both  acknowledge  that no other  broker  or finder  was
involved with respect to the transactions contemplated hereby, other than Delano
Group Securities.

         3.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company  understands,  agrees with,  and represents and warrants to
the Buyer that:

         a.  Organization and  Qualification.  The Company is a corporation duly
organized and existing,  and by March 31, 2000,  will be in good standing  under
the laws of the  jurisdiction in which it is  incorporated,  except as would not
have a  Material  Adverse  Effect  (as  defined  below),  and has the  requisite
corporate  power to own its properties and to carry on its business as now being
conducted. The Company is duly qualified as a foreign corporation to do business
and is in good  standing  in every  jurisdiction  in  which  the  nature  of the
business  conducted  by it makes  such  qualification  necessary  and  where the
failure so to qualify would have a Material  Adverse Effect.  "Material  Adverse
Effect"  means any material  adverse  effect on the  operations,  properties  or
financial  condition  of the  Company  taken as a  whole.  The  Common  Stock is
eligible to trade and is listed for trading on the OTC  Bulletin  Board  Market.
The Company has received no notice,  either written or oral, with respect to the
continued  eligibility of the Common Stock for such listing, and the Company has
maintained  all  requirements  for the  continuation  of such  listing,  and the
Company does not  reasonably  anticipate  that the Common Stock will be delisted
from the OTC Bulletin Board Market in the  foreseeable  future.  The Company has
complied or will timely comply with all requirements of the National Association
of  Securities  Dealers and the OTC  Bulletin  Board  Market with respect to the
issuance of the Securities.

         b.  Authorization;  Enforcement.  (i) The  Company  has  the  requisite
corporate  power and  authority  to enter into and perform this  Agreement,  the
Registration  Rights Agreement and the Escrow  Agreement,  to issue and sell the
Notes and the Registrable Securities in accordance with the terms hereof, and to
perform its obligations  under the Notes in accordance with the  requirements of
the same, (ii) the execution,  delivery and  performance of this Agreement,  the
Notes, the Warrants,  the Registration Rights Agreement and the Escrow Agreement
by the  Company  and the  consummation  by it of the  transactions  contemplated
hereby and thereby have been duly authorized by the Company's Board of Directors
and no further consent or authorization of the Company,  its Board of Directors,
or its stockholders is required,  (iii) this Agreement,  the Registration Rights

                                      -5-
<PAGE>

Agreement, the Escrow Agreement and, on the Closing Date, the Notes and Warrants
sold at the  Closing,  have  been  duly and  validly  authorized,  executed  and
delivered by the Company, and (iv) this Agreement,  the Notes (when issued), the
Warrants  (when  issued),  the  Registration  Rights  Agreement  and the  Escrow
Agreement   constitute  the  valid  and  binding   obligations  of  the  Company
enforceable  against  the Company in  accordance  with their  respective  terms,
except  as  such  enforceability  may  be  limited  by  applicable   bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting, generally, the enforcement of creditors' rights and remedies or by
other equitable  principles of general  application.  The Company (and its legal
counsel) has examined  this  Agreement  and is satisfied in its sole  discretion
that this Agreement and the accompanying Exhibits, Schedules and the Addenda, if
any, are in accordance  with  Regulation D and the 1933 Act and are effective to
accomplish the purposes set forth herein and therein.

         c.  Capitalization.  As of March 1, 2000, the  authorized  Common Stock
consisted of 100,000,000  shares of Common Stock of which 46,711,140 shares were
issued and outstanding.  There are no shares of preferred stock authorized.  All
of such  outstanding  shares  have been  validly  issued  and are fully paid and
nonassessable. No shares of Common Stock are subject to preemptive rights or any
other   similar   rights  or  any  liens  or   encumbrances.   Except   for  the
above-referenced  preferred stock and as disclosed in Schedule 3(c) (attached if
applicable),  as of the  effective  date of this  Agreement,  (i)  there  are no
outstanding  options,   warrants,  scrip,  rights  to  subscribe  to,  calls  or
commitments  of any  character  whatsoever  relating to, or securities or rights
convertible  into,  any  shares of  capital  stock of the  Company or any of its
subsidiaries, or arrangements by which the Company or any of its subsidiaries is
or may become bound to issue  additional  shares of capital stock of the Company
or any of its subsidiaries,  (ii) there are no outstanding debt securities,  and
(iii) there are no agreements or arrangements  under which the Company or any of
its  subsidiaries  is  obligated  to  register  the  sale of any of its or their
securities under the 1933 Act (except as provided herein, in Schedule 3(g) or in
the Registration  Rights Agreement).  If requested by the Buyer, the Company has
furnished  to the  Buyer,  and the  Buyer  acknowledges  receipt  of same by its
signature  hereafter,  true and  correct  copies of the  Company's  Articles  of
Incorporation,  as  amended,  as in  effect  on the date  hereof  ("Articles  of
Incorporation"),  and the Company's Bylaws, as in effect on the date hereof (the
"Bylaws").

         d. Issuance of  Securities.  The  Registrable  Securities  are all duly
authorized  and reserved for issuance,  and in all cases upon issuance  shall be
validly issued,  fully paid and  non-assessable,  free from all taxes, liens and
charges with respect to the issue thereof, and will not be subject to preemptive
rights or other similar rights of stockholders of the Company.

         e.  Acknowledgment  Regarding  Buyer's Purchase of the Securities.  The
Company  acknowledges  and  agrees  that the Buyer is not  acting  as  financial
advisor to or fiduciary of the Company (or in any similar  capacity with respect
to this Agreement or the transactions  contemplated hereby), that this Agreement
and the transactions contemplated hereby, and the relationship between the Buyer
and the Company,  are and will be considered  "arms-length"  notwithstanding any
other or prior agreements or nexus between the Buyer and the Company, whether or
not  disclosed,  and  that  any  statement  made  by  the  Buyer,  or any of its

                                     -6-
<PAGE>

representatives   or  agents,   in  connection   with  this  Agreement  and  the
transactions  contemplated  hereby is not advice or a recommendation,  is merely
incidental  to the Buyer's  purchase of the  Securities  and has not been relied
upon in any way by the Company,  its officers or directors.  The Company further
represents to the Buyer that the Company's decision to enter into this Agreement
and  the  transactions  contemplated  hereby  have  been  based  solely  upon an
independent evaluation by the Company, its officers and directors.

         f.  No  Integrated  Offering.  Neither  the  Company,  nor  any  of its
affiliates,  nor any  person  acting on its or their  behalf,  has  directly  or
indirectly  made any offers or sales of any security or solicited  any offers to
buy any security under circumstances which would prevent the parties hereto from
consummating the transactions  contemplated hereby pursuant to an exemption from
registration  under  the  1933  Act and  specifically  in  accordance  with  the
provisions of Regulation D. The transactions contemplated hereby are exempt from
the  registration  requirements  of the 1933 Act,  assuming  the accuracy of the
representations and warranties contained herein of the Buyer.

         g. No  Conflicts.  The  execution,  delivery  and  performance  of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated  hereby  will not (i)  result in a  violation  of the  Articles  of
Incorporation  or Bylaws or (ii)  conflict  with, or constitute a default (or an
event which with notice or lapse of time or both would become a default)  under,
or  give to  others  any  rights  of  termination,  amendment,  acceleration  or
cancellation of, any agreement,  indenture or instrument to which the Company or
any of its  subsidiaries  is a party, or result in a violation of any law, rule,
regulation,  order,  judgment or decree (including  federal and state securities
laws and regulations) applicable to the Company or any of its subsidiaries or by
which any property or asset of the Company or any of its  subsidiaries  is bound
or affected  (except for such  conflicts,  defaults,  terminations,  amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect). Except as set forth in Schedule 3(g)
(attached if applicable),  neither the Company nor any of its subsidiaries is in
violation of its Articles of  Incorporation or other  organizational  documents,
and neither the Company nor any of  its/subsidiaries is in default (and no event
has occurred which,  with notice or lapse of time or both, would put the Company
or any of its  subsidiaries in default) under,  nor has there occurred any event
giving others (with notice or lapse of time or both) any rights of  termination,
amendment,   acceleration  or  cancellation  of,  any  agreement,  indenture  or
instrument to which the Company or any of its  subsidiaries  is a party,  except
for possible  defaults or rights as would not, in the aggregate or individually,
have a Material Adverse Effect. The business of the Company and its subsidiaries
is not being conducted, and shall not be conducted so long as the Buyer owns any
of the  Securities,  in violation of any law,  ordinance  or  regulation  of any
governmental  entity,  except for possible violations which neither singly or in
the  aggregate  would have a Material  Adverse  Effect.  Except as  specifically
contemplated  by this  Agreement  and as  required  under  the  1933 Act and any
applicable  state  securities  laws  (any of which  exceptions  are set forth in
Schedule 3(g)), the Company is not required to obtain any consent, authorization
or order of, or make any filing or registration  with, any court or governmental
agency in order for it to  execute,  deliver or perform  any of its  obligations
under this Agreement, the Notes, the Warrants, the Registration Rights Agreement
or the Escrow  Agreement in accordance with the terms hereof and thereof,  or to
perform its  obligations  with respect to the Notes  exactly as described in the
Notes (once  issued),  and with respect to the Warrants  exactly as described in
the Warrants (once issued).

          h.  SEC  Documents;  Financial  Statements.  Except  as  disclosed  on
Schedule  3(h) hereof,  since at least  August 16, 1999,  the Company has timely
filed all reports,  schedules, forms, statements and other documents required to
be  filed by it with  the SEC  pursuant  to the  reporting  requirements  of the
Securities  Exchange  Act of 1934,  as  amended  (the  "1934  Act")  (all of the
foregoing filed prior to the date hereof and all exhibits  included  therein and
financial  statements and schedules  thereto and documents (other than exhibits)
incorporated by reference  therein,  being  hereinafter  referred to as the "SEC
Documents").  The Company has  delivered  to the Buyer as requested by the Buyer
true and  complete  copies  of the SEC  Documents,  except  for  such  exhibits,

                                      -7-
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schedules and  incorporated  documents.  As of their  respective  dates, the SEC
Documents  complied in all material  respects with the  requirements of the 1934
Act and the rules and regulations of the SEC promulgated  thereunder  applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC,  contained  any untrue  statement of a material fact or omitted to
state a material  fact  required to be stated  therein or  necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.  As of their respective dates, the financial statements of
the Company  included in the SEC  Documents  complied as to form in all material
respects with  applicable  accounting  requirements  and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared  in  accordance   with  generally   accepted   accounting   principles,
consistently  applied,  during  the  periods  involved  (except  (i)  as  may be
otherwise  indicated in such financial  statements or the notes thereto, or (ii)
in the case of  unaudited  interim  statements,  to the extent  they may exclude
footnotes or may be condensed or summary  statements)  and fairly present in all
material respects the financial  position of the Company as of the dates thereof
and the  results of its  operations  and cash flows for the  periods  then ended
(subject,  in the  case  of  unaudited  statements,  to  normal  year-end  audit
adjustments).  No other  information  provided by or on behalf of the Company to
the  Buyer  (including  the  information  referred  to in  Section  2(d) of this
Agreement)  contains any untrue  statement of a material  fact or omits to state
any material  fact  necessary in order to make the  statements  therein,  in the
light of the  circumstance  under which they are or were made,  not  misleading.
Except as set forth in the financial  statements of the Company  included in the
SEC Documents,  the Company has no liabilities,  contingent or otherwise,  other
than (i) liabilities  incurred in the ordinary course of business  subsequent to
the date of such financial  statements and (ii) obligations  under contracts and
commitments  incurred in the ordinary  course of business and not required under
generally  accepted  accounting  principles  to be reflected  in such  financial
statements,  in each case of clause (i) and (ii) next above which,  individually
or in the  aggregate,  are not material to the  financial  condition,  business,
operations,  properties,  operating results or prospects of the Company. The SEC
Documents  contain  a  complete  and  accurate  list  of all  written  and  oral
contracts,  agreements,  leases or other instruments to which the Company or any
subsidiary is a party or by which the Company or any subsidiary is subject which
are required by the rules and regulations promulgated by the SEC to be so listed
(each a "Contract").  None of the Company,  its  subsidiaries or, to the best of
the  Company's  knowledge,  any of the other  parties  thereto,  is in breach or
violation of any Contract, which breach or violation would, or with the lapse of
time, the giving of notice, or both, have a Material Adverse Effect.

         i.  Absence  of  Certain  Changes.  Except  as  disclosed  in  the  SEC
Documents,  since at least  March 1, 1999,  there has been no  material  adverse
change  and  no  material  adverse  development  in  the  business,  properties,
operation,  financial  condition,  results of  operations  or  prospects  of the
Company.  The Company has not taken any steps,  and does not currently  have any
reasonable  expectation of taking any steps, to seek protection  pursuant to any
bankruptcy law nor does the Company have any knowledge that its creditors intend
to initiate  involuntary  bankruptcy  proceedings.  The Company shall,  at least
until  Buyer no  longer  holds any of the  Securities,  maintain  its  corporate
existence in good  standing and shall pay all taxes when due except for taxes it
reasonably disputes.

                                      -8-
<PAGE>

         j.  Absence  of  Litigation.  Except  as set  forth  in  Schedule  3(j)
(attached  if  applicable),  there is no action,  suit,  proceeding,  inquiry or
investigation  before or by any court,  public  board or body pending or, to the
knowledge of the Company,  threatened against or affecting the Company,  wherein
an unfavorable decision,  ruling or finding would have a Material Adverse Effect
or which  would  adversely  affect the  validity  or  enforceability  of, or the
authority  or ability of the  Company to perform  its  obligations  under,  this
Agreement or any of the documents contemplated herein.

         k.  Foreign  Corrupt  Practices.  Neither  the  Company  nor any of its
subsidiaries,  nor any officer, director or other person acting on behalf of the
Company or any subsidiary  has, in the course of his actions for or on behalf of
the  Company,  used any  corporate  funds for any unlawful  contribution,  gift,
entertainment or other unlawful expense relating to political activity, made any
direct or  indirect  unlawful  payment  to any  foreign or  domestic  government
official or employee from  corporate  funds;  violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or made
any bribe, rebate, payoff, influence payment, kickback or other unlawful payment
to any foreign or domestic government official or employee.

         l. Brokers;  No General  Solicitation.  The Company has taken no action
that  would  give rise to any claim by any  person  for  brokerage  commissions,
finder's  fees  or  similar   payments   relating  to  this  Agreement  and  the
transactions  contemplated  hereby,  other than to Delano Group Securities.  The
Company  and the Buyer  both  acknowledge  that no other  broker  or finder  was
involved with respect to the transactions contemplated hereby, other than Delano
Group Securities.  Neither the Company nor any distributor  participating on the
Company's behalf in the transactions  contemplated  hereby nor any person acting
for  the  Company,   or  any  such  distributor,   has  conducted  any  "general
solicitation,"  as described in Rule 502(c) under  Regulation D, with respect to
the Securities being offered hereby. The Company has agreed to compensate Delano
Group Securities in accordance with their separate written agreement; the Escrow
Agent shall pay to Delano Group  Securities the agreed upon  compensation out of
Escrow from the Purchase Price at the Closing.

         m. Acknowledgment of Dilution. The number of Conversion Shares issuable
upon   conversion   of  the  Notes  may   increase   substantially   in  certain
circumstances,  including  the  circumstance  wherein the  trading  price of the
Common Stock  declines.  The Company's  executive  officers and  directors  have
studied and fully  understand the nature of the securities  being sold hereunder
and recognize they have a potential  dilutive effect.  The board of directors of
the Company has concluded in its good faith business judgment that such issuance
is in the best  interests  of the  Company.  The Company  acknowledges  that its
obligation to issue  Conversion  Shares upon  conversion of the Notes is binding
upon it and  enforceable  regardless of the dilution that such issuance may have
on the ownership interests of other stockholders.

         n. Eligibility to File Registration Statement. The Company is currently
eligible to file a  registration  statement  with the SEC on Form SB-2 under the
1933 Act.

         o. (Intentionally Omitted.)

         p.  Non-Disclosure of Non-Public  Information.  The Company shall in no
event   disclose   non-public   information   to  the  Buyer,   advisors  to  or
                                      -9-

<PAGE>

representatives  of the Buyer unless prior to such disclosure of information the
Company marks such  information as "non-public  information - confidential"  and
provides the Buyer,  such advisors and  representatives  with the opportunity to
accept or refuse to accept such non-public  information for review.  The Company
may, as a condition to disclosing any non-public information hereunder,  require
the Buyer,  its advisors  and  representatives  to enter into a  confidentiality
agreement in form reasonably satisfactory to the Company and the Buyer.

         4.  COVENANTS.

         a.  Best  Efforts.  Each  party  shall  use its best efforts  timely to
satisfy  each of the  conditions to be satisfied by it as provided in Sections 6
and 7 of this Agreement.

         b.  Securities  Laws.  The  Company  agrees to timely file a Form D (or
equivalent form required by applicable state law) with respect to the Securities
if and as required under  Regulation D and applicable  state securities laws and
to provide a copy thereof to the Buyer promptly  after such filing.  The Company
shall,  in a timely  fashion,  take  such  action  as is  necessary  to sell the
Securities  being  sold to the Buyer  under  applicable  securities  laws of the
United States and the relevant state(s),  and shall if specifically so requested
provide evidence of any such action so taken to the Buyer.

         c. Reporting Status. So long as the Buyer  beneficially owns any of the
Securities, the Company shall file all reports required to be filed with the SEC
pursuant to the 1934 Act, and the Company  shall not  terminate its status as an
issuer  required to file reports  under the 1934 Act even if the 1934 Act or the
rules and regulations hereunder would permit such termination.

         d. Use of Proceeds.  The Company will use the proceeds from the sale of
the Securities for general working capital purposes.

         e.  Financial  Information.  Until  such  time as the  Buyer no  longer
beneficially  owns Notes,  Warrants,  Conversion  Shares or Warrant Shares,  the
Company agrees to send the following reports to the Buyer: (i) after filing with
the SEC, a copy of each of its Annual Reports,  its quarterly  Reports,  and any
reports  filed  on Form  8-K;  and  (ii) as soon as  practicable  after  release
thereof,  copies  of all press  releases  issued  by the  Company  or any of its
subsidiaries.

         f.  Reservation  of  Shares.  The  Company  shall  at  all  times  have
authorized,  and reserved for the purpose of  issuance,  a sufficient  number of
shares of Common  Stock to provide  for the  issuance  of all of the  Conversion
Shares,  the Warrant Shares and the Interest Shares (if any).  Prior to complete
conversion  of the Notes and  exercise of the  Warrants,  the Company  shall not
reduce the number of shares of Common  Stock  reserved  for  issuance  hereunder
without the written consent of the Buyer except for a reduction proportionate to
a reverse stock split  effected for a business  purpose other than affecting the
requirements  of this  Section,  which reverse stock split affects all shares of
Common Stock equally.

         g. Listing.  Upon the Closing,  the Company shall  promptly  secure the
listing of the Common  Stock  underlying  the Notes and the  Warrants  upon each

                                      -10-

<PAGE>

national  securities  exchange or automated quotation system, if any, upon which
shares of Common Stock are then listed  (subject to official notice of issuance)
and shall  maintain,  so long as any other  shares of Common  Stock  shall be so
listed,  such  listing  of shares of  Registrable  Securities  from time to time
issued under the terms of this Agreement and the Registration  Rights Agreement.
The  Company  shall at all  times  comply  in all  respects  with the  Company's
reporting,  filing  and  other  obligations  under the  by-laws  or rules of the
National Association of Securities Dealers and the OTC Bulletin Board Market (or
such other national  securities exchange or market on which the Common Stock may
then be listed, as applicable).

         h. Prospectus Delivery  Requirement;  Escrow of Common Stock. The Buyer
understands that the 1933 Act requires delivery of a prospectus  relating to the
Common  Stock in  connection  with any sale thereof  pursuant to a  registration
statement  under the 1933 Act  covering  any  resale by the Buyer of the  Common
Stock being  sold,  and the Buyer shall  comply with any  applicable  prospectus
delivery  requirements  of the 1933 Act in  connection  with any such sale.  The
Company shall have the unequivocal right to rely upon the Buyer's representation
and covenant to deliver a prospectus as required by applicable law or regulation
contained in this  Section  4(h),  and thus,  with respect to any resales by the
Buyer pursuant to a registration statement of Conversion Shares, Interest Shares
or Warrant Shares,  such Common Stock shall contain a restrictive legend only if
and to the extent  required by law. The Buyer will  indemnify  and hold harmless
the  Company and its  transfer  agent for any loss,  cost or expense  (including
reasonable  attorney's  fees)  incurred by such  parties as a result of improper
actions taken by the Buyer in response to the Company's and the transfer agent's
compliance  with  the  provisions  of  this  Section  4(h),   including  without
limitation  the sales of such Common Stock  without  delivery of a prospectus as
required  by  applicable  law or  regulation.  Subject  only to the  approval of
Company counsel,  which shall not be unreasonably  withheld,  the Company agrees
that, upon the earlier of (x) the effective date of the  Registration  Statement
or (y) the date which is twelve (12) months  after the  Closing  Date,  and from
time to time thereafter as reasonably  requested by the Buyer, the Company shall
deliver or cause the Company's transfer agent to deliver to the Escrow Agent one
or more  stock  certificates  representing  the  number of shares of  registered
Common  Stock into which the Notes and the  Warrants  might then  reasonably  be
convertible or exercisable (as applicable) (collectively,  the "Escrow Shares").
Such  certificate(s)  shall not contain a restrictive legend of any kind, unless
and only to the extent  required by law.  The Escrow Agent shall hold the Escrow
Shares  in  trust,  in  certificate  form or in a  brokerage  account  as deemed
appropriate by the Escrow Agent.  Upon a full or partial  conversion of Notes or
exercise  of the  Warrants,  the Buyer  shall  deliver a copy of its  conversion
notice  to the  Escrow  Agent,  and to the  extent  that the  Escrow  Agent  has
sufficient  Escrow  Shares,  the Escrow Agent shall release Escrow Shares to the
Buyer to satisfy such conversion or exercise.  The Escrow Agreement describes in
detail the duties of the Escrow  Agent with  respect to the  provisions  of this
Section 4(h).

         i.  Intentional  Acts or Omissions.  Neither party shall  intentionally
perform any act that if  performed,  or omit to perform any act which if omitted
to be performed,  would prevent or excuse the  performance  of this Agreement or
any of the transactions contemplated hereby.

        j. No Shorting.  As a material inducement for the Company to enter into
this Agreement,  the Buyer represents that it has not as of the date hereof, and
covenants  on behalf of itself and its  affiliates  that  neither  Buyer nor any

                                      -11-

<PAGE>

affiliate  of Buyer will at any time in which the Buyer or any  affiliate of the
Buyer beneficially owns any of the Securities,  engage in any short sales of, or
hedging or  arbitrage  transactions  with respect to, the Common  Stock,  or buy
"put"  options or similar  instruments  with  respect to the Common  Stock.  The
Company  acknowledges  that a sale of Conversion Shares or Warrant Shares on the
date a conversion of the Notes or exercise of the Warrants,  as  applicable,  is
made,  even if such sale is made prior to delivery  of the notice of  conversion
with respect to such Conversion  Shares (or exercise notice with respect to such
Warrant Shares), is not a "short sale" for purposes of this Section 4(j).

         k. Trading  Restrictions.  The Buyer  covenants that upon conversion of
the Notes,  unless the Company agrees  otherwise in advance,  the Buyer will not
sell more  Conversion  Shares in any one trading day than the greater of (x) ten
percent (10%) of the current trading day's total share volume or (y) ten percent
(10%) of the previous trading day's total share volume. In addition,  unless the
Company agrees otherwise in advance,  the Buyer may only sell Conversion  Shares
between the hours of 10:00 A.M. and 3:30 P.M. Eastern Standard Time. The Company
agrees that minor  violations of this Section 4(k) in isolated  instances  shall
not be deemed to constitute a breach of this Section 4(k).

         l.  Restriction on Below Market Issuance of Securities.  Until the date
that is twelve (12)  months  from the  Closing  Date or the date that all of the
Notes have been paid or converted in full,  whichever is earlier, if the Company
proposes to issue or agree to issue any equity securities of the Company (or any
security   convertible  into  or  exercisable  or   exchangeable,   directly  or
indirectly,  for equity  securities  of the Company) or debt  securities  of the
Company at a price (or provide  for a  conversion,  exercise or exchange  price)
which may be less than the current market price for the Common Stock on the date
of issuance (in the case of Common Stock) or the date of conversion, exercise or
exchange  (in  the  case  of  securities  convertible  into  or  exercisable  or
exchangeable, directly or indirectly, for Common Stock), the Company shall first
offer to the Buyer to purchase such  securities on the same terms and conditions
as proposed by the Company  (the "First  Offer").  The Buyer shall have ten (10)
days to advise the Company in writing  that it accepts the First  Offer.  If the
Buyer does not so advise the Company, the Company shall be free, for a period of
sixty (60) days, to issue such securities as proposed to such other party, after
which sixty (60) day period the  restrictions  contained  in this  Section  4(l)
shall apply as if the First Offer had not been made to the Buyer.  The preceding
sentence  shall not apply to any  securities  issued by the  Company  (i) to the
Buyer pursuant to the transactions contemplated in this Agreement, (ii) pursuant
to any employee stock option plan or employee stock purchase plan of the Company
established  during  the  term of this  restriction  for a  legitimate  business
purpose and not to avoid the restrictions imposed in this Section 4(l), (iii) as
all or a portion of the compensation paid or to be paid to any current or future
officer,  director,  employee  or  agent of the  Company  (iv)  pursuant  to any
existing security,  option,  warrant, scrip, call or commitment or right in each
case as disclosed on Schedule 3(c) hereof;  (v) for the purposes of effecting an
acquisition  or merger that the  Company's  Board of Directors has in good faith
determined is in the best interests of the Company,  or (vi) with the consent of
the Buyer, not to be unreasonably withheld (collectively, the "Exceptions").

         5.       LEGEND AND TRANSFER INSTRUCTIONS.

                                      -12-

<PAGE>

         a. Transfer Agent Instructions. The Company shall instruct its transfer
agent  to  issue  certificates,  registered  in the  name  of the  Buyer  or its
permitted  nominee,  for the  Conversion  Shares,  the  Warrant  Shares  and the
Interest  Shares (if any) in accordance  with the terms of the applicable  Notes
and Warrants and in such amounts as specified  from time to time by the Buyer to
the  Company,  upon  conversion  of the Notes or  exercise of the  Warrants  (as
applicable).  All such certificates  shall bear the restrictive legend specified
in Section 2(g) of this Agreement only to the extent  required by applicable law
and as specified in this  Agreement  and the  Exhibits and Addenda  hereto.  The
Company warrants that no instruction other than such instructions referred to in
this Section 5, and stop  transfer  instructions  to give effect to Section 2(f)
hereof in the case of the Conversion Shares, the Warrant Shares and the Interest
Shares (if any) prior to the  registration  of same under the 1933 Act,  will be
given by the Company to its transfer agent and that the Conversion  Shares,  the
Warrant  Shares  and the  Interest  Shares (if any)  shall  otherwise  be freely
transferable  on the books  and  records  of the  Company  as and to the  extent
permitted by applicable law and provided by this Agreement, the Warrants and the
Registration  Rights Agreement.  Nothing in this Section shall affect in any way
the Buyer's  obligations and agreement to comply with all applicable  securities
laws upon  resale of the  Conversion  Shares,  the  Warrant  Shares  and/or  the
Interest  Shares (if any).  If the Buyer  complies with Section 2(f) and Section
4(k) of this Agreement  with respect to any transfer of Securities,  the Company
shall permit the said  transfer,  and if applicable  promptly (and in all events
within two (2) trading  days)  instruct its transfer  agent to issue one or more
certificates in such name and in such denominations as specified by the Buyer.

         b.  Removal of  Legends.  The Legend  shall be removed  and the Company
shall issue a certificate without such Legend to the holder of any Security upon
which it is stamped, and a certificate for a security shall be originally issued
without the Legend,  if, unless otherwise required by state securities laws, (x)
the sale of such Security is  registered  under the 1933 Act, or (y) such holder
provides the Company with an opinion by counsel  reasonably  satisfactory to the
Company,  that is in form,  substance and scope  reasonably  satisfactory to the
Company,  to the effect that a public sale or transfer of such  Security  may be
made without  registration under the 1933 Act. The Buyer agrees that its sale of
all Securities,  including those represented by a certificate(s)  from which the
Legend has been removed,  or which were  originally  issued  without the Legend,
shall be made only  pursuant  to an  effective  registration  statement  (and to
deliver a prospectus  in  connection  with such sale) or in  compliance  with an
exemption from the  registration  requirements of the 1933 Act. In the event the
Legend is removed from any Security or any Security is issued without the Legend
and thereafter the effectiveness of a registration  statement covering the sales
of such  Security is suspended or the Company  determines  that a supplement  or
amendment  thereto  is  required  by  applicable   securities  laws,  then  upon
reasonable  advance notice to the holder of such Security,  the Company shall be
entitled  to require  that the  Legend be placed  upon any such  Security  which
cannot  then be sold  pursuant  to an  effective  registration  statement  or an
available  exemption  from  registration  or with  respect to which the  opinion
referred to in clause (y) next above has not been  rendered,  which Legend shall
be removed when such Security may be sold pursuant to an effective  registration
statement or an available  exemption from  registration (or such holder provides
the opinion with respect thereto described in clause (y) next above.

         c.  Conversion of Notes.  Except as provided in Section 5 of the Notes,
the Buyer shall have the right to convert the Notes sold hereunder by delivering
via facsimile an executed and completed  Notice of Conversion (as defined in the

                                      -13-
<PAGE>

Notes) to the Company and delivering within two (2) business days thereafter the
original Notice of Conversion and the original Note being converted (but only at
such time as it is  converted in full into Common  Stock) by express  courier to
the Company.  Each date on which a Notice of  Conversion is faxed to the Company
in accordance  with the provisions  hereof shall be deemed a "Conversion  Date."
The Company will  transmit the  certificates  representing  the shares of Common
Stock  issuable  upon  conversion  of any Notes (along with a  replacement  Note
representing  the  amount  of  principal  of  said  Note  not so  converted,  if
applicable)  to the Buyer via express  courier,  within five (5)  business  days
after the  relevant  Conversion  Date  (with  respect  to each  conversion,  the
"Deadline").  Time is of the essence  with  respect to the  requirements  of the
immediately preceding sentence.

         d. Injunctive Relief for Breach. The Company acknowledges that a breach
of its  obligations  under  Sections  5(a),  5(b)  and  5(c)  above  will  cause
irreparable  harm to the  Buyer by  vitiating  the  intent  and  purpose  of the
transactions contemplated hereby. Accordingly the Company agrees that the remedy
at law for a breach of its  obligations  under such Sections would be inadequate
and agrees,  in the event of a breach or threatened breach by the Company of the
provisions  of such  Sections,  the Buyer shall be entitled,  in addition to all
other remedies at law or in equity, to an injunction  restraining any breach and
requiring  immediate  issuance and  transfer,  without the  necessity of showing
economic loss and without any bond or other security being required.

         e. Liquidated Damages for Non-Delivery of Certificates.  In addition to
the provisions of Section 5(d) above, the Company  understands and agrees that a
delay in the issuance of the  Certificates  beyond the  Deadline  will result in
substantial   economic  loss  and  other  damages  to  the  Buyer.   As  partial
compensation  to the Buyer for such loss,  the Company  agrees to pay liquidated
damages (and which the Company  acknowledges  is not a penalty) to the Buyer for
issuance and delivery of the Certificates after the Deadline, in accordance with
the following  schedule (where "No. Business Days Late" is defined as the number
of business  days beyond five (5) business days from the date of delivery by the
Buyer to the Company of a facsimile Notice of Conversion (or, if later, from the
date on which all other necessary documentation duly executed and in proper form
required for conversion of Notes as described in this  Agreement,  including the
original  Notice of  Conversion,  all in accordance  with this Agreement only if
such  necessary  documentation  has not been delivered to the Company within the
two (2) business day period after the  facsimile  delivery to the Company of the
Notice of Conversion required in this Agreement)):

         No. Business Days Late                      Liquidated Damages
         ----------------------                      ------------------
                                                       (in US$)

                  1                                    $900
                  2                                    $1,200
                  3                                    $1,500
                  4                                    $1,800
                  5                                    $2,100
                  6                                    $2,400
                  7                                    $2,700
                  8                                    $3,000
                  9                                    $3,000
                  10                                   $4,500
                  11+                                  $4,500 + $1,000 for
                                                       each Business Day Late
                                                       beyond 11 days

                                      -14-

<PAGE>

         The  Company  shall pay the Buyer any  liquidated  damages  incurred as
called for under this Section  5(e) by  certified  or  cashier's  check upon the
earlier of (i) issuance of the relevant Certificate(s) to the Buyer or (ii) each
monthly  anniversary  of the  receipt by the  Company of the  Buyer's  Notice of
Conversion.  Nothing  herein  shall  limit the  Buyer's  right to pursue  actual
damages for the Company's  failure to issue and deliver all  Certificates to the
Buyer in  accordance  with the  terms of this  Agreement  or for  breach  by the
Company of this Agreement.  Notwithstanding anything in this Section 5(e) to the
contrary,  the  Company  shall not be  responsible  for  liquidated  damages  as
described  in this Section 5(e) if a delay past a Deadline in delivery of Common
Stock to the Buyer upon a conversion or exercise is solely due to the action (or
omission to act) of the Escrow  Agent  (that is, if the Escrow  Agent has in its
possession  a  sufficient  number  of  non-legended  Escrow  Shares  to effect a
conversion of Notes, and there is no  Company-caused  delay involved in delivery
by the  Escrow  Agent  of the  requisite  number  of  Escrow  Shares  upon  such
conversion or exercise).

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

         The  obligation of the Company  hereunder to sell Notes and Warrants at
the Closing is subject to the  satisfaction,  on or before the Closing  Date, of
each of the following  conditions,  provided that these  conditions  are for the
Company's  sole benefit and may be waived by the Company at any time in its sole
discretion:

         a. The parties  shall have executed this  Agreement,  the  Registration
Rights Agreement and the Escrow Agreement,  and the parties shall have delivered
the respective  documents or signature pages thereof (via facsimile or otherwise
as permitted in the Escrow Agreement) to the Escrow Agent.

         b. The Buyer shall have  delivered to the Escrow Agent on behalf of the
Company the Purchase Price for the Notes and Warrants  purchased at the Closing,
by  wire  transfer  of  immediately  available  funds  pursuant  to  the  wiring
instructions provided by the Escrow Agent.

         c. The  representations  and  warranties of the Buyer shall be true and
correct in all material  respects as of the date made and as of the Closing Date
as though made at that time  (except for  representations  and  warranties  that
speak as of a specific date), and the Buyer shall have performed,  satisfied and
complied in all material respects with the covenants,  agreements and conditions
required by this  Agreement to be  performed,  satisfied or complied with by the
Buyer at or prior to the Closing Date.

         d. No statute,  rule,  regulation,  executive order, decree,  ruling or
injunction  shall have been  enacted,  entered,  promulgated  or endorsed by any

                                      -15-

<PAGE>

court or governmental authority of competent jurisdiction or any self regulatory
organization  having  authority  over  the  matters  contemplated  hereby  which
restricts or prohibits the consummation of any of the transactions  contemplated
herein.

         e. The Company's  Board of Directors shall have approved this Agreement
and the related documentation referred to herein.

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

         The  obligation of the Buyer to purchase  Notes and Warrants is subject
to the  satisfaction,  on or before the Closing  Date,  of each of the following
conditions, provided that these conditions are for the sole benefit of the Buyer
and may be waived by the Buyer at any time in its sole discretion:

         a. The parties  shall have executed this  Agreement,  the  Registration
Rights Agreement and the Escrow Agreement,  the parties shall have delivered the
respective  documents or signature  pages thereof (via facsimile or otherwise as
permitted in the Escrow Agreement) to the Escrow Agent on behalf of each other.

         b. The  representations and warranties of the Company shall be true and
correct in all  material  respects as of the date made and as of Closing Date as
though made at that time (except for  representations  and warranties that speak
as of a specific  date) and the  Company  shall have  performed,  satisfied  and
complied in all material respects with the covenants,  agreements and conditions
required by this  Agreement to be  performed,  satisfied or complied with by the
Company at or prior to the Closing  Date.  The Buyer may require a  certificate,
executed by the Chief Executive Officer of the Company,  dated as of the Closing
Date, to the foregoing  effect and as to such other matters as may be reasonably
requested by the Buyer.

         c. With respect to the Closing,  the Company shall have issued and have
duly executed by the  authorized  officers of the Company,  and delivered to the
Escrow  Agent on behalf of the  Buyer,  the Note and  Warrant  being sold at the
Closing  (via  facsimile  or  otherwise  as  required  by the Escrow  Agreement,
provided that any permitted  facsimile of such documents  shall be followed with
physical  delivery to the Escrow  Agent of the original  instrument  or security
within one (1) business day after facsimile of same to the Escrow Agent).

         d. The  Common  Stock  shall be  authorized  for  quotation  on the OTC
Bulletin Board Market (or another  national  securities  exchange or market) and
trading in the Common Stock on such market shall not have been  suspended by the
SEC or other relevant regulatory agency.

         e. No statute,  rule,  regulation,  executive order, decree,  ruling or
injunction  shall have been  enacted,  entered,  promulgated  or endorsed by any
court or governmental authority of competent jurisdiction or any self regulatory
organization  having  authority  over  the  matters  contemplated  hereby  which
restricts or prohibits the consummation of any of the transactions  contemplated
herein.

                                      -16-

<PAGE>

         f. The  Escrow  Agent  shall have  received  on behalf of the Buyer the
opinion of Company counsel,  dated as of the Closing Date,  substantially in the
form attached hereto as Exhibit E.

         8.       GOVERNING LAW; MISCELLANEOUS.

         a. Governing Law. This Agreement  shall be governed by and  interpreted
in  accordance  with the laws of the  State of  Delaware  without  regard to the
principles  of conflict of laws.  In the event of any  litigation  regarding the
interpretation or application of this Agreement, the parties irrevocably consent
to  jurisdiction  in any of the state or federal  courts  located in the City of
Chicago, State of Illinois and waive their rights to object to venue in any such
court,  regardless of the  convenience  or  inconvenience  thereof to any party.
Service of  process  in any civil  action  relating  to or  arising  out of this
Agreement  (including also all Exhibits or Addenda hereto) or the transaction(s)
contemplated  herein may be  accomplished  in any manner  provided  by law.  The
parties hereto agree that a final,  non-appealable  judgment in any such suit or
proceeding  shall be conclusive  and may be enforced in other  jurisdictions  by
suit on such judgment or in any other lawful manner.

         b.  Counterparts.  This  Agreement  may be  executed  in  two  or  more
identical  counterparts,  all of  which  shall  be  considered  one and the same
agreement and shall become effective when  counterparts have been signed by each
party and  signature  pages from such  counterparts  have been  delivered to the
Escrow Agent on behalf of the other party.  In the event any  signature  page is
delivered by facsimile  transmission  (which the parties  agree is an acceptable
form of delivery),  the party using such means of delivery shall cause three (3)
additional originally executed signature pages to be physically delivered to the
Escrow  Agent on behalf of the other party  within one (1)  business  day of the
execution and delivery hereof.

         c.  Headings;  Gender,  Etc.  The  headings of this  Agreement  are for
convenience  of  reference  and  shall  not  form  a  part  of,  or  affect  the
interpretation of this Agreement.  As used herein,  the masculine shall refer to
the  feminine  and neuter,  the feminine to the  masculine  and neuter,  and the
neuter to the  masculine  and  feminine,  as the  context may  require.  As used
herein,  unless the context  clearly  requires  otherwise,  the words  "herein,"
"hereunder" and "hereby,"  shall refer to this entire  Agreement and not only to
the  Section or  paragraph  in which such word  appears.  If any date  specified
herein falls upon a Saturday, Sunday or public or legal holidays, the date shall
be construed to mean the next business day following  such  Saturday,  Sunday or
public or legal holiday. For purposes of this Agreement, a "business day" is any
day other than a Saturday, Sunday or public or legal holiday.

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

         e. Entire  Agreement;  Amendments.  This Agreement and the  instruments
referenced  herein contain the entire  understanding of the parties with respect
to the matters covered herein and therein and, except as specifically  set forth

                                      -17-

<PAGE>

herein or therein,  neither the Company nor the Buyer makes any  representation,
warranty,  covenant or undertaking with respect to such matters. No provision of
this  Agreement  may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.

         f.  Notices.  Any notices  required or  permitted to be given under the
terms of this Agreement  shall be sent by U. S. Mail or delivered  personally or
by courier or via facsimile (if via facsimile,  to be followed  within three (3)
business  days by an original of the notice  document via U.S.  Mail or courier)
and shall be effective  five (5) days after being placed in the mail, if mailed,
certified or registered, return receipt requested, or upon receipt, if delivered
personally or by courier or by facsimile, in each case properly addressed to the
party to receive the same. The addresses for such communications shall be:

If to the Company:        Sales Online Direct, Inc.
                          4 Brussels Street
                          Worcester, Massachusetts 01610
                          Telephone: 781.821.0199 or 508.791.6710
                          Facsimile: 508.797.5398 and 305.489.6114
                          Attention: Mr. Greg Rotman, Chief Executive Officer

If to the Buyer,  at the address on the signature page of this  Agreement.  Each
party shall provide written notice to the other party of any change in address.

         g.  Successors and Assigns.  This  Agreement  shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.
Neither the Company nor the Buyer shall  assign this  Agreement or any rights or
obligations  hereunder  without the prior  written  consent of the other  (which
consent shall not be  unreasonably  withheld),  and in any event any assignee of
the Buyer shall be an accredited  investor (as defined in Regulation  D), in the
written opinion of counsel who is reasonably  satisfactory to the Company and in
form,   substance   and   scope   reasonably   satisfactory   to  the   Company.
Notwithstanding the foregoing,  if applicable,  any of the entities constituting
the Buyer (if greater  than one (1) entity) may assign its rights  hereunder  to
any of its "affiliates," as that term is defined under the 1934 Act, without the
consent of the Company;  provided,  however,  that any such assignment shall not
release  such  assigning  entity  from its  obligations  hereunder  unless  such
obligations  are  assumed by such  affiliate  and the  Company has prior to such
assignment  and  assumption  consented  in  writing  to the  same;  and no  such
assignment  shall be made unless it is made in  accordance  with any  applicable
securities  laws of any applicable  jurisdiction.  Any request for an assignment
made  hereunder by the Buyer shall be  accompanied  by a legal  opinion in form,
substance and scope reasonably satisfactory to the Company, that such assignment
is proper under applicable law. Notwithstanding anything herein to the contrary,
Buyer may pledge the Securities as collateral for a bona fide loan pursuant to a
security  agreement  with a third party  lender,  and such  pledge  shall not be
considered an assignment in violation of this Agreement so long as it is made in
compliance with all applicable law.

         h. No Third Party  Beneficiaries.  This  Agreement  is intended for the
benefit of the parties  hereto and their  respective  permitted  successors  and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

                                      -18-
<PAGE>

         i. Survival.  Unless this  Agreement is terminated  under Section 8(1),
the  representations  and  warranties of the Company and the Buyer  contained in
Sections 2 and 3 and the agreements and covenants set forth in Sections 4, 5 and
8 shall survive the Closing of the purchase and sale of Securities purchased and
sold hereby.

         j. Publicity.  The Company and the Buyer shall have the right to review
before issuance by the other, any press releases or any other public  statements
with respect to the transactions  contemplated hereby;  provided,  however, that
the Company shall be entitled,  without prior  consultation  with or approval of
the Buyer, to make any press release or other public  disclosure with respect to
such transactions as is required by applicable law and regulations.

         k. Further Assurance.  Each party shall do and perform,  or cause to be
done and  performed,  all such  further acts and things,  and shall  execute and
deliver all such other agreements,  certificates,  instruments and documents, as
the other  party may  reasonably  request  in order to carry out the  intent and
accomplish  the  purposes  of  this  Agreement  and  the   consummation  of  the
transactions contemplated hereby.

         l.  Termination.  In the event that the Closing shall not have occurred
on or before ten (10) business days from the date hereof,  this Agreement  shall
terminate at the close of business on such date.  Neither party may unilaterally
terminate this Agreement  after the Closing for any reason other than a material
breach of this Agreement by the non- breaching party. Such termination shall not
be the sole remedy for a breach of this  Agreement by the  non-breaching  party,
and each party  shall  retain all of its rights  hereunder  at law or in equity.
Notwithstanding  anything  herein to the  contrary,  a party  whose  breach of a
covenant  or  representation  and  warranty  or failure  to satisfy a  condition
prevented the Closing shall not be entitled to terminate this Agreement.

         m. Remedies.  No provision of this Agreement providing for any specific
remedy to a party shall be construed to limit such party to the specific  remedy
described,  and any other remedy that would otherwise be available to such party
at law or in equity shall be so available. Nothing in this Agreement shall limit
any rights a party may have with any applicable federal or state securities laws
with respect to the transactions contemplated hereby.

         IN  WITNESS  WHEREOF,  the  Buyer  and the  Company  have  caused  this
Securities  Purchase  Agreement to be duly executed as of the date first written
above.

                            [SIGNATURE PAGE FOLLOWS]

                                      -19-

<PAGE>

List of Exhibits

Exhibit A         Form of Note
Exhibit B         Warrant to Purchase Common Stock
Exhibit C         Registration Rights Agreement
Exhibit D         Escrow Agreement
Exhibit E         Opinion of Counsel for the Company

                                      -20-
<PAGE>

             [SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT DATED
                              AS OF MARCH 23, 2000]

                     COMPANY:

                        SALES ONLINE DIRECT, INC.

                        By:/S/  Greg Rotman
                           --------------------------------
                           Mr.  Greg Rotman, Chief Executive Officer

                    BUYER:

                        AUGUSTINE FUND, L.P.

                        By:  Augustine  Capital  Management, L.L.C., its General
                             Partner

                        By:  /S/  Thomas F. Duszyriski
                             ------------------------------
                             Mr. Thomas F. Duszynski, Member

                    BUYER'S ADDRESS:
                                               141 West Jackson Blvd.
                                               Suite 2182
                                               Chicago, Illinois 60604
                                               Telephone: 312.427.5457
                                               Telecopier: 312.427.5396

                                      -21-
<PAGE>

                          SECURITIES PURCHASE AGREEMENT

                                  Schedule 3(c)

                  Outstanding Options to Purchase Common Stock:

                 Outstanding Warrants to Purchase Common Stock:

                           Other Stock Purchase Rights

                                      -22-

<PAGE>

                          SECURITIES PURCHASE AGREEMENT

                                  Schedule 3(g)

         Registration of all the Registrable Securities under the Securities Act
of 1933, as amended,  requires the filing of a  registration  statement with the
Securities and Exchange  Commission and a declaration  of  effectiveness  of the
registration statement by the Securities and Exchange Commission.

                                      -23-
<PAGE>EXHIBIT A (Form of Note)

THE SECURITIES  REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933,  AS AMENDED  (THE  "ACT"),  OR  APPLICABLE  STATE  SECURITIES  LAWS
(COLLECTIVELY, THE "LAWS"). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED  FOR SALE,  SOLD,  TRANSFERRED  OR ASSIGNED IN THE ABSENCE OF
EITHER (I) AN EFFECTIVE  REGISTRATION  STATEMENT  FOR THE  SECURITIES  UNDER THE
LAWS,  OR (II) AN OPINION OF COUNSEL  PROVIDED TO THE ISSUER IN FORM,  SUBSTANCE
AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER TO THE EFFECT THAT REGISTRATION IS
NOT REQUIRED  UNDER THE LAWS DUE TO AN AVAILABLE  EXCEPTION TO OR EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE LAWS.

                                                    DATE: MARCH 23, 2000

NOTE # 01
U.S.$3,000,000.00

                            SALES ONLINE DIRECT, INC.

             SERIES A EIGHT PERCENT (8%) CONVERTIBLE PROMISSORY NOTE
                               DUE MARCH 31, 2002

         THIS NOTE is one of a duly  authorized  issue of Notes (a "Note" or the
"Notes") of Sales Online Direct,  Inc., a corporation duly organized and validly
existing  under  the  laws of the  State of  Delaware,  U.S.A.  (the  "Company")
designated  as its Series A Eight Percent (8%)  Convertible  Notes Due March 31,
2002, in an aggregate principal face value for all Notes of this series of Three
Million and no/100 United States Dollars (US$3,000,000.00).

         FOR VALUE  RECEIVED,  the Company  promises to pay to  AUGUSTINE  FUND,
L.P.,  the  registered  holder  hereof  and  its  successors  and  assigns  (the
"Holder"),  the principal sum of Three Million and no/100 United States  Dollars
($3,000,000.00)  on March 31, 2002 (the "Maturity Date"), and to pay interest on
the principal sum  outstanding,  at the rate of eight percent (8%) per annum due
and payable in quarterly  installments  in arrears,  on June 30,  September  30,
December  31 and March 31 of each year  during the term of this  Note,  with the
first such payment to be made on September 30, 2000.  Accrual of interest on the
outstanding  principal  amount,   payable  in  cash  or  Common  Stock  (defined
hereinafter)  at the  Company's  option,  shall  commence on the date hereof and
shall continue  until payment in full of the  outstanding  principal  amount has
been made or duly  provided  for.  The  interest so payable  will be paid to the
person in whose name this Note (or one or more predecessor  Notes) is registered

<PAGE>

on the records of the Company  regarding  registration and transfers of the Note
(the "Note Register");  provided,  however,  that the Company's  obligation to a
transferee of this Note arises only if such transfer,  sale or other disposition
is made in accordance with the terms and conditions of that Securities  Purchase
Agreement of even date  herewith  between the Company and Augustine  Fund,  L.P.
(the "Securities Purchase Agreement").

         The  principal  of, and interest on, this Note are payable in such coin
or currency  of the United  States of America as at the time of payment is legal
tender for payment of public and private debts, at the address last appearing on
the Note  Register of the Company as  designated in writing by the Holder hereof
from time to time. The Company will pay the outstanding principal of and any and
all accrued and unpaid  interest due upon this Note on the Maturity  Date,  less
any amounts required by law to be deducted or withheld,  to the record Holder of
this Note as of the fifth  business day (as defined in the  Securities  Purchase
Agreement)  prior to the Maturity  Date and addressed to such Holder at the last
address  appearing  on the Note  Register.  The  forwarding  of such funds shall
constitute a payment of outstanding  principal and interest  hereunder and shall
satisfy and  discharge  the liability for principal and interest on this Note to
the extent of the sum  represented  by such payment plus any amounts so deducted
or withheld. Except as herein provided, this Note may not be prepaid without the
prior written  consent of the Holder.  Interest may at the  Company's  option be
paid in Common Stock,  with the number of shares of Common Stock to be delivered
in payment of such  interest  determined by taking the dollar amount of interest
being paid divided by the applicable Conversion Price (defined below).

         This Note is subject to the following additional provisions:

         1.  Withholding.  The Company  shall be  entitled to withhold  from all
payments of principal or interest  pursuant to this Note any amounts required to
be withheld under the  applicable  provisions of the United States income tax or
other applicable laws at the time of such payments.

         2.  Transfer/Exchange of Note;  Registered Holder;  Opinion of Counsel;
Legend.  This Note has been issued subject to investment  representations of the
original purchaser hereof and may be transferred or exchanged only in compliance
with the  Securities  Act of 1933,  as amended  (the "1933 Act") and  applicable
state  securities  laws. Prior to due presentment for transfer of this Note, the
Company  and any agent of the  Company  may treat the  person in whose name this
Note is duly  registered on the Company's  Note Register as the owner hereof for
the purpose of receiving  payment as herein provided and for all other purposes,
whether or not this Note be overdue,  and neither the Company nor any such agent
shall be affected or bound by notice to the contrary.

         The Holder  understands and acknowledges by its acceptance  hereof that
(i)  except  as  provided  in the  Securities  Purchase  Agreement  and in  that
Registration  Rights Agreement attached as Exhibit C to the Securities  Purchase
Agreement   (the   "Registration   Rights   Agreement"),   both  such  documents
incorporated  herein by  reference,  this Note and the shares of common stock in
the Company  issuable upon conversion  thereof as herein  provided  ("Conversion
Shares"),  and any shares of Common Stock payable as interest hereunder have not

                                       2

<PAGE>

been and are not being  registered  under  the 1933 Act or any state  securities
laws, and may not be offered for sale, sold,  assigned or transferred unless (a)
subsequently  registered  thereunder,  or (b) the Holder shall have delivered to
the Company an opinion of counsel,  reasonably  satisfactory in form,  substance
and scope to the Company, to the effect that the securities to be sold, assigned
or transferred  may be sold,  assigned or  transferred  pursuant to an exemption
from such  registration;  (ii) any sale of such  securities  made in reliance on
Rule 144 promulgated  under the 1933 Act may be made only in accordance with the
terms of said Rule and further,  if said Rule is not  applicable,  any resale of
such securities  under  circumstances in which the seller (or the person through
whom the sale is made)  may be  deemed  to be an  underwriter  (as that  term is
defined  in the 1933 Act) may  require  compliance  with some  other  regulation
and/or  exemption  under the 1933 Act or the rules and regulations of the United
States  Securities and Exchange  Commission  (the "SEC")  thereunder;  and (iii)
neither  the Company nor any other  person is under any  obligation  to register
such  securities  under the 1933 Act or any state  securities  laws  (other than
pursuant to the terms of the Securities  Purchase Agreement and the Registration
Rights  Agreement)  or to comply with the terms and  conditions of any exemption
thereunder.

         Any  Conversion  Shares  issued upon  conversion of this Note, , and if
applicable,  any Common Stock issued in payment of interest as herein  provided,
shall,  if and only to the extent  required by law, bear legends in similar form
to the legends set forth on the first page of this Note.

         3.       Conversion of Note into Common Stock.

         The  Holder  of this  Note is  entitled,  at its  option,  at any  time
commencing  on the date first written at the top of this Note, to convert all or
a portion of the  original  principal  face  amount of this Note into  shares of
common  stock in the  Company,  $.001 par value  per  share  (defined  herein as
"Common Stock"),  at a conversion price (the "Conversion  Price") for each share
of Common Stock equal to the lesser of (x) one hundred ten percent (110%) of the
lowest of the closing  bid prices for the Common  Stock for the five (5) trading
days prior to the date of this Note (the  "Fixed  Price"),  or (y) a  percentage
(the  "Applicable  Percentage") of the average of the closing bid prices for the
Common Stock for the five (5) trading days immediately  preceding the Conversion
Date (as  hereinafter  defined),  as reported  on the  National  Association  of
Securities  Dealers  OTC  Bulletin  Board  Market  (or on  such  other  national
securities  exchange  or market  as the  Common  Stock may trade at such  time).
Except as stated in the next sentence,  the Applicable Percentage shall be equal
to 75%.  Notwithstanding  anything herein to the contrary,  if the  Registration
Statement  is not declared  effective by the SEC on or before the  Effectiveness
Date (as  defined  in the  Registration  Rights  Agreement)  (or does not remain
effective  on the date of  conversion  if such date is after  the  Effectiveness
Date),  then with  respect to any portion of the Note not  previously  converted
into Common Stock, the Applicable  Percentage shall decrease by two percent (2%)
for each thirty (30) day period  (pro-rated  for partial  periods and rounded to
the nearest  half-month)  beginning on the date after the Effectiveness Date and
ending on the date the Registration  Statement is declared effective by the SEC;
and if the  Registration  Statement has not been  declared  effective by the SEC
within one (1) year  after the date of this Note (or does not  remain  effective
until the  Holder has  converted  this Note in full into  non-restricted  Common

                                       3

<PAGE>

Stock),  the  Applicable  Percentage  shall  from the date which is one (1) year
after the date of this Note be fifty percent  (50%).  As an example,  and not by
way of limitation,  if the Registration  Statement is declared  effective by the
SEC thirty days after the  Effectiveness  Date,  then the Applicable  Percentage
will be equal to seventy-three percent (73%) [75% less {2% X 1 month}].

         Any  conversion  of this Note shall be  achieved by  submitting  to the
Company the fully completed form of conversion notice attached hereto as Exhibit
I (a "Notice of  Conversion"),  executed  by the Holder of this Note  evidencing
such Holder's intention to convert this Note or the specified portion (as herein
provided)  hereof.  A Notice of Conversion may be submitted via facsimile to the
Company at the  telecopier  number for the Company  provided  in the  Securities
Purchase  Agreement  (or at such other  number as  requested  in advance of such
conversion in writing by the Company),  and if so submitted the original  Notice
of  Conversion  shall be delivered to the Company  within two (2) business  days
thereafter.  The Company and the Holder  shall each keep records with respect to
the  portion  of this Note then  being  converted  and all  portions  previously
converted;  upon receipt by the Holder of the requisite  Conversion  Shares, the
outstanding  principal  amount  of the  Note  shall  be  reduced  by the  amount
specified in the Notice of Conversion  resulting in such Conversion  Shares. The
Company may from time to time,  but is not required to,  instruct the Holder and
the Holder shall surrender this Note along with the Notice of Conversion for the
purposes  of making a  notation  thereon  as to the  amount of  principal  being
converted,  or of  canceling  this Note and  issuing a new Note in the same form
with the principal amount of such Note reduced by the amount converted. Such new
or notated Note shall be delivered to the Holder  within five (5) business  days
after such  Holder's  surrender to the Company.  No  fractional  shares or scrip
representing fractions of shares will be issued on conversion, but the number of
shares issuable shall be rounded to the nearest whole share. Accrued interest on
the converted portion of the Note shall be payable upon conversion  thereof,  in
cash or Common Stock at the Conversion Price, at the Company's option.  The date
on which a notice of conversion is given (a  "Conversion  Date") shall be deemed
to be either the date on which the Company  receives from the Holder an original
Notice of Conversion duly executed,  or, if earlier,  the date set forth in such
Notice of  Conversion  if the original  Notice of  Conversion is received by the
Company within two (2) business days thereafter.

         In all cases,  the Company shall deliver the  Conversion  Shares to the
Holder within five (5) business days after the  Conversion  Date with respect to
such  Conversion  Shares being  delivered,  and at the address  specified in the
Notice of Conversion.

         Subject to the  provisions  of Paragraph  4(b) hereof,  at the Maturity
Date, the remaining portion of this Note which remains unconverted, if any, plus
accrued interest shall be automatically converted into shares of Common Stock as
of the Maturity  Date, as if the Holder had  converted the remaining  portion of
this Note  according to the  provisions  of this Section 3, with the  Conversion
Date being  equivalent in such event to the Maturity  Date, as if the Holder had
provided the Company with a Notice of Conversion with respect to the outstanding
principal amount of this Note on the Maturity Date. Other than a conversion made
on the Maturity Date in accordance with this paragraph, conversions of this Note
must be effected in increments of at least Ten Thousand U.S.  Dollars  ($10,000)
of principal amount of this Note (or such lesser outstanding principal amount of
this Note).

                                       4

<PAGE>

         4. Limitation on Number of Conversion Shares. (a)  Notwithstanding  any
other provision  herein,  the Company shall not be obligated to issue any shares
of Common Stock upon  conversion  of this Note if the issuance of such shares of
Common  Stock  would  exceed  that  number of shares of Common  Stock  which the
Company  may issue upon  conversion  of the Note (the  "Exchange  Cap")  without
breaching  the  Company's  obligations  under the rules and  regulations  of The
Nasdaq  Stock  Market,  Inc.,  to the extent that the same apply to the Company,
except  that such  limitation  shall not apply in the event that the Company (a)
obtains the approval of its  stockholders as required by applicable rules of The
Nasdaq Sock Market, Inc., for issuances of Common Stock in excess of such amount
or (b) obtains a written  opinion from outside  counsel to the Company that such
approval is not required,  which opinion shall be reasonably satisfactory to the
holder of this Note; provided,  however, that notwithstanding anything herein to
the  contrary,  the  Company  will issue such  number of shares of Common  Stock
issuable upon conversion of this Note at the then current Conversion Price up to
the Exchange Cap. The Company hereby agrees that,  should  shareholder  approval
become necessary to issue  additional  shares upon conversion of this Note, then
the  Company  shall use its best  efforts  to obtain  such  approval  within one
hundred  twenty (120) days after such necessity  arises.  Should the Company not
obtain  shareholder  approval  within such one hundred  twenty (120) day period,
then within five (5) business days thereafter the Company shall redeem this Note
by paying to the Holder a sum equal to one hundred twenty five percent (125%) of
the  then  outstanding   principal  amount  of  this  Note,   payable  utilizing
immediately  available funds, in accordance with the payment instructions of the
Holder.  The  provisions  of this  Section 5(a) will apply only in the event the
Company  becomes listed for trading on the NASDAQ stock market (either Small Cap
or National Market).

         (b) Conversion  Restrictions.  Notwithstanding anything to the contrary
set forth herein or in the Securities Purchase Agreement,  in no event shall any
holder of this Note be entitled to convert  this Note in excess of such  portion
of the principal of the Note that, upon giving effect to such conversion,  would
cause the aggregate number of shares of Common Stock  beneficially owned by such
converting  holder and its affiliates to exceed 4.99% of the outstanding  shares
of the  Common  Stock  following  such  conversion.  For of this  Section  4(b),
beneficial ownership shall be calculated in accordance with Section 13(d) of the
Securities  Exchange Act of 1934, as amended.  The  limitations  imposed by this
Section 4(b) on conversion of this Note shall no longer apply, and the holder of
this Note may  convert  all or any  portion  of this Note,  irrespective  of the
resulting  beneficial ownership of the Company's Common Stock, should any of the
following events occur: (I) The Company shall either: (i) become insolvent; (ii)
admit in writing its inability to pay its debts generally or as they become due;
(iii) make an  assignment  for the benefit of creditors or commence  proceedings
for its  dissolution;  or (iv) apply for,  or consent to the  appointment  of, a
trustee,  liquidator,  or  receiver  for  its or for a  substantial  part of its
property  or  business;  or (II) A  trustee,  liquidator  or  receiver  shall be
appointed for the Company or for a substantial  part of its property or business
without the Company's  consent and such  appointment  is not  discharged  within
sixty (60) days after such appointment;  or (III) Any governmental agency or any
court of competent jurisdiction at the instance of any governmental agency shall
assume  custody  or  control  of the  whole or any  substantial  portion  of the
properties or assets of the Company and shall not be dismissed within sixty (60)
days thereafter; or (IV) Bankruptcy,  reorganization,  insolvency or liquidation
proceedings or other  proceedings for relief under any bankruptcy law or any law
for the relief of debtors  shall be instituted by or against the Company and, if
instituted  against the Company,  shall not be dismissed within sixty days after
such  institution  or the  Company  shall by any  action or answer  approve  of,
consent  to,  or  acquiesce  in any  such  proceedings  or  admit  the  material
allegations  of,  or  default  in  answering  a  petition  filed  in,  any  such
proceeding.

                                       5

<PAGE>

         5. Obligations of the Company Herein are Unconditional. No provision of
this Note shall alter or impair the obligation of the Company,  which obligation
is absolute and unconditional, to repay the principal amount of this Note at the
time,  place  and rate  herein  stated.  This  Note and all  other  Notes now or
hereafter  issued in  replacement  of this Note on the same or similar terms are
direct  obligations  of the Company.  This Note ranks at least  equally with all
other  Notes now or  hereafter  issued  under the  terms set forth  herein.  The
Conversion  Price and number of shares of Common Stock issuable upon  conversion
shall be subject to adjustment from time to time as provided in Section 6 below.

         6.       Adjustments.

         (a) In the event the  Company  should at any time or from time to time,
after the date of this Note, fix a record date for the  effectuation  of a split
or subdivision of the outstanding shares of Common Stock or the determination of
holders of Common  Stock  entitled to receive a dividend  or other  distribution
payable in  additional  shares of Common  Stock  (equal to at least ten  percent
(10%) or more of the  Company's  then  issued and  outstanding  shares of Common
Stock) or other securities or rights  convertible  into, or entitling the holder
thereof to receive  directly or  indirectly  additional  shares of Common  Stock
(hereinafter  referred to as "Common Stock Equivalents")  without payment of any
consideration  by such holder for the  additional  shares of Common Stock or the
Common  Stock  Equivalents  (including  the  additional  shares of Common  Stock
issuable upon conversion or exercise thereof),  then, as of such record date (or
the date of such dividend,  distribution, split or subdivision if no record date
is fixed), then unless the Conversion Price is otherwise  automatically adjusted
in  accordance  with the  terms of this  Note,  the  Conversion  Price  shall be
appropriately decreased so that the number of shares of Common Stock issuable on
conversion of this Note shall be increased in proportion to such increase in the
aggregate  number of shares of Common Stock  outstanding and those issuable with
respect to such Common Stock Equivalents.

          (b) If the number of shares of Common  Stock  outstanding  at any time
after the date of this Note is decreased  by a  combination  of the  outstanding
shares of Common Stock, then, following the record date of such combination, the
Conversion Price shall be  appropriately  increased so that the number of shares
of Common  Stock  issuable  upon  conversion  of this Note shall be decreased in
proportion to such decrease in outstanding shares.

         (c) In the event the  Company,  at any time while all or any portion of
this Note is outstanding,  shall be  consolidated  with or merged into any other
corporation or corporations or shall sell or lease all or  substantially  all of
its property and business as an entirety,  then lawful  provisions shall be made
as part of the terms of such  consolidation,  merger,  sale or lease so that the
holder  of this  Note  may  thereafter  receive  in lieu  of such  Common  Stock
otherwise  issuable  to such  holder upon  conversion  of this Note,  but at the
conversion rate which would otherwise be in effect at the time of conversion, as
hereinbefore  provided,  the same kind and amount of securities or assets as may
be issuable,  distributable or payable upon such consolidation,  merger, sale or
lease with respect to Common Stock of the Company.

                                       6

<PAGE>

         7.  Reservation  of Shares.  The Company shall at all times reserve and
keep available out of its authorized but unissued shares of Common Stock, solely
for the purpose of effecting  the  conversion  of this Note,  such number of its
shares of Common  Stock as shall from time to time be  sufficient  to effect the
conversion of all of the outstanding  principal  amount,  and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the  conversion  of this Note,  in addition to such other  remedies as
shall be available to Holder,  the Company  will take such  corporate  action as
may, in the  opinion of its  counsel,  be  necessary  to increase  the number of
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes,  including without  limitation,  using its best
efforts to obtain the requisite  stockholder  approval necessary to increase the
number of authorized shares of the Company's Common Stock.

         8. Note Holder Not Deemed a  Stockholder.  No Holder,  as such, of this
Note shall be entitled (prior to conversion of this Note into Common Stock,  and
only then to the extent of such  conversion) to vote or receive  dividends or be
deemed the holder of shares of the Company for any purpose,  nor shall  anything
contained in this Note be construed to confer upon the Holder  hereof,  as such,
any of the rights of a stockholder of the Company or any right to vote,  give or
withhold consent to any corporate action (whether any  reorganization,  issue of
stock,   reclassification  of  stock,   consolidation,   merger,  conveyance  or
otherwise),  receive  notice of  meetings,  receive  dividends  or  subscription
rights,  or  otherwise,  prior to the issuance to the holder of this Note of the
Conversion  Shares  which he or she is then  entitled  to  receive  upon the due
conversion of all or a portion of this Note.  Notwithstanding the foregoing, the
Company  will  provide  the Holder  with  copies of the same  notices  and other
information   given   to   the   stockholders   of   the   Company    generally,
contemporaneously with the giving thereof to the stockholders.

         9. No Limitation on Corporate Action. No provisions of this Note and no
right or option granted or conferred hereunder shall in any way limit, affect or
abridge the exercise by the Company of any of its corporate  rights or powers to
recapitalize, amend its Certificate of Incorporation, reorganize, consolidate or
merge with or into  another  corporation,  or to transfer all or any part of its
property or assets,  or the  exercise of any other of its  corporate  rights and
powers.

         10.  Representations  of Holder.Upon  conversion of all or a portion of
this  Note,  the  Holder  shall  confirm  in  writing,   in  a  form  reasonably
satisfactory to the Company,  that the Conversion  Shares so purchased are being
acquired  solely for the Holder's own account and not as a nominee for any other
party, and that such Holder is an Accredited Investor (as defined in Rule 501(a)
of Regulation D promulgated  under the 1933 Act). The Company  acknowledges that
Holder's duly executed certification on the Notice of Conversion is satisfactory
confirmation of the facts set forth in the immediately  preceding  sentence.  If
such Holder  cannot make such  representations  because  they would be factually
incorrect,  it shall be a  condition  to such  Holder's  conversion  of all or a
portion of the Note that the Company receive such other  representations  as the
Company considers  reasonably  necessary to assure the Company that the issuance
of its  securities  upon  conversion  of the Note shall not  violate  any United
States or state securities laws.

                                       7

<PAGE>

         11. Waiver of Demand,  Presentment,  Etc. The Company hereby  expressly
waives demand and presentment for payment, notice of nonpayment, protest, notice
of protest, notice of dishonor,  notice of acceleration or intent to accelerate,
bringing of suit and  diligence in taking any action to collect  amounts  called
for hereunder and shall be directly and primarily  liable for the payment of all
sums owing and to be owing  hereunder,  regardless  of and  without  any notice,
diligence,  act or omission as or with respect to the  collection  of any amount
called for hereunder.

         12.  Attorney's Fees. The Company agrees to pay all costs and expenses,
including without limitation  reasonable  attorney's fees, which may be incurred
by the Holder in  collecting  any amount due under this Note or in enforcing any
of Holder's conversion rights as described herein.

         13. Default.  If one or more of the following described "Events of
Default" shall  occur:

     (a)  The Company  shall  continue in default in the payment of principal or
          interest  on this Note for a period of ten (10) days after a notice of
          default is received by the Company with  respect to any such  payment,
          or the  Company  shall not timely  honor any Notice of  Conversion  as
          specified herein and in the Securities Purchase Agreement; or

     (b)  Any of the  representations  or warranties made by the Company herein,
          in  the  Securities  Purchase   Agreement,   the  Registration  Rights
          Agreement,  or in  any  certificate  or  financial  or  other  written
          statement  heretofore  or  hereafter  furnished by or on behalf of the
          Company in connection  with the execution and delivery of this Note or
          the Securities Purchase Agreement or the Registration Rights Agreement
          shall be false or misleading in any material  respect at the time made
          and the Holder shall have provided seven (7) days prior written notice
          to the Company of the alleged  misrepresentation or breach of warranty
          and the same  shall  continue  uncured  for a period of seven (7) days
          after such written notice from the Holder; or

     (c)  The Company shall fail to perform or observe, in any material respect,
          any  other  covenant,   term,  provision,   condition,   agreement  or
          obligation of the Company under this Note or the  Securities  Purchase
          Agreement  and such  failure  shall  continue  uncured for a period of
          seven (7) days after  written  notice from the Holder of such failure;
          or

     (d)  The Company shall either: (i) become insolvent;  (ii) admit in writing
          its inability to pay its debts  generally or as they become due; (iii)
          make  an   assignment   for  the  benefit  of  creditors  or  commence
          proceedings for its dissolution;  or (iv) apply for, or consent to the
          appointment  of, a trustee,  liquidator,  or receiver for its or for a
          substantial part of its property or business; or

     (e)  A trustee,  liquidator or receiver  shall be appointed for the Company
          or for a  substantial  part of its  property or  business  without the
          Company's  consent and such appointment is not discharged within sixty
          (60) days after such appointment; or

     (f)  Any governmental agency or any court of competent  jurisdiction at the
          instance of any governmental agency shall assume custody or control of
          the whole or any  substantial  portion of the  properties or assets of
          the  Company  and  shall  not be  dismissed  within  sixty  (60)  days
          thereafter; or

                                       8
<PAGE>

     (g)  Any money judgment, writ or Note of attachment,  or similar process in
          excess of Five Hundred Thousand United States Dollars  (US$500,000.00)
          in the aggregate  shall be entered or filed against the Company or any
          of its  properties  or assets  and  shall  remain  unpaid,  unvacated,
          unbonded or unstayed for a period of fifteen (15) days or in any event
          later  than  five (5) days  prior  to the  date of any  proposed  sale
          thereunder; or

     (h)  Bankruptcy,  reorganization,  insolvency or liquidation proceedings or
          other  proceedings  for relief under any bankruptcy law or any law for
          the relief of debtors  shall be  instituted  by or against the Company
          and, if instituted against the Company,  shall not be dismissed within
          sixty days after such  institution  or the Company shall by any action
          or answer approve of, consent to, or acquiesce in any such proceedings
          or admit the  material  allegations  of, or  default  in  answering  a
          petition filed in, any such proceeding; or

     (i)  The Company shall have its Common Stock delisted from the OTC Bulletin
          Board Market or suspended from trading thereon, and shall not have its
          Common  Stock  relisted  on the same or  another  national  securities
          exchange  (other  than the  National  Quotation  Bureau,  Inc.,  "pink
          sheets" market),  or have such suspension  lifted, as the case may be,
          within ninety days after such delisting or suspension; or

     (j)  The Company  shall have received a notice of default on the payment of
          any debt(s)  aggregating  in excess of Five  Hundred  Thousand  United
          States Dollars (US$500,000.00) beyond any applicable grace period;

then,  or at any time  thereafter,  and in any and every such case,  unless such
Event of Default  shall have been waived in writing by the Holder  (which waiver
in one  instance  shall not be deemed to be a waiver in another  instance or for
any other prior or subsequent  Event of Default) at the option of the Holder and
in the Holder's  sole  discretion,  the Holder may  immediately  accelerate  the
maturity  hereof,  whereupon  all  principal  and  interest  hereunder  shall be
immediately due and payable,  without presentment,  demand, protest or notice of
any kind,  all of which are hereby  expressly  waived by the  Company,  anything
herein  or  in  any  Note  or  other   instrument   contained  to  the  contrary
notwithstanding,  and the Holder may immediately, and upon the expiration of any
period  of  grace,  enforce  any and all of the  Holder's  rights  and  remedies
provided herein or any other rights or remedies afforded by law or equity.

         14.  Note a General  Unsecured  Obligation  of the  Company.  This Note
represents a general unsecured  obligation of the Company.  No recourse shall be
had for the payment of the  principal  of, or the interest on, this Note, or for
any  claim  based  thereon,   or  otherwise  in  respect  hereof,   against  any
incorporator,  shareholder,  officer,  director,  or agent of the Company or any
successor corporation, whether by virtue of any constitution, statute or rule of
law, or by the  enforcement of any assessment or penalty or otherwise,  all such
liability being, by the acceptance  hereof and as part of the  consideration for
the issue hereof, expressly waived and released.

                                       9

<PAGE>

         15.  Enforceability.  In case any  provision  of this Note is held by a
court of competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent  possible,  and the validity and
enforceability  of the remaining  provisions of this Note will not in any way be
affected or impaired thereby.

         16.  Entire  Agreement.  This Note and Exhibit I attached  hereto,  the
Securities  Purchase  Agreement  and  the  Exhibits  attached  thereto  and  the
Registration  Rights  Agreement  and the  Exhibits  attached  thereto  (if  any)
constitute the full and entire understanding  between the Company and the Holder
with respect to the subject matter hereof and thereof. Neither this Note nor any
term hereof may be amended,  waived,  discharged or  terminated  other than by a
written instrument signed by the Company and the Holder.

         17.  Governing  Law.  This Note shall be governed by and  construed  in
accordance  with the laws of the  state of  Delaware  without  giving  effect to
applicable principles of conflict of law.

         18. Headings. Headings in this Note are for convenience only, and shall
not be used in the construction of this Note.

         IN WITNESS  WHEREOF,  the Company has caused this instrument to be duly
executed  by an  officer  thereunto  duly  authorized,  all as of the date first
hereinabove written.

                                    SALES ONLINE DIRECT, INC.

                                 By:  /s/ Greg Rotman
                                      --------------------------------------
                                      Mr. Greg Rotman, CEO

                                       10
<PAGE>

                                    EXHIBIT I

                              NOTICE OF CONVERSION

     (To Be Executed by the Registered Holder in Order to Convert the Note)

         The  Undersigned  hereby  irrevocably  elects to convert $_____________
of the Eight ercent (8%)  Convertible  Note Due  March  31, 2002,  No. 01,  into
shares of Common tock of Sales Online Direct,  Inc. (the "Company"),   according
to  the  terms  and  conditions  set  forth in such Note, as of the date written
below.  If securities are  to  be issued to a person other than the Undersigned,
the Undersigned agrees  to  pay  all  applicable  transfer  taxes  with  respect
thereto.

         The Undersigned  represents that it, as of this date, is an "accredited
investor" as such term is defined in Rule 501(a) of Regulation D promulgated  by
the SEC under the 1933 Act.

         The Undersigned  also  represents that the Conversion  Shares are being
acquired  for the Holder's own account and not as a nominee for any other party.
The  Undersigned  represents  and  warrants  that all  offers  and  sales by the
Undersigned of the Conversion  Shares shall be made pursuant to  registration of
the same under the 1933 Act, or pursuant to an exemption from registration under
the 1933 Act. The Undersigned  acknowledges  that the Conversion Shares shall if
(and only if)  required  by law contain  the legend  contained  on page 1 of the
Note.

Conversion Date:* _____________________

Applicable Conversion Price: ______________________________

Holder (Print True Legal Name): ______________________________________

________________________________________________________
(Signature of Duly Authorized Representative of Holder)

Address of Holder:  ___________________________

                    ___________________________

                    ___________________________

* This  original  Notice of  Conversion  must be  received by the Company by the
second business day following the Conversion Date.

                                       11

<PAGE>

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